Filed 7/24/19
                  CERTIFIED FOR PUBLICATION

 IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                 SECOND APPELLATE DISTRICT

                           DIVISION ONE


ASHISH ADHAV et al.,                    B285586

       Plaintiffs and Appellants,       (Los Angeles County
                                         Super. Ct. No. BC485275)
       v.

MIDWAY RENT A CAR, INC., et al.,

       Defendants and Respondents.


     APPEAL from a judgment of the Superior Court of
Los Angeles County, Elihu Berle, Judge. Affirmed.
       Kearney Littlefield, Thomas A. Kearney, Prescott W.
Littlefield; Catherine Burke Schmidt; Ringler Law Corporation,
Jerome L. Ringler; Esner, Chang & Boyer, Stuart B. Esner and
Shea S. Murphy, for Plaintiffs and Appellants.
     Molino & Berardino, Steven R. Berardino and Michelle
Cooper, for Defendant and Respondent Midway Rent A Car, Inc.
     Michelman & Robinson, Mona Z. Hanna and Jennifer A.
Mauri, for Defendants and Respondents National Specialty
Insurance Company, KnightBrook Insurance Company and Knight
Management Services, LLC.
                        I. INTRODUCTION
       Plaintiffs Ashish Adhav and Cullen Dickson rented cars from
defendant Midway Rent A Car, Inc. (Midway) and opted to purchase
insurance coverage in connection with those rentals. Because
Midway is not an insurance company, Midway purchased master
insurance policies from defendants KnightBrook Insurance
Company (KnightBrook) and National Specialty Insurance
Company (National Specialty) to make such optional insurance
coverage available to its customers. Midway was the insured but
was authorized to extend coverage to its customers under the
policies. These policies, and the rates they charged Midway, were
approved by the California Department of Insurance (DOI) as
required by California law. Many of the policies were structured to
include a $25,000 per claim self-insured retention (essentially, a
deductible) for which Midway was responsible in case of a customer
loss. KnightBrook and National Specialty became liable only if the
loss exceeded the self-insured retention. Shifting some of the risk of
loss to Midway in this manner lowered the premium Midway paid
to the insurers. In light of the self-insured retention,
administrative costs in connection with adjusting claims (for which
it was responsible), and other factors including presumably some
profit margin, Midway charged customers purchasing optional
insurance more than the premium it paid to KnightBrook and
National Specialty.
      Plaintiffs chose to rent cars from Midway based on
convenience, location, and overall cost—not based on anything
insurance related. Plaintiffs understood they were not obligated to
purchase insurance from Midway. The insurance rates Midway
charged customers were set forth in the rental agreement and
known to Plaintiffs before they opted to purchase the coverage. The
insurance rates paid by Plaintiffs were comparable to rates charged



                                  2
by other rental car companies, and in some instances lower.
Plaintiffs received the benefit of the coverage they purchased, did
not experience any covered losses, and there is no dispute
concerning any adjustment of a claimed loss.
      Plaintiffs nevertheless brought a class action against Midway,
asserting they were economically harmed by unlawful and
fraudulent business practices. (Bus. & Prof. Code, § 17200, et seq.)
Plaintiffs also named as defendants KnightBrook, National
Specialty and their managing general agent Knight Management
Insurance Services (KMIS) (collectively, the Insurer Defendants).
How did the Defendants injure Plaintiffs, one might ask. Plaintiffs
assert various Insurance Code provisions required Midway to
disclose to them what rate Midway was paying the Insurer
Defendants, and further to charge Plaintiffs that same rate (despite
this meaning Midway would offer insurance at a loss given the self-
insured retention).1 Plaintiffs contend the Insurer Defendants were
liable because, although they never received anything beyond the
premium owed by Midway, the Insurance Code required funds
collected by Midway from customers purchasing insurance be
imputed to the Insurer Defendants. Plaintiffs argue the result of
this imputation was that the Insurer Defendants constructively
“received” a premium in excess of that authorized by the DOI.
      Plaintiffs claimed these business practices caused them harm
because they paid more than what Midway paid its insurers,
despite the fact they received the benefit of coverage based not only
on the premium paid to the Insurer Defendants, but also on
Midway’s self-insured retention. Plaintiffs further sought an



1    All statutory references are to the Insurance Code, unless
otherwise specified.



                                  3
injunction to prohibit these alleged unlawful and fraudulent
practices.
       The trial court disagreed with Plaintiffs’ arguments, finding
their claims were based on Insurance Code provisions inapplicable
to Plaintiffs’ interactions with Midway. The court further found
Plaintiffs failed to establish any illegal or fraudulent business
practice, or any economic injury. Following a bench trial, it entered
judgment in favor of the Defendants. We affirm.
      II. FACTUAL AND STATUTORY BACKGROUND
      A.    The Insurance Arrangements
      Midway is a car rental agency in the business of renting cars
to customers. Midway offers insurance to its rental car customers
as an optional feature of its rental agreements. Available coverages
include Renters Liability Protection Insurance (RLP), Supplemental
Liability Insurance (SLI), and Personal Accident Insurance-
Personal Effects Coverage (PAC). RLP provides liability insurance
coverage at the state-required policy limits for motor vehicle drivers
of $15,000 per person/$30,000 per accident for bodily injury, and
$5,000 in property damage per accident. (§ 11580.1, subd. (b); Veh.
Code, § 16056.) SLI provides liability insurance in excess of any
existing insurance, from the state statutory minimum limits up to
$1,000,000. PAC provides coverage for death or injury in the event
of an accident involving the rented vehicle, and loss or damage of a
rental car customer’s personal belongings.
            1.    RLP and SLI Coverage
      KnightBrook and National Specialty are admitted insurance
carriers in California. KMIS is their managing general agent.
From May 25, 2008 through January 31, 2012, Midway purchased
master RLP and SLI insurance policies from National Specialty




