District Court (Tx) Says Insurance Products Not Subject to CLRA

In Berry v. Indianapolis Life Ins. Company, 2009 WL 424549 (N.D.Tex. 2009), Judge Boyle found the CLRA inapplicable to insurance products.  Judge Boyle explained:

Indianapolis Life also argues that the Complaint fails to state a claim based on the alleged violation of the CLRA, because the CLRA applies only to the “sale or lease of goods and services.” Cal. Civ.Code § 1770(a). The term “goods” is defined in the CLRA as “tangible chattels” while the term “services” is defined as “work, labor, and services for other than a commercial or business use.”Cal Civ.Code § 1761(a)(b). Indianapolis Life argues that insurance is neither a good nor a service as those terms are de-fined in the CLRA. The parties do not dispute that the California Supreme Court has not rendered an opinion directly addressing this issue. In applying state law on an issue of first impression, it is the duty of this Court to determine how the highest court of a given state would rule based on its precedent. Chemstar, Inc. v. Liberty Mut. Ins. Co., 41 F.3d 429, 432 (9th Cir.1994) (“The panel applies California law as it believes the California Supreme Court would apply it.”).  ¶  It appears that the California Supreme Court would find that insurance is neither a good nor service under the CLRA. Civil Serv. Employees Ins. Co. v.Super. Ct., 22 Cal.3d 362, 376 (Cal.1978) (stating in dicta that “[section 1781(d) ] does not directly apply to [an insurance contract] because insurance is technically neither a ‘good’ nor a ‘service’ within the meaning of the [ CLRAsection 1761(a) and (b) ]”). The great weight of authority applying California law has dis-missed CLRA claims based on insurance contracts. See, e.g., Mahoney v. Fidelity Nat. Title Co., No. SACV 08-0561-AG, 2008 WL 4286934, at *3 (C.D.Cal. Sept. 15, 2008) (dismissing CLRA claim finding that insurance is not a “service”); Estate of Migliaccio v. Midland Nat’l. Life Ins. Co., 436 F.Supp.2d 1095, 1108-1109 (C.D.Cal.2006) (dismissing CLRA claim on the ground that annuities, which are defined in the California Insurance Code as part of life insurance, are not “goods” or “services”); Bacon ex. rel. Maroney v. Am. Int’l Group, 415 F.Supp.2d 1027, 1035-36 (N.D.Cal.2006) (same); Newland v. Progressive Corp., No. CIV-S-05-01405 DFL PAN, 2006 WL 2536625 at *5 (E.D.Cal. Aug. 31, 2006) (insurance is neither a “good” nor a “service” within the meaning of the CLRA); Bufano v. State Farm Gen. Ins. Co., No. B166899, 2004 WL 2526422, at *7 (Cal.Ct.App. Nov. 9, 2004) (same); Lynch v. Commercial Union Ins. Co., No. A094846, 2001 WL 1660035 at *7 (Cal.Ct.App. Dec. 28, 2001) (holding that insurance is not a “good” or “service” and noting that “insurance is a contract by which indemnification is provided for loss arising from a con-tingent or unknown event”).FN26 As the parties have pointed out, the California Supreme Court currently has the issue of whether insurance contracts are subject to the CLRA under advisement since it granted review of Fairbanks v.Super. Ct., 64 Cal.Rptr.3d 623 (Cal.Ct.App.2007), rev. granted, 68 Cal.Rptr.3d 273 (Cal.2007).FN27 Thus, although the Court dismisses this claim, having found no claim as a matter of law, Plaintiffs may move for reconsideration of the dismissal in the event of a contrary ruling from the California Supreme Court in Fairbanks.