Opinion
B229491
02-16-2012
GUILLERMO RODRIGUEZ et al., Plaintiffs and Appellants, v. UNITED NATIONAL INSURANCE COMPANY, Defendant and Respondent.
BASTA, Inc., Daniel J. Bramzon and R. Paul Katrinak for Plaintiffs and Appellants. Berman, Berman & Berman and Howard Smith for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC430004)
APPEAL from an order of the Superior Court of Los Angeles County, Rex Heeseman, Judge. Affirmed.
BASTA, Inc., Daniel J. Bramzon and R. Paul Katrinak for Plaintiffs and Appellants.
Berman, Berman & Berman and Howard Smith for Defendant and Respondent.
This is an appeal from an order granting respondent's special motion to strike the first amended complaint pursuant to the anti-SLAPP statute. (Code Civ. Proc., § 425.16.) Appellants contend the motion was untimely and that the trial court erred in finding the causes of action alleged arise from protected speech or petitioning activity because the action is, in essence, a simple breach of contract action. They also contend the court erred in finding appellants had failed to demonstrate a probability of prevailing because the communications at issue are protected by the litigation and mediation privileges (Civ. Code, § 47, subd. (b); Evid. Code, § 1115 et seq.) We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying actions
Appellants Guillermo Rodriguez and Benedicta Aragon lived at 229 W. 25th Street in Los Angeles, California (25th Street property). In March 2007 appellants sued their landlord, David Behrend and several entities he controlled, including "Savvy Property Management, LLC" (collectively, the Behrend entities), for claims involving breach of the warranty of habitability, in an action entitled Enciso et al. v. Savvy Property Management, LLC (LASC Case No. BC367152) (Enciso action). The Enciso action was certified as a class action in early 2009. In July 2009, appellants filed another class action, entitled Aragon et al. v. Savvy Property Management, LLC, et al. (LACS Case No. BC418735) (Aragon action) regarding habitability of the same 25th Street property. Appellants were represented in the Enciso and Aragon actions, as they are here, by attorneys from the law firm, BASTA, Inc. (BASTA).
Behrend was insured under a commercial liability and property policy (the policy) issued by respondent United National Insurance Company (UNIC) for a separate property located on Normandie Avenue in Los Angeles. On March 23, 2007, Behrend requested and UNIC issued an endorsement to the policy, adding liability coverage for the 25th Street property. At the time it issued the policy endorsement for the 25th Street property, UNIC was not aware the Behrend entities were already defendants in the pending Enciso litigation. UNIC agreed to defend the Behrend entities in the Enciso action, subject to a complete reservation of rights.
In October 2008, the Behrend entities sued UNIC for bad faith, based on UNIC's reservation of rights, in an action entitled Savvy Property Management, LLC, et. al. v. United National Insurance Company (LASC Case No. BC400496) (bad faith action). UNIC was represented in the bad faith action by the law firm of Nixon Peabody and one of its partners, Gregory Schopf. Neither Nixon Peabody nor Schopf represented any party in, nor were they parties to, the Enciso or Aragon actions.
On August 31, 2009, UNIC filed a motion for summary judgment against the Behrend entities in the bad faith action. That motion sought a declaration that UNIC had no duty to defend the Behrend entities because Behrend was aware of—but failed to disclose—the Enciso action at the time he obtained the policy endorsement from UNIC.
Settlement discussions
On September 17, 2009, UNIC, represented by Nixon Peabody and Schopf, participated in a mediation related to the Enciso and Aragon actions, as did BASTA, on behalf of appellants, and representatives of the Behrend entities. No settlement agreement was reached at the mediation. Between September 17 and November 17, 2009, Schopf participated in numerous e-mail exchanges while the parties continued discussing resolution of the Enciso and Aragon actions. The mediator was a party to or copied on all those communications.
On December 14, 2009, the trial court granted UNIC's summary judgment motion in the bad faith action. The court found the policy endorsement void due to Behrend's misrepresentation and concealment, and found that UNIC had no duty to defend or indemnify the Behrend entities in the Enciso and Aragon actions for claims regarding the 25th Street property.
The action against Nixon Peabody, Schopf and UNIC
On January 19, 2010, appellants filed the complaint in the instant action pleading, among others, causes of action for breach of contract, fraud and negligent misrepresentation against UNIC, Nixon Peabody and Schopf. These claims were predicated on representations Schopf was alleged to have made in the course of and subsequent to the mediation in the Enciso and Aragon actions regarding UNIC's intention and desire to settle with appellants.
