This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Lawrence S. Plack, et al.,
Richard Stempel, et al.,
defendants and third-party plaintiffs,
Illinois Farmers Insurance Company,
Filed July 3, 2000
Dissenting, Foley, Judge*
County District Court
File No. 9812301
Richard M. Schultz, Marshall & Associates, 9501 Lexington Avenue North, Circle Pines, MN 55014 (for appellants)
Timothy K. Masterson, Spence, Ricke & Thurmer, P.A., 325 Cedar Street, Suite 600, St. Paul, MN 55101; and
R. Steven Tillitt and Elliott Olsen, Gislason & Hunter, LLP, P.O. Box 5297, Hopkins, MN 55343 (for respondents)
Considered and decided by Amundson, Presiding Judge, Anderson, Judge, and Foley, Judge.
Appellants appeal from the district court’s award of summary judgment to respondents on the ground that respondent’s statements were not protected by the doctrine of judicial privilege. Appellants contend that the doctrine of judicial action privilege is inapplicable as the alleged defamatory communication was made after the parties had reached settlement and not made to benefit the client. We affirm.
On June 24, 1994, a vehicle insured by respondent and third party defendant Illinois Farmers Insurance Co. (Farmers) caught fire. Farmers retained appellant Lawrence Plack, a certified fire investigator, to investigate the fire. On July 15, 1994, Plack examined the car, interviewed the owner, and submitted a written report. In the report, Plack noted that the cause of the fire was suspicious because all accidental sources of ignition were examined and ruled out, an incendiary cause could not be eliminated, and the physical evidence did not comport with the account given by the insured. Plack recommended that Farmers not deny the insured’s claim, as there was insufficient evidence to determine if the fire was, in fact, incendiary. Nevertheless, Farmers denied the insured’s claim.
The insured then sued Farmers to recover the loss of the vehicle and its contents and Farmers retained Richard Stempel as counsel. A few days prior to the trial, on or about August 10, 1995, Plack and Stempel met for the first time to discuss the nature of Plack’s testimony as an expert witness. According to Plack, when he asked Stempel why Farmers denied the claim, Stempel replied, “arson, you’re going to testify that it was arson, right?” Plack responded by affirming that he would testify to the contents of the report—including that he had eliminated all non-incendiary causes—but would deny that he concluded that the fire was, in fact, incendiary. At this time, Stempel understood that Plack would be willing to testify to the contents of his report.
On the morning before trial, Plack and Stempel met once again to discuss Plack’s testimony. Plack claims Stempel again asked him if he was going to testify that the fire was arson. Plack reiterated his position stated on August 10: that he would testify to the report, but not say it was arson.
After this meeting, Stempel had a telephone conversation with Farmers and during this conversation, Farmers decided to settle. Stempel informed Plack that the parties had settled and asked Plack to send him an invoice for his services. Stempel had several conversations with Bruce Carpenter, a claims investigation manager for Farmers, regarding the merits of the insured’s case, the events of the morning of trial, and whether to pay the entire amount of Plack’s invoice. At least once during these conversations, Stempel allegedly defamed Plack by stating that Plack was unable, unwilling, or simply refusing to testify to the contents of his report.
Stempel received Plack’s invoice on August 25, 1995, but did not submit it to Farmers until September 26, 1995—after Plack called Stempel to inquire about his invoice. On October 13, 1995, Carpenter sent Plack a letter stating,
the morning of trial you advised [Stempel] that you were unable to testify to the contents of your report. Therefore, it is our feeling that we did not receive any benefit from your attendance at the trial and do not believe that any payment should be made.
Subsequently, Carpenter allegedly told Plack that, according to Stempel, he (Plack) had been unwilling to testify to the contents of his report, forcing Farmers to settle the case. The stipulation of dismissal finalizing the settlement was filed in May of 1996.
On September 22, 1997, Plack commenced this action alleging that Stempel defamed Plack to Farmers, Plack’s and Stempel’s mutual client, and that because of Stempel’s defamatory remarks, Farmers has not since retained him for his investigatory services.
Respondents moved for summary judgment on Plack’s claims. On August 11, 1999, the district court granted respondents’ motion finding that Stempel’s statements were within the scope of the judicial action privilege doctrine. This appeal followed.
