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April 29, 2013 | Law Alert

Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136 (rev. denied April 10, 2013)

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The Second District holds over a strong dissent an attorney-client conspiracy was properly alleged.  The attorneys owed independent legal duties to the plaintiffs, and thus claims were not precluded by the agent’s immunity rule.  The litigation privilege did not apply, because the communications and affirmative misconduct of the attorneys interfered with the abatement of a nuisance; involved non-participants in the litigation; and did not attempt to achieve the objects of the litigation. The attorney-client privilege did not preclude the action because the allegations were capable of being resolved without reference to attorney-client communications. 

Rebecca Rickley and Natasha Roit (Rickley) lived next door to Marvin and Tina Goodfriend.  When the Goodfriends remodeled their home, debris was dumped on both properties contaminating the soil with asbestos and lead.  Rickley filed a lawsuit to force removal of the debris.  The trial court entered judgment for Rickley, and ordered Goodfriend to abate the nuisance and bear the expense. 

On Goodfriend’s motion, the court did not award Rickley an amount to abate the nuisance on her property, but approved a budget to abate the contamination on both properties.  The budgeted amount was placed in the trust account of James Procter, Daniel Stevens, and Procter, Slaughter & Reagan, Goodfriend’s attorneys and was to be distributed per the instructions of Rickley’s expert.  Without Rickley’s knowledge, the attorneys disbursed funds that were not used to remediate her property. 

Rickley filed a second lawsuit alleging Goodfriend had not complied with the first judgment, and had increased the amount of debris on her property.  Rickley moved to amend the complaint to allege a civil conspiracy against Procter, Stevens, and their law firm.  The amendment alleged Procter refused to comply with a court order precluding him from sending e-mails or letters to the contractors without prior approval, and Stevens violated a court order by supervising and performing proscribed work. 

Rickley prevailed in a third lawsuit alleging the Goodfriends had erected a fence encroaching on her property.   When the Goodfriends refused to comply with the judgment, the trial court issued an OSC regarding contempt. Two of the three contempt charges pertained to orders that were the attorney’s responsibilities: preparing status reports and documentation.  The Goodfriends were found guilty of contempt. 

Rickley alleged each defendant was the agent or employee of the remaining defendants and was acting within the purpose and scope of his agency or employment.  She asserted the attorneys formed and operated a conspiracy with their clients to thwart compliance with the judgment and orders by interference with the remediation plan, and disbursement of the remediation funds in an unfair manner.  Rickley also sought to add three new causes of action against the attorneys: breach of fiduciary duty, negligence, and accounting.  The trial court granted the motion. 

Conspiracy Claims Against Attorneys

Attorney-client conspiracy claims are subject to Civil Code § 1714.10, a gateway statute intended to weed out meritless claims of conspiracy. Subdivision (a) mandates plaintiffs obtain a court order permitting a conspiracy claim after establishing a reasonable probability of prevailing.  The statute does not apply if the attorney has an independent legal duty to the plaintiff, or the attorney’s acts go beyond the performance of a professional duty in furtherance of the attorney’s financial gain.

The statute was enacted in response to case law that held attorneys could be sued for conspiring with their client to commit unfair or deceptive acts or practices prohibited by the Insurance Code, although they could not be sued directly for violations.  After the statute was enacted, the Supreme Court ruled that an attorney could not be liable for conspiring with a client to violate the Insurance Code under the “agent’s immunity rule.” An alleged conspirator, though a participant, has no duty if acting only as an agent or employee of the party who has a duty. 

The Supreme Court did not rule out valid claims of attorney-client conspiracy.  For example, an attorney who conspires to cause a client to violate a statutory duty for the attorney’s financial gain, or an attorney who conspires with a client to violate the attorney’s own duty to the plaintiff, is liable under a conspiracy theory. 

After this decision, § 1714.10 was amended to exclude claims within those two exceptions.  The net effect was to eliminate the gatekeeping requirement for any viable conspiracy claim, and to apply it only to a meritless claim.    

An attorney has an independent legal duty to refrain from defrauding non-clients. For example, a conspiracy claim may be brought where a corporation and its attorney conspire to conceal from potential investors that other investors have threatened litigation against the venture. A conspiracy claim is proper where an insurance company’s coverage counsel misrepresents the policy limits to a party that has obtained a judgment against the company’s insured. Where an attorney gives his client a written opinion with the intention that it be transmitted to and relied upon by a third party in dealing with the client, the attorney owes the third party a duty of care. 