Nixon Peabody's and Schopf's anti-SLAPP motion
On February 25, 2010, Nixon Peabody and Schopf filed a Special Motion to Strike (an anti-SLAPP motion) in this action. (Code Civ. Proc., § 425.16.) They argued the complaint was subject to the anti-SLAPP statute, because their representation of UNIC in settlement discussions during the Enciso and Aragon litigation was constitutionally protected petitioning activity conducted in association with that representation. Nixon Peabody and Schopf also argued appellants could not demonstrate a probability that they could prevail, because the litigation and mediation privileges precluded liability based on any mediation-related communications or litigation-related conduct, both of which formed the bases of the allegations of the complaint. In opposition, appellants argued the anti-SLAPP statute did not apply because this was an action for breach of a binding settlement agreement.
UNIC'S Demurrer, Motion to Strike and the First Amended Complaint
On March 3, 2010, UNIC filed a demurrer arguing that the complaint was barred by res judicata, based upon the dismissals with prejudice in the Aragon and Enciso actions. UNIC also argued that appellants' claims were based on UNIC's counsel's settlement negotiations which were absolutely privileged under Civil Code Section 47, subdivision (b). UNIC also filed a motion to strike in which it argued appellants had failed properly to plead claims for punitive damages or for recovery of attorney fees. UNIC's demurrer was sustained with leave to amend in mid-May 2010, at which time the motion to strike was deemed moot.
In mid-May 2010, the court granted Schopf's and Nixon Peabody's anti-SLAPP motion. No appeal was taken from that ruling.
On June 15, 2010, appellants served the operative First Amended Complaint (FAC).
UNIC'S anti-SLAPP motion
On July 15, 2010, UNIC filed an anti-SLAPP motion against the FAC arguing it could not be held liable for representations regarding settlement made by its counsel during the Enciso and Aragon litigation because its attorneys' conduct had been deemed protected petitioning activity under the anti-SLAPP statute. UNIC also argued its counsels' representations during settlement discussions in those actions was petitioning activity directly associated with their legal representation of UNIC. Thus, appellants could not demonstrate a probability that they could prevail, because of the absolute protections of the litigation privilege (Civ. Code, § 47, subd. (b)), and the mediation privilege (Evid. Code, § 1115 et seq.) The trial court granted UNIC's anti-SLAPP motion. This appeal followed.
DISCUSSION
Appellants contend the trial court erred when it granted UNIC's anti-SLAPP motion because the motion was untimely. They also argue the anti-SLAPP statute does not apply in this action because they seek to hold UNIC liable for breach of a settlement agreement, not for the exercise of free speech or petitioning activities. Neither contention has merit.
1. UNIC's anti-SLAPP motion was timely
By statute, an anti-SLAPP motion "may be filed within 60 days of the service of the complaint or, in the court's discretion, at any later time upon terms it deems proper." (Code Civ. Proc., § 425.16, subd. (f).) Appellants contend UNIC's anti-SLAPP motion was untimely because it was not filed within 60 days of February 3, 2010, the date on which it was served with the initial complaint in this action.
Appellants invite us to read the statute to limit the 60-day filing period to service of the initial complaint. We decline to do so. "Because the Legislature has specified that the anti-SLAPP suit law [citation] is to be construed broadly, the provision in the law that a special motion to strike 'may be filed within 60 days of service of the complaint' [citation] includes amended as well as original complaints." (Lam v. Ngo (2001) 91 Cal.App.4th 832, 835.)
Appellants served the FAC on UNIC on June 15, 2010. Thirty days later, UNIC served and filed its anti-SLAPP motion. Service of an amended complaint "reopens" the 60-day time period within which to file an anti-SLAPP motion. (Lam v. Ngo (2001) 91 Cal.App.4th 832, 840-841.) Indeed, in Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, the court found an anti-SLAPP motion timely, even though it was filed over three years after the action was commenced, because it was filed within 60 days of service of a third amended complaint. (Id. at pp. 313-314.) In a recent pronouncement on this issue another court also held that filing of an anti-SLAPP motion more than 60 days after service of the original complaint but within 60 days of service of an amended complaint was timely so long as the amendments were substantive. (Country Side Villas Homeowners Assn. v. Ivie (2011) 193 Cal.App.4th 1110, 1115-1116.) UNIC's anti-SLAPP motion was timely filed within the renewed 60-day period triggered by service of appellants' substantively amended FAC.
