Ref H - Text of Fremont Indemnity vs. Fremont General

“Inner-City Holocaust and America’s Apartheid ‘Justice’ System” is a book that “Yours Truly” has (except for the final chapter) already written and placed in safe hands. However, the last chapter cannot be written before Fall 2011 because it will record the actions taken, if any, by the recipients of the 5 letters whose texts are posted in this section (the casual reader would best start with the letters to Messrs. Axelrod/Plouffe and to Sen. Chris Coons) =

(1) to President Obama and 20 other US & California governmental officials imploring them AS THEY REFUSED TO DO LAST YEAR to cause Amicus Curiae briefs to be filed on behalf of 10 million inner-city children and thereby REPRESENT THEIR OWN CONSTITUENTS.

(2) to Gwen Ifill and 42 other news-media superstars imploring them AS THEY REFUSED TO DO LAST YEAR to provide the same kind of spotlight on the lawsuits involving the 10 million inner-city children that they routinely provide for, say, David Boies and his Proposition 8 lawsuits.

(3) to 51 inner-city clergy from Los Angeles, San Francisco and Oakland CA providing the latest report on what the report described as “The Segregated Toilet and The Fatal Flush” – the “Segregated Toilet” being the abhorrent practice, even authorized by statute in California, that judges can flush away the rights of minorities in opinions THAT CANNOT BE PUBLISHED OR CITED because the judges know that the opinions are diametrically opposed to the well-settled law enjoyed by first-class American citizens.

(4) to Messrs. David Axelrod and David Plouffe, the Chicago- and Washington-based co-heads of President Obama’s Reelection Campaign providing them a “heads up” on what is “going down” because the aim of “Inner-City Holocaust” is to make the inaction of the 21 governmental officials an issue in any 2012 re-election campaigns in which they are involved – by making “Inner-City Holocaust” available without charge and electronically for ethics classes in law schools and divinity schools, and in undergraduate courses in political science, ethics/philosophy, sociology, etc.

(5) to U.S. Senator Christopher Coons from Delaware, newly elected last November, to provide him a “heads up” on what is “going down” because Senator Coons served with “Yours Truly” in the 1990’s on the national “I Have A Dream”® Board as Secretary and Treasurer, respectively, and it was IHAD- and IHAD-style programs that the $84 billion involved in the lawsuits was designed to provide for the 10-million inner-city children.

“Inner-City Holocaust” has been written In Memory Of John Howard Griffin whose “Black Like Me” half a century ago tried to convince America of its racism.

It is also written in honor of Jonathan Kozol whose award-winning books over the last half century have tried to convince America that it has created a permanent “untouchable” under-caste as a result of its racism – (1) The Shame of the Nation: The Restoration of Apartheid Schooling in America (2005); (2) Ordinary Resurrections: Children in the Years of Hope (2001); (3) Amazing Grace: The Lives of Children and the Conscience of a Nation (1995); (4) Savage Inequalities: Children in America’s Schools (1991); (5) Rachel and Her Children (1988); (6) Illiterate America (1985); (7) The Night is Dark and I Am Far From Home: Political Indictment of US Public Schools (1975); (8) Death at an Early Age (1967)

One might wonder why I am placing myself on the same stage as these two Saints. I’m not. They are on pedestals in my place of worship. Like one of Ghandi’s followers, it is my turn to have my head bashed in since the expected reactions to the prospect of “Inner-City Holocaust” are to try to defame me and to try to explain why the racism of the judges involved, the 21 governmental officials and the 43 news-media super-stars is all my fault rather than theirs.
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johnkarls
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Ref H - Text of Fremont Indemnity vs. Fremont General

Post by johnkarls »

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The text of the court opinion for Fremont Indemnity vs. Fremont General is too long to fit in a single posting.

Accordingly, the first half of the opinion will be contained in the first Reply hereto, and the last half in the second Reply hereto.

johnkarls
Posts: 2033
Joined: Fri Jun 29, 2007 8:43 pm

Text of Fremont Indemnity vs. Fremont General - Part 2/2

Post by johnkarls »