An independent legal duty may also arise when an attorney engages in conduct that goes beyond the role of a legal representative.  For example, an attorney who engages in self-help in  a property dispute by personally evicting a party’s guest, requesting the assistance of a Sheriff who is a relative, engaging a locksmith to change locks, and contacting a storage company to remove a party’s personal possessions goes beyond the parameters of an attorney’s normal professional services.  A lawyer’s role in retaking possession is limited to service of a notice to quit, filing an unlawful detainer, and obtaining a court order.  Once an attorney goes beyond normal professional services, the attorney owes a duty to the plaintiff and can be liable for wrongdoing to the same extent as a non-attorney.

Procter and Stevens interfered with the remediation plan, and contributed to the continuing nature of the nuisance.  Procter interfered by contacting the contractors through unapproved e-mails and providing information and instructions that interfered with the remediation plan. At the worksite Stevens misdirected a contractor’s employees and even participated in digging in the soil contrary to the trial court’s order.  While the Goodfriends had a duty to abate the nuisance, their decision to continue the nuisance was with the active assistance of their attorneys, whose actions were outside the normal services of an attorney.  The attorneys’ actions breached an independent duty grounded in tort law not to interfere with the remediation. 

Procter and Stevens also owed an independent legal duty with respect to the funds held in their trust account. By holding the remediation funds for the benefit of all parties, the attorneys assumed a duty to disburse the money equitably. 

The Goodfriends were found in contempt for not providing status reports and documentation.  The attorneys were aware of the court’s orders.  If the reports had been made accurately, they would have revealed that the Goodfriends and their attorneys were interfering with the remediation plan and disbursing the remediation funds unfairly.

Goodfriend violated the Coastal Act by depositing toxic debris in his residential trash can.  The court found the attorneys’ participation in the conspiracy to interfere with the remediation rendered them liable for the Coastal Act violations.  Once a conspiracy was formed to continue the existing nuisance by interference with the remediation plan, Procter and Stevens were liable not only for their own wrongdoing, but also for the Goodfriends’ actions performed in furtherance of the conspiracy.  The court would not distinguish between a tort and a statutory violation once a threshold for an attorney-client conspiracy was met. 

Nor was the court persuaded that the amendment should be denied because it was based on “mere allegations” which, the attorneys argued, would open the floodgates to frivolous conspiracy claims.  While acknowledging that possibility, the Court noted in this case Rickley submitted deposition transcripts; the remediation judgment; an order to show cause; e-mails; contempt orders; governmental notices, and reporter’s transcripts. 

Litigation Privilege 

The litigation privilege, codified at Civil Code § 47, was originally enacted with reference to defamation but is now applicable to any communication, whether or not it amounts to a publication, and all torts except malicious prosecution.  It applies to any communication made in judicial or quasi-judicial proceedings; by litigants or other participants authorized by law; to achieve the objects of the litigation; and that have some connection or logical relation to the action.  Communications with “some relation” to judicial proceedings are absolutely immune from tort liability. 

A threshold issue is whether the defendant’s conduct was communicative or non-communicative. The distinction hinges on the gravamen of the action; that is, whether the injury allegedly resulted from an act that was communicative in its essential nature.

In another case, the California Supreme Court held it was proper to strike an abuse of process complaint under California’s anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute because it was barred by the litigation privilege.  The plaintiff had alleged the attorney had filed perjured declarations, which are clearly communications.  The Supreme Court also held the privilege extends to necessarily related non-communicative acts. 

However, the Court found Procter’s and Stevens’ communications were not protected by the litigation privilege.  The communications had the intended effect of continuing a nuisance by interfering with a court-approved remediation plan, leaving contaminated debris on plaintiffs’ property. This differs from filing a declaration with the court. The Court of Appeal determined that the Supreme Court did not extend the litigation privilege to post-judgment communications or misconduct that contributes to a continuing tort. 

Rather, the Supreme Court extended the litigation privilege only to post-judgment enforcement activities.  Procter and Stevens engaged in post-judgment obstructionist activities by actively assisting their clients in contravening the judgment.  Their acts were not “necessarily related” to a privileged communication, and continued the existing nuisance by interfering with the remediation plan.

Further, the communications were with third parties, the contractors and the employees performing the remediation work.   Statements to nonparticipants in the action are not privileged and are thus actionable. 

Nor were the communications an attempt “to achieve the objects of the litigation,” which are limited to the remedies that can be awarded by courts.  A plaintiff’s objects are to obtain a monetary recovery for damages or other relief; a defendant’s objects are to resist a determination of liability, damages, penalty, or other order that the plaintiff seeks.  The Goodfriends’ remedy was to seek relief by appeal and a request for a stay or, if necessary, the posting of a bond.  The litigation privilege offers no protection for the collaborative efforts of the parties and their attorneys to interfere with a court-approved remediation plan.