2. The standard of review
A court confronted with a defendant's special motion to strike engages in a two-step process. "First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity." (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).) In making its determination, the court considers "'the pleadings and supporting and opposing affidavits stating the facts upon which the liability or defense is based.'" (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. (Ibid.) To make this showing, "'"the plaintiffs 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.' [Citations.]" [Citation.]'" (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1477 (Feldman).) The "'plaintiffs' burden as to the second prong of the anti-SLAPP test is akin to that of a party opposing a motion for summary judgment.' [Citation.] If the plaintiff fails to carry that burden, the cause of action is 'subject to be stricken under the statute.'" (Id. at p. 1478.) The defendant bears the burden on the threshold issue; the plaintiff has the burden at the second step. (Code Civ. Proc., § 425.16, subd. (b)(1); Equilon, at p. 67.) "Only a cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under the statute." (Navellier, supra, 29 Cal.4th at p. 89.)
We independently review a trial court's ruling granting or denying an anti-SLAPP motion. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.) Like the trial court, we consider "the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." (Code Civ. Proc., § 425.16, subd. (b)(2).) We do not "weigh credibility [nor] compare the weight of the evidence. Rather, . . . [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law. [Citations.]" (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212 (HMS Capital); Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1394, fn. 6 (Vergos) ["In ruling on an anti-SLAPP motion, the trial court considers only evidence that would be admissible at trial"].)
Upon analysis of the pleadings and supporting evidence here, we conclude that the trial court properly granted UNIC's special motion to strike the FAC.
3. Arising out of protected activity
Appellants maintain the anti-SLAPP motion should have been denied because they do not seek to hold UNIC liable for exercising the right of free speech or for any petitioning activities but only for breach of a settlement agreement.
In determining whether UNIC satisfied its burden under the first prong of the analysis, "the critical consideration is whether the cause of action is based on the defendant's protected free speech or petitioning activity." (Navellier, supra, 29 Cal.4th at p. 89.) The focus of the anti-SLAPP statute is not the form of the plaintiff's cause of action, but on the activity in which the defendant engaged that gives rise to its asserted liability—and whether that activity constitutes protected speech or petitioning. (Id. at p. 92.) Under section 425.16, an "'act in furtherance of a person's right of petition or free speech under the United States or California Constitution,'" includes statements or writings before a "judicial proceeding, or any other official proceeding authorized by law" and statements or writings "made in connection with an issue under consideration or review by . . . a judicial body." (Code Civ. Proc., § 425.16, subd. (e); Rohde v. Wolf (2007) 154 Cal.App.4th 28, 35.) "[S]tatements, writings, and pleadings in connection with civil litigation are covered by the anti-SLAPP statute, and that statute does not require any showing that the litigated matter concerns a matter of public interest. [Citations.]" (Rohade, at p. 35.) A defendant bringing an anti-SLAPP motion need not prove plaintiff's suit was intended to or that it actually did chill defendant's speech. (Flatley v. Mauro (2006) 39 Cal.4th 299, 312.)
Appellants argue that the underlying action falls outside the reach of the anti-SLAPP statute because "the activity at issue is an action to enforce a settlement agreement." They point to Applied Business Software, Inc. v. Pacific Mortgage Exchange, Inc. (2008) 164 Cal.App.4th 1108 (Applied Business), and Delois v. Barrett Block Partners (2009) 177 Cal.App.4th 940 (Delois), to support their contention that the FAC is not subject to the anti-SLAPP statute. Neither case assists appellants.
First, unlike both Applied Business and Delois, appellants and UNIC have no executed written settlement agreement. The evidentiary record reflects that, notwithstanding months of back and forth between Schopf and BASTA, as of December 17, 2009, "there was no final settlement agreement" between UNIC and appellants.
