When Traveling the Litigation Highway, Drive Defensively
by Randall A. Miller and Hall R. Marston
(County Bar Update, April 2004, Vol. 24, No. 4)
When Traveling the Litigation Highway, Drive Defensively
By Randall A. Miller and Hall R. Marston. Miller is a partner in the law firm of Sedgwick, Detert, Moran & Arnold LLP in Los Angeles. He leads the firm's professional liability group and has a nationally recognized practice in the area of professional malpractice defense and insurance related litigation. Marston is special counsel for Sedgwick, Detert, Moran & Arnold LLP in the Los Angeles office. He is a certified appellate specialist and has many years of experience in attorneys' professional liability defense.
Did you know there are more malicious prosecution claims made against LACBA Professional Liability Program insureds than any other type of claim? They may be judicially disfavored (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811,816-817), but they are undeniably popular. If your business is screening claims, drafting complaints, and taking them (hopefully) to judgment, how can you protect yourself from this epidemic of malicious prosecution plaguing California lawyers? Here are some suggestions for lowering your profile in the malicious prosecution shooting gallery:
1. Document, Document, Document.
Counsel are entitled to rely on their clients, credible sources, and documentary and physical evidence in their possession at the time of the filing of the action. (Morrison v. Rudolph (2002) 103 Cal.App.4th 506, 512-513 ["[W]hen evaluating a client's case and making an initial assessment of tenability, the attorney is entitled to rely on information provided by the client. . . . Absent . . . notice (otherwise) an attorney 'may, without being guilty of malicious prosecution, vigorously pursue litigation in which he is unsure of whether his client or the client's adversary is truthful, so long as that issue is genuinely in doubt.'" (Citations omitted)]
If for no one else but yourself, keep a solid paper trail of your investigation, your interviews, and your assessments of the case. Confer with colleagues, perhaps even judges you know socially, to test novel contentions or claims. Probable cause is determined at the outset of the case so do your homework. (Swat-Fame, Inc. v. Goldstein (2002) 101 Cal.App.4th 613, 628 ["The long-standing rule in California is that, if probable cause exists at the outset of the action, the party acting with probable cause is insulated from liability for malicious prosecution."])
2. Edit, Edit, Edit.
One of the most frequent foibles befalling barristers is the unnecessarily verbose and "overdrafted" complaint, setting forth scores of causes of action ranging from the latest tort to theories Blackstone discarded centuries ago. If even one of those causes of action crashes and burns, you could have a bright red malicious prosecution bull's-eye on your back. (Crowley v. Katleman (1994) 8 Cal.4th 666, 678.) Be Hemingwayesque. "Simple complaints, narrow allegations, focused prayers for relief," he said briefly. For each claim, confirm factual support for all of the elements. Don't overplead.
3. Don't Be Unnecessarily Cross.
Part of the Full-Employment Act for Lawyer's Professional Liability Counsel is the ill-considered cross-complaint. Often cross-actions are filed for perceived "tactical" reasons without full investigation or strategic assessment. When the cross-action is thrown out on demurrer or otherwise dismissed, the cause of action for malicious prosecution accrues, and before you know it, you and your client are malicious prosecution defendants. So much for your tactical plan to put your adversary on the defensive.
4. Lose Gracefully.
Sometimes there's solace in defeat. If possible, try to posture shaky aspects of the case so that if you lose ultimately, it is either not on the merits, or you survive an earlier motion for summary judgment. For example, if the motion for summary judgment against you argues a limitations point and a merits point, do your best to lose on limitations since this is not a favorable termination on the merits. (Lackner v. LaCroix (1979) 25 Cal.3d 747, 752 ["A bar raised by the statute of limitations does not reflect on the merits of the action and thus is not a favorable termination for purposes of a subsequent malicious prosecution action."])
Use an interim adverse judgment to your advantage. Defeat a dispositive motion, and you may be protected from liability. (Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 384 ["Because denial of summary judgment is a sound indicator of probable cause, it is sensible to accept it as establishing probable cause defeating a later malicious prosecution."])
5. Hold Your Tongue.
How often are you enticed into a (ahem) spitting contest with your adversary that is laced with invective and threats? Even the most even-headed among us fall into the trap of meeting fire with fire. But that can come back to haunt you if that good-for-nothing stumbles into a win and comes after you for more. Don't give anyone fuel for the malice or punitive damages fire.