                                  4
under which Midway was the insured. Endorsements on these
policies, as well as later policies purchased by Midway for RLP, SLI
and PAC insurance, allowed Midway to offer coverage pursuant to
the insurance policies to car rental customers who opted to
purchase such coverage.
       The sale of insurance products in California is heavily
regulated, and insurers generally must submit proposed rate filings
and receive approval from the DOI before offering an insurance
product. Plaintiffs acknowledge the Insurer Defendants complied
with these requirements. The Insurer Defendants’ DOI filings for
the insurance policies at issue indicated the rates in those policies
applied to the named insured (the rental car company). In 2011,
after an inquiry by the DOI, a representative of the Insurer
Defendants specifically confirmed “these are rates being charged
the named insured—the car rental company” and not others. As
pertinent here, the DOI approved premium rates for RLP insurance
offered by National Specialty at $1 per day (subject to a policyholder
self-insured retention of $25,000), and $4.00 per day for SLI
insurance, with up to a 25 percent adjustment in the rate charged.
Midway paid National Specialty $1.00 for each day a rental
customer purchased RLP coverage and $4.38 for each day a
customer purchased SLI coverage. The significant self-insured
retention lowered the rate the DOI approved, and Midway paid.
       In 2012, when National Specialty was preparing a new
regulatory filing, a representative of the vendor processing that
filing sent an email to the DOI saying she had “a question regarding
rental car insurance in California that I was hoping you could help
me with. If an insurance company were to file new program rates
like any other product, but we believe that the rental company
involved may charge additional money once the insurance coverage
is offered to the renters, does that additional money need to be filed



                                  5
as part of the filing and is it considered part of the premium?” The
DOI responded that it “believe[d] this would be a separate
transaction that is outside our review. If the additional money
came back to the insurer in any way, either directly or indirectly,
then we would expect to see it included in a rate filing.
      From February 1, 2012 through February 23, 2013, Midway
purchased master RLP and SLI insurance policies from
KnightBrook. The premium rates approved by the DOI for these
KnightBrook policies were $1 per day (subject to a self-insured
retention of $25,000 per claim), and $12.94 per day for SLI
coverage. KnightBrook charged these same premium amounts for
each day a rental customer purchased RLP and/or SLI coverage
under these policies.
            2.    PAC Coverage
       From May 25, 2008, through February 23, 2013, Midway was
listed as an insured under a PAC group policy issued by National
Specialty to Arizona-based Sonoran National Insurance Group.
Midway paid 99 cents for each day a rental customer purchased
PAC coverage. This rate was not part of a rate filing with the DOI,
but was set forth in a master policy that was “desk filed” with the
Arizona Department of Insurance. The policy contained a base net
rate ranging from $.99 to $1.13, and “gross/retail” rates ranging
from $3.95 to $5.95.
      B.    The Plaintiffs
      Class representatives Ashish Adhav and Cullen Dickson
rented cars from Midway between May 25, 2008 and February 23,
2013. Midway charged Adhav $12.95 per day for RLP coverage,
$19.95 per day for SLI coverage, and $3.00 per day for PAC




                                  6
coverage. Midway charged Dickson $14.95 per day for RLP
coverage.2
      Adhav testified that had he not purchased the optional
insurance from Midway, he would have purchased such insurance
as part of a car rental from another rental car company at the same
price. Both class representatives testified they considered only the
bottom line cost when pricing car rentals from competing rental car
companies (as opposed to individual charges in the total price). The
rental agreements clearly set forth the amounts charged for
coverage. Neither class representative noticed any difference in the
price of rental car insurance between Midway and other rental car
companies. Both Adhav and Dickson rented from Midway
primarily based on factors such as convenience and location.
Evidence at trial showed the rates Midway charged its customers
for optional insurance did not exceed the rates charged by other
rental car companies. Indeed, when Adhav bought PAC coverage
from other rental car companies, he paid the same amount or more
than what Midway charged.
      C.     The Relevant Statutory Regimes
      To understand Plaintiffs’ unfair competition law theory under
Business and Professions Code section 17200 (the UCL), and
Defendants’ responses to it, some background on four separate
statutory regimes implicated by the parties’ respective arguments is
required.
             1.   Civil Code Section 1939.19(c)
      Civil Code section 1939.19, subdivision (c) provides in
pertinent part that “[i]n addition to the rental rate, taxes,

2    Dickson did not provide any evidence suggesting he
purchased SLI or PAC coverage.



                                  7
additional mandatory charges, if any, and mileage charges, if any, a
rental company may charge for an item or service provided in
connection with a particular rental transaction if the renter could
have avoided incurring the charge by choosing not to obtain or
utilize the optional item or service. Items and services for which
the rental company may impose an additional charge include, but
are not limited to, optional insurance . . . requested by the renter
. . . .”
      This statute, codified as Civil Code section 1936 during the
class period,3 was enacted following Truta v. Avis Rent A Car
System, Inc. (1987) 193 Cal.App.3d 802 (Truta). The Truta court
concluded a collision-damage waiver (CDW) offered by a rental car
company was not insurance, and therefore Insurance Code
provisions were “irrelevant in measuring the alleged excessiveness”
of the CDW’s cost. (Id. at p. 820.) Passed in response to Truta,
Civil Code section 1936 “was primarily designed to protect
consumers against rental car company overcharges for collision
damage waivers . . . and for the cost of repairing cars damaged
during a rental.” (Schnall v. Hertz Corp. (2000) 78 Cal.App.4th
1144, 1154-1155 & fn 5.) It does so, among other ways, by capping
the total amount of a renter’s liability to the rental company
resulting from damage to the rental vehicle (Civ. Code, § 1939.05),
and specifying the terms of any damage waiver (id., § 1939.09).
Sections 1939.01―1939.37 also “touch on a variety of other rental
car practices,” such as permitting a rental car company to “impose

3     Following its enactment, Civil Code section 1936 was
amended numerous times, and, in 2016, “recast and reorganiz[ed]”
under sections 1939.01-1939.37. (See 2016 Cal. Stats. ch. 183,
(enacted August 26, 2016)). Regardless of the amendments, the
statute has consistently provided a car rental company may impose
an additional charge for optional insurance.