Applied Business involved an executed settlement agreement breached after litigation was terminated. The parties entered into a written agreement to settle pending federal copyright litigation and that litigation was dismissed. That agreement provided that the defendant licensee would within a time certain cease using the plaintiff licensor's software, and certify the software had been deleted from its computers and that it had returned all physical copies of the software to the plaintiff. (164 Cal.App.4th at pp. 1111-1112.) The licensor sued in state court after the defendant failed to comply with that agreement. (Id. at p. 1114.) The licensee filed an anti-SLAPP motion, arguing that the enforcement action was a ruse filed in retaliation for protected activity (its submission of a declaration on behalf of another company in an unrelated action). (Id. at pp. 1114-1115.) The trial court denied the motion. The appellate court affirmed, holding that the licensor's causes of action did not arise from protected activity under section 425.16, subdivision (b)(1). Although entering into the settlement agreement was a protected activity, the alleged breaching conduct in which the licensee engaged was not. The conduct on which the licensor's action was based was the defendant's failure to provide the required certification and its continued use of the software beyond the time established in the settlement agreement for cessation of use by the licensee. (Id. at pp. 1117-1118.) The court found that "[n]either of those alleged actions by defendant can reasonably be said to have been taken by defendant in furtherance of its right of petition or free speech . . . ." (Id. at p. 1117.) The licensor's suit alleged only that the licensee defendant breached a settlement agreement after the underlying litigation concluded. (Id. at p. 1118.) That garden variety contractual breach was "not protected activity because it cannot be said that the alleged breaching activity was undertaken by defendant in furtherance of [its] right of petition or free speech as those rights are defined in section 425.16." (Ibid.)
Delois involved a breach of contract claim based on a binding executed settlement agreement in a landlord-tenant dispute in which the anti-SLAPP statute was found inapplicable. The court found the anti-SLAPP statute inapplicable because "no litigation . . . ever commenced . . . [thus] a later suit alleging breach of that agreement and related tortious conduct [did] not constitute the sort of activity encompassed by the [anti-]SLAPP statute's first prong." (Delois, supra, 177 Cal.App.4th at pp. 948-949, italics omitted.)
Applied Business and Delois do not inform the result in the instant action which does not involve breach of an enforceable settlement agreement either postlitigation or in a case in which no litigation was never undertaken. Rather, the allegations of the complaint are premised on conduct aimed at settlement, but which did not result in an enforceable agreement, during active litigation by counsel representing UNIC's interests in the Enciso and Aragon actions. Feldman, on which appellants also rely, rejected claims virtually identical to those at issue here on the ground that contract and fraud claims which arose out of prior litigation were based on protected activities within the meaning of the anti-SLAPP statute. (Feldman, supra,160 Cal.App.4th at pp. 1483-1484.)
Complaints based on the litigation conduct of attorneys representing an opposing party in a legal action are, by definition, activity "in connection with an issue under consideration or review by a . . . judicial body." (Code Civ. Proc., § 425.16, subd. (e)(2).) It is settled law that, under the anti-SLAPP statute, "all communicative acts performed by attorneys as part of their representation of a client in a judicial proceeding or other petitioning context are per se protected as petitioning activity by the anti-SLAPP statute." (Cabral v. Martins (2009) 177 Cal.App.4th 471, 480.)
Several cases have applied the anti-SLAPP statute in the context of settlement negotiations and agreements. For example, in Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834 (Navarro), a franchisee negotiated a stipulated judgment with the franchisor (IHOP) in an unlawful detainer action. That judgment was entered against the franchisee after she failed to meet agreed upon deadlines. (Id. at pp. 837-838.) The franchisee filed a separate suit against IHOP, alleging causes of action for breach of contract and fraud. She claimed IHOP had falsely promised to consider outside offers to buy her franchise rights "'without undue delay'" but intentionally put off doing so to enable it to seek entry of the stipulated judgment. (Id. at p. 838.) The franchisee claimed IHOP obtained entry of the judgment "'through extrinsic fraud,'" never intended to review her proposed agreements to sell, and that IHOP's "true intention was to stall and thereby prevent plaintiff from exercising her right to present an alternative purchaser . . . ." (Id. at pp. 841-842.) The trial court denied IHOP's anti-SLAPP motion. (Id. at p. 838.) The appellate court reversed, recognizing that the franchisee's claims were squarely predicated on IHOP's "allegedly fraudulent statements within the context of negotiating the stipulated judgment." (Id. at p. 842.) Such litigation conduct "falls within the ambit of the anti-SLAPP statute" as petitioning activity. (Id. at p. 843.) Similarly, here, the FAC triggers the anti-SLAPP statute, because the contract and fraud claims are based on allegedly "fraudulent statements" made by UNIC's counsel in the context of settlement negotiations conducted in the course of pending litigation involving its insured.
Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400 (Dowling) is also instructive. In Dowling, the plaintiff sued the attorney who had represented his adversaries in three unlawful detainer actions, alleging causes of action for defamation and misrepresentation. (Id. at pp. 1408-1409.) The complaint alleged that the attorney "knowingly made false 'representations' and concealed . . . 'material facts'" during negotiations on behalf of her clients with regard to a stipulated settlement of the third unlawful detainer action. (Id. at p. 1418.) Affirming the trial court's ruling granting the attorney's anti-SLAPP motion the court of appeal held that all the alleged claims "arose from [the attorney's] acts of negotiating a stipulated settlement of a pending unlawful detainer action" and the writing and publishing of an allegedly defamatory letter, while acting in her capacity as counsel. (Id. at p. 1420.) Such conduct is protected petitioning activity under the anti-SLAPP statute. (Ibid.)
Finally, in GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, counsel for plaintiffs in securities litigation communicated a settlement offer to one individual defendant. The same attorneys represented all co-defendants. (Id. at pp. 905-906.) The defendants in the securities action sued the attorneys who had communicated the divisive settlement offer for intentional interference with contractual relations and negligence, alleging they had unethically tried "to raise a conflict of interest." (Id. at p. 906.) The appellate court affirmed a ruling granting the plaintiffs' attorneys' anti-SLAPP motion. It held that an attorney's communication with opposing counsel "directly implicates the right to petition and thus is subject to a special motion to strike." (Id. at p. 908.)
The offending conduct alleged in the FAC is no different in kind than in the cases discussed above. The FAC alleges "that UNIC would pay plaintiffs . . . $497,500 in return for plaintiffs . . . ceasing to pursue their claims in the Aragon and Enciso actions . . . . In reliance on defendants' promises, representations, assurances, and instructions, plaintiffs . . . abandoned the Aragon action [and] dismissed with prejudice . . . the Enciso action." The FAC also alleges that "defendants [have] failed and refused . . . to pay plaintiffs . . . as promised and agreed upon." UNIC's purported liability is based on alleged misrepresentations made by Nixon Peabody and Schopf in the course of settlement negotiations of pending litigation while acting on behalf of UNIC. In an earlier ruling (from which no appeal was taken) the trial court found that, at all pertinent points, Nixon Peabody and Schopf were engaged in protected activity and that appellants had "not shown a probability of prevailing on the claims" alleged against Schopf and Nixon Peabody. Appellants' allegations that UNIC's agents "fraudulently negotiated" a settlement agreement on UNIC's behalf are subject to the anti-SLAPP statute.
4. Probability of success on the merits
Once the party moving to strike meets its burden to show the complaint alleges acts arising from protected activity, the burden shifts to the plaintiffs to make a prima facie showing of facts which, if proven, would support a judgment in their favor. (Equilon, supra, 29 Cal.4th at p. 67.) To satisfy this burden, plaintiffs may not simply rely on the allegations in their pleading. They must provide the court with sufficient competent, admissible evidence to permit the court to determine whether there is a probability they will prevail on the claim. (Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613-614.) When assessing the probability that a plaintiff will prevail, a court looks to evidence that would be presented at trial, as it would when reviewing a summary judgment motion. (Ibid.; HMS Capital, supra, 118 Cal.App.4th at p. 212 ["In opposing an anti-SLAPP motion, the plaintiff cannot rely on the allegations of the complaint, but must produce evidence that would be admissible at trial"].)
a. No written contract
Appellants are unable to establish a probability of success on their complaint. The entire action rests on the premise that UNIC breached a final, binding settlement agreement. However, as the trial court correctly found, Appellants' own evidence shows that no enforceable written agreement existed between themselves and UNIC. On the contrary, in mid-December 2009, there still was "no final agreement on the settlement documents, no proposal of a date for signing of the documents, and no payment by UNIC." And, as discussed below, application of the litigation and mediation privileges prevent appellants from presenting evidence of communications that might confirm the existence of an enforceable oral settlement agreement.
b. Litigation privilege
Appellants also failed to meet their burden of demonstrating a probability of success on the FAC because the communications at issue are entitled to absolute protection under the litigation privilege. (Civ. Code, § 47, subd. (b) (§ 47).)
The litigation privilege provides that "[a] privileged publication or broadcast is one made . . . [i]n any . . . judicial proceeding . . . ." (§ 47, subd. (b).) "For well over a century, communications with 'some relation' to judicial proceedings have been absolutely immune from tort liability by the privilege . . . ." (Rubin v. Green (1993) 4 Cal. 4th 1187, 1193.) The litigation privilege applies to communications "(1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) Under California law, "the privilege [has] an expansive reach, [citation] and . . . is absolute, even if the result is inequitable." (Morales v. Cooperative of American Physicians (9th Cir. 1999) 180 F.3d 1060, 1062.) "[A]ny doubt as to whether the privilege applies is resolved in favor of applying it." (Ibid.)