6. Be Humble.
If there is a malicious prosecution claim in your future, it is likely also in your client's. This could foment a cross-action by the client so you may find yourself on the receiving end of both a malicious prosecution case and a negligence cross-complaint. Don't give your client ammunition by writing hyperbolic missives touting your unparalleled skills, good looks, and charm, and predicting riches beyond comprehension at the end of the litigation rainbow. Make sure your retainer agreement makes it clear that there are no assurances of success and that in electing to pursue your client's claim you have expressly relied on the truthfulness and accuracy of the client's version of events.
7. Go for the Home Field Advantage.
There are forums where an adverse outcome cannot give rise to malicious prosecution liability. (Brennan v. Tremco Incorporated (2001) 25 Cal.4th 310, 314 [" [I]f (the underlying action) ends in contractual arbitration, that termination will not support a malicious prosecution action."]; Choy v. Redland Insurance Company (2002) 103 Cal.App.4th 789 [Bankruptcy Code preempts malicious prosecution liability.]) At the beginning of either a transaction or a suit, consider whether the client's interests might be served by requiring contractual arbitration or perhaps by proceeding via a bankruptcy adversary proceeding to minimize malicious prosecution exposure.
8. Cut Your Losses.
What happens if the case goes south mid-stream, and what looked like a thoroughbred turns out to be headed for the glue factory? Although there is a difference of opinion on this (compare Swat-Fame, Inc. v. Goldstein (2002) 101 Cal.App.4th 613 [no continuation malicious prosecution liability if probable cause existed at outset of action] with Lujan v. Gordon (1977) Cal.App.3d 260, 263-264 [There can be no doubt that the continuation of malicious prosecution beyond the initial act of instigation may inflict additional damage upon the victim . . . ."], and the question is before the California Supreme Court on respondents' petition for review in Zamos v. Stroud (2003) 110 Cal.App.4th 60, rev. granted, 4 Cal.Rptr. 808 (2003), the safer course is that if a case appears untenable midstream, bail to avoid potential malicious prosecution liability. Make sure that your retainer agreement gives you the right to do so. While it may cost you a portion of your fee, this approach will spare you much grief if a malicious prosecution action is filed.
9. "I was Only Following Orders."
This defense may work for subordinates who are merely carrying out instructions from superiors and who later have to prove they didn't act with malice in the event that the case tanks, and a malicious prosecution claim is filed. Following instructions probably won't act as an immunity, but defense counsel might be able to get summary judgment on the malice issue if there is a good paper trail on specifically what you were asked to do and when. Lawyers who actively participate in the prosecution of an action can be on the hook. For example, in Lujan, although there was no formal substitution made, two lawyers whose names appeared on the pleadings with the suit's "instigator" were held potentially liable for malicious prosecution, even though the action was originally filed many years before their appearance.
10. All Humor Aside.
Malicious prosecution liability is serious stuff. There is no obligation on the part of the professional liability carrier to indemnify the insured for malicious prosecution liability, although there can be a duty to defend. (Butcher v. Truck Ins. Exchange (2000) 77 Cal.App.4th 1142, 1147) Indeed, the errors and omissions carrier could actually set up a claim for reimbursement if it settles malicious prosecution liability. (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478) In all likelihood, because malicious prosecution is a "willful act," there would be no discharge of such liability in bankruptcy, which is also true of liability for punitive damages. So be careful out there.
Under Murphy's law, you can follow all of these tips and still get sued. If you do, take heart. Anti-SLAPP and the generally disfavored outlook toward malicious prosecution provide many defenses that capable counsel can put to work for you and your clients.
This article is intended to inform the reader of potential liability exposures for attorneys. This article reflects general principles only and does not render legal advice. Readers should consult legal, financial, insurance, and other advisors if they have specific concerns. Neither the Los Angeles County Bar Association, Aon and its affiliates, nor the authors assume any responsibility for how the information in this article is applied in practice or for the accuracy and completeness of the information. Reproduction without written permission is prohibited. This article is made available by Aon Direct Insurance Administrators, administrators of the LACBA Sponsored Aon Insurance Solutions Program, to the LACBA members. www.aonsolutions.com