                                  8
additional charges for optional services if the renter knows the
charge is avoidable.” (Schnall v. Hertz Corp., supra, 78 Cal.App.4th
at p. 1155.) Those additional permitted (so long as avoidable)
charges include insurance. (Civ. Code, § 1939.19, subd. (c).) In
contrast to some of its other provisions, which limit charges that
can be imposed (e.g., id., § 1939.05), the statute is silent regarding
the amount of permissible insurance fees that can be charged in
addition to the rental rate.
            2.    Proposition 103
      Prior to Proposition 103, “California . . . regulate[d] the rates
of most types of insurance ‘to the end that they shall not be
excessive, inadequate or unfairly discriminatory.’ ” (Amwest Surety
Ins. Co. v. Wilson (1995) 11 Cal.4th 1243, 1258.) “The Legislature
emphasized . . . that this goal was to be achieved through open
competition in the insurance market rather than by state
regulation.” (Ibid.) Proposition 103, a constitutional amendment,
was approved by the electors on November 8, 1988 and took effect
the following day. (Travelers Indemnity Co. v. Gillespie (1990) 50
Cal. 3d 82, 88; Cal. Const., art. II, § 10). Proposition 103 made
fundamental changes to this open-market/competition approach.
(Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th
554, 561.)
      Like the law it replaced, Proposition 103 utilizes the basic
standard that “[n]o rate shall be approved or remain in effect which
is excessive, inadequate, unfairly discriminatory or otherwise in
violation of this chapter.” (§ 1861.05, subd. (a).) But unlike prior
law, Proposition 103 directs that “no consideration shall be given to
the degree of competition” in determining whether a rate is
excessive, inadequate or unfairly discriminatory. (Ibid.) Instead,
Proposition 103 installed an elected Insurance Commissioner and




                                   9
created a “prior approval” process whereby most insurance products
(including the proposed rates to be charged for those products by
the insurer) must be filed by the insurer with the DOI, and
approved by the Commissioner, prior to sale. (§ 1861.01, subd. (c).)4
      With regard to automobile insurance, Proposition 103 dictates
that rates are to be determined primarily by a driver’s safety
record, years of driving experience, and annual number of miles
driven. (§ 1861.02, subd. (a).) Insurers are required to offer good
driver discount policies to persons with suitable driving records.
(§§ 1861.02, subd. (b)(1), 1861.025.)
            3.    Agent Provisions
                  a.    General Purpose Agents
       An insurance agent is a person “authorized, by and on behalf
of an insurer, to transact all classes of insurance other than life,
disability, or health insurance, on behalf of an admitted insurance
company.” (§ 31; see also § 1621.) Agents must hold a valid license
from the Commissioner to conduct business. (§ 1631.) An
insurance agent’s primary obligation is to represent the insurer in
the transaction of insurance business with the general public.
(Marsh & McLennan of Cal., Inc. v. City of Los Angeles (1976) 62
Cal.App.3d 108, 117―118.) An insurance agent as defined by
sections 31 and 1621 therefore may bind the insurer if acting within
the scope of the insurance business entrusted to him or her. (R & B
Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th




4     Section 1861.13 states that Proposition 103 “shall apply to all
insurance on risks or on operations in this state, except those listed
in Section 1851.” Automobile insurance is not among the exempted
types of insurance listed in section 1851.



                                  10
327, 344 [“ ‘The most definitive characteristic of an insurance agent
is his authority to bind his principal, the insurer.’ ”].)
      Agents are typically compensated by the insurer based on
products sold. (E.g., Arnold v. Mutual of Omaha Ins. Co. (2011) 202
Cal.App.4th 580, 584; § 1861.16, subd. (a).) Agents are responsible
for delivering a copy of any motor vehicle policy they sell to the
insured. (§ 383.5.) That policy must specify the premium. (§ 381,
subd. (f).)
                   b.    Rental Car Agents Act
        In 1999, the Legislature enacted the Rental Car Agents Act,
which added sections 1758.8–1758.891 to the Insurance Code.
(Stats. 1999, ch. 618.) The Act became effective January 1, 2001.
(§ 1758.891.) Section 1758.8 provides that a car rental agency may
either (1) offer or sell insurance under a general license issued to
brokers and agents under Article 3, commencing with section 1631
[i.e., the agency provisions described above] or (2) obtain a more
limited license that authorizes the car rental agent to sell certain
types of insurance “incidental to rental agreements, on behalf of any
insurer authorized to write those types of insurance in this state.”
(§ 1758.8.)5 Section 1758.81 provides that a car rental agency may
obtain the more limited, specific license by filing a certificate signed
by an insurer which appoints the car rental agency to act as its




5      These types of insurance are personal accident, liability,
personal effects, roadside assistance, and emergency sickness.
(§ 1758.85.) The Insurance Code elsewhere provides for other types
of businesses to obtain similar limited licenses for selling insurance
incidental to their business, such as travel agents, cargo shippers,
self-storage unit operators, and others. (See §§ 1752―1758.994.)




                                  11
agent and transact the permitted kinds of insurance. (§ 1758.81
(a)(2).)
       The parties do not dispute that Midway was appointed by the
Insurer Defendants, and held a proper rental car agency license, in
connection with the sale of the RLP, SLI, and PAC products at
issue.

                 III. PROCEDURAL HISTORY
      A.    Proceedings Before the Trial Court
      On August 29, 2014, Plaintiffs filed a second amended class
action complaint (SAC), the operative complaint in this action. On
November 18, 2015, the trial court certified a class of “[a]ll
consumers who paid for car rental insurance through Defendants in
California at any time between May 25, 2008, and February 23,
2013, and who did not rent again from Midway after February 23,
2013.”
       Plaintiffs’ first UCL cause of action alleged Midway’s practice
of charging its customers a fee for insurance coverage that exceeded
the DOI approved rate in the policies between the Insurer
Defendants and Midway violated Proposition 103’s rate approval
requirement (§ 1861.01), and consequently, constituted an unlawful
business act or practice. Plaintiffs alleged the Insurer Defendants
were liable because Midway was their agent, payments made by
rental car customers were therefore imputed to the insurers as
premium, and the Insurer Defendants thereby “received” premium
in excess of the DOI authorized rate. Plaintiffs’ second UCL cause
of action alleged Defendants’ failure to disclose to Plaintiffs the
premium in the agreements between Midway and the Insurer
Defendants was a fraudulent business act or practice.