Pointing to Haneline Pacific Properties, LLC v. May (2008) 167 Cal.App.4th 311 (Haneline) and Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54 (Shafer), appellants claim the litigation privilege is inapplicable here because UNIC was not a party to the underlying litigation, and no litigation against UNIC was contemplated until after December 17, 2009. Neither case assists appellants.
Haneline involved communications between counsel for co-owners of a commercial property attempting to negotiate a contract regarding a business matter (the potential sale of and best way to maximize the property's value). No litigation was pending or threatened at the time of the communications. (Haneline, supra, 167 Cal.App.4th at p. 315.) In a subsequent suit by one property owner for interference with contract and various torts, the trial court granted the defendant's anti-SLAPP motion. The appellate court reversed, concluding that the communications regarding the business dispute were not covered by the litigation privilege as their "overall tone" was "one of persuasion and a desire to cooperate to achieve mutual goals." (Id. at p. 319.) "[F]ar from contemplating or threatening litigation, Defelice [one owner's attorney], . . . sent a proposal to [the co-owner and its counsel] . . . , suggesting that DeFelice's firm jointly represent [both owners] with respect to terminating the lease and selling the property. Further communications [by DeFelice] delivered appraisals." (Id. at p. 320.) The court found that neither party construed the communications as threats of, or as having been made in anticipation of litigation. (Id. at p. 319.) Rather, "the tone and language were intended to encourage collaboration and agreement, not 'serious consideration' of litigation." (Id. at p. 320.)
Here, the communications between Nixon Peabody and appellants were made during the course of the vigorously contested Enciso and Aragon class actions. While appellants are correct that UNIC was technically not a party to either action, as Behrend's insurer, it did have a stake in and represent a party to those actions. As the provider of the defense for the Behrend entities in the underlying litigation, UNIC was an authorized party entitled to the full protection of the litigation privilege. (Doctors' Co. Ins. Services v. Superior Court (1990) 225 Cal.App.3d 1284, 1295; see also Home Insurance Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 24 (Zurich) ["Where the insurer provides a defense for a party, the realities of the insurer's role in litigation dictate that the insurer be treated as an authorized party for purposes of the litigation privilege"]; Seltzer v. Barnes (2010)182 Cal.App.4th 953, 970 (Seltzer).) Those "communications [bear] 'some relation' to judicial proceedings," and as such are "absolutely immune from tort liability by the [litigation] privilege." (Rubin, supra, 4 Cal. 4th at p. 1193.)
Appellants reliance on our decision in Shafer is also misplaced. In Shafer, homeowners sued a contractor for fraud and the contractor tendered its defense to its insurer. (Shafer, supra, 107 Cal.App.4th at p. 60.) The insurer issued a reservation of rights and disclaimed coverage for intentional acts and punitive damages. Later, it withdrew its reservation of rights and, in order to avoid having to pay for Cumis counsel, agreed to indemnify the contractor, even for willful conduct. (Id. at pp. 60-62.) The homeowners obtained a judgment for general and punitive damages against the contractor based on a finding the contractor willfully engaged in misconduct. (Id. at pp. 62-63.) As a result, the homeowners became judgment creditors with direct rights to sue the insurer. (Id. at pp. 64, 67-68; see Ins. Code, § 11580.) The homeowners demanded payment from the insurer, whose attorney told them intentional and willful acts were not covered under the contractor's policy, even though the attorney knew the insurer had agreed to indemnify such acts when it withdrew its reservation of rights. The insurer paid less than half of a $336,000 judgment. (Shafer, at pp. 64-66.)
The homeowners sued the insurer and its counsel for fraud after they discovered the insurer had in fact agreed to indemnify the contractor for intentional misconduct. (Shafer, supra, 107 Cal.App.4th at p. 66.) The trial court sustained the attorney's demurrer based on the litigation privilege. We reversed, holding that, as judgment creditors, the homeowners effectively "step[ped] into the shoes of the insured." (Id. at p. 81.) Accordingly, the insurer and its counsel owed a direct obligation to the homeowners. (Id. at pp. 76-79.) As third-party beneficiaries of the policy, the homeowners were entitled "to be treated as the insureds" under the policy." (Id. at p. 76.) The attorney's "misrepresentations were made to a party standing in the shoes of an insured . . . ." (Id. at p. 78.) As a result, the litigation privilege did not apply. (Id. at p. 81.)
