Mar 16, 2020

California Anti-SLAPP Statute Does Not Protect All Litigation Conduct of Insurer-Retained Defense Attorney

By: Moris Davidovitz

Not all conduct of an insurer-retained defense attorney in connection with a legal action, which becomes the basis for an insured’s bad faith action, is protected by California’s anti-SLAPP statute (Code of Civil Procedure Section 425.16). Miller Marital Deduction Trust v. Zurich Insurance Co., 41 Cal. App. 5th 247, 254 Cal. Rptr. 3d 124 (Ct. App. 2019).

As part of plaintiffs’ claim of insurer bad faith liability in not providing independent, or “Cumis,” counsel [1] to defend plaintiffs in a liability action, they offered evidence of communications by their insurer-appointed defense counsel.  Plaintiffs asserted a significant conflict of interest in the insurer’s retention of defense counsel, and they sought to support that claim with statements made by counsel that plaintiffs asserted evidenced such a conflict. 

The insurer filed an anti-SLAPP motion, asserting that the plaintiffs’ claim arose from protected litigation conduct of the insurer’s retained counsel.  However, the Court of Appeals held that, where the allegations of the attorney’s conduct provided not the basis for the claim of recovery, but rather “context” for the plaintiffs’ claim for recovery, the claim cannot be stricken under the anti-SLAPP statute.  The court’s view was that what gave rise to the asserted liability of the insurer was not counsel’s communications, but denial of the benefit of independent defense counsel for the insured, so that the anti-SLAPP statute did not apply. 

[1]  See San Diego Federal Credit Union v. Cumis Ins. Society, Inc., 162 Cal.App.3d 358 (1984).