                                 12
      The matter proceeded to a six-day bench trial. Before trial,
the parties submitted a joint stipulation of facts, which the court
accepted. Midway introduced evidence indicating it paid
approximately $1.4 million in claims under its self-insured
retention for RLP coverage during the class period. It also paid
approximately half a million dollars in claims administration costs
and sales incentives to employees related to the coverages it sold.
      While the DOI was not a party and did not otherwise directly
weigh in during trial, both parties presented testimony from former
DOI officials. Plaintiffs called former Deputy Commissioner Steve
Miller, who took the position that state law precluded rental car
companies from charging any fees in excess of the DOI-approved
rates. Mr. Miller further testified that, based on his inquiry and
investigation, no other major car rental company was charging
customers above the DOI-approved rate. Defendants called Phillip
Pratt, the former Bureau Chief for the DOI’s Rate Regulatory
Division (the division responsible for review of rate filings). Mr.
Pratt testified that, based on his experience in the rate regulation
division, state law did not preclude rental car companies from
charging a fee because they were the insured, not the insurer. Mr.
Pratt further testified that Midway held a limited car rental agent
license as provided by state law, and thus was not subject to the
same fee restrictions that apply to general agents. Mr. Pratt
acknowledged, however, he was aware of no other rental car agency
that charges consumers more than the premium rates approved by
the DOI.
      At the conclusion of trial, the court invited the parties to
submit proposed statements of decision; the court noted there were
not many facts in dispute, and that the issues to be decided were
legal as opposed to factual.




                                 13
      B.    Statement of Decision
      On September 27, 2017, the trial court issued its statement of
decision. The court found the Insurer Defendants complied with
the DOI rate filing requirements for the master policies issued to
Midway.6 Midway was authorized to sell rental car insurance
coverage to customers through the commercial policies issued to it.
The Insurer Defendants collected from Midway only the amount of
premium charged to Midway for each product.
      The court found KnightBrook and National Security
appointed Midway as a designated rental car agent, in a notice filed
with the DOI pursuant to section 1758.81, subdivision (a)(2).
Midway was neither a “general insurance agent” nor an “employee
of any insurance agent,” nor a “broker.” Rather, Midway was
licensed under the Rental Car Agents Act, a legislative scheme
distinct from that applicable to general insurance agents and
brokers under sections 1621 and 1631. Midway was therefore not
subject to the general agency provisions of the Insurance Code, but
rather the more specific and limited provisions applicable to car
rental agencies set forth in the Rental Car Agents Act.
      The court found the rates charged by Midway were preset and
did not vary based on factors such as the driver’s safety record.
Midway did not know the driving record of potential renters, did not
know how many miles a renter drove in a year, and therefore did
not and could not underwrite policies or offer good driver discount
to customers. Nor could Midway modify coverage limits or terms, or

6      With regard to the policy “desk-filed” with Arizona for PAC
coverage, the court held the law “does not require that an out-of-
state policy, issued to an out-of-state insured, [be] filed or approved
by the DOI.” Before us, Plaintiffs focus on the DOI-approved
policies, and do not take issue with this finding.



                                  14
refuse to offer coverage—it could chose only to whom it would or
would not rent a car. When it sold someone insurance, Midway
provided the disclosures required by the Rental Car Agents Act,
specifically those set forth in section 1758.86, subdivision (b).
Midway did not receive any compensation from the Insurer
Defendants for selling car rental insurance.
       Finding the rates approved by the DOI were for commercial
policies issued to Midway, the court concluded the DOI-approved
rates did not govern charges imposed by Midway on rental car
customers. The court found Midway did not charge Plaintiffs
insurance premiums in excess of the DOI authorized rate, and that
the “amounts received by Midway for the sale of rental insurance
are not imputed to any Defendant insurer because Midway was not
acting with the powers of a general agent or with substantial
oversight and control by any insurance carrier.” The court further
found the fees charged by Midway should not be imputed to the
Insurer Defendants because Midway was the policyholder, and the
insurance coverage it provided was ancillary to its primary business
of renting vehicles. In addition, Midway operated under a $25,000
self-insured retention and was solely responsible for claims up to
that amount, as well as administering claims.
       Accordingly, the court concluded sections 1861.01 (concerning
approved rates) and 381, subdivision (f) (concerning disclosure of
premium) did not apply to Midway’s interaction with its customers
and there was nothing unlawful or fraudulent about Defendants’
conduct that created UCL liability. The court also found Plaintiffs
had not suffered any actual economic injury, because the fees
Midway charged were fully disclosed, Plaintiffs obtained the
bargained for insurance at the bargained for price, and Plaintiffs
failed to establish Midway’s optional insurance charges were in




                                 15
excess of the charges for such insurance by other rental car
companies.
     Following entry of judgment in favor of Midway and the
Insurer Defendants, Plaintiffs timely appealed.

                         IV. DISCUSSION
      A.    Standard of Review
       The parties do not dispute the facts set forth in the statement
of decision, and their arguments are focused on the trial court’s
conclusions of law. “We view all of the evidence in the light most
favorable to the judgment, drawing every reasonable inference and
resolving every conflict to the support the judgment. [Citation.]
‘Even in cases where the evidence is undisputed or uncontradicted,
if two or more different inferences can reasonably be drawn from
the evidence this court is without power to substitute its own
inferences or deductions for those of the trier of fact. . . . We must
accept as true all evidence and all reasonable inferences from the
evidence tending to establish the correctness of the trial court’s
findings and decision, resolving every conflict in favor of the
judgment.’ ” (Jonkey v. Carignan Construction Co. (2006) 139
Cal.App.4th 20, 24.) Pure issues of law and application of law to
undisputed facts are both reviewed de novo. (Rael v. Davis (2008)
166 Cal.App.4th 1608, 1617; Crocker National Bank v. City and
County of San Francisco (1989) 49 Cal.3d 881, 888.)
      B.    The UCL
       The business of insurance is subject to the UCL. (§ 1861.03,
subd. (a).) “To bring a UCL claim, a plaintiff must show either an
(1) ‘unlawful, unfair, or fraudulent business practice,’ or (2) ‘unfair,
deceptive, untrue or misleading advertising.’ ” (Lippitt v. Raymond
James Financial Services Inc. (9th Cir. 2003) 340 F.3d 1033, 1043.)