The litigation privilege serves broad goals of guaranteeing access to the judicial process, promoting zealous representation by counsel, and reinforcing the traditional function of the trial as the engine for the determination of truth. Applying the litigation privilege to some forms of unlawful litigation-related activity may advance those broad goals notwithstanding the occasional unfair result.  It applies to subornation of perjury because it is in the nature of a statutory privilege that it must deny a civil recovery for immediate wrongs in order to accomplish what the Legislature perceives as a greater good.

Every conspiracy between a client and an attorney involves communications and conduct. Yet the goals of the litigation privilege are not served by conferring immunity on the Goodfriends and their attorneys to interfere with the abatement of the nuisance on Rickley’s property.   To do so would be tantamount to eliminating civil conspiracy claims against attorneys.  Implicit in § 1714.10 is the Legislature’s conclusion that some attorney-client conspiracy claims may be properly maintained.

Attorney-Client Privilege

The Court disagreed the claims against the attorneys would require disclosure of communications protected by the attorney-client privilege, because the claims were capable of complete resolution without breaching the privilege.  The claims were based on non-confidential communications with third parties – contractors – and non-confidential conduct – digging in the soil and sending unapproved e-mails to contractors.  The proposed amendment alleges the attorneys interfered with the remediation plan and delayed the removal of contaminated debris from plaintiffs’ property.  These issues can be resolved without any evidence of statements between the attorneys and their clients.

Before dismissing a case on the grounds that  the attorney-client privilege precludes an attorney from presenting an adequate defense, the trial court must first conduct an evidentiary hearing to determine whether it is able to effectively use ad hoc measures from its equitable arsenal, including techniques such as sealing and protective orders, limited admissibility of evidence, orders restricting the use of testimony in successive proceedings, and, where appropriate, in camera proceedings, to permit the action to proceed.

Conspiracies are typically proved by circumstantial evidence. Section 1714.10 was intended to weed out frivolous attorney-client conspiracy claims, not to bar them all. If the attorney-client privilege barred the action, it would similarly bar all attorney-client conspiracy claims. 

The Dissent

The dissent asserted that the majority misinterpreted Supreme Court precedent.  A valid conspiracy claim alleges the attorney-defendants act “in furtherance of their own financial gain” (other than the earning of attorney fees), or violate their own duty to the plaintiff.  By contrast, there is no conspiracy liability against a participant in the agreement underlying the injury who is not personally bound by the duty, and is acting only as an agent or employee of the party who does have a duty.

For example, the statutory duty to fairly settle an insurance claim belongs only to the insurer.  The acts of a doctor and an attorney to allegedly provide a false basis to reject the claim are actionable only against the insurance company.  Similarly, the judgment in the first case imposed a duty only on the Goodfriends, not their counsel. 

The majority imposed a duty on the attorneys not to engage in affirmative misconduct that would interfere with the remediation of the contaminated debris.  The dissent disagreed that acts that go beyond the “normal” services of an attorney expose the attorney to liability.  The Court of Appeal opinion that established that standard failed to articulate or apply the Supreme Court rule that conspiracy is limited to acts in furtherance of an attorney’s personal financial gain or violation of an independent duty.   Even the allegation concerning trust fund disbursements was not actionable, because the duty to pay for the remediation belonged to Goodfriend. 

The dissent also disagreed with the analysis of the litigation privilege.  The majority distinguished between post-judgment enforcement activities and post-judgment obstruction activities.  However 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. 

The dissent chastised the majority for relying on facts when the case was in the pleading stage.  Further, liberal construction of the pleadings is inappropriate in a case involving claims of attorney-client conspiracy. Civil Code § 1714.10 reflects a legislative judgment that such claims are disfavored, given the potential for abuse and disruption of attorney-client relationships. A more demanding standard, such as that applied to fraud claims, should apply. 

Even applying a liberal standard, the complaint was questionable because the facts alleged could be interpreted multiple ways and the evidence attached was incomplete. 

Comment:  Petitions for rehearing and review by the California Supreme Court were both denied and, as a result, this opinion will likely be the subject of much trial court scrutiny as opposing parties seek to involve counsel in disputes.  Years of careful jurisprudence that protect attorney conduct to preserve the duties of zealous advocacy, loyalty, and confidentiality are impacted by this decision.  Especially troubling is imposing liability on attorneys for a client’s completely independent act if the conspiracy can be established. 

Practice Area: Lawyers & Judges Defense Group
Attorney: Jennifer A. Becker

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