The California Supreme Court this week dismissed its review of Hughes v. Progressive Direct Ins. Co. and remanded the case to the Court of Appeal.
In its June 15, 2011 decision in Hughes, the California Court of Appeal (Second Appellate District) concluded that the California Supreme Court’s 1988 ruling in Moradi-Shalal v. Fireman’s Fund Ins. Co. did not bar an insured’s Unfair Competition Law (UCL) claim against an insurer which was based solely on the allegation that the insurer violated Insurance Code Section 758.5, the so-called “steering” statute, which prohibits an insurer from requiring that a vehicle must be repaired at a specific repair shop.
The defendant’s insurance company in the Hughes case appealed the Court of Appeal’s decision to the California Supreme Court. The Supreme Court granted the petition for review of the case but deferred action while the Court considered Zhang v. Superior Court, which presented the issue whether Moradi-Shalal bars certain UCL actions against insurers.
On August 1, 2013, the Supreme Court handed down its decision in Zhang, which held that Moradi-Shalal does not preclude a first party UCL action against an insurer even though the insurer’s alleged misconduct also violates Insurance Code Section 790.03.
On September 11, 2013, the Supreme Court dismissed its review of Hughes v. Progressive Direct Ins. Co. and remanded the case to the Court of Appeal. Presumably, the Court of Appeal now will reconsider its prior decision in light of the Supreme Court’s holding in Zhang.