2013-00137950-CU-PN

Angela Spanos vs. Robert B Bale

Nature of Proceeding: Hearing on Demurrer to First Amended Complaint

Filed By: Steinheimer, Andrew M.

*** Judge Cadei discloses that the law firm of Dreyer, Babich, Buccola, Wood &
Campora LLP represented his family in 2004-05 in connection with an
automobile accident. Additionally, prior to Judge Cadei’s appointment to the
bench, he had a professional relationship with the Dreyer, Babich law firm
including the representing the firm regarding certain financial matters in the
early 1990s, referring matters to them and undertaking cases and clients that
were referred to him while he was in practice prior to June 2002. Judge Cadei
has not had any personal relationship with the members of the firm and does not
socialize with any of the attorneys from the Dreyer, Babich firm beyond the
usual meetings of professional organizations in the community. Judge Cadei
has determined that the foregoing does not disqualify him from hearing this
matter but provides this information to fully inform all parties in advance of the
hearing. ***

Defendants’ demurrer to the first amended complaint (“1AC”) is SUSTAINED with
leave to amend, as follows.

Plaintiff’s counsel is admonished for failing to comply with CRC Rule 3.1110(b)(3)-(4).

This is a malpractice action against the attorneys who represented plaintiff in her prior
personal injury suit arising out of a 2005 trip-and-fall incident. Because she was
injured while in the course and scope of her employment, plaintiff also filed a worker
compensation claim in which she was represented by another attorney, Curtis Winter.
According to the original complaint in this action (which plaintiff filed in propria persona
), a mediation was held in January 2012 which resulted in a settlement of both
plaintiff’s third party personal injury action and her corresponding worker compensation
claim. (Compl., ¶13.) Unhappy with this resolution of both actions, plaintiff
commenced the present malpractice action in January 2013. The 1AC now asserts
causes of action for legal malpractice, misrepresentation and breach of fiduciary duty
in connection with the settlement of the underlying actions at the January 2012
mediation with an emphasis on defendant attorneys’ failure to invite to the mediation
plaintiff’s worker compensation attorney and the refusal to permit plaintiff to call the worker compensation attorney before agreeing to settle both claims.

Defendant attorneys now demur to the entire 1AC on the ground that each cause of
action is barred because they are based entirely on communications between
defendant attorneys and plaintiff which are pursuant to Evidence Code §1119 both
confidential and inadmissible as a result of being made in preparation for, related to
and/or during the January 2012 mediation. Defendants further assert that according to
the recent California Supreme Court decision of Cassel v. Superior Court
(Wasserman, Comden, et al.) (2011) 51 Cal.4th 113, “there is no exception to
mediation confidentiality even where the evidence is needed to substantiate or defend
a claim for legal malpractice.” (Mov. Memo. P&A, p.1:15-18 (citing Cassel, at 128).)
Since the evidence needed to support plaintiff’s causes of action and to defend against
her allegations remains confidential and inadmissible, defendants insist that plaintiff
cannot maintain the present action which must therefore be dismissed.

In Cassel, the plaintiff sued his former attorneys for legal malpractice, breach of
fiduciary duty, fraud and breach of contract after a mediation in which he agreed to
settle his business litigation claims. Specifically, the plaintiff alleged that his attorneys
had obtained his consent to the settlement through bad advice, deception and
coercion and that the attorneys, who had a conflict of interest, induced him to settle not
only for a lower amount than he had told them he would accept but also for less than
the case was worth. (Cassel, at 118.) The trial court granted the attorneys’ motion to
exclude all evidence of private attorney-client discussions immediately preceding, and
during, the mediation concerning mediation settlement strategies and the attorneys’
efforts to persuade the client to reach a settlement in the mediation. (Id.)

After the Court of Appeal reversed, the California Supreme Court ultimately affirmed
the trial court’s granting of defendant attorneys’ motion to exclude all mediation-related
evidence (including evidence of private attorney-client discussions immediately
preceding and during the mediation concerning settlement strategies and the
attorneys’ efforts to persuade the plaintiff to settle his claims at the mediation) on the
grounds that the Legislature has in Evidence Code §1119 “broadly provided for the
confidentiality of things spoken or written in connection with a mediation proceeding”
such that “neither ‘evidence of anything said,’ nor any ‘writing,’ is discoverable or
admissible ‘in any arbitration, administrative adjudication, civil action,…in
which…testimony can be compelled to be given,’ if the statement was made, or the
writing was prepared, ‘for the purpose of, in the course of, or pursuant to, a
mediation…’ [Cite]” and that “All communications, negotiations, or settlement
discussions by and between participants in the course of a mediation…shall remain
confidential. [Cite.]” (Id., at 117-119.) The Supreme Court highlighted its precedent
which has repeatedly held that “confidentiality provisions are clear and absolute” and
“Except in rare circumstances, they must be strictly applied and do not permit judicially
crafted exceptions or limitations, even where competing public policies may be
affected. [Cite.]” (Id., at 118.) With this background, the Supreme Court then asked
how the mediation confidentiality statutes affect “private discussions between a
mediating client and attorneys who represented him in the mediation” and in the end
concluded that “the plain terms of the mediation confidentiality statutes” must be
applied to the facts of this case “even though they may compromise petitioner’s ability
to prove his claim of legal malpractice. [Cite.]” (Id., at 119.)

