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October 11, 2013

Zealous Advocacy Loses Ground

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(Reprinted from the Los Angeles – San Francisco Daily Journal, October 11, 2013)

Attorneys are taught to be zealous advocates for their clients. With rare exception, an attorney’s zealous advocacy should not lead to liability to third parties. Two recent state Court of Appeal decisions demonstrate that the line between zealous advocacy and actionable attorney conduct is blurring.

In Rickley v. Goodfriend, 212 Cal. App. 4th 1136 (2013) (rev. denied April 10, 2013), the 2nd District Court of Appeal allowed a nonclient to pursue attorney-client conspiracy claims by characterizing attorney conduct as obstructionist, and therefore not protected by the litigation privilege.

The 4th District Court of Appeal, in Keleveland v. Siegel & Wolensky, 215 Cal. App. 4th 534 (2013), evaluated the conduct of underlying litigation and then denied an attorney anti-SLAPP protection in a malicious prosecution action.

Both opinions fail to protect the adversary system by distinguishing client duties from attorney duties, and appropriately applying the litigation privilege.

A third recent decision, Malin v. Singer, 217 Cal. App. 4th 1283 (2013), finding an abrasive and arguable extreme settlement demand was protected by the litigation privilege embraces the public policy underlying the litigation privilege and is at odds with Rickley and Kleveland.

Rickley

When the Goodfriends remodeled their home, they dumped debris on Rickley and Roit’s property. Rickley prevailed in a lawsuit, and the Goodfriends were ordered to abate the nuisance at their own expense.

In a second lawsuit to enforce the judgment, Rickley was permitted to allege a civil conspiracy between the Goodfriends and their counsel, Proctor and Stevens, to thwart compliance with the judgment. Rickley alleged Goodfriend’s counsel gave contrary instructions to remediation contractors, hindering their work. She also asserted that Stevens directed laborers on the Goodfriends property to do work in violation of a court order, and even performed physical labor himself.

The court acknowledged that in The Doctors’ Co. v. Superior Court (Valencia), 49 Cal. 3d 39 (1989), the state Supreme Court held an attorney could not be liable for conspiring with a client to violate a duty that belonged solely to the client. An attorney has no duty to a client’s adversary if acting only as an agent of the client.

However, the court was persuaded by the Supreme Court’s recognition of certain valid claims of attorney-client conspiracy. An attorney who conspires with a client to violate the attorney’s own duty to the plaintiff can be liable under a conspiracy theory.

For example, an attorney who misrepresents policy limits violates her own duty not to misrepresent facts. Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 107 Cal. App. 4th 54, 84-85 (2003). An attorney who provides a written opinion the attorney knows a third party will rely upon assumes a duty to the third party. Pavicich v. Santucci, 85 Cal. App. 4th 382, 390-96 (2000).

The court reasoned an independent legal duty may also arise when an attorney engages in conduct “way” beyond the role of a legal representative.

For example, a divorce attorney in a property dispute who personally evicts an opposing party’s guest, changes the locks, and removes possessions, goes beyond providing normal professional services, and can be liable for her own wrongdoing. Burtscher v. Burtscher, 26 Cal. App. 4th 720 (1994).

The Rickley court found Proctor and Stevens violated their independent duty not to interfere with the abatement of a continuing nuisance. Their actions – contacting contractors and performing physical labor on the property – were unrelated to legal services, and therefore unprotected conduct. The court dismissed Proctor and Stevens’ assertion of the litigation privilege by holding it did not apply to post-judgment “obstructionist” activities, and did not apply to communications with third parties not connected to the litigation, contractors and employees performing remediation work.

A strong and well-reasoned dissent pointed out Doctors’ Co. should apply because the only duty at issue was the Goodfriends’ duty to remediate the property and comply with the judgment. There can be no conspiracy claim against a participant, such as counsel, acting only as an agent or employee of the party with the duty.

The dissent did not agree the litigation privilege was inapplicable based on the characterization of Proctor’s and Steven’s actions as obstructionist. The difference between enforcement and obstruction is often in the eye of the beholder. Activities viewed by the prevailing party as obstructionist may be viewed by the losing party as insistence on strict enforcement of the exact terms of the judgment. If a mere allegation that activity is obstructionist defeats the privilege, it is a hollow protection.