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Finally, in Beck v. American Health Group Internat., Inc. (1989) 211 Cal.App.3d 1555, the plaintiff sued for breach of contract and other counts based on an alleged written contract to employ the plaintiff as a hospital medical director and attached a copy of the alleged contract to the complaint. The alleged contract was a letter from the hospital to the plaintiff, countersigned by the plaintiff, expressly stating that the letter was preliminary to a proposed "future agreement" and written contract. (Id. at pp. 1558-1559 & fn. 1.) The plaintiff did not allege that the letter was ambiguous or that it was susceptible of the interpretation that it was a present agreement. (Id. at pp. 1561-1562.) Beck cited the rule that if the plaintiff fails to allege that a document attached to the complaint has a special meaning, a court ruling on a demurrer will interpret the document on its face to determine as a matter of law whether it is reasonably susceptible of an interpretation that would support a cause of action. (Id. at p. 1561, citing Hillsman v. Sutter Community Hospitals (1984) 153 Cal.App.3d 743, 749-750 and California Assn. of Highway Patrolmen v. Department of Personnel Admin. (1986) 185 Cal.App.3d 352, 361.) Interpreting the letter on its face, Beck concluded that the letter was not a binding contract. (Beck, supra, at pp. 1562-1563.) Thus, the court interpreted the letter on its face without regard to the possibility of extrinsic evidence because the plaintiff relied on the letter as the basis for his cause of action but failed to allege any special meaning. Here, in contrast, Indemnity does not rely on the letter dated July 2, 2002, to support a cause of action and did not attach a copy of the letter to its complaint, and therefore is not precluded from presenting extrinsic evidence concerning the enforceability and proper interpretation of the letter. [148 Cal.App.4th 119]

3. The Sustaining of the Demurrer Cannot Be Affirmed Based on the Other Reasons Cited by the Trial Court

A demurrer must dispose of an entire cause of action to be sustained. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.) Counts one, two, and three are based exclusively on the alleged misappropriation of Comstock's net operating losses, while counts four through twelve are based on that and also on the alleged misappropriation of other assets involving Re. The trial court's conclusion that Indemnity lacks standing to sue for injuries to Re and that some of the allegations are directed against Re concerns only the alleged misappropriation of assets involving Re and does not dispose of an entire count or cause of action. We therefore conclude that the demurrer cannot be sustained to any count based on the reasons cited by the trial court and express no opinion as to the validity of those reasons. We will now address the other reasons for general demurrer asserted in the demurrer but not relied on by the trial court.

4. The Complaint Adequately Alleges a Cause of Action for Conversion

[6] Fremont General and Insurance Group demurred to count seven for conversion arguing that the unauthorized taking of an intangible property interest that is not merged with or reflected in tangible property is not actionable as conversion. Conversion is generally described as the wrongful exercise of dominion over the personal property of another. (Gruber v. Pacific States Sav. & Loan Co. (1939) 13 Cal.2d 144, 148.) The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages. (Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066.)

Thrifty-Tel, Inc. v. Bezenek (1996) 46 Cal.App.4th 1559, 1565 stated, "Courts have traditionally refused to recognize as conversion the unauthorized taking of intangible interests that are not merged with, or reflected in, something tangible. (Adkins v. Model Laundry Co. (1928) 92 Cal.App. 575, 583 [268 P. 939] [business goodwill]; Olschewski v. Hudson (1927) 87 Cal.App. 282, 286-288 [262 P. 43] [competitor's customer route]; Faircloth v. A.L. Williams & Associates (1992) 206 Ga.App. 764 [426 S.E.2d 601, 604-605] [unpaid commissions not evidenced by a receipt or certificate]; Matzan v. Eastman Kodak Co. (1987) 134 A.D.2d 863 [521 N.Y.S.2d 917, 918] [no protected interest in an idea].) And Dean Prosser has cautioned against scuttling conversion's tangibility requirement altogether, recommending instead the use of other remedies to protect intangible interests. (Prosser [148 Cal.App.4th 120] & Keeton on Torts [(5th ed. 1984)] § 15, p. 92.) [Fn. omitted.]" fn. 6 Thrifty-Tel involved unauthorized use of the plaintiff's access and authorization codes to make long distance telephone calls. The jury found the defendants liable for conversion. The Court of Appeal concluded that the evidence supported the verdict based on a theory of trespass to personal property and declined to decide whether the evidence established liability for conversion. (Id. at pp. 1565-1566.) The quoted language from the opinion was dictum.

The California Supreme Court in Payne v. Elliot (1880) 54 Cal. 339 held that the defendant was liable for trover for the conversion of shares of stock despite the absence of any allegation that the plaintiff had owned or that the defendant had converted share certificates. (Id. at p. 340.) Payne stated: "At common law, trover was the proper remedy for a conversion of personal property; but it lay only for tangible property, capable of being identified and taken into actual possession. The conversion of the property was the gist of the action; and the action did not lie, unless the defendant had become actually possessed of the property by some means, whether of finding or otherwise. Shares of stock, and such things, did not belong to that class of property known as chattels; they were considered incorporeal, intangible things, which existed in idea, and were incapable of being subjected to actual possession. . . . The certificates themselves were not considered property, but were considered evidence of property. Wherever common-law ideas of personal property prevail, courts hold that trover is not the proper remedy for the conversion of things which were considered at common law as mere personal rights, not reducible into possession, but recoverable by law. . . .