We acknowledged in Shafer that our analysis of the litigation privilege was based upon the homeowners' unique status under Insurance Code section 11580. (Shafer, supra, 107 Cal.App.4th at p. 82, fn. 7.) Subsequent case law has agreed that that Shafer's discussion of application of litigation privilege is limited to cases in which application of the privilege would undermine the policies behind Insurance Code section 11580. (See Seltzer, supra, 182 Cal.App.4th at pp. 971-972.) Insurance Code section 11580 is not implicated here.
Here, in contrast to Shafer, there was no direct relationship of any kind or privity between Schopf, Nixon Peabody or UNIC and the plaintiff class or its counsel in the Enciso and Aragon actions. The plaintiffs in those actions had not reduced their claims against the Behrend entities to an enforceable judgment, were not third-party beneficiaries under Behrend's policy with UNIC, did not stand in the shoes of the insured under Insurance Code section 11580, and Nixon Peabody and Schopf did not provide coverage advice to the plaintiffs, but were conducting settlement negotiations with an opposing party in ongoing litigation.
Unlike Shafer, the absolute protections of the litigation privilege are implicated here. Appellants claim Schopf and Nixon Peabody made "fraudulent misrepresentations" regarding settlement, and that appellants justifiably "relied" on these statements made by opposing counsel retained to represent UNIC's interests in pending litigation. The same argument was rejected in Zurich, supra, 96 Cal.App.4th 17. There, a plaintiff and defendant involved in an automobile accident were insured, respectively, by Home Insurance Company ("Home") and Zurich Insurance Company ("Zurich"), and each policy had a $500,000 limit. (Id. at p. 20.) But, Zurich's counsel allegedly misrepresented to counsel for Home that Zurich's insured driver was a "permissive user" subject to the lower financial responsibility limits. (Id. at pp. 20-21.) Relying on this representation, Home's insureds settled with Zurich for $15,000 and then obtained a $250,000 arbitration award against Home in an under-insurance claim. (Id. at p. 21.) Later, Home learned that, even as a permissive user, Zurich's motorist was insured for the full policy limits, in direct conflict with the representations of Zurich's counsel. (Id. at pp. 20-21.) Home sued Zurich for fraud and misrepresentation, claiming Zurich's counsel fraudulently induced settlement of the underlying action, and that Home's counsel had reasonably relied on the representation made by Zurich's counsel. (Id. at pp. 21-22.) The trial court sustained Zurich's demurrer. (Id. at p. 22.)
The Court of Appeal affirmed, holding that Home's reliance on representations made by Zurich's counsel "was unreasonable as a matter of law because such representation was absolutely privileged under the litigation privilege" which extends "to any communication, whether or not it is a publication, and to all torts other than malicious prosecution." (Zurich, supra, 96 Cal.App.4th at pp. 22, 23, italics omitted.) Specifically, the court found that the litigation privilege "applies to statements made by counsel during [and to induce] settlement negotiations." (Id. at p. 24.)
Here, appellants make the identical assertion. They claim UNIC's counsel made "fraudulent misrepresentations" regarding settlement and that appellants' counsel justifiably "relied" on those representations, even though Schopf and Nixon Peabody were adverse counsel representing only UNIC's interests in the Enciso and Aragon litigation. But, as in Zurich, supra, 96 Cal.App.4th 17, appellants' alleged reliance was "unreasonable as a matter of law." (Id. at p. 22.) Appellants' claims are barred by the litigation privilege. (See also Seltzer, supra, 182 Cal.App.4th at pp. 963-964, 970-971 [granting anti-SLAPP motion after finding that statements made by counsel for insurer made during litigation which affirmatively misrepresent available policy limits to induce settlement receive absolute protection under the litigation privilege, so plaintiff cannot demonstrate a probability of success].) Appellants' claims are also no different than those asserted in Seltzer: That in his role as coverage counsel, Schopf engaged in allegedly fraudulent settlement discussions to defeat appellants' right to insurance coverage. Such settlement negotiations are clearly protected by the litigation privilege.