                                   16
Because the UCL is written in the disjunctive, “ ‘it establishes three
varieties of unfair competition—acts or practices which are
unlawful, or unfair, or fraudulent.’ ” (Cel-Tech Communications,
Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163,
180 (Cel-Tech).)
       Plaintiffs here pursued claims based on the “unlawful” and
“fraudulent” prongs. “Unlawful” conduct includes any business
practice or act forbidden by local, state or federal statutes or by
regulations or case law. (Munson v. Del Taco, Inc. (2009) 46
Cal.4th 661, 676; see also Rose v. Bank of America, N.A. (2013) 57
Cal.4th 390, 396.) With regard to the fraudulent prong, a plaintiff
“ ‘proceeding on a claim of misrepresentation as the basis of his or
her UCL action must demonstrate actual reliance on the allegedly
deceptive or misleading statements, in accordance with well-settled
principles regarding the element of reliance in ordinary fraud
actions.’ ” (Kwikset Corp v. Superior Court (2011) 51 Cal.4th 310,
362; see also Bus. & Prof. Code § 17204.) Put another way, “a UCL
fraud plaintiff must allege he or she was motivated to act or refrain
from action based on the truth or falsity of a defendant’s statement,
not merely on the fact it was made.” (Id. at p. 326, fn. 10.)
      Despite the UCL’s broad language, the scope of a court’s
power under that law “is not unlimited.” (Cel-Tech, supra, 20
Cal.4th at p. 182.) “If the Legislature has permitted certain conduct
or considered a situation and concluded no action should lie, courts
may not override that determination. When specific legislation
provides a ‘safe harbor,’ plaintiffs may not use the general unfair
competition law to assault that harbor.” (Ibid.)
      C.    There Was No Fraudulent Omission
    Plaintiffs assert that section 381, subdivision (f) required
Midway and the Insurer Defendants disclose to them the premium



                                 17
Midway paid to the Insurer Defendants, and the failure to do so was
a fraudulent omission under the UCL. The parties do not dispute
the general provisions of the Insurance Code (including section 381)
govern the relationship between the Insurer Defendants and their
insured Midway. The parties’ fundamental disconnect stems from
whether the relationship between Midway and its rental car
customers is governed by the general provisions of the Insurance
Code, or by more specialized provisions addressing rental car
agencies. We resolve this dispute by adhering to the well-
established principle that “ ‘more specific provisions take
precedence over more general ones.’ ” (State Dept. of Public Health
v. Superior Court (2015) 60 Cal.4th 940, 960.) Section 37 aptly
summarizes this rule as it pertains to the Insurance Code:
“Provisions of this code relating to a particular class of insurance or
a particular type of insurer prevail over provisions relating to
insurance in general or insurers in general.”
       Car rental agencies like Midway have their own licensing and
disclosure requirements under the Rental Car Agents Act, and their
own set of permitted and prohibited acts. (E.g., §§ 1758.8,
1758.81―1758.86.) The trial court correctly applied those
requirements in concluding Defendants did not engage in any
fraudulent omission. Plaintiffs’ claim that section 381, subdivision
(f) required disclosure to them of the premium paid by Midway
disregards the disclosure requirements applicable to Midway as a
limited rental car agent, which are different than those applicable
to a general agent. It also disregards that the named insured under
the policies was Midway, not Plaintiffs. And finally, it ignores the
Insurer Defendants’ specific statutory disclosure obligation under
the Rental Car Agents Act when issuing a car rental insurance
policy like the ones at issue here.




                                  18
            1.    The Rental Car Agents Act, Not More
                  General Insurance Provisions, Applies to the
                  Disclosure at Issue
      Section 1758.8 gives a rental car agent two options should it
wish to offer insurance—it can become a general agent (§ 1758.8,
subd. (a)), or a limited agent (§ 1758.8, subd. (b)). Midway and the
Insurer Defendants chose the more limited agency. Treating these
two types of agencies as equivalent, as Plaintiffs do, obliterates the
statutory distinction between them set forth in the Rental Car
Agents Act.
       A general agent is obligated to give an insured a copy of the
policy, and that policy must include the premium amount.
(§§ 383.5, 381, subd. (f).) As a limited agent, however, Midway was
not statutorily required to provide its policy with the Insurer
Defendants to rental car customers, nor was it required to disclose
the premium amount paid by Midway. Instead, the Code requires a
limited agent such as Midway to “[s]ummarize the material terms
and conditions of coverage offered to renters, including the identity
of the insurer,” and “[d]isclose any additional information on the
price, benefits, exclusions, conditions, or other limitations of those
policies that the commissioner may by rule prescribe.” (§ 1758.86,
subd. (b).) Midway did as it was required.7



7      Plaintiffs direct us to no such prescribed regulations requiring
disclosure of the amount paid by Midway to the Insurer
Defendants. Plaintiffs argue in the absence of such regulation that
the premium Midway paid was a material term of the coverage
offered, and therefore Midway was obligated to disclose it pursuant
to section 1758.86. We disagree. The cost to the consumer is a
material term and was disclosed. The premium paid by Midway, its
self-insured retention and associated loss experience, claims