" . . . But the fiction on which the action of trover was founded, namely, that a defendant had found the property of another, which was lost, has become, in the progress of law, an unmeaning thing, which has been by most courts discarded; so that the action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property. It lies for bank notes sealed in a letter (Moody v. Keeney, 7 Ala. 218); for negotiable instruments (Comparet v. Burr, 5 Blackf. 419); for a judgment (Hudspeth v. Wilson, 2 Dev. N. C. 372); for a promissory note which has been paid (Pierce v. Gibson, 9 Vt. 216); for copies of a creditor's account (Fulton v. Cunningham, 16 Vt. 697); for a writ of execution issued [148 Cal.App.4th 121] on a judgment (Keeler v. Fasset, 21 Vt. 539); and for certificates of shares of stock (Anderson v. Nicholas, 28 N. Y. 600; Atkins v. Gamble, 42 Cal. 98; Von Schmidt v. Bourne, 50 Id. 616.)" (Payne v. Elliot, supra, 54 Cal. at pp. 340-341.)

Payne v. Elliot, supra, 54 Cal. at page 342 stated further: "It is, therefore, the 'shares of stock' which constitute the property which belongs to the shareholder. Otherwise, the property would be in the certificate; but the certificate is only evidence of the property; and it is not the only evidence, for a transfer on the books of the corporation, without the issuance of a certificate, vests title in the shareholder: the certificate is, therefore, but additional evidence of title, and if trover is maintainable for the certificate, there is no valid reason why it is not also maintainable for the thing itself which the certificate represents. For, as the Supreme Court of Connecticut say, 'If a certificate of stock is unlawfully retained when demanded, what is presumed to have been converted? The certificate has no intrinsic value disconnected from the stock it represents. No one would say that the paper alone had been converted--that the conversion of the paper constitutes the entire wrong. The real act done in such cases is precisely the same as that done here--no more, no less; and to say that trover will lie in one case and not in the other, is to make a distinction where in reality there is no difference. * * * The stock in both cases was converted; and we think that in these days, when the tendency of courts is to do away with technicalities not based upon reason, a technical distinction of this character should no longer be sustained.' (Ayres v. French, 41 Conn. 151.) In Boylan v. Hagnel, 8 Nev. 352, and in Kuhn v. McAllister, 1 Utah, 275, actions of this character for 'shares of stock' were sustained. It follows that the Court below did not err in overruling the demurrer to the complaint, or in rendering judgment for the plaintiff for the value of the stock and interest thereon from the time of the conversion until the time of the trial."

[7] Thus, Payne v. Elliot, supra, 54 Cal. 339 concluded that to allow a conversion action if the defendant misappropriated shares of stock by converting share certificates but disallow the action if the defendant misappropriated shares of stock without converting share certificates would perpetuate a " 'technicalit[y] not based upon reason' " (id. at p. 342). Payne concluded that the defendant's conversion of shares of stock, an intangible property interest, without converting share certificates was an actionable conversion.

Olschewski v. Hudson, supra, 87 Cal.App. at page 288 stated of Payne v. Elliot, supra, 54 Cal. 339: "That case in fact does say: 'The fiction on which the action of trover was founded, namely, that a defendant had found the property of another, which was lost, has become, in the progress of the law, an unmeaning thing which has been by most courts discarded; so that the [148 Cal.App.4th 122] action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property.' This language is also quoted in 24 Cal. Jur. 1030, section 7, which text is supported only by the one authority above mentioned. But this is too broad a statement as to the application of the doctrine of conversion or trover, and it was unnecessary to the determination of the issue in that case. All that was involved in the Payne case, supra, was the question as to whether conversion would lie for the unlawful appropriation of shares of stock in a mining company. Shares of stock are represented by certificates which are evidence of a definite interest in the assets of a company. Shares of stock are tangible and may be identified. It is the uniform rule of law that shares of stock in a company are subject to an action in conversion. (26 R. C. L. 1105; 7 R. C. L. 197, sec. 166; Ralston v. Bank of California, 112 Cal. 208, 213 [44 Pac. 476]; Jackins v. Bacon, 63 Cal. App. 463, 468 [218 Pac. 1027]; People v. Flanagan, 60 Cal. 1 [44 Am. Rep. 52].)" (Italics added.)

