Plaintiffs stated a cause of action for civil conspiracy against their opponents' lawyers who allegedly helped their clients thwart a court-ordered remediation plan for removal of contaminated debris on the parties' adjoining properties, a divided California Court of Appeal, Second District, decided Jan. 16 (Rickley v. Goodfriend, Cal. Ct. App. 2d Dist., No. B236180, 1/16/13).
In his opinion for the majority, Justice Robert M. Mallano said the complaint sufficiently alleges that the lawyers owed the plaintiffs independent duties not to interfere with the remediation plan and not to disburse the remediation funds unfairly.
The litigation privilege does not apply on these facts, and allowing the conspiracy claim to proceed will not intrude on the attorney-client privilege, the court also ruled.
The dissenting panel member asserted that the majority opinion conflicts with California precedent and muddies the law on attorney-client conspiracy claims.
Rebecca Rickley and Natasha Roit live next door to Marvin Goodfriend and Tina Fasbender Goodfriend in Malibu, Cal. During a remodeling project, the Goodfriends allegedly dumped debris contaminated with asbestos and lead on their neighbors' property as well as their own.
A trial court ordered Marvin Goodfriend to abate the nuisance on both parcels, and $230,000 of remediation funds were placed in the trust account of his attorneys, James N. Procter and Daniel R. Stevens.
Later Rickley and Roit went back to court alleging that the Goodfriends had not complied with the judgment. The judge allowed the plaintiffs to add a cause of action for civil conspiracy against Procter, Stevens, and their law firm on the ground that they had schemed with their clients to interfere with the court-approved remediation plan and to disburse the funds from the trust account so as to avoid removing the contaminated debris.
The court of appeal affirmed, holding the plaintiffs' conspiracy claims may proceed because, on the facts alleged, the lawyers owed two independent legal duties to the plaintiffs: (1) an obligation not to interfere with the remediation plan for removal of the contaminated debris, and (2) a duty to disburse the funds in the attorneys' trust account in a fair manner to remediate both properties.
The court pointed out that although Section 1714.10(a) of the California Civil Code erects procedural hurdles for filing conspiracy claims against lawyers and their clients, the statute exempts claims grounded on a lawyer's independent duty to the plaintiff.
It is well established, the court said, that lawyers have an independent legal duty to refrain from defrauding nonclients. An independent duty also may arise when a lawyer engages in conduct that goes far beyond the role of a legal representative, circumventing established legal channels to help accomplish a desired result, Mallano said.
While acknowledging that agents are generally immune from a conspiracy claim for violating a duty that the principal owes, the court said that Procter and Stevens had independent duties to the plaintiffs and allegedly took affirmative steps that interfered with the remediation plan. Mallano pointed out that:
• Procter allegedly interfered with the cleanup effort by sending contractors emails that, contrary to court order, had not been cleared by the trial court or plaintiffs' counsel, and by providing contractors with information or instructions that interfered with the remediation plan.
• Stevens allegedly went to the site and misdirected a contractor's work in removing a tree--even performing some of the digging himself--contrary to the trial court's instruction.
“[T]he attorney-defendants owed plaintiffs an independent legal duty not to prolong the nuisance by interfering with the remediation plan,” the court declared.
Moreover, the court said, when the attorneys voluntarily placed Marvin Goodfriend's money in their trust account they assumed a duty to disburse the money equitably, yet they allegedly passed out the funds without the plaintiffs' knowledge and in a manner that unfairly benefited their clients.
The court also decided the lawyers could be added as conspirators to the plaintiffs' claim alleging that the Goodfriends violated a California statute on coastal development permits by failing to place contaminated debris in an appropriate disposal site.
Once a conspiracy was formed to continue the existing nuisance by interfering with the remediation plan, the court said, the lawyers were liable not only for their own wrongful acts but also for the Goodfriends' disposal of the contaminated debris in an unlawful manner.
The court also held that the lawyers were not shielded by the litigation privilege, codified in Civil Code Section 47(b).
The privilege generally applies to communications made in judicial proceedings by litigants or other participants authorized by law to achieve the objects of the litigation, if the statements have some connection or logical relation to the action.
The privilege did not apply here, the court decided, because the lawyers' communications and affirmative misconduct allegedly interfered with the abatement of a nuisance, involved communications with nonparticipants in the litigation, and did not attempt to achieve the objects of any litigation.
The court distinguished Rusheen v. Cohen, 128 P.3d 713, 22 Law. Man. Prof. Conduct 157 (Cal. 2006), which applied the privilege to post-judgment conduct tied to allegedly fraudulent statements about service of process in the underlying case. Rusheen did not extend the litigation privilege to post-judgment communications and misconduct that contribute to a continuing tort, Mallano said.
The court also reasoned that the goals of the litigation privilege would not be advanced by conferring immunity on the attorneys. “To apply the litigation privilege in this case would be tantamount to eliminating civil conspiracy claims against attorneys,” it stated.
The lawyers argued that allowing the conspiracy claims to proceed would require the disclosure of communications protected by the attorney-client privilege, contrary to California cases that have dismissed claims where the privilege prevents an attorney-defendant from presenting an adequate defense.
The court disagreed. The plaintiffs' claims do not implicate the attorney-client privilege, Mallano said, because they are based on the lawyers' nonconfidential communications with third-party contractors and nonconfidential conduct such as digging in the soil and sending unapproved emails.
Conspiracies typically are proved by circumstantial evidence, the court noted.
Justice Frances Rothschild dissented, asserting that the majority opinion conflicts with the leading California Supreme Court decision on conspiracy claims against lawyers and “introduces confusion and uncertainty into this area of law.”
The plaintiffs' claims fail as a matter of law, Rothschild argued, because the lawyers did not act for their own financial advantage or violate their own obligations to the plaintiffs, but rather allegedly assisted the clients in violating their duties.
Rothschild also disagreed with the court's analysis of the litigation privilege and contended that the majority construed the factual allegations of the complaint too liberally in favor of the plaintiffs.
Natasha Roit, Law Offices of Natasha Roit, Malibu, Cal., represented herself and Rebecca Rickley.
Andrew J. Waxler and Danielle R. Sokol of Waxler Carner Brodsky, El Segundo, Cal., represented James Procter, Daniel R. Stevens, and Procter Slaughter & Reagan.
Michael B. Giebel and James I. Montgomery Jr. of Gibbs, Giden, Locher, Turner & Senet, Los Angeles, represented the Goodfriends.
Full text at http://op.bna.com/mopc.nsf/r?Open=kswn-942sha.
Copyright 2013, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
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