Van Zanen v. Qwest Wireless, L.L.C.

Citations: 550 F. Supp. 2d 1261; 2007 U.S. Dist. LEXIS 28965; 2007 WL 1160010Docket: Civil Action 06-cv-02546-LTB-PAC

Court: District Court, D. Colorado; April 19, 2007; Federal District Court

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Patrick Van Zanen and Vicki Van Zanen, representing themselves and a potential class, filed a complaint against Qwest Wireless, L.L.C., Qwest Services Corporation, and Qwest Communications International, Inc., claiming that the defendants unlawfully sold wireless telephone equipment insurance (Handset Insurance) without proper licensing in fourteen states. The Van Zanens allege that Qwest, which sold this insurance through Lock/Line, LLC (also known as Asurion Protection Services, L.L.C.), collected monthly premiums of $4.99 and retained a commission, misrepresented as a "billing and administration fee." 

The complaint details that Mrs. Van Zanen purchased Handset Insurance in May 2005 but faced challenges when attempting to file a claim after losing her phone, including a requirement to report the loss to the police. The complaint does not specify who advised her on this requirement, nor does it clarify the terms of the insurance coverage, leaving it uncertain whether any misrepresentation occurred. Importantly, the Van Zanens do not assert claims against Lock/Line, do not intend to cancel their coverage, and do not claim fraud. They argue that Qwest’s alleged concealment of the true nature of its compensation should toll any applicable statute of limitations. The court granted Qwest's motion to dismiss the complaint.

Qwest is accused of ongoing violations of Arizona's insurance licensing laws, with the Van Zanens asserting four personal claims: violation of Arizona's insurance licensing statute (Ariz.Rev.Stat. 20-282), violation of the statute prohibiting compensation to unlicensed insurance producers (Ariz.Rev.Stat. 20-298), demands for declaratory and injunctive relief, and claims of unjust enrichment and constructive trust. Claims 3 to 28 address violations of laws from other states on behalf of a potential class. Both parties agree that Arizona law applies to the Van Zanens' claims.

Qwest contends these claims should be dismissed based on two arguments: first, that the insurance licensing statute does not provide a private cause of action; and second, that while the lack of a license can be a defense against fee recovery, it cannot support a restitution claim for services rendered. The Van Zanens counter that the statute implies a private right of action or at least does not invalidate their unjust enrichment claim. However, it is concluded that the statute does not establish a private right of action, and the Van Zanens failed to assert a valid unjust enrichment claim.

The relevant statutes prohibit selling, soliciting, or negotiating insurance without a license, and accepting commissions without the necessary license. Qwest admits to violating these statutes. Enforcement mechanisms are provided through administrative recourse, allowing the director of insurance to order cessation of violations and to seek injunctions through the attorney general in court. The statutes do not explicitly allow for private enforcement. Arizona courts utilize the Restatement to evaluate whether a statute permits a private cause of action, considering the legislative intent and the necessity of a civil remedy for enforcement.

The Restatement (Second) of Torts, 874A (1979) emphasizes that courts should interpret legislative intent regarding civil liability, treating situations as if the intent were explicitly stated. Arizona courts prioritize the legislation's purpose, examining the context, language, subject matter, effects, and overall spirit of the law. The intent—whether express or implied—is critical in determining if a statute creates a private cause of action, as established in various cases including Napier and Lancaster.

In Bentivegna v. Powers Steel & Wire Products Inc., plaintiffs sought restitution from an unlicensed contractor after defects emerged in a warehouse they built. The court ruled against the plaintiffs, clarifying that the contractor licensing statute aims to protect the public rather than penalize contractors. It noted that unlicensed contractors are not automatically barred from recovering payments for work performed, as this would not further the statute's protective purpose. The court also highlighted that allowing unlicensed contractors to retain payments while restricting their ability to sue encourages compliance with licensing requirements.

In Colberg v. Rellinger, the court similarly found no indication of legislative intent for the contractor licensing statutes to permit private claims against agents of licensees, concluding that the legislature did not intend to create such a right of action.

In Darner Motor Sales, Inc. v. Universal Underwriters Insurance Co., the Arizona Supreme Court outlined the rationale behind insurance licensing statutes, emphasizing that individuals selling insurance must be licensed to ensure competency and protect the public. Insurance agents perform a vital personal service, advising clients on coverage and policy selection, and thus must adhere to professional standards. If agents act negligently, they can be held liable for damages, akin to other professionals. However, in this case, the Van Zanens do not claim that Qwest acted negligently in selling them Handset Insurance; they do not seek to cancel the insurance, nor do they express dissatisfaction with the coverage or its terms. The transaction appears to be a standard arms-length interaction.

The court noted that it need not determine whether a private right of action exists under the relevant statutes, as none is applicable in this instance. Unlike previous cases where statutes explicitly allowed private causes of action, the statutes in question here do not provide such provisions. The Van Zanens’ interpretation of the director's discretion under Ariz.Rev.Stat. 20-292 does not imply legislative intent to create private causes of action against unlicensed insurers, leading to the dismissal of their claims under the Arizona licensing statute.

Furthermore, the Van Zanens' argument for a common law claim of unjust enrichment is flawed, as they do not possess a valid claim under either Arizona or Colorado law. Unjust enrichment requires three specific elements, which the Van Zanens fail to satisfy.

The Van Zanens must demonstrate that: 1) they incurred an expense, 2) Qwest received a benefit, and 3) it would be unjust for Qwest to retain that benefit without restitution, as established in DCB Constr. Co. v. Central City Dev. Co. Under Arizona law, they must also show: 1) enrichment, 2) impoverishment, 3) a link between the two, 4) lack of justification for the enrichment and impoverishment, and 5) absence of a legal remedy, per Trustmark Ins. Co. v. Bank One, Arizona, NA. The Van Zanens have not suffered any detriment or impoverishment; instead, they received a valuable product, Handset Insurance, which they intend to keep. Their argument that Qwest should return its commission, while Lock/Line retains the premium, is unpersuasive, as they acknowledge Qwest facilitated their acquisition of the insurance policy. Thus, they cannot seek restitution for a benefit they willingly accepted. As a result, their unjust enrichment claim is dismissed. Furthermore, since the Van Zanens have failed to establish any claims for themselves, their class action claims are also dismissed. Consequently, Qwest's motion to dismiss is granted, leading to the dismissal of the Complaint.