Olschewski v. Hudson, supra, 87 Cal.App. 282 held that the alleged misappropriation of a list of laundry customers, which was not reduced to writing but was known to an employee, was not an actionable conversion and affirmed the sustaining of a demurrer to the plaintiff's complaint. Olschewski likened the list of laundry customers to a company's goodwill and stated: "Unlawful interference with property rights in the goodwill of a business, or the benefits of trade and patronage of a specific list of customers in a definite route may be protected by injunctive relief in a court of equity. [Citations.] But there is nothing definite or tangible in the character of the ordinary list of laundry customers which makes an effort to transfer the district in which they live subject to an action in conversion. No authority has been furnished, which sustains the maintenance of an action in trover or conversion for the unlawful interference with a laundry route, or any similar property right. Clearly the proceeding in conversion was not intended to reach so intangible, uncertain, and indefinite a property right. The very meaning of the word 'conversion,' as it is used in this sense, is to 'change into another form, substance or state; to transform, or change, as in law, the wrongful appropriation to one's own use of the goods of another.' (Standard Dictionary.) The very definition of the word presupposes the existence of tangible goods or chattels in a form capable of being changed or transformed, turned over, delivered, or appropriated for the use and benefit of the wrongdoer. In 38 Cyc. 2011 it is said that conversion lies for 'every species of tangible personal property which is the subject of private ownership.' In this case conversion is used as a term synonymous with trover. (Black's Law Dictionary, 1174.) Trover comes from a French word meaning to find, and is defined as 'a form of action which lies to recover damages against one who has, without right converted to his own use goods or personal chattels, in which the plaintiff has a general or special property. . . . It was originally an action of [148 Cal.App.4th 123] trespass on the case where goods were found by the defendant and retained against the plaintiff's rightful claim. The manner of retaining possession soon came to be disregarded, as the substantial part of the action is the conversion to the defendant's use; so that the action lies whether the goods came into the defendant's possession by finding or otherwise, if he fails to deliver them upon the rightful claim of the plaintiff. It differs from detinue and replevin in this, that it is brought for damages and not for the specific articles; and from trespass in this, that the injury is not necessarily a forcible one, as trover may be brought in any case where trespass for injury to personal property will lie.' (3 Bouvier's Law Dictionary, 3d Rev. 3326.) Various authorities confine the application of the proceeding of trover or conversion to the wrongful interference with specific tangible goods or chattels. 'In substance it (trover) is a remedy to recover the value of personal chattels wrongfully converted by another to his own use.' (1 Chitty on Pleading, 14th Am. ed., 146.) It is 'a generic term applied to those torts, arising from the wrongful conversion of any particular piece of personal property owned by another.' (Spellman v. Richmond & D. R. Co., 35 S. C. 475 [28 Am. St. Rep. 858, 14 S. E. 947].) 'In form it is a fiction, in substance a remedy to recover the value of personal chattels wrongfully converted by another to his own use.' (1 Burr. 31.) 'Trover lies for specific chattels wrongfully converted, and not for money had and received for payment of debts. It does not operate on chattels generally, but specifically, such as money in coin, or bills, animals or other property capable of identification as being the actual property or thing wrongfully taken or converted.' (Kerwin v. Balhatchett, 147 Ill. App. 561, 566.) And in 26 R. C. L. 1105, it is said: 'An action in trover is not maintainable for the conversion of a bill or note unless the plaintiff can show that he was entitled to the possession of the specific property in question.' From the foregoing authorities it appears that the action of trover or conversion lies only for the wrongful appropriation of goods, chattels or personal property which is specific enough to be identified, and not to such indefinite, intangible and uncertain property rights as the mere goodwill of a business, or trade secrets (Roystone v. Woodbury, 67 Misc. Rep. 265 [122 N. Y. Supp. 444]), or a newspaper route (Boehm v. Spreckels, 183 Cal. 239 [191 Pac. 5]), or a licensed market stall for transacting trade. (Meier v. Wilkens, 15 App. Div. 97 [44 N. Y. Supp. 274].)" (Olschewski, supra, at pp. 286-288.)

Contrary to Olschewski v. Hudson, supra, 87 Cal.App. 282, we see no indication in Payne v. Elliot, supra, 54 Cal. 339 that the Supreme Court concluded that shares of stock were tangible property and therefore were the proper subject of a conversion action. In our view, rather than attempt to conform to the common law rule restricting a conversion action to tangible property, Payne acknowledged that shares of stock were intangible property [148 Cal.App.4th 124] and rejected the common law rule, at least as applied to shares of stock. fn. 7 Moreover, the statement in Payne that "the action no longer exists as it did at common law, but has been developed into a remedy for the conversion of every species of personal property" (id. at p. 341) suggests a much broader rejection of the restrictive common law rule. Although the authorities cited for that statement all involved either documents evidencing intangible property or documents with their own inherent value (ibid.), Payne went beyond those authorities by holding that the conversion of shares of stock was actionable even without the conversion, or even the existence, of a document evidencing ownership of the shares. Payne rejected the common law rule that only a tangible property interest can be unlawfully converted. fn. 8

