APPEAL from an order of the Superior Court of San Diego County, Timothy B. Taylor, Judge. Reversed and remanded. (Super. Ct. No. 37-2008-00079950).
The opinion of the court was delivered by: Irion, J.
CERTIFIED FOR PUBLICATION
Carolyn Wallace appeals from an order striking class allegations from the proposed class action lawsuit she filed against GEICO General Insurance Company, Government Employees Insurance Company, GEICO Casualty Company and GEICO Indemnity Company (collectively, GEICO). Wallace sued GEICO under Business and Professions Code section 17200 et seq.,*fn1 and other theories, alleging that GEICO wrongly denied coverage for body shop repairs performed at labor rates it considered to be above the prevailing rate. As we will explain, the trial court improperly concluded, as a predicate to its order striking the class allegations, that GEICO's offer of monetary compensation to Wallace after she filed her lawsuit caused her to lose standing as the representative plaintiff. Accordingly, we reverse the order striking the class allegations and remand for further proceedings.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. Wallace's Proposed Class Action Complaint
On August 7, 2007, Wallace filed a proposed class action complaint against her automobile insurance carrier, GEICO. According to Wallace, her vehicle was damaged in a March 5, 2007 accident and required body work. She obtained an estimate from a repair shop of her choice and presented the estimate to GEICO. GEICO told her that it would not pay the full amount of the estimate because the hourly rate for labor charged by that business was above what GEICO considered to be the prevailing labor rate. Wallace had the repairs performed and paid the difference between what GEICO agreed to pay and what she was charged for the repairs.*fn2
The operative first amended complaint alleges three causes of action: (1) unfair competition in violation of section 17200 et seq., premised in part on GEICO's alleged violation of the Insurance Code and related regulations in that it claimed prevailing labor rates without the proper support;*fn3 (2) breach of contract; and (3) breach of the covenant of good faith and fair dealing. Wallace brought the lawsuit on behalf of a proposed class composed of:
"all individuals who, within four years preceding the date of this complaint and continuing while this action is pending, met and meet all of the following criteria:
* Resident of California;
* Purchased automobile insurance from [GEICO];
* Made a claim to [GEICO] for insurance coverage for automobile repairs;
* Submitted to [GEICO] a written repair cost estimate from an automobile repair shop of their choice;
* Whose claims were denied by [GEICO], either in whole or in part, because [GEICO] asserted that the labor rate in the automobile repair estimate exceeded the labor rate that [GEICO] [was] required to pay; and
* Were forced to either pay or become indebted to the automobile repair shop of their choice the difference between the rates provided by their automobile repair shop of their choice and the labor rate [GEICO] claim[s] [it was] required to pay."
On behalf of the class, Wallace sought damages, including punitive damages, injunctive relief, disgorgement and attorney fees.
B. GEICO's Motion for Summary Judgment
GEICO filed a motion for summary judgment or in the alternative for summary adjudication. In support of its motion, GEICO submitted evidence of a stipulation that GEICO entered into with the California Department of Insurance (DOI) in April 2007, and an implementing order issued by California's Insurance Commissioner on May 2, 2007 (collectively, the consent order). The consent order was in response to orders to show cause that DOI issued in 2005 and 2006, and it covered the same subject matter as Wallace's complaint, namely GEICO's refusal to reimburse labor rates that it considered to be above the prevailing rate. In the consent order, GEICO was ordered to cease and desist from violations of certain Insurance Code provisions and related regulations; it agreed to submit a labor rate survey in compliance with existing law; and it was ordered to pay $60,000 to DOI. In addition, as highly relevant here, the consent order contained the following provisions regarding reimbursement of GEICO's insureds and other claimants:
"D. [GEICO] will conduct an internal audit of complaints submitted to [GEICO] or [DOI] since January 1, 2004 regarding labor rates to identify those claims, if any, where the insured or claimant paid an additional amount to the repair shop as a result of the difference in the labor rate charged by the repair shop and the amount paid by [GEICO]. [GEICO] shall reimburse the insured or claimant the additional amount paid no later than ninety days after [GEICO] [is] served with the Commissioner's Order ...