Opinion
G030233.
11-4-2003
JANET SUE REISWIG, Plaintiff and Appellant, v. ESTHER VELMA FERENTZ et al., Defendants and Respondents.
Baker Law Group and John H. Baker for Plaintiff and Appellant. Jackson, DeMarco & Peckenpaugh, Veronica M. Gray and Jeanine A. Scalero for Defendants and Respondents.
Janet Reiswig appeals the judgment entered against her after the demurrer to her third amended complaint was sustained without leave to amend, contending four of the seven causes of action should survive. We find the causes of action are barred by the litigation privilege and there is no chance of a curative amendment. Accordingly, we affirm.
FACTS
Reiswig, an agent for College Life Insurance Company and a freelance paralegal, drafted an inter vivos revocable trust for an elderly couple, Judson and Esther Ferentz, in June 1997. The trust document provided that the Ferentzes would act as co-trustees until one of them died, and then Reiswig would succeed to the vacant co-trustee position. The Ferentzes also signed a separate contract agreeing to pay Reiswig "two percent (2%) of the gross value of our combined personal and trust estates as compensation for her personal time" when one of them died. The contract provided that Reiswig could continue to sell life insurance products to the Ferentzes and could earn commissions on those sales "free of any claim of conflict" from them.
Shortly after the execution of the trust, Reiswig sold an annuity contract to the Ferentzes, naming Judson Ferentz as the annuitant. Judson died two weeks later, and Reiswig took over as successor trustee and demanded that Esther turn over the trust assets to her. Within the next two months, Reiswig sold Esther Ferentz two more annuity contracts. The annuity date for all three contracts commenced in 2022 and continued through 2045.
In 1998, Esther Ferentz filed an action in the probate court against Reiswig, alleging breaches of fiduciary duty and seeking her removal as trustee. During the litigation, the probate court suspended Reiswig as trustee and appointed Del Schmidt as temporary trustee. In May 1999, judgment was entered against Reiswig, permanently removing her as trustee and requiring her to reimburse the trust for fees, commissions, and expenses. The court discharged Schmidt as temporary trustee in November 1999 and replaced him with Esther Ferentz and Janice Ortiz, Esthers daughter, as successor co-trustees.
Reiswig responded by filing two federal court actions alleging that the probate court proceedings violated her civil rights. Both cases were dismissed. On March 28, 2001, ten days after the second federal case was dismissed, Reiswig filed her initial complaint in this action, alleging breach of contract against Esther Ferentz and defamation based on Ferentzs communications with College Life Insurance Company.
On April 16, 2001, Ferentzs attorney wrote a letter on her behalf to Charles Schwab. The letter explained that Ferentz had received a trust account statement for March 2001, showing title in the name of "Janet Reiswig TTEE Judson & Esther Ferentz Trust B" with a balance of $10,030.51. The statement indicated the account was created sometime in 1998. Schwab had been served with the 1998 court order directing the transfer of all trust assets to Schmidt and had "cooperated in turning over access to Del Schmidt of [three existing accounts]. Moreover, Schwab apparently represented to Mr. Schmidt and his counsel that these accounts were the only Schwab accounts in the name of the Judson & Esther Ferentz Trust."
The letter continued, "It now appears that both Janet Reiswig and Schwab have violated the March 5, 1998 Court Order in a number of respects. Because of her familiarity with the accounts, Ms. Aguilar [Schwabs branch account representative] testified at the trial, and thus was well aware of the Court Orders suspending and removing Ms. Reiswig, and ordering that all accounts in the name of the Trust were to be turned over to Del Schmidt by March 5, 1998. . . . Neither Ms. Ferentz, Ms. Ortiz, Mr. Schmidt, Mr. Schmidts counsel, . . . nor we were ever informed of the existence of this account, which . . . should have been turned over to Mr. Schmidt. . . . The account is located in the same branch as the other Trust accounts . . . . Even though Ms. Aguilar, at that branch, was well aware of the Court Orders, and in fact stated to me today that she had `some familiarity with this account, neither she, nor anyone else at Schwab, ever informed the Court, or the Court-appointed Trustees, that this account existed, and that Janet Reiswig was spending and investing funds in this account."