[8] The specific holding in Olschewski v. Hudson, supra, 87 Cal.App. 282 was that a list of laundry customers that had not been reduced to writing was more akin to business goodwill or a trade secret than to tangible personal property and was too "intangible, uncertain, and indefinite a property right" to be the subject of a conversion action. (Id. at pp. 286-288.) fn. 9 We recognize that the common law of conversion, which developed initially as a remedy for the dispossession or other loss of chattel (1 Harper et al., Torts (rev. 3d ed. 2006) Interference with Chattels, § 2.7, pp. 178-183), may be inappropriate for some modern intangible personal property, the unauthorized use of which can take many forms. In some circumstances, newer economic torts have developed that may better take into account the nature and uses of intangible property, the interests at stake, and the appropriate measure of damages. On the other hand, if the law of conversion can be adapted to particular types of intangible property and will not displace other, more suitable law, it may be appropriate to do so. (Payne v. Elliot, supra, 54 Cal. at pp. 340-342.) The appropriate scope of a conversion action as applied to intangible personal property has been the subject of scholarly and informative discussion. [148 Cal.App.4th 125] (See, e.g., Harper et al., supra, § 2.13, pp. 204-214; Comment, Analyzing the Urge to Merge: Conversion of Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen (2005) 42 Hous. L.Rev. 489; 1 Dobbs, Law of Torts (2001) Direct and Intentional Interference with Property, § 63, pp. 132-135; Comment, The Conversion of Intangible Property: Bursting the Ancient Trover Bottle with New Wine (1991) 1991 B.Y.U. L.Rev. 1681; Prosser and Keeton, Torts, supra, Intentional Interference with Property, § 15, pp. 90-92; see also Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024, 1029-1036. fn. 10 )

[9] A net operating loss is a definite amount (see 26 U.S.C. § 172(c)) that can be recorded in tax and accounting records. The significance of this, in our view, is not that the intangible right is somehow merged or reflected in a document, but that both the property and the owner's rights of possession and exclusive use are sufficiently definite and certain. fn. 11 The misappropriation of a net operation loss without compensation in the manner alleged in the complaint, causing damage to Indemnity as alleged, is comparable to the misappropriation of tangible personal property or shares of stock for purposes relevant here. We see no sound basis in reason to allow recovery in tort for one but not the other. We therefore decline to follow either Olschewski v. Hudson, supra, 87 Cal.App. 282 or the dictum in Thrifty-Tel, Inc. v. Bezenek, supra, 46 Cal.App.4th at page 1565. At this juncture, we need not decide whether in these circumstances the cause of action should differ in any material respect from a traditional conversion action. (See generally Comment, The Conversion of Intangible Property: Bursting the Ancient Trover Bottle with New Wine, supra, 1991 B.Y.U. L.Rev. 1681.) For purposes of ruling [148 Cal.App.4th 126] on the demurrer, it is sufficient to conclude as we do that the misappropriation of intangible net operating losses alleged here supports a cause of action for conversion.

5. Count Eleven Fails to Allege a Proper Cause of Action

Indemnity alleges in count eleven that the alleged misappropriation of funds by Fremont General and Insurance Group was not fair and reasonable to Indemnity as required by Insurance Code section 1215.5. Indemnity seeks to recover "the full value of the assets misappropriated."

Insurance Code section 1215.5, part of the Insurance Holding Company System Regulatory Act, states among other things that the terms of transactions by insurers with their affiliates must be "fair and reasonable," that an insurer must notify the commissioner before entering into certain types of transactions, and that the commissioner may disapprove the transaction. (Id., subds. (a)(1), (b), (d).) Section 1215.10, subdivision (b) states that the commissioner, after notice and a hearing, may impose a civil monetary forfeiture on certain individuals who knowingly violate or permit a violation of the reporting requirement of section 1215.5. Section 1215.10, subdivision (c) states that if an insurer or any director, officer, employee, or agent of the insurer has "engaged in any transaction or entered into a contract which is subject to Section 1215.5 and which would not have been approved had approval been requested," the commissioner may order that insurer or individual to cease and desist any further activity under the transaction or contract. Section 1215.10, subdivision (c) states further that the commissioner, after notice and a hearing, "may also order the insurer to void any contracts and restore the status quo if this action is in the best interest of the policyholders, creditors, or the public." fn. 12 Section 1215.9, subdivision (a) states that the commissioner may apply to the superior court to enjoin a violation of the act or any rule, regulation, or order by the commissioner under the act, and for other equitable relief.

Indemnity argues: "Insurance Code section 1215.10, subdivision (c) empowers the Commissioner to require insurers (Comstock and Fremont Indemnity) to void contracts that violate Insurance Code section 1215.5 and restore [148 Cal.App.4th 127] the status quo. This is precisely what the Commissioner seeks to do through the eleventh cause of action--he seeks to void the unfair transactions at issue, and seeks to restore Comstock and Fremont Indemnity to the status quo ante."

