Insurance & The Absolute Litigation Privilege

Lawyers Are Obligated To Vigorously Defend Their Clients

No one likes to lose a lawsuit. Unable to accept that the case they brought was not viable or their own lawyers were incompetent, the losers strike out at whoever they can strike at, usually, the lawyers for their opponents. Lawyers are required, by their oath, to vigorously act for their client and are protected, usually, by the litigation privilege from claims brought against them by the losers.

BACKGROUND

In O’Callaghan v. Satherlie, — N.E.3d —-, 2015 IL App (1st) 142152, 2015 WL 4123629 (Ill.App. 1 Dist., 07/08/2015) the O’Callaghan’s sued the lawyers who successfully represented their opponents only to lose again in the trial court. They appealed to the Illinois Court of Appeal.

The O’Callaghan’s, Condominium owners, who previously brought action against condominium association for allegedly causing black mold to infiltrate their condominium,sued the attorney and law firm who represented the condominium association for intentional infliction of emotional distress and strict liability for ultrahazardous activity. The Circuit Court, Cook County, granted attorney and firm’s motion to dismiss based on absolute attorney litigation privilege.

OPINION

The trial court dismissed the suit filed by plaintiffs Joseph Michael O’Callaghan and Suzanne T. O’Callaghan (the O’Callaghans) against defendants Jacqueline M. Satherlie and her law firm, Kopka, Pinkus & Dolin, P.C. (Kopka). The O’Callaghans essentially alleged that Satherlie and Kopka, who had represented the O’Callaghans’ adversaries in underlying litigation regarding toxic black mold that had infiltrated the O’Callaghans’ property, had committed intentional infliction of severe emotional distress and were otherwise strictly liable for ultrahazardous activity, specifically, the remediation of toxic black mold.

The Present Action

The O’Callaghans sued Satherlie and Kopka, alleging intentional infliction of severe emotional distress and strict liability for ultrahazardous activity, and seeking punitive damage. The complaint alleged that in the underlying action, Satherlie failed to disclose an expert’s recommendations for remediating the mold in 2007, a report not discovered by the O’Callaghans until some unspecified time later. The complaint also alleged that in light of the report, Satherlie and Kopka knew that the defendants in the underlying action had no meritorious defense but nonetheless contrived a defense that the O’Callaghans had caused the toxic mold to form due to the unapproved modification of their condominium.

In addition,  Satherlie and Kopka, in bad faith, unnecessarily prolonged the underlying action based on a nonmeritorious defense, filed baseless motions and discovery, refused to produce discovery until ordered to do so, contested the O’Callaghans’ meritorious motions and concealed documents.  The O’Callaghans alleged a parade of horribles that they painted on the lawyers.

Satherlie and Kopka  moved to dismiss the complaint. The motion argued that the O’Callaghans’ claims were barred by an attorney’s absolute litigation privilege, res judicata, and a policy against claim-splitting.

The trial, deciding in favor of the lawyers, stated: “The reason I’m granting the [motion] and dismissing it with prejudice and not giving you a chance to amend it or replead it is I don’t see any way in this world that you can plead valid causes of action against your opponents in an underlying suit for things like intentional infliction of emotional distress. There’s no duty here. There is also a public policy against this kind of suit. Litigation about litigation, you know? You had your litigation. You either won or lost, and I’m assuming you lost, because this is [sic ] your response to losing is bring this. So I could be wrong, that’s what the appellate court is for…. But this is one of the strangest—and I think that’s kind to put it that way, strangest lawsuits I’ve ever seen, okay?” (Emphasis added)

ANALYSIS

The motion to dismiss was appropriately filed where the defendant did not challenge the complaint’s failure to plead an element of the claims but raised a public policy argument based on the face of the pleadings, the motion fell within the confluence various statutes. The court can take judicial notice of the underlying action filed by the O’Callaghans. This is particularly appropriate given that the complaint relies on that proceeding. As a result, Satherlie’s and Kopka’s contention that the complaint’s allegations are improperly based on those attorneys’ roles in the prior proceeding do not require consideration of any matter outside the scope of the statute and judicial notice was not at issue. Because the absolute attorney litigation privilege appears on the face of the complaint, the motion was appropriately filed.