                                  19
       As for the Insurer Defendants, they were obligated to give
their insured (Midway) a copy of the policy, including the premium
owed. (§ 381, subd. (f).) They were not required, however, to make
sure that policy was also provided to rental car customers. Instead,
under the Rental Car Agents Act, the requirement regarding the
policy itself is that the insurer file a copy of the policy issued to the
rental car company with the DOI, “who shall make that policy
available to the public.” (§ 1758.88.) The Insurer Defendants did
so. If Plaintiffs wanted a copy of the policy itself, including any
information in the policy, it was available to them through the DOI,
as the Rental Car Agents Act specified. More was not required.
       Given the specific disclosure provisions in the Rental Car
Agents Act, we reject Plaintiffs’ further argument that Troyke v.
Farmers Group, Inc. (2009) 171 Cal.App.4th 1305 mandated
disclosure to them of the premium amount. In Troyke,
policyholders received a declaration page from their insurer stating
the purported premium, but were separately charged a billing
service fee. (Id. at pp. 1315―1316.) Finding the premium to be the
total amount the insureds were required to pay to obtain insurance
coverage (which included the billing service fee), the Troyke court
held the insurer did not comply with section 381, subdivision (f)
because the service charge was not stated in the main policy,
declaration page, or endorsements. (Id. at p. 1334.)
      Troyke addresses a classic insurer-insured scenario, in which
the insurer is statutorily obligated to provide the insured a policy
which states the premium. The Insurer Defendants complied with


administration cost, and other elements that made up the price
charged to the consumer were not material terms required to be
disclosed in the absence of specific regulatory direction that
consumers must be provided such a breakdown.



                                   20
this statutory mandate by providing their insured Midway with a
policy stating the premium. Troyke does not address the Rental Car
Agents Act, the more specific disclosures required of licensees under
that Act to rental car customers, or the insurer’s obligation under
the Act not to provide the policy to rental car customers, but rather
to make it publicly available through a filing with the DOI. Given
the differing statutory standards, Troyke did not obligate the
defendants to provide the policies between Midway and the Insurer
Defendants, or the premium amount in those policies, to Plaintiffs.
            2.    Plaintiffs Demonstrate No Conflict Between
                  the Rental Car Agents Act and Proposition
                  103
       Proposition 103 was a constitutional amendment, and as a
fallback Plaintiffs argue that its provisions trump those set forth in
the Rental Car Agency Act’s licensing and disclosure regime. (E.g.,
Foundation for Taxpayer & Consumer Rights v. Garamendi (2005)
132 Cal.App.4th 1354, 1365 [Legislature lacks the authority to
amend Proposition 103 except to further the initiative’s purposes].)
We perceive no conflict between Proposition 103 and the Rental Car
Agents Act requiring we declare the licensing or disclosure regime
set forth in the Rental Car Agents Act unconstitutional.
Proposition 103 addresses the obligations of insurers, including
general agents of insurers. The Rental Car Agents Act, in contrast,
addresses the obligations of limited rental car agents offering only
specific types of insurance in connection with car rentals.
      Both the DOI and the Legislature have similarly concluded
that the Rental Car Agents Act legislated in an area not yet
occupied by Proposition 103 or other general Insurance Code
provisions. For example, in 1999 (i.e., after the passage of
Proposition 103), the DOI issued a report from its Insurance




                                 21
Producer Licensing Working Group. The DOI noted “[t]here is no
specific scheme in California’s law” for the sale of insurance by
rental car companies, and it made recommendations to create an
“organizational license” similar to that required for car dealers to
govern such sales. When the Rental Car Agents Act was enacted a
year later, the Legislature acknowledged the Working Group’s
statement that rental car agencies selling insurance in connection
with car rentals were not previously subject to insurance agency
provisions. (§ 1758.891 [noting that prior to effective date of Act,
rental companies are not required to obtain a license to offer
insurance products].)
      D.    The Insurer Defendants Did Not Charge an
            Unapproved Rate
       Plaintiffs next argue rental car customer payments to
Midway for insurance coverage should be imputed to the Insurer
Defendants, meaning the Insurer Defendants thus charged and
collected more than the statutorily approved rate. Neither the
Insurance Code nor case law supports this argument.
            1.    Midway Is Not a General Agent
      Plaintiffs first argue rental car customer insurance payments
to Midway should be imputed to the Insurer Defendants as
premium because Midway was the insurers’ agent, and any fees
received by an agent are premium.
      While Midway was an agent for some purposes, the type of
agency it held matters. In circumstances where a party is a general
agent, there is plentiful authority that “premium includes all
payment made by an insured that are part of the cost of insurance,
including ‘all sums paid to an insurance agent.’ ” (E.g., Mercury
Ins. Co. v. Lara (2019) 35 Cal.App.5th 82, 97 (Lara); see also
Elfstrom v. New York Life Ins. Co. (1967) 67 Cal.2d 503 (Elfstrom).)



                                 22
Plaintiffs’ reliance on this authority is misplaced, however, because
these cases involve the type of general agency sufficient to hold a
principal vicariously liable as opposed to the more limited agency
present here.8
      In Elfstrom, an employer offering a group life insurance plan
to employees was found to be the agent of the insurer (as opposed
the agent of its employee) where the employer prepared an
application for coverage containing misstatements, which led to the
employee’s claim being denied. (67 Cal.2d at pp. 512―513.) Our
Supreme Court reached this conclusion, inter alia, because the
insurer was directing and otherwise in control of the performance of
the employer’s administrative acts. (Id. at pp. 513―514.) Here, in
contrast, there was no evidence the Insurer Defendants were
directing and/or controlling Midway’s actions. Lara was an appeal
that followed an earlier decision in Krumme v. Mercury Ins. Co.
(2004) 123 Cal.App.4th 924 (Krumme). Krumme analyzed the


8      The parties also cite to In the Matter of American Reliable
Insurance Company (June 30, 2006) Dept. of Ins. File No. DISP
06091926 (American Reliable), which the DOI ordered designated
as precedential pursuant to Government Code section 11425.60,
subdivision (b). The Office of Administrative Law (OAL), however,
later determined American Reliable to be an “underground
regulation” that was not adopted pursuant to the Administrative
Procedure Act as required. (See Cal. Reg. Notice Register 2007,
No. 17-Z, p. 726.) An OAL determination that administrative
guidance is an underground regulation is not binding on the courts,
but is entitled to deference. (People v. Medina (2009) 171
Cal.App.4th 805, 814.) We need not resolve the propriety of OAL’s
determination regarding American Reliable to decide this appeal in
light of similar judicial precedent on the issue of agency, and
accordingly express no opinion on the underground regulation
question.



