Metropolitan News-Enterprise


Thursday, January 10, 2019


Page 1


No Vicarious Liability for Controller’s Office In Action for Abuse of Process—C.A.


By a MetNews Staff Writer


The First District Court of Appeal has granted state Controller Betty T. Yee’s petition for a writ of mandate ordering the trial court to accept her office’s defense of immunity in an action for abuse of process claim because her office’s employees could not be individually liable for the alleged abuse.

The opinion, filed Tuesday but not made public until yesterday, was written by Presiding Justice J. Anthony Kline of Div. Two.

The discussion centered on the exception to governmental immunity set forth in Government Code §815.2(a), which provides:

“A public entity is liable for injury proximately caused by an act or omission of an employee of the public entity within the scope of his employment if the act or omission would, apart from this section, have given rise to a cause of action against that employee or his personal representative.”

Underlying Cause

The plaintiff in the abuse-of-process action is Thrivent Financial for Lutherans, an out-of-state insurance company that was one target of the Controller’s Office multistate investigation into insurance practices involving unclaimed property subject to escheatment to the state.

In response, Thrivent sued for injunctive and declaratory relief to prevent the audit and asked for a preliminary injunction, which the trial court denied. Yee cross-complained, seeking an injunction to enforce the audit.

In the course of litigation, the parties agreed to a protective order for discovery responses, with Yee’s counsel promising that documents produced by Thrivent would only be used in the present case and not for any other purpose.

Nonetheless, Yee’s lawyers gave the documents to an outside auditor who determined that the company’s business in California concerning escheatable properties was so negligible as to warrant no further action. The Controller’s Office abandoned the audit.

Present Lawsuit

The insurer then sued Yee for abuse of process. According to the plaintiff, Controller’s Office employees used the discovery in the underlying case in order to conduct the audit, which damaged it by forcing it to expend time and money responding to the office’s “unlawful and contumacious conduct” and invaded its privacy.

San Francisco Superior Court Judge Harold E. Kahn overruled Yee’s demurrer, finding that it was adequately alleged that she had violated court orders by using the discovery responses for the audit, and that “there is no discretion to violate a court order.”

He later denied her claim of immunity under the Government Tort Claims Act, set forth in a motion for judgment on the pleadings. He said that if Controller’s Office employees misused documents, there was no impediment to imposing “abuse of process liability on them personally” and on the office, “vicariously.”

Kline accepted Yee’s argument that the California Supreme Court’s 2008 opinion in Miklosy v. Regents of University of California, although based on a wrongful termination claim, was applicable. There, the high court decided that a public entity cannot be vicariously liable for that tort because only the entity itself has the power to fire someone; its individual employees cannot be personally liable for a wrongful termination.

He said:

“Despite the fact that Miklosy concerned a tort uniquely premised on a particular relationship between the public entity tortfeasor and plaintiff, to the extent conducting the audit is an integral part of the allegedly tortious act, the situation here is analogous to that in Miklosy in that it involves a tort alleged to have been committed by conduct that can be undertaken only by the public entity and not any individual in his or her own right….

“The phrasing of the complaint makes it clear that the audit is, in fact, an integral part of the alleged abuse of process.”

Because only the Controller’s Office has the power to audit an insurer, Kline reasoned, the employees could never be individually liable such that vicarious liability could attach to Yee.

The case is Yee v. Superior Court, 2019 S.O.S. 169.


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