The opposition first argues that defendants’ reliance on Evidence Code §1119 and
Cassel is misplaced because the mediation at which plaintiff’s claims were settled was
not “procedurally and substantively proper” under various standards, including the
California Rules of Court, California Alternative Dispute Resolution standards, Uniform
Medication [sic] Act, and the Model Standards of Conduct for Mediation Association for
Conflict Resolution, all of which “require: (1) voluntary participation, (2) the attendance
of all interested parties, for the purpose of reaching (3) a mutually acceptable
settlement that is not the result of fraud or duress.” (Oppos., p.1:8-14.) Since
defendants did not comply with these rules governing mediation and did not meet the
prerequisites to conducting a proper mediation, neither §1119 nor Cassel apply. The
opposition next contends that defendants’ conduct constituted fraud and
misrepresentation which is “not protected by the mediation confidentiality statutes”
because their application would deprive plaintiff of her day in court and because
“attorneys are not immune from liability for misrepresentation” especially since they
owed “a heightened duty to avoid any misrepresentations to their client.” (Id., at p.1:20-
26.) Third, because the 1AC alleges that “defendants settled [plaintiff’s] personal
injury case for fractions of what it was actually worth” and “settled her workers’
compensation case in which she was represented by another attorney for nothing,”
any confidentiality which may have applied was waived at least as to the Settlement
Agreement which “was published with the California Worker’s Compensation Appeals
Board (WCAB) and the document is thus, judicially noticeable.” (Id., at p.1:27-p.2:6.)
Finally, the opposition requests that if the demurrer be sustained, leave to amend be
granted. (Id., at p.2:7-10.)

The Court finds plaintiff’s substantive arguments cited above to be unpersuasive in
light of the plain language of not only Evidence Code §1119 but also the California
Supreme Court’s analysis in Cassel v. Superior Court.

Plaintiff’s insistence that defendants’ alleged conduct constituted
fraud/misrepresentation and is therefore outside the scope of mediation confidentiality
statutes does not withstand scrutiny. After all, similar to the present case, the plaintiff
in Cassel asserted inter alia fraud and fiduciary duty claims against his attorneys for
essentially deceiving and/or forcing him to accept an unfairly low settlement but
nowhere did the Supreme Court expressly or impliedly suggest that mediation
confidentiality might not trump allegations of fraud against attorneys who clearly owe
various duties to a client. In fact, the Supreme Court went to great lengths to explain
that the mediation confidentiality statutes “are clear and absolute,” “they must be
strictly applied and do not permit judicially crafted exceptions or limitations, even
where competing public policies may be affected.” ( Cassel, at 118.) Moreover, the
Supreme Court affirmed the trial court’s original ruling even though it seriously
compromised the plaintiff’s ability to prove his claim of legal malpractice” (Id., at 119),
an unequivocal statement which all but eviscerates plaintiff’s related arguments that
the confidentiality provisions should not apply here because defendants’ conduct
violated their heightened duties to plaintiff and that plaintiff will otherwise be deprived
of her day in court.

Likewise, the mere fact plaintiff alleges the defendant attorneys not only settled the
former’s personal injury case “for fractions of what it was actually worth” but also
“settled her workers’ compensation case in which she was represented by another
attorney for nothing” does not establish a valid exception to the broad, unequivocal
holding of Cassel. Certainly, there can be no dispute that in Cassel there was also a
claim that the defendant attorneys effectively deceived and/or coerced the plaintiff to
accept too small a settlement. Accordingly, this is not a legitimate basis on which to
distinguish the present case from Cassel and while it is true that Cassel did not involve any allegation against the attorneys for settling any claim for which the plaintiff had
different legal counsel, plaintiff has not demonstrated how or why this would lead to a
different outcome than in Cassel.

Regardless, given the sweeping and largely unqualified language used by the
Supreme Court in Cassel, this Court can find no language or rationale which would
consistent with this binding precedent permit the creation of an exception to the
mediation confidentiality rule based on the allegation that defendants settled plaintiff’s
workers compensation action even though it was being handled by a different attorney.
To be sure, as noted above, the Supreme Court stated in the most concise terms that
the confidentiality provisions in Evidence Code §1119 “do not permit judicially crafted
exceptions or limitations, even where competing public policies may be affected.” (Id.,
at 118.) This Court must reject plaintiff’s invitation here to carve out a new exception
to this well established rule of mediation confidentiality merely because she was
persuaded to settle her worker compensation claim on unfavorable terms without
discussing it with her other attorney.