[10] Insurance Code section 1215.10, subdivision (c) authorizes the commissioner to order an insurer to cease and desist activity under a transaction or contract only if the insurer was required by section 1215.5 to notify the commissioner of the proposed transaction or contract but failed to do so, and only if the commissioner would not have approved the transaction or contract had approval been requested. This is the clear implication of the first sentence of section 1215.5, subdivision (c). The second sentence states that the commissioner "may also order the insurer to void any contracts and restore the status quo . . . " after notice and a hearing. We construe this to mean that in addition to issuing a cease and desist order in the circumstances described in the first sentence, the commissioner may also order the insurer to void any contracts and restore the status quo in those same circumstances. Thus, section 1215.10, subdivision (c) does not authorize the commissioner to void contracts and restore the status quo unless (1) the insurer was required by section 1215.5 to notify the commissioner of the proposed transaction or contract but failed to do so, and (2) the commissioner would not have approved the transaction or contract had approval been requested. The complaint does not allege that those were the circumstances here and therefore fails to state a cause of action under the statute.

[11] Moreover, Insurance Code section 1215.10, subdivision (c) provides for administrative enforcement of the Insurance Holding Company System Regulatory Act by authorizing the commissioner, after notice and a hearing, to order an insurer to void a transaction or contract and restore the status quo, but does not state that the commissioner may commence a judicial action seeking those remedies. Section 1215.19, subdivision (a) authorizes the commissioner to apply to the superior court to enjoin a violation of the act or any rule, regulation, or order by the commissioner under the act, and for other equitable relief, but does not authorize the commissioner to commence a judicial action to void a transaction or contract or restore the status quo absent an actual or threatened violation of an order by the commissioner to that effect. Indemnity cites no statutory language and offers no legislative history indicating a legislative intent to create a cause of action by the commissioner to void a transaction or contract or restore the status quo absent such a prior order by the commissioner. Indemnity does not request leave to amend. The fact that the Insurance Holding Company System Regulatory Act creates a comprehensive scheme for administrative enforcement and a judicial remedy to enforce administrative action strongly suggests that the remedies provided are exclusive. (Farmers Ins. Exchange v. Superior [148 Cal.App.4th 128] Court (2006) 137 Cal.App.4th 842, 850.) We conclude that Indemnity has shown no prejudicial error in the sustaining of the demurrer to count eleven.

6. The Sustaining of the Demurrer to Count Twelve Was Error

Indemnity alleges in count twelve that Fremont General and Insurance Group made improper "distributions" of the assets of Comstock and Indemnity within the meaning of Insurance Code section 1215.16 by misappropriating funds in the manners alleged. Indemnity seeks to recover the alleged improper distributions.

[12] Fremont General and Insurance Group argued in support of their demurrer and argue again on appeal that the term "distributions" as used in Insurance Code section 1215.16, subdivision (a) is limited to "the distribution of shares of stock or monetary bonuses." Section 1215.16, subdivision (a) states that the receiver under an order for liquidation or rehabilitation of a domestic insurer may recover from any parent corporation, holding company, or other controlling person or affiliate "the amount of distributions other than distributions of shares of the same class of stock paid by the insurer on its capital stock," or "any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or its subsidiary to a director, officer, or employee," provided that the distribution or payment was made within one year before the petition for liquidation, conservation, or rehabilitation. Subdivision (b) states that the receiver cannot recover a distribution if the parent or affiliate shows that the distribution was lawful and reasonable when it was paid, "and that the insurer did not know and could not reasonably have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations."

[13] The statute refers to "distributions" rather than "distributions of shares of stock," and the statutory language does not suggest that the term "distributions" is limited to only distributions of shares of stock. Moreover, the apparent purpose of the provision to allow the receiver to recover assets conveyed unreasonably to a parent corporation or other controlling person or affiliate suggests that the Legislature did not intend such a restrictive meaning of the term "distributions" as the defendants suggest. In support of their demurrer, the defendants cited a legislative committee analysis stating that the bill "Authorizes receivers for [148 Cal.App.4th 129] insolvent insurers to recover from holding companies and affiliates distributions of shares, and bonuses or other extraordinary salary adjustments . . . ." (Assem. Com. on Insurance, Analysis of Sen. Bill No. 1666 (1991-1992 Reg. Sess.) as amended June 16, 1992, p. 4.) They also cited an enrolled bill report stating, "This bill authorizes receivers for insolvent insurers to treat distributions to holding company employees of shares and bonuses or other extraordinary salary adjustments by the insolvent insurer . . . as a fraudulent conveyance . . . ." (Off. of Insurance Advisor, Enrolled Bill Rep. on Sen. Bill No. 1666 (1991-1992 Reg. Sess.) Aug. 12, 1992, p. 3.) fn. 13 We do not view these brief summaries as comprehensive statements of the intent of the statute. [14] Moreover, although legislative history can help to disclose the intent of the Legislature when a statute is unclear or ambiguous, the statutory language is the primary indication of legislative intent. (S. B. Beach Properties v. Berti (2006) 39 Cal.4th 374, 379.) Absent some indication in the language of the statute that the term "distributions" was intended to mean only "distributions of shares of stock," we will not construe the statute so restrictively.