If this were not enough, the court made clear how an attorney-client conspiracy theory can potentially expand attorney liability. The Goodfriend’s violated the Coastal Act when they dumped toxic debris in their residential trash can. As co-conspirators, the attorneys were equally liable with the Goodfriends for an act they neither knew about nor participated in.

Keleveland

Another successful challenge to attorney advocacy occurs in Keleveland. Leach retained Siegel to question his uncle Kleveland’s handling of his grandparents’ estate. Siegel filed and then litigated a petition for breach of trust and Kleveland’s removal as trustee very aggressively. During the course of litigation, Siegel made a demand for a major estate asset in exchange for dismissal of the petition.

After Kleveland was vindicated in the trial court, he filed a malicious prosecution action against Siegel and his client. Siegel filed a special motion to strike the complaint under California’s anti-SLAPP law, CCP Section 425.16. Historically, the anti-SLAPP statute has been a powerful tool to stem litigation against attorneys by litigation adversaries.

The court correctly found Siegel, as defendant, met his burden under the first prong of the anti-SLAPP analysis, because the complaint arose from Siegel’s assistance to Leach in the exercise of his right to petition. However, the court found Kleveland, as plaintiff, met his burden to demonstrate a probability of success on the merits under the second prong of the analysis.

According to the court, Kleveland demonstrated Siegel acted without probable cause and with malice. In making this evaluation, the court concluded Siegel supported Leach’s objective to force an unequal division of the estate. This was established by a demand letter offering to dismiss the petition prior to expensive litigation in exchange for an estate asset; “unreasonable discovery demands”; and rejection of an invitation to discuss the division of the estate prior to filing the petition.

Although Siegel asserted the litigation privilege should protect these garden variety litigation events, the court did not address this argument. While the lawsuit was highly unpleasant, it appears the conduct was within rules that apply to litigation, subject to sanctions in the context of the litigation, and protected by the litigation privilege.

Malin

The court in Malin struck the proper balance to protect the adversary system. Malin and Moore owned a restaurant with Arazm. Arazm’s attorney Singer sent Malin a demand letter accusing him of misusing company resources to arrange sexual liaisons, and included a draft complaint. Malin sued Singer and Arazm for civil extortion, violation of civil rights, and intentional and negligent infliction of emotional distress.

The court reversed a trial court ruling denying Singer protection under the anti-SLAPP statute. The trial court reasoned the demand letter was extreme, constituted extortion as a matter of law, and was not constitutionally protected conduct.

Although a demand letter is typically speech or petitioning activity protected under the anti-SLAPP statute, the Supreme Court has created an exception where a demand letter is so extreme it amounts to extortion. See Flatley v. Mauro, 39 Cal. 4th 299, 329 (2006).

The court rejected the notion Singer’s demand letter constituted extortion. It did not expressly threaten to disclose Malin’s alleged wrongdoings to a prosecuting agency or the public at large. The letter accused Malin of embezzling money and informed him Arazm knew how he had spent the funds. The letter noted the filing of a complaint would reveal the use of the embezzled funds for a provocative purpose. The threats were not extortion, and the exposure of Malin’s activities would not subject him to any more disgrace than the claim that he was an embezzler.

Further, the demand letter was protected under the litigation privilege. A protected pre-litigation communication must relate to litigation contemplated in good faith and under serious consideration. The sexual misconduct allegations in the complaint were related to the demand letter that preceded the complaint, and were logically connected to litigation contemplated in good faith and under serious consideration when the letter was sent.

The Takeaway

These cases suggest zealous advocacy is being challenged and scrutinized more closely than in years past. There is no bright line test to determine whether an attorney’s conduct crosses the line from appropriate but unpleasant advocacy to actionable conduct. The success of a practitioner’s assertion of the litigation privilege is far from guaranteed and depends in large part on the court or appellate panel reviewing the matter. Although it may have a chilling effect on advocacy, attorneys should be mindful of what appears to be a more selective application of the litigation privilege.

 

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