                                 23
agency question pursuant to the general agency and broker
statutes, sections 1621 and 1623, which as discussed above are
inapplicable to Midway. (Id. at pp. 928―929.) Lara later adopted
Krumme’s findings in this regard in concluding the premium at
issue there included sums paid to brokers who “were not actually
brokers but were de facto agents.” (Lara, supra, 35 Cal.App.5th at
p. 97.)
       Midway’s agency under the Rental Car Agents Act is
significantly more limited and constrained than that of a general
agent. The evidence showed, and the trial court found, that unlike
a general agent Midway had no authority to bind the Insurer
Defendants. A general agent has broad ability to sell different
types of insurance. (E.g., § 1621.) As a limited agent, Midway
cannot sell insurance other than “in conjunction with, and
incidental to, authorized rental agreements” (§ 1758.87, subd. (a)),
and further can sell only certain limited types of such insurance
(§ 1758.85). General agents sell policies. Midway does not sell
insurance policies but rather extends coverage under a master
policy issued to it incidental to its primary business of renting cars.
If asked, general agents may assist individuals in understanding
their existing coverage. As a limited agent, Midway is required to
state it is not qualified or authorized to evaluate the adequacy of
any existing coverage the car rental customer may have.
(§ 1758.86, subd. (c)(3).) As discussed above, Midway is subject to
different disclosure requirements than a general agent. General
agents are compensated by commission. Midway, on the other
hand, was not paid by the Insurer Defendants for placing
insurance, but rather was itself paying the insurers for insurance
issued to it.
     Additionally, unlike a general agent Midway does not
underwrite policies or apply underwriting criteria on behalf of the



                                  24
insurers. Midway had no authority to issue a binder—that is, a
document evincing insurance during the application process before
an insurance policy is actually issued and delivered to the insured.
The rates charged by Midway were preset and did not vary based on
factors such as the driver’s safety record. Midway did not know the
driving record of potential renters, did not know how many miles a
renter drove in a year, and therefore did not and could not
underwrite policies or offer good driver discounts to customers. Nor
could Midway modify coverage limits or terms, or refuse to offer
coverage—it could chose only to whom it would or would not rent a
car.
      Given these many differences, the facts here do not support
Plaintiffs’ contention that Midway’s agency was sufficiently robust
to make Midway a general agent and therefore impute the funds
received by Midway to the Insurer Defendants as premium.
            2.    Cases Discussing Premium Taxation Do Not
                  Support Plaintiffs’ Imputation Argument
      Plaintiffs additionally rely on Metropolitan Life Ins. Co. v.
State Bd. of Equalization (1982) 32 Cal.3d 649 (Met Life) to argue
customer payment to Midway must be imputed to the Insurer
Defendants. In Met Life, our Supreme Court addressed an insurer’s
obligation to pay taxes based on gross premium received. (Id. at
pp. 652―653.) Met Life offered a group medical insurance plan to
employers to cover their employees. Met Life and the employers
sought to reduce the premium tax owed by Met Life through an
arrangement whereby the employer paid less premium in return for
covering employee claims up to a certain amount each month (the
so-called trigger point). (Id. at p. 653.)
      The Supreme Court found payments made by the employer up
to the trigger-point were still premium taxable to the insurer,



                                 25
because the employer was acting as the insurer’s agent. Among
other things, Met Life determined the amount of all claim payments
(whether below or above the trigger point), actually paid many of
the claims below the trigger point based on funds deposited with it,
remained liable if the employer failed to pay any claim below the
trigger point, and continued to bear other insurance risk putatively
belonging to the employer. (Met Life, supra, 32 Cal.3d at
pp. 657―658.) Therefore, the employer and insurer had a “highly
entangled, symbiotic relationship” that made the employers the
insurer’s agent, thus requiring premium be imputed to the insurer
and therefore taxed. (Id. at p. 658.)
      The central teaching of Met Life, insofar as it applies here in a
nontax matter, is that we must “discern the true economic
substance” of the parties’ arrangement when determining questions
of agency and premium imputation. (32 Cal.3d at pp. 656―657.)
The true economic substance here did not involve the Insurer
Defendants acting in a way that would make amounts paid to
Midway properly attributable to the Insurer Defendants. The
Insurer Defendants did not retain meaningful risk below the self-
insured retention level. Midway was responsible for administering
claims and incurred the costs for such administration. The trial
court did not find the Insurer Defendants were involved with or
directed how Midway paid claims, or find facts suggesting the
operations of Midway and the Insurer defendants were highly
tangled or inextricably intertwined.
       Later cases have confirmed that where (1) the insurer does
not retain meaningful insurance risk for claims below the self-
insured retention, (2) a party like Midway acts independently, and
(3) the operations of the parties are not inextricably intertwined, a
party like Midway is not an agent and the amount it receives from
its employees (or in this case its customers) is not imputable to the



                                  26
insurer. (E.g., Lincoln National Life Ins. Co. v. State Bd. of
Equalization (1994) 30 Cal.App.4th 1411, 1416―1422; Prudential
Ins. Co. v. State Bd. of Equalization (1993) 21 Cal.App.4th 458;
Aetna Life Ins. Co. v. State Bd. of Equalization (1992) 11
Cal.App.4th 1207, 1212―1213.)
     E.    Midway Was Not Required to Charge its
           Customers the Premium It Paid to the Insurer
           Defendants
      Moving beyond the Insurer Defendants, Plaintiffs’ final
argument is Midway was required to charge no more than the
premium it paid to the Insurer Defendants. We find no support in
the record for this claim. Midway did not charge in excess of the
approved rate, because what Plaintiffs identify as the approved rate
related to the insurance relationship between Midway and the
Insurer Defendants, not the relationship between Midway and its
rental car customers. Civil Code section 1939.19, subdivision (c),
permitted Midway to impose charges for insurance in addition to
the rental rate it charged (how much additional the statute does not
say). Insurance Code section 1861.01’s rate approval requirements
govern the actions of insurers and their general agents. Midway is
not an insurer but an insured, and it is not the general agent of an
insurer.9 Nor was Midway able to do the things required for a rate