The opposition’s claim that the provisions affording confidentiality to mediation-related
communications were waived with respect to the written agreement which
memorialized the settlement negotiated at the mediation misses the mark. Plaintiff’s
argument flies in the face of the 2008 Supreme Court decision of Simmons v. Ghaderi,
which held that “the judicial doctrines of equitable estoppel and implied waiver are not
valid exceptions to the strict technical requirements set forth in the mediation
confidentiality statutes for the disclosure and admissibility of oral settlement
agreements reached in mediation.” (Cassel, at 126.) Thus, when the plaintiffs in
Simmons sued to enforce an oral mediation agreement the defendant had refused to
sign, the plaintiffs could not claim the defendant’s pretrial disclosure of the agreement
for litigation purposes estopped her from invoking the mediation confidentiality
statutes, or constituted a waiver of their requirements. (Id., at 126-127.) Consequently,
this Court cannot find any waiver, express or implied, of the mediation privilege
otherwise applicable here but even if it could, it is of no real consequence because
plaintiff will need to introduce evidence which extends far beyond the settlement
agreement itself in order to prove the substantive allegations of her 1AC. However,
according to Evidence Code §1119 and Cassel, evidence of any written or oral
statements made by defendant attorneys in preparation for or in connection with the
January 2012 mediation remains inadmissible.

The opposition’s final argument that the January 2012 mediation was not “procedurally
and substantively proper” is unfounded factually but regardless, it fails to establish a
valid justification for not applying the mediation confidentiality statues consistent with
the unequivocal holding and analysis in Cassel. First, the suggestions that plaintiff’s
participation was not “voluntary” and/or that the settlement reached at the negotiation
was the product of defendant attorneys’ own fraud or duress does not, without more,
put the present action beyond the scope of Cassel since the same claims were
effectively made and rejected in Cassel. As discussed above, the plaintiff in Cassel
alleged that his attorneys through deception and coercion induced him to settle on
terms which he said were unacceptable and which was less than his case was worth. (
Cassel, at 118.) This, however, did not in the Supreme Court’s opinion preclude
application of the plain, broad language found in Evidence Code §1119.

Second, the fact that plaintiff’s worker compensation attorney was not invited to attend
nor otherwise participated in the January 2012 mediation also does not appear to be of legal significance because according to the 1AC, this mediation was set up in an
attempt to resolve plaintiff’s third party civil action. As such, the Court finds nothing
that required as a matter of law the worker compensation attorney be informed of the
mediation, invited to attend the mediation or required to attend the mediation and yet
nothing per se prevented plaintiff herself from advising her worker compensation
attorney of the mediation, asking him to attend or even calling him (or anyone else)
during the mediation before agreeing to the terms of the settlement negotiated on that
day. In any event, this Court is not persuaded this allegation about plaintiff’s worker
compensation attorney is substantively different from the evidence in Cassel that the
plaintiff “felt increasingly tired, hungry, and ill” at the mediation but his attorneys
insisted he remain until the mediation was concluded, pressing him to accept the
settlement terms by “telling him he was ‘greedy’ to insist on more.” (Id., at 120.) Then
after Mr. Cassel left the mediation to eat and talk with his family, his attorneys called to
have him return and then “continued to harass and coerce him to accept [the]
settlement,” even threatening to abandon him at trial, misrepresenting significant terms
of the settlement and falsely assuring him they would negotiate a side deal and would
discount a large portion of his attorney fees. (Id.) In the end, at midnight and after 14
hours of mediation, when he was exhausted and unable to think clearly, Cassel’s
attorneys gave him a draft settlement agreement and then evaded his questions about
its complicated terms but seeing no way to find new counsel before trial and believing
he had no other choice, the plaintiff signed the agreement. (Id.) Aside from the fact
that nothing required plaintiff’s worker compensation attorney to attend a mediation
designed to resolve only her party action, the Court finds no reason why it should
create a new exception to the mediation confidentiality statues based on his absence
from the mediation particularly when the Supreme Court made abundantly clear that
the statutes “must be strictly applied and do not permit judicially crafted exceptions or
limitations, even where competing public policies may be affected. [Cite.]” (Id., at 118.)

For all these reasons, the Court finds that plaintiff’s opposition lacks legal merit and
thus, defendants’ demurrer to the 1AC is hereby sustained.

Since this is the first challenge to the complaint, leave to amend is granted. Plaintiff
may file and serve an amended complaint no later than 5/12/2014. Although not
required by court rule or statute, plaintiff is directed to present a copy of this
order when the amended complaint is presented for filing.

Defendants to respond within 10 days if the amended complaint is personally served,
15 days if served by mail.

This minute order is effective immediately. No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)