Absolute Attorney Litigation Privilege

Illinois’ absolute attorney litigation privilege is generally based on section 586 of the Restatement (Second) of Torts, which provides: “An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.” Restatement (Second) of Torts § 586 (1977).

This privilege is intended to provide attorneys with “the utmost freedom in their efforts to secure justice for their clients.” Kurczaba v. Pollock, 318 Ill.App.3d 686, 701–02, 252 Ill.Dec. 175, 742 N.E.2d 425 (2000). This privilege also furthers an attorney’s need to fully and fearlessly communicate with his client.

In determining whether the privilege should apply,the Court of Appeal also considered whether a limitation on the privilege’s application would frustrate an attorney’s ability to settle or resolve cases without resorting to expensive litigation, as many disputes are best resolved out of court.  In light of these policies, an attorney’s motives are irrelevant. The privilege is intended to promote zealous advocacy and does not apply where there are no safeguards against abuse of the privilege.

Based on the restatement’s specific reference to defamation and communications, the absolute attorney privilege has historically been applied to attorneys’ communications. The privilege applies to communications made before, during  and after litigation. In addition, the privilege applies to out-of-court communications between an attorney and his client regarding pending litigation as well as out-of-court communications between the litigants’ attorneys.

Limiting the privilege to communications, as opposed to conduct, would undermine the policies behind the privilege. Conversely, the pertinency requirement prevents an attorney from shielding unrelated misconduct from liability. Instead, parties should attempt to redress injuries from misconduct in judicial proceedings in the same litigation. Were it otherwise, litigation would never end. Moreover, it is improper for a trial court to review prior litigation that occurred before a different judge.

In the underlying proceeding, Satherlie and Kopka defended their clients against the O’Callaghans.  Motives and diligence before taking the challenged actions are irrelevant for purposes of the litigation privilege.

Even assuming that Satherlie and Kopka were motivated by economic benefit, that motivation is not mutually exclusive with serving their clients. Each of the alleged acts challenged can fairly be said to be in furtherance of the Association’s interest, i.e., limiting damages, regardless of whether those acts were entirely proper. Where misconduct has occurred in a given proceeding, an injured party may generally seek recourse in that particular proceeding, unlike the method the O’Callaghans have pursued here.

CONCLUSION

Here, the trial court properly dismissed the O’Callaghans’ complaint as the absolute attorney litigation privilege barred their claims.

ZALMA OPINION

Another case where, without even mentioning the word insurance, insurers were compelled to expend enormous amounts of money defending, first, the homeowners’ association and then defending the lawyers who insurers paid to defend the association. The O’Callaghans, and their lawyers, simply refused to accept the fact that they lost their suit against the condominium association and tried to sue the lawyers that beat them. They, rightfully, lost twice. The insurers who had to pay to defeat them also lost and should consider, along with the lawyers they represented, a suit for malicious prosecution.

ZALMA-INS-CONSULT© 2015 – Barry Zalma

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide.

The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at  http://shop.americanbar.org/eBus/Store/ProductDetails.aspx?productId=214624, or 800-285-2221 which is presently available.

Mr. Zalma’s new e-books  “Getting the Whole Truth,” “Random Thoughts on Insurance – Volume III,” a collection of posts on this blog; “Zalma on California SIU Regulations;”  “Zalma on California Claims Regulations – 2013″ explains in detail the reasons for the Regulations and how they are to be enforced; “Rescission of Insurance in California – 2013;”  “Zalma on Diminution in Value Damages – 2013; “Zalma on Insurance,” “Heads I Win, Tails You Lose,”  “Arson for Profit”  and others that are available at www.zalma.com/zalmabooks.htm.

Mr. Zalma’s reports on World Risk and Insurance News’ web based television programing, http://wrin.tv  or at the bottom of the home page of his website at http://www.zalma.com.

Legal Disclaimer:

The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

 

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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