The letter demanded that Schwab "freeze this account immediately," and transfer ownership of it to the current trustees. It continued, "Please also inform us of whether there are any other accounts held in the name of the [trust] and supply us with all account statements for all such other accounts."
Reiswig filed her first amended complaint in May 2001, adding causes of action based on the letter to Schwab. In response to successful demurrers, she amended her complaint twice more. The third amended complaint alleges that the Schwab account was frozen shortly after the letter was received, and Reiswig "was blocked from making any transfers to or from and[] visa access[] was denied." As a result, she suffered injury to her personal and professional reputation, became physically and emotionally ill, and lost her business and earning power. Based on the letter, Reiswig pleaded causes of action against Ferentz and Ortiz and their attorneys for conspiracy to commit fraud and theft, conspiracy to convert personal property, conspiracy to defame, and conspiracy to intentionally inflict emotional distress.[]
Ferentz demurred to the entire third amended complaint, specifically arguing that the fourth, fifth, sixth, and seventh causes of action were barred by the litigation privilege. The trial court rejected the litigation privilege as a basis for the demurrers to those causes of action but sustained the demurrers because "a conspiracy to perform an uncompleted civil wrong is generally not actionable . . . . [I]ts value is in raising the concept of vicarious liability in persons who perhaps contributed to a completed tort." Reiswig appeals only from the dismissal of the fourth, fifth, sixth, and seventh causes of action.
DISCUSSION
When reviewing a judgment dismissing an action after sustaining a demurrer, we assume the truth of all facts pleaded in the complaint and conduct an independent review of the grounds of the demurrer. `"The judgment must be affirmed "if any one of the several grounds of demurrer is well taken." However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any . . . legal theory. As always, questions of law are independently reviewed." (Walker v. Allstate Indem. Co. (2000) 77 Cal.App.4th 750, 754, internal citations omitted.)
We find the four causes of action under consideration are barred by the litigation privilege as a matter of law. The litigation privilege protects a communication made "[i]n any . . . judicial proceeding . . ." (Civ. Code, § 47, subd. (b)(2)) in order to further the policy of "unhindered access to the courts." (Rubin v. Green (1993) 4 Cal.4th 1187, 1194.) It provides absolute immunity for all torts except malicious prosecution and applies to a communication made outside the courtroom so long as it relates in some way to a judicial proceeding. (Ibid.; Drum v. Bleau, Fox & Associates (2003) 107 Cal.App.4th 1009, 1023-1024.)
Reiswig contends the Schwab letter should not be protected by the litigation privilege because it was a prelitigation communication that did not contemplate imminent litigation; rather, it was merely a coercive negotiating tactic. Reiswig relies on Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15 to support her contention.
In Edwards, homeowners complained to their builder of cracking in the concrete foundations of their homes. The builder inspected and proposed repairs to the homeowners, and offered to pay for the repairs in exchange for general releases. After the homeowners signed the releases, it was discovered that the foundation cracking was caused by fundamental design problems not addressed by the repair project. Five years after their initial complaints about the foundations, the homeowners filed an action against the builder for damages and rescission of the releases based on fraud. Seeking to exclude all evidence of the communications leading to the execution of the releases, the builder claimed they were inadmissible as prelitigation communications under the litigation privilege. The trial court agreed.
The appellate court reversed, finding "the mere potential or `bare possibility that judicial proceedings `might be instituted in the future is insufficient to invoke the litigation privilege. [Citation.] In every case, the privileged communication must have some relation to an imminent lawsuit or judicial proceeding which is actually contemplated seriously and in good faith to resolve a dispute, and not simply as a tactical ploy to negotiate a bargain. [Citations.]" (Edwards v. Centex Real Estate Corp., supra, 53 Cal.App.4th at p. 36.)
