Attorney General Bonta: California’s Unfair Competition Law Supersedes Insurance Policy Statute of Limitations

OAKLAND — California Attorney General Rob Bonta today filed an amicus brief in Rosenberg-Wohl v. State Farm Fire and Casualty Co. (State Farm), a case that hinges on whether an Unfair Competition Law (UCL) action filed by a policyholder against their insurance company is subject to the UCL's four-year statute of limitations or the Insurance Code’s one-year limitations period for actions to recover on an insurance policy. The brief, filed in the California Supreme Court, argues that a UCL action is distinct from an action to recover policy benefits, therefore an insurance policy claims period cannot override the four-year statute of limitations that applies to all UCL actions. A contrary decision would hinder consumers’ ability to challenge unlawful, unfair, or fraudulent conduct by insurance companies. 

“We must protect consumers’ right to challenge abusive business practices by insurance companies,” said Attorney General Bonta. “California's Unfair Competition Law protects all 39 million Californians from unlawful, unfair, and fraudulent business practices by any industry, including insurance companies. The lower court got it wrong and if allowed to stand the decision threatens to undermine the broad protections afforded to Californians under the Unfair Competition Law. I urge the California Supreme Court to overturn the erroneous decision.”

California’s UCL prohibits businesses in California from engaging in illegal, unfair, or fraudulent practices in any aspect of their business, and allows California consumers injured by those practices to go to court to protect their rights. The UCL can also be enforced by the Attorney General and district attorneys, as well as by some city attorneys and county counsels.  

The plaintiff in this case filed an insurance claim under their homeowners’ insurance policy with State Farm, which the insurer denied. Roughly a year and a half later, the plaintiff filed a lawsuit against State Farm, alleging that it violated the UCL by engaging in unfair and misleading practices that included failing to properly investigate property insurance claims and failing to provide explanations for claim denials. The plaintiff sought injunctive relief that would require the company to reform its marketing practices and its process for investigating and resolving certain home-insurance claims. The Court of Appeal upheld the dismissal of the plaintiff’s action as untimely, holding that the plaintiff’s UCL claims were subject to the contractual one-year limitations period rather than the UCL’s four-year statute of limitations because they arose from parties’ contractual relationship.

In today’s brief Attorney General Bonta argues that the one-year limitations period set forth in the Insurance Code does not apply to a UCL action, regardless of whether the action relates to an insurance claim. The brief also notes that the Court of Appeal's decision departs from long-standing Supreme Court precedent holding that the UCL’s statute of limitations “admits no exceptions.” 

Attorney General Bonta is committed to upholding Californians’ protections under the UCL:

• In February, Attorney General Bonta sent a letter small banks and credit unions warning that overdraft and returned deposited item fees may violate state and federal consumer protection laws, and urged small financial institutions to eliminate these fees.

• Also in February, Attorney General Bonta filed an amicus brief in Capito v. San Jose Healthcare System, LP, urging the court to clarify when consumers can sue businesses for engaging in fraudulent acts or practices, and to adopt a standard for unfair acts or practices in UCL cases.

• In January 2023, Attorney General Bonta announced a lawsuit against the nation's largest insulin makers and pharmacy benefit managers for driving up the cost of the lifesaving drug through unlawful, unfair, and deceptive business practices in violation of California's consumer protection laws.

•  In September 2022, Attorney General Rob Bonta announced a lawsuit against Amazon alleging that the company stifled competition and caused increased prices across California through anticompetitive contracting practices in violation of California’s consumer protection and antitrust laws.

A copy of the amicus brief can be found here.