November 15, 2011
In a case seemingly of first impression, the California Court of Appeal, Second Appellate District, Division Six, has been asked to decide whether California Land Title Association ("CLTA") can be subject to liability for an alleged violation of California's Cartwright Act (California Business and Professions Code § 16700 et seq.), Unfair Competition (California Business and Professions Code § 17200 et seq.) and false advertising as a result of its drafting of standard form policies of title insurance. In Scott Meisterlin and Julie Meisterlin v. California Land Title Association, et al., Case Number B231308 (San Luis Obispo Superior Court Case No. CV100088A), Plaintiffs Scott and Julie Meisterlin contended that they sustained a loss covered by their title insurance. They further alleged that their title insurer failed to provide the "complete coverage" that the Meisterlins expected when they purchased their policy. The Meisterlins sued their title insurer, and also named CLTA as a defendant. As to CLTA, the Meisterlins alleged that, in drafting a "standardized" CLTA policy and in marketing the benefits of title insurance, CLTA was deceiving consumers as to the extent of coverage they would obtain, and was limiting the scope of insurance available in the marketplace.
CLTA successfully demurred to the Complaint. In agreeing with the positions advanced by CLTA, the trial court held that the allegations of the Complaint did not establish that CLTA had adopted a business policy that was neither mandated nor authorized by the Insurance Code or other statutory relation of the title insurance industry. The trial court also held that CLTA's "advertising" on its website was simply a generalized statement as to the description of title insurance and its potential value to a homeowner, and was not deceptive or misleading to a reasonable consumer. The Meisterlins appealed.
Oral argument on the appeal was held on November 9, 2011. The Appellate Panel appeared unpersuaded by the arguments advanced by Meisterlins' counsel that CLTA was engaged in an unlawful "trust" to limit the type and scope of title insurance that consumers can purchase in California. To the contrary, the Appellate Panel appeared to agree with CLTA that, to the extent the Meisterlins disagreed with the coverage determination made by their title insurer, the Meisterlins' remedy was to bring an action against their insurer, and that CLTA was not a proper party to that dispute. The Appellate Panel also appeared to accept the argument, advanced by CLTA, that CLTA was not a party to any alleged "trust" to restrain trade, that by law CLTA is not an insurer and does not issue any insurance policies, and that CLTA did not make any representations as to the policy at issue. Instead, CLTA's role was properly limited to the filing of proposed policy forms with the California Department of Insurance and to providing generalized marketing on behalf of the title insurance industry, activities which are all permitted by law.
The decision of the Appellate Panel is expected in the next few weeks. CLTA will report further once that decision has been issued.
CLTA is represented in the action by Gary J. Lorch of Gordon & Rees LLP.
Mr. Lorch can be contacted via email at firstname.lastname@example.org, or by telephone at (213) 576-5000.