The circumstances surrounding the Schwab letter differ markedly from those in Edwards. There, the litigation occurred five years before the litigation was filed. Here, Reiswig and Ferentz had been engaged in a dispute over the trust accounts for three years, which was the subject of the Schwab letter. The dispute had already spawned three lawsuits when the letter was written, and there is no doubt Ferentz would have filed further litigation if Schwab had not resolved the problem.
A prelitigation communication need not specifically reference a contemplated lawsuit to fall within the privilege. In Knoell v. Petrovich (1999) 76 Cal.App.4th 164, an attorney sought to extinguish an easement deed across her clients property in favor of Knoell. The client claimed the deed might have been a forgery, and the attorney wrote a letter to Knoell demanding its extinguishment on that basis. Knoell refused, and the attorney then wrote to the city attorney asking it to investigate alternative access to Knoells lots. The letter stated: "[My client] takes the position that the easement was obtained by fraud and deception and has sent a rescission letter to Mr. Knoell. . . ." (Id. at p. 167.) The easement dispute was later settled, and Knoell sued the attorney for defamation.
The court found the complaint was barred by the litigation privilege. "Unlike Edwards, [the attorneys] communications were timely and directed to the easement dispute. The [first] letter was in contemplation of litigation and a condition precedent to an action for rescission. [Citation.] The . . . letter to the city attorney was also privileged and sent in anticipation of litigation. [Citation.]" (Id. at p. 171.)
Reiswig argues even if the Schwab letter was related to future litigation, the statements about her were incorrect and should not be protected by the privilege. She cites Nguyen v. Proton Technology Corp. (1999) 69 Cal.App.4th 140, 148 for the proposition that "the [litigation] privilege obviously cannot extend to anything that is written just because it is contained in a prelitigation demand letter . . . ."
Nguyen involved a prelitigation demand letter written by the attorney for Proton, a circuit board manufacturer, to a competitor that had allegedly been raiding its employees and customers. The letter accused Nguyen, one of Protons former employees who had left to work for the competitor, of wrongfully soliciting customers to induce them to switch their business. The letter continued, "We think you should be aware that [Nguyen] was working for Proton under a work furlough program sponsored by the Santa Clara County Probation Department. [Nguyen] was in prison for repeatedly and violently assaulting his wife . . . ." (Nguyen v. Proton Technology Corp., supra, 69 Cal.App.4th at pp. 143-144.) Subsequently, Protons attorney received a report on Nguyens criminal record and discovered he had been mistaken about the crimes for which he had been convicted. He wrote another letter to the competitor, stating, "`Although it is true that . . . Nguyen was in the county jail when he was released to work at Proton . . . under a work furlough program . . ., [his] convinction was for shooting a gun at an unoccupied motor vehicle and vandalism. . . . Nguyen pled guilty to these felonies . . . . If you have any questions, or wish to see the record of the conviction, please feel free to contact me." (Id. at p. 145.)
The court held the reference to Nguyens criminal record fell outside the protection of the litigation privilege. Characterizing the letter as "`vindictive," the court found "any `connection between such a conviction and the civil unfair competition focus of [the] demand letter is, to be charitable about it, tenuous." (Nguyen v. Proton Technology Corp., supra, 69 Cal.App.4th at pp. 152, 151.)
Unlike Nguyen, the Schwab letter did not engage in irrelevant mudslinging at Reiswig. Rather, the letter was focused on the subject of the parties ongoing litigation, and the accusations, although ultimately proved incorrect, arose out of a statement in apparent violation of a court order. Because the letter was a communication with "`some relation to an anticipated lawsuit," it is protected by the litigation privilege. (Rubin v. Green, supra, 4 Cal.4th at p. 1194, italics in original.)
DISPOSITION
The judgment of dismissal is affirmed. Respondent is entitled to costs on appeal.
WE CONCUR: RYLAARSDAM, J. and OLEARY, J. --------------- Notes: Reiswig informs us in her brief that Schwabs investigation later revealed she was the legitimate owner of the account; it then released the funds to her.