7. Other Reasons Asserted in the Demurrer Do Not Support the Sustaining of the Demurrer

Fremont General and Insurance Group argued as an independent basis for their demurrer to counts one (declaratory relief), two (permanent injunction), and three (breach of contract) that even absent the letter agreement, Fremont General had a fiduciary obligation to use Comstock's net operating losses to offset the taxable income of other affiliated companies. They argued that Indemnity was not entitled to compensation for that use because Indemnity had no taxable income and therefore could not benefit from its own use of the net operating losses. The factual premise that Indemnity had no taxable income is not alleged in the complaint and is contrary to the allegation in the complaint that Indemnity "remains a taxpayer." We therefore cannot affirm the sustaining of the demurrer to counts one, two, and three on this basis.

Fremont General and Insurance Group argued as an independent basis for their demurrer to counts eight (avoidance of fraudulent transfers), nine (avoidance of voidable preferences), and ten (avoidance of fraudulent transfers) that those counts are not pled with the specificity required for a cause of action based on a statute. They neglected to argue either in the trial court or on appeal in what manner the complaint fails to allege the elements required to establish a right to relief under the applicable statutes. Absent specific argument on this point, we perceive no pleading deficiency and cannot affirm the demurrer to those counts on this basis.

Fremont General and Insurance group made various other arguments in support of their general demurrer that would not dispose of an entire cause of action and therefore cannot support the sustaining of the demurrer to any count. We express no opinion concerning the parties' respective legal arguments on those issues. [148 Cal.App.4th 130]

DISPOSITION

The judgment is reversed with directions to the superior court to (1) vacate its order sustaining the demurrer without leave to amend to each count alleged in the complaint, and (2) enter a new order sustaining the demurrer without leave to amend as to count eleven only and overruling the demurrer as to the other counts. Indemnity is entitled to recover its costs on appeal.

Kitching, J., and Aldrich, J., concurred.

Footnote 1. By carrying over or carrying forward a net operating loss, a taxpayer can reduce its taxable income in a given year. (26 U.S.C. § 172.)

Footnote 2. Paragraph 18 of the letter stated, in relevant part: "This Agreement will be superseded, in its entirety, except for Paragraphs 19 and 21 herein, if prior to March 1, 2004, the Department obtains an Order of Conservation from a California Superior Court. However, contributions received pursuant to Paragraph 20 are not refundable under any circumstance. On and after March 1, 2004, this Agreement shall remain in full force and effect until a) the Department provides written notice to Fremont [defined as Insurance Group and Indemnity collectively] that it is released from its obligations required herein or b) it is superseded by Order of a California Superior Court except for Paragraphs 19 and 20, which shall remain in full force and effect."

Footnote 3. Paragraph 19 of the letter stated: "In consideration of FGC [Fremont General] agreeing to make the contributions to FIC [Indemnity] described in Paragraph 20 hereof, FIC hereby transfers to FGC, with the Department's express consent, any and all right, title and interest in and to the right to benefit from the net operating loss of or attributable to FIC (the 'NOL'). The Department acknowledges that the NOL is critical to and the property of FGC and maintenance of such asset is dependent on the continued consolidation of FIC with FGC for federal income tax purposes. The Department shall cooperate with FGC in the preparation of consolidated income tax returns and shall not request from the Internal Revenue Service termination of status of FIC as a member of the FGC consolidated group. If FGC is placed into conservatorship or receivership, neither the Department nor any of its agents or representatives shall sell any or all of FIC stock, issue FIC stock, claim tax exempt or nonprofit status for FIC or transfer substantially all of the assets of FIC to another corporation. If FIC is placed in liquidation, the Department shall consult with FGC and its advisors and shall take such reasonable actions as requested by FGC necessary to preserve the benefit of the NOL for FGC, consistent with the Department's obligations to FIC's policyholders and creditors."

Footnote 4. Fremont General and Insurance Group had requested judicial notice of the letter agreement dated July 2, 2002, in the NOL action. In that action, they cited no statutory authority for judicial notice, but argued that reference to the document was essential to an understanding of the facts alleged in the complaint. Indemnity did not oppose the request. The court granted the request, stating only, "Judicial Notice is taken of the July 2, 2002 letter agreement." We take judicial notice of the request for judicial notice filed in the NOL action on August 16, 2004, and the minute order in that action dated January 25, 2005, pursuant to Evidence Code sections 452, subdivision (d) and 459.