c. Mediation privilege
To the extent appellants assert the evidence demonstrates the existence of a binding agreement, notwithstanding the absence of any final writing, appellants' claims are barred by the mediation privilege, Evidence Code section 1115 et seq. "Evidence Code Section 1115 et seq. sets forth an extensive statutory scheme protecting the confidentiality of mediation proceedings, with narrowly delineated exceptions." (Simmons v. Ghaderi (2008) 44 Cal.4th 570, 574, fn. omitted.) The privilege "prohibits any person, mediator and participants alike, from revealing any written or oral communication made during mediation." (Foxgate Homeowners' Assn. v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 13; Evid. Code § 1119.) Moreover, "statements made during mediation and mediation materials are confidential not only during the mediation, but also after the mediation ends." (Simmons v. Ghaderi, supra, 44 Cal.4th at p. 580.)
Appellants argue the mediation privilege is inapplicable because Schopf "walked out" of the mediation on September 17, 2009 and the mediation ended when UNIC's agent left the mediation with no resolution. As a result, they argue e-mail and other communications between counsel after September 17, 2009 may be viewed, collectively, as evidence demonstrating the existence of an enforceable settlement agreement. Appellants are mistaken.
Absent an agreement to the contrary, a mediation does not end until and unless "[f]or 10 calendar days, there is no communication between the mediator and any of the parties to the mediation relating to the dispute." (Evid. Code, §1125, subd. (a)(5).) Here, as the trial court observed, "the mediator continued to communicate and correspond with the parties via e-mail" until at least November 27, 2009. There was no 10-day lapse in communication between September 17 and late November 2009.
An e-mail is a writing for purposes of mediation confidentiality. (Wimsatt v. Superior Court (2007) 152 Cal.App.4th 137, 159 [e-mails made for the purpose of, in the course of, or pursuant to mediation are not subject to disclosure].)
"All communications, negotiations, or settlement discussions" made during the period in which a mediation remains ongoing are confidential and may not be disclosed. (Evid. Code, § 1119, subd. (c).) Some evidence presented by appellants in opposition to UNIC's anti-SLAPP motion in an attempt to demonstrate a probability of success includes communications made while the mediation remained ongoing. That evidence, however, is not admissible and may not used to show a probability of success. A court may only consider admissible evidence when ruling on an anti-SLAPP motion. (Roberts, supra, 105 Cal.App.4th at pp. 613-614; Vegos, supra, 146 Cal.App.4th at pp. 1400-1401; Evid. Code, § 1119.)
Appellants point to a December 10, 2009 e-mail and an attachment thereto from Nixon Peabody as evidence to support their claim that a final agreement had been reached. But that evidence does not demonstrate the proposed settlement was ever finalized. First, the language of the proposed agreement indicates it would only be final and effective upon the signatures of all parties thereto. Moreover, in his December 10 e-mail, Schopf said Nixon Peabody needed "to see exhibits to the Settlement Agreements before finalizing them," and asked when BASTA "plan[ned] to proceed with signing of agreements?" The email does not indicate that a settlement agreement was ever finalized.
--------
d. Nonparticipating principal not liable
We also conclude that UNIC's anti-SLAPP motion was properly granted for a final independent reason. UNIC had no direct involvement with the underlying litigation, or any incident related to the mediation and subsequent discussions. Its alleged liability is premised on the actions and representations of its attorneys in connection with the mediation and subsequent settlement communications. But, the trial court granted the anti-SLAPP motion filed by UNIC's agents, Schopf and Nixon Peabody, a now-final ruling from which no appeal was taken.
Where "[t]he liability of [a] . . . nonparticipating principal . . . is based on the wrongful conduct of an agent; the principal cannot be liable unless the agent is liable." (3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 167, p. 211; CACI 3700.) Because neither Schopf nor Nixon Peabody can any longer be held liable for any representation or conduct at issue, neither may UNIC. (De Villers v. County of San Diego (2007) 156 Cal.App.4th 238, 250 [when liability of a principal is derivative of agent's liability, judgment on merits in favor of agent bars recovery against principal].)
For the foregoing reasons, we conclude the trial court was correct to grant UNIC's anti-SLAPP motion.
DISPOSITION
The order granting UNIC's special motion to strike the first amended complaint pursuant to Code of Civil Procedure section 425.16 is affirmed. UNIC shall recover its costs on appeal.
NOT TO BE PUBLISHED.
JOHNSON, J.
We concur:
MALLANO, P. J.
CHANEY, J.