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Litigation

: CalBizLit

Cal Supremes Rule Life Insurance Not A Service Under CLRA

By Bruce Nye

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The Consumer Legal Remedies Act (Civ. Code section 1750 et seq.) prohibits various unfair and deceptive acts and practices in a "transaction intended to result or which results in the sale or lease of goods or services to any consumer."

Is life insurance a service? The California Supreme Court today said "no" in Fairbanks v. Superior Court (April 20, 2009) ___Cal.4th___ (S157001), a CLRA case against Farmers' Insurance. Section 1761(b) defines "services" as "work, labor and services for other than a commercial business use, including services furnished in connection with the sale or repair of goods." Life insurance, as a contract of indemnity, doesn't qualify.

And the broader application of this decision to CLRA cases is this: while the plaintiffs contended that there were services involved because of "the work or labor of insurance agents and other insurance company employees in helping consumers select policies that meet their needs," etc., those ancillary services didn't change the result.

. . . ancillary services are provided by the sellers of virtually all intangible goods ? investment securities, bank deposit accounts and loans, and so forth. The sellers of virtually all these intangible items assist prospective customers in selecting products that suit their needs, and they often provide additional customer services related to the maintenance, value, use, redemption, resale, or repayment of the intangible item. Using the existence of these ancillary services to bring intangible goods within the coverage of the Consumers Legal Remedies Act would defeat the apparent legislative intent in limiting the definition of ?goods? to include only ?tangible chattels.?

Full post as published by CalBizLit on April 20, 2009 (boomark / email).