Plaintiff sued defendant, alleging disclosure of confidential and privileged information. Defendant moved to strike the complaint as a “strategic lawsuit against public participation” (SLAPP) suit under Cal. Civ. Proc. Code § 425.16. Plaintiff responded with motions to disqualify the attorneys representing defendant. The Superior Court of Los Angeles County (California) denied both motions. Both sides appealed.
Overview
Plaintiff sued defendant, its former in-house counsel, upon learning that defendant planned to sue for wrongful termination. The court of appeals affirmed the order denying disqualification of defendant’s attorneys, finding that plaintiff failed to establish that the attorneys possessed relevant confidential material acquired from their prior unrelated representation of plaintiff, or by defendant’s disclosures of confidential information she acquired while counsel to plaintiff. Further, plaintiff could not create a conflict by simply threatening to sue the attorneys for interference with contract or divulging privileged information. The court reversed denial of defendant’s motion to strike under § 425.16. Defendant was not required to show that plaintiff intended to chill her exercise of First Amendment rights, and plaintiff did not demonstrate a reasonable probability of prevailing on the merits. The court concluded that an in-house counsel could disclose ostensible employer-client confidences to her own attorneys to the extent they might be relevant to the preparation and prosecution of her wrongful termination action against her former client-employer.
Outcome
The court affirmed the order denying the motions to disqualify defendant’s counsel, and reversed the order denying the motion to strike plaintiff’s complaint.
Procedural Posture
Defendants, an insurance agency and its director, appealed from judgments against them in the Superior Court of Los Angeles County (California) in plaintiff insurance underwriter’s negligence action for damages resulting from defendants’ setting of a low premium rate and the consequent exorbitant loss ratio. The parties consulted with several counsel which included labor attorney and business counsel.
Overview
Defendants, an insurance agency and its director, issued an insurance policy without investigating the insured’s loss history. Plaintiff insurance company brought a negligence action seeking damages that resulted from defendants’ setting of a low premium rate and from the consequent exorbitant loss ratio. The court found that defendant insurance agency owed a duty to plaintiff to exercise reasonable care in handling plaintiff’s business and, in the investigation of each insurance risk, to make a reasonable effort to produce a profit for plaintiff. The court further found no personal responsibility on the part of defendant director. The court determined that defendant insurance agency was liable for negligently inducing plaintiff to assume coverage on which it suffered a loss. The action was timely filed and was not barred by the statute of limitations. Damages were properly assessed as the proximate result of the negligently set low premium rate and excessive losses.
Outcome
The court affirmed the judgment against defendant insurance agency, with jurisdiction to add to the judgment additional sums due to plaintiff insurance company when those sums had been determined and approved, and reversed the judgment against defendant director.