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Posts Tagged ‘State Farm’

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].

Murphy’s Law and The Exception to Georgia’s Impact Rule

Posted on: September 17th, 2018

By: Jason Kamp

Claims for negligent infliction of emotional distress are limited by the Impact Rule in Georgia.  In a recent attempt to keep the sole exception from swallowing the Impact Rule, the Supreme Court of Georgia may have done exactly what it sought to prevent.

The Impact Rule states: “In a claim concerning negligent conduct, a recovery for emotional distress is allowed only where there is some impact on the plaintiff, and that impact must be a physical injury.”  Lee v. State Farm Mut. Ins. Co. et al., 272 Ga. 583, 584 (2000).

The Impact Rule has one exception for the death of a child:

When, as here, a parent and child sustain a direct physical impact and physical injuries through the negligence of another, and the child dies as the result of such negligence, the parent may attempt to recover for serious emotional distress from witnessing the child’s suffering and death without regard to whether the emotional trauma arises out of the physical injury to the parent.

Lee v. State Farm Mut. Ins. Co. et al., 272 Ga. 583, 588 (2000).

The Supreme Court of Georgia recently decided a case concerning the exception to the Impact Rule for the death of a child.  In Coon v. Med. Ctr., Inc., the plaintiff learned during a routine prenatal examination that her unborn baby no longer had a heartbeat. Coon v. Med. Ctr., Inc., 300 Ga. 722, 723 (2017). After labor was induced, the plaintiff’s stillborn child was mixed up with another stillborn at the hospital.  Id. at 724.  The hospital then released the wrong remains to the plaintiff and her family, who unknowingly held services and buried the wrong remains as a result.  Id.  The hospital later realized its mistake and informed the plaintiff.  Id. at 725.  A claim for negligent infliction of emotional harm under the exception followed.

The Supreme Court of Georgia declined to extend the exception, reasoning, “[the plaintiff] did not suffer any physical impact that resulted in physical injury from the hospital’s negligent mishandling of her stillborn child’s remains, nor did the child suffer any physical impact or injury.” Id. at 734-735.

By focusing on the impact element, the Supreme Court implicitly assumed the answer to a threshold question: whether an unborn child is a child capable of dying under the exception.  The court’s reasoning appears to open the exception to all tort cases with a physical impact that results in a failed pregnancy.  This could result in a growth in negligent infliction of emotional distress claims in bodily injury and medical malpractice cases.

Before Coon, the exception to the impact rule assumed the dead child had already been born.  After Coon, that assumption is either gone or open to question.  In its attempt to limit the exception, the Supreme Court of Georgia incidentally expanded it to include a debate on when life begins.  At the end of the Coon opinion, the court remarked, “If we do not insist on a workable limiting principle as a prerequisite to recognition of new exceptions to the physical impact rule, the exceptions will soon will soon swallow the rule.”  Id. at 735.  Unfortunately, Murphy’s Law knows no exceptions.

If you have any questions or would like more information, please contact Jason Kamp at [email protected].