Monday, July 20, 2020
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Court of Appeal:
Insurer’s Action for Indemnity Against Law Firm Not a SLAPP
By a MetNews Staff Writer
Div. Five of the Court of Appeal for this district has declared that in light of decisional law barring an anti-SLAPP motion in legal malpractice actions, a special motion to strike should likewise be precluded where a third party sues a law firm for indemnity and contribution for a harm stemming from the firm’s negligence in representing its clients.
That holding that drew a dissent from Presiding Justice Dennis Perluss. His dissent came in Aetna Inc. v. Whatley Kallas, LLP, B292572, an unpublished opinion filed Thursday.
In it, Perluss stuck to his view, which he expressed in a dissent to Div. Five’s 2015 decision in Sprengel v. Zbylut, that attorney malpractice actions are not outside the ambit of the anti-SLAPP statute, Code of Civil Procedure §425.16. In any event, he asserted in his latest expression, there’s no justification for extending such a bar to actions against lawyers by parties that had not been their clients.
Justice John Segal wrote the majority opinion in Aetna, in which Justice Gail Ruderman Feuer joined. Segal declared that “[a]ttorney malpractice is not protected activity under section 425.16,” no matter who is suing.
Underlying Facts
Segal’s opinion reverses an Aug. 30, 2018 order by then-Los Angeles Superior Court Judge Richard E. Rico (now a private judge) granting an anti-SLAPP motion by two law firms, Whatley Kallas and Consumer Watchdog.
Those firms had filed putative class actions against the insurance company Aetna, Inc. in federal courts challenging its policy of requiring insured who were HIV positive to obtain prescription medicines by mail order, rather than at a pharmacy. The theory was that family member or others would see the packaging and learn of the person’s condition, and that this breached state and federal privacy laws.
A settlement was reached under which Aetna was to advise affected insured of their options in filling prescriptions. A settlement administration firm sent out notices, but used envelopes with see-through windows, rendering visible the words “HIV medications” next to the recipient’s name.
The insureds sued Aetna, resulting in a $17 million settlement by it. Aetna then sued Whatley Kallas and Consumer Watchdog in Los Angeles Superior Court for implied indemnity, equitable indemnity, contribution, and declaratory relief.
It was in that action that RICO granted a special motion to strike, saying:
“The Defendants’ actions clearly arose out of their involvement in representing their clients in the settlement and this current lawsuit for indemnity is a way of punishing the lawyers directly and the original plaintiffs indirectly for the underlying lawsuit.”
Wording of Statute
Segal discerned that the gravaman of Aetna’s action against the law firms was that they committed malpractice for their part in not assuring that the privacy rights of class members were not violated by the settlement administrator. Liability, he said, was foreclosed by Div. Seven’s decision in Sprengel and other numerous cases.
The majority opinion in Sprengel, authored by Justice Laurie Zelon—and in which Segal joined—said that “malpractice claims that challenge the competency of an attorney’s legal services are not subject to section 425.16.”
Sec. 425.16 says that an anti-SLAPP motion may lie where a person is sued over having exercised a “right of petition,” and cases have interpreted that right as encompasses the filing of litigation.
In Sprengel, Zelon quoted the Fourth District’s Div. Three as explaining in its 2006 decision in Kolar v. Donahue, McIntosh & Hammerton that a plaintiff in a legal malpractice action “is not suing because the attorney petitioned on his or her behalf, but because the attorney did not competently represent the client’s interests while doing so.”
Segal observed in Thursday’s opinion that the view expressed by the majority in Sprengel was in conformity with “a long line of cases” to the same effect.
‘Public’ Not Implicated
“SLAPP” is an acronym for “strategic lawsuits against public participation.” Segal wrote:
“When lawyers make a mistake like the one Aetna claims the lawyers made here, they are not doing or participating in anything public. If the mistake is below the standard of care, the lawyers are simply committing malpractice….
“Our dissenting colleague, based on an argument Whatley Kallas and Consumer Watchdog do not make, would overturn nearly two decades of case law under section 425.16, including precedent in this division.”
He cited nine Court of Appeal decisions, including Sprengel, and commented:
“Neither the Legislature nor the Supreme Court has taken any action to disapprove any of these cases, and no one in this litigation contends any or all of them were wrongly decided.”
Recognizing that the action against the law firms was not brought by a former client, Segal reasoned:
“Where, as here, the alleged indemnitee (Aetna) contends an attorney (the indemnitor) is at fault because his or her professional negligence caused injuries to the attorney’s clients, the indemnity cause of action arises from the attorney’s professional negligence—just as if the attorney’s clients had filed a legal malpractice cause of action directly against the attorney. Therefore, the indemnity cause of action does not arise from the attorney’s protected petitioning activity.”
In his dissent, Perluss said:
“An honest appraisal of Sprengel and similar cases demands acknowledgement that they are policy-based decisions to exclude most legal malpractice cases from section 425.16….While I believe it is properly the role of the Legislature to restrict the scope of section 425.16 where desirable…, that view has not prevailed in this context. If we continue to accept this court-created exception to section 425.16, at the very least it should be confined to those situations in which the policies that underlie it exist: lawsuits by former clients against their attorneys for litigation-related breaches of professional duties—that is, instances where the potential for a future lawsuit between the parties does not threaten a lawyer’s zealous advocacy on behalf of his or her client.”
He went on to say:
“To expand the malpractice exception to include claims against lawyers by their adversaries not only violates the plain meaning of section 425.16 but also runs afoul of the compelling public policy generally disallowing nonclient lawsuits against lawyers other than for malicious prosecution or abuse of process. As the courts of appeal in those cases have explained, such nonclient actions create conflicting motivations for an attorney, threatening the attorney’s duty of loyalty to the client.”
Attorneys on appeal were Matthew P. Kanny and Benjamin G. Shatz of Manatt, Phelps & Phillips for Aetna; Jeffrey N. Brown, Kacey R. Riccomini and J. David Duffy of Thompson Coburn for Whatley Kallas, LLP; and Fredric D. Woocher, Michael J. Strumwasser and Caroline Chiappetti of Strumwasser & Woocher for Consumer Watchdog.
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