9      Midway’s self-insured retention under the RLP policies did
not make it an insurer, as the principal object and purpose of the
transaction between Midway and its customers was the rental of an
automobile, and reallocation of risk in the event of an accident
through a partial self-insured retention was tangential to that
principal object and purpose. (Cf. Heckart v. A-1 Self Storage, Inc.
(2018) 4 Cal.5th 749, 758―764 [storage unit protection plan sold by
self-storage company did not constitute insurance subject to
regulation under the Insurance Code]; Truta, supra, 193 Cal.App.3d



                                27
filing, as it did not have the authority nor the information to
underwrite.
       Additionally, it is important to note the approved rates here
as between Midway and the Insurer Defendants contemplated
Midway would impose an additional charge in offering coverage to
customers. The Insurer Defendants’ filings, as well as
communication with the DOI, indicated the policy rates were only
for the insured rental car company, not others. The RLP policies
filed with the DOI and approved by it indicated an insured like
Midway would have a self-insured retention. It was therefore
obvious that a rental car company like Midway would charge more
than the premium paid to the Insurer Defendants to account for
that self-insured retention and related costs—the policy made no
economic sense otherwise.
      While the SLI policies did not have a similar self-insured
retention, the DOI understood the rental car agency purchasing
coverage would charge more than the premium set forth in the
commercial contract, and the DOI indicated that so long as the
insurer was not directly or indirectly receiving any additional
money beyond premium paid to the insurer, the DOI would not seek
to restrict the amount. The Insurer Defendants received no such
additional money.
      Finally, with regard to the PAC policy filed with Arizona, it
disclosed both the “wholesale” price to the rental car company and



at p. 814 [CDW did not “have the effect of converting [car rental
companies] into insurers subject to statutory regulation” because
“[t]he principal object and purpose of the transaction . . . , the
element which gives the transaction its distinctive character, is the
rental of an automobile.”].)



                                  28
the retail price to the rental car customer. Midway’s charges for
PAC conformed to the retail prices set forth in that agreement.
      F.    Judicial Abstention
       The regulation of insurance is a complex area in which courts
are often ill-equipped to resolve complicated fact and policy issues
tied to the economics, risks, cost and availability of insurance.
Given these complexities, we asked for supplemental briefing from
the parties on the wisdom of judicial abstention. This doctrine,
alternatively called primary jurisdiction, “ ‘applies where a claim is
originally cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the special
competence of an administrative body; in such a case the judicial
process is suspended pending referral of such issues to the
administrative body for its views.’ ” (Farmers Ins. Exchange v.
Superior Court (1992) 2 Cal.4th 377, 390, italics omitted.) All
parties argue such abstention would be inappropriate here and
having considered their submissions we agree.
       First, the DOI lacks a clear administrative process to address
Plaintiffs’ claims, which concern the statutory scheme applicable to
insurance rates and not individual rate making decisions. (§ 1858,
subd. (a); Farmers Ins. Exchange, supra, 2 Cal.4th at pp. 384―385;
MacKay v. Superior Court (2010) 188 Cal.App.4th 1427, 1441.)
Second, while we give appropriate deference to the DOI’s
interpretation of the insurance statutes (for example where the DOI
has a long-standing interpretation of a statute or has adopted a
formal regulation interpreting a statute), statutory interpretation is
an issue we must ultimately decide. (Automotive Funding Group,
Inc. v. Garamendi (2003) 114 Cal.App.4th 846, 851; see also Heckart
v. A-1 Self Storage, Inc., supra, 4 Cal.5th at p. 769.)




                                  29
       Finally, and perhaps most importantly, judicial abstention is
not necessary given the facts before us. To underscore this point,
we close by highlighting that nothing in our decision here restricts
the DOI’s future ability to seek to regulate in this area should it so
choose. Here, the DOI approved policies understanding the rental
car company would be charging its customers an amount in
addition to the premium it paid to the insurer. That arrangement
allowed Midway to offer insurance at rates comparable to its
competitors, whereas alternate arrangements may not have.
Plaintiffs’ position, which we reject, would effectively preclude any
self-insured retention by a car rental company purchasing a
commercial policy, because a self-insured retention requires the
ability to charge more than the premium paid by the rental car
company to its insurer. In the absence of controlling authority, we
do not believe it appropriate to impose by judicial fiat a one size fits
all solution to rental car coverage insurance arrangements.
       Self-insured retentions and markups of the commercial policy
rate to rental car customers may be good, bad, or indifferent—that
is a regulatory judgment we do not make and leave to the special
competence of the DOI. To the extent the DOI may seek in a future
filing review to disapprove of a self-insured retention or other
arrangement that results in a rental car company charging more
than the premium it pays under a commercial policy, or may seek to
regulate the end charge to the rental car customer, nothing in our
decision should be read to delimit the scope of the DOI’s authority
in that regard one way or the other.
      Similarly, nothing before the trial court suggested Midway
was charging disproportionately high or deceptive rates for
insurance. Midway disclosed its fees for insurance coverage to its
customers and charged prices comparable to what its competitors
charged. The Rental Car Agents Act gives the DOI authority to



                                   30
promulgate regulations regarding disclosure, including concerning
price as well as any limitations of the insurance purchased from a
rental car agent. (§ 1758.86, subd. (b)(3).) The trial court noted, as
do we, that the Commissioner has not prescribed any regulations
concerning the price for insurance coverage charged by car rental
agents. To the extent the DOI wants to mandate disclosure of the
underlying rate paid by the rental car company to its insurer (as
Plaintiffs suggest), or impose other regulation pursuant to section
1758.86, subdivision (b)(3), nothing in our opinion restricts the
DOI’s authority to do so.
                         V. DISPOSITION

      The judgment is affirmed. Respondents are to recover their
costs on appeal.
      CERTIFIED FOR PUBLICATION




                                           WEINGART, J.*
We concur:



                  ROTHSCHILD, P. J.



                  CHANEY, J.




      * Judge of the Superior Court of Los Angeles County,
assigned by the Chief Justice, pursuant to article VI, section 6 of
the California Constitution.



                                  31