Footnote 5. "[T]he 'meaning of language is to be found in its applications. An indeterminacy in the application of language signals its vagueness or ambiguity. An ambiguity arises when language is reasonably susceptible of more than one application to material facts. There cannot be an ambiguity per se, i.e., an ambiguity unrelated to an application.' [Citations.] [¶] Accordingly, '[e]ven if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is yet reasonably susceptible.' [Citation.]" (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 391.) "The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. [Citations.] [¶] A rule that would limit the determination of the meaning of a written instrument to its four-corners merely because it seems to the court to be clear and unambiguous, would either deny the relevance of the intention of the parties or presuppose a degree of verbal precision and stability our language has not attained." (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co., supra, "69 Cal.2d at p. 37.)

Footnote 6. Section 242 of the Restatement Second of Torts, published in 1965, states: "(1) Where there is conversion of a document in which intangible rights are merged, the damages include the value of such rights. [¶] (2) One who effectively prevents the exercise of intangible rights of the kind customarily merged in a document is subject to a liability similar to that for conversion, even though the document itself is not converted." The comments to section 242 recognized that the law of conversion was undergoing a "process of extension" at that time and stated, "nothing that is said in this Section is intended to indicate that in a proper case liability for intentional interference with some other kind of intangible rights may not be found." (Id., com. f, p. 475; see id., com. b., pp. 473-474.)

Footnote 7. Shares of stock in a corporation are intangible property (Ashton v. Heydenfeldt (1899) 124 Cal. 14, 16; see Navistar Internat. Transportation Corp. v. State Bd. of Equalization (1994) 8 Cal.4th 868, 875), although a certificate representing those shares is tangible property (Englert v. Ivac Corp. (1979) 92 Cal.App.3d 178, 184).

Footnote 8. Similarly, the Court of Appeal in A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 570 concluded that the unauthorized duplication and sale of music recordings constituted conversion, stating, "The court correctly found that such misappropriation and sale of the intangible property of another without authority from the owner is conversion. [Citations.]"

Footnote 9. Thrifty-Tel, Inc. v. Bezenek, supra, 46 Cal.App.4th at page 1565 cited only Olschewski v. Hudson, supra, 87 Cal.App. 282, Adkins v. Model Laundry Co., supra, 92 Cal.App. 575, and two out-of-state cases in support of the statement, "Courts have traditionally refused to recognize as conversion the unauthorized taking of intangible interests that are not merged with, or reflected in, something tangible." Adkins followed Olschewski and held that the plaintiff in an action for breach of a laundry services contract could not recover tort damages for the conversion of individual customers on a laundry route. (Adkins, supra, at pp. 583-585.)

Footnote 10. The Ninth Circuit requested a decision from the California Supreme Court on the question whether an Internet domain name was within the scope of property subject to the tort of conversion under California law, and on related questions concerning the "merger doctrine" articulated in the passage from Thrifty-Tel, Inc. v. Bezenek, supra, 46 Cal.App.4th at page 1565 quoted ante. (Kremen v. Cohen (9th Cir. 2003) 325 F.3d 1035, 1038; see Cal. Rules of Court, rule 8.548.) The California Supreme Court denied the request. (Kremen v. Cohen, supra, 337 F.3d at p. 1031.) Deciding the question for itself under California law, the Ninth Circuit discussed Payne v. Elliot, supra, 54 Cal. 339, Olschewski v. Hudson, supra, 87 Cal.App. 282, and other authorities. (Kremen, supra, at pp. 1030-1033.) The Ninth Circuit ultimately stated that it need not decide whether California adheres to the merger doctrine because assuming that some degree of merger is required under California law, all that is required is "some connection to a document or tangible object." (Id. at p. 1033.) The Ninth Circuit concluded that an electronic database, an intangible document, associated the domain name with particular computers connected to the Internet and satisfied any merger requirement. (Id. at pp. 1033-1034.)
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Footnote 11. “The ownership of a thing is the right of one or more persons to possess and use it to the exclusion of others. In this Code, the thing of which there may be ownership is called property." (Civ. Code, § 654.)

Footnote 12. Insurance Code section 1215.10, subdivision (c) states in full: "Whenever it appears to the commissioner that any insurer subject to this article or any director, officer, employee, or agent thereof has engaged in any transaction or entered into a contract which is subject to Section 1215.5 and which would not have been approved had approval been requested, the commissioner may order the insurer to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the commissioner may also order the insurer to void any contracts and restore the status quo if this action is in the best interest of the policyholders, creditors, or the public."
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Footnote 13. We take judicial notice of the two items of legislative history, which were submitted to the trial court with a request for judicial notice in the NOL action.

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