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Posts Tagged ‘anti-SLAPP’

Insurer Side Beware: Litigation Privilege for Pre-Suit Communications Extends Only To The Party Contemplating Filing Of Litigation

Posted on: January 14th, 2019

By: Tim Kenna & Kristin Ingulsrud

Strawn v. Morris, Polich & Purdy—filed Jan. 4, 2019, Court of Appeal of California, First District, Division Two 2019 Cal.App. LEXIS 9*—makes explicit that the application of the litigation privilege to pre-suit claims communications where the policyholder disputes its contemplation of litigation only applies to policy side interests if the insurer is contemplating litigation in good faith.

The litigation privilege makes inadmissible any communication made in judicial or quasi-judicial proceedings. California Civil Code § 47(b)(2). This privilege extends to pre-litigation statements relating to litigation contemplated in good faith and under serious consideration. Action Apartment Assn., Inc v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.

In Strawn, the insureds brought a cause of action for invasion of privacy against State Farm’s counsel based on the alleged wrongful transmittal of the insureds’ tax returns to State Farm in connection with a coverage investigation involving potential arson. The MPP argued that the transmittal was protected by the litigation privilege because it was in anticipation of the civil action the insureds “would surely and did in fact” file. The trial court agreed and sustained the demurrer based on the litigation privilege.

The California Court of Appeal reversed. In order for the insurer to apply the privilege to its own communications, the Court held, the insurer would need to establish that it was contemplating litigation in good faith when it received the tax returns.

There have been cases in which the courts have held that routine claims communications relate to the business of insurance and are not protected speech. See, e.g. People ex. Rel. Fire Insurance Exchange v. Anapol (2012) 211 Cal.App.4th 809. Other cases have attempted to discern whether the communications themselves establish a good faith consideration of litigation. Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903.  Strawn seems to go one step further in requiring the movant to establish that IT was contemplating the filing of litigation in good faith. Strawn appears to hold that at least in a case of disputed intent of the policyholder, the insurer side’s good faith subjective or objectively reasonable belief that the policyholder was contemplating litigation is irrelevant. Thus, where claimants’ counsel threatens suit, there was no protection to the insurer side no matter how unlikely settlement.

Strawn’s effects may be felt by litigants who attempt to utilize the litigation privilege in furtherance of dispositive pre-trial motions, including anti-SLAPP and motions for summary judgment.  First, Strawn emphasizes that good faith is a question of fact that must be determined before the litigation privilege can apply. Second, it severely limits the application of the litigation privilege in favor of any party who is responding to a perceived threat of litigation, even if that perceived threat is objectively reasonable.

If you have any questions or would like more information, please contact Tim Kenna at [email protected] or Kristin Ingulsrud at [email protected].

Facebook And Association Criticism: How To Address Unfounded Allegations Against An Association And Its Board

Posted on: October 12th, 2018

By: Jonathan Romvary

How far can a Board go in fighting against what they believe is unfair homeowner criticism? Can they publish a formal response to unfounded allegations? How should Associations address online criticism on unofficial Facebook groups created by dissatisfied homeowners?

These issues were partially addressed in a recent unpublished California Appeals Court decision in Kulick v. Leisure Village Association (2018). Kulick involved two consecutive lawsuits between a homeowner who was anonymously publishing an unofficial newsletter that was highly critical of his Homeowner’s Association, the Association’s Board and its attorneys. Unfortunately for the homeowner, the HOAs rules specifically prohibited the dissemination of anonymous publications to the Association’s members and the Association successfully filed suit against the homeowner for breaching the Association’s covenants, conditions and restrictions (CC&Rs) and was awarded more than $125,000.00 including punitive damages.

After losing his appeal, and apparently not learning from the prior lawsuit, the homeowner began republishing his anonymous newsletter criticizing the Association’s Board, this time asserting that the Board and its officers committed perjury, extortion, obstruction of justice, racketeering, and lying and cheating. The Association’s attorneys responded to the most recent allegations by distributing an official letter to all of the homeowners addressing the allegations as a “reckless communication” containing “unfounded, inaccurate, and spiteful allegations” against the Association and detailing the prior lawsuit against the homeowner. Feeling attacked by the HOA, the homeowner filed a lawsuit against the Association for, among other things, defamation. The HOA defended itself saying its actions were protected under California’s anti-SLAPP laws which are designed to protect defendants who have been sued for acts in furtherance of a constitutionally protected right of free speech or petition. The trial court agreed, finding that the Association’s letter constituted “protected activity” as a public writing relating to an issue of public interest to the Association’s homeowners’, i.e. the lawsuit between the Association and homeowner. Ultimately the California Appellate Court upheld the trial court’s ruling.

From Kulick, it is clear that Associations may respond to individual criticisms that are not legally permissible (e.g. false assertions of fact, etc.) and have certain rights against defamation published by its members. However, it remains unclear to what extent Associations can restrict alternative forms of publications, such as Facebook community groups or anonymous Twitter accounts. In the age of Facebook, where publishing and distribution is free and easy, Associations must remain vigilant. False accusations and anonymous publications can cause significant disruption to the operation and reputation of an Association. Associations should be alert for publications containing false assertions or publications that purport to be official communication and should address any statements that defame the association, its board of directors, managing agent, or employees.

If you have any questions on how your Association can be proactive and protect itself against unofficial homeowner publications or would like more information, please contact Jonathan Romvary at [email protected].