On appeal from summary judgement, appellate courts ask (1) whether any genuine issues of material fact exist, and (2) whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). In a defamation action, the determination of whether a communication is privileged is a question of law. Lewis v. Equitable Life Assurance Soc’y, 389 N.W.2d 876, 890 (Minn. 1986). Review of the district court’s application of the law is de novo, Frost-Benco Elec. Ass’n v. Minnesota Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn. 1984), and when reviewing the evidence for material facts at issue, the evidence is viewed in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
The fundamental basis of a defamation claim is that “one is liable for an unprivileged communication or publication of false and defamatory matter, which injures the reputation of another.” Matthis v. Kennedy, 243 Minn. 219, 222-23, 67 N.W.2d 413, 416 (1954). Here, the district court specifically found that Stempel’s statements, regardless of whether those statements were false, defamatory, or injurious, were privileged.
“[D]efamatory matter published in the due course of a judicial proceeding is absolutely privileged.” Id. at 224, 67 N.W.2d at 417. The doctrine of privileged communication is not intended to protect those who speak, but rather the public welfare generally. Id. at 223, 67 N.W.2d at 417. In the context of the judicial privilege, the protection is extended to attorneys for the interest and benefit of the party they represent allowing them full freedom of speech in advocating the rights of their clients. Id. at 224-25, 67 N.W.2d at 417-18. The test for whether matters spoken in judicial proceedings are privileged is whether it has “reference to and relation to the subject matter of the action.” Id. at 225-26, 67 N.W.2d at 418.
Plack argues that the statements were extra-judicial in nature because they were made after the parties had reached settlement. But settlement was not finalized until May of 1996. Accordingly, the statements were made during a judicial proceeding. The fact that the parties had reached a preliminary agreement does not change the fact that, at the time of the defamatory communications, settlement of the dispute had not been perfected.
Even if we accept Plack’s contention that the case had been settled, he does not prevail, because the doctrine is not limited solely to communications made while a lawsuit is pending. See Kittler v. Eckberg, Lammers, Briggs, Wolff & Vierling, 535 N.W.2d 653, 657-8 (Minn. App. 1995), review denied (Minn. Oct. 10, 1995) (holding that the judicial action privilege applies to pre-litigation client solicitations). Though pre-litigation communications have been held to be protected by the judicial action privilege, the question of post-settlement communication has not yet been directly addressed in Minnesota.
In adopting the judicial action privilege, Minnesota adopted the position of the Restatement (Second) of Torts, § 586 (1977) which specifically includes as privileged those “communications preliminary to a proposed judicial proceeding.” Kittler, 535 N.W.2d at 655 (quoting Restatement (Second) of Torts § 586 (1977)). However, § 586 also specifies that the privilege applies to communications “in the institution of, or during the course and as a part of, a judicial proceeding.” Restatement (Second) of Torts (1977), 586 (1977). Although section 586 makes no specific mention of post-settlement communications, attorney-client discussions are certainly “part of” a judicial proceeding because an attorney has a legitimate and important need to communicate with a client about the events that preceed a settlement.
The Kittler court observed that soliciting clients in good faith and for a case under serious consideration, is “an initial step in the litigation process.” Kittler, 535 N.W.2d at 655, 657. Discussions with clients about the mechanics of a lawsuit’s resolution may be the sine qua non in the litigation’s conclusion. The absence of this discourse could be an act of malpractice or violation of the Minnesota Rules of Professional Conduct. SeeMinn. R. Prof. Conduct 1.4 cmt. (stating that even when a client delegates settlement authority to the attorney, “the client should be kept advised of the matter”). Certainly clients’ interests are not furthered if their attorneys are afraid to be frank with them about all aspects of their case, including settlement. Plack argues that, if the case at hand was settled, then Stempel’s observations about Plack’s pre-trial behavior could not be a “step in the litigation process.” But this fails to take into account the full extent of an attorney’s representational duties. An attorney’s zealous representation of his client’s is without predetermined boundary.
The Illinois Court of Appeals when facing a similar issue noted
[a]n attorney must be free to discuss with the client the outcome of the litigation, future strategies, if any, and generally respond to inquiries from the client without fear of civil liability. Indeed, it is incumbent upon an attorney, following the conclusion of a legal proceeding or some portion thereof, to explain fully to the client what has occurred, why it has occurred, and the ramifications. Such explanation may require an assessment of the conduct of opposing counsel, other parties to the litigation, witnesses, and even the court. * * * [T]here is a “tremendous public interest” in protecting and facilitating this type of open communication and commentary. Accordingly, we hold that the absolute privilege which attaches to defamatory statements made by an attorney incidental to a pending legal proceeding also applies to post-litigation defamatory statements made by an attorney to the client he or she represented in such proceeding.
Golden v. Mullen, 693 N.E.2d 385, 390 (Ill. App. Ct. 1998).
Plack argues that the Illinois court’s rationale doesn’t apply to the present situation because the nature of the communication is different. In Golden, the disputed communication was a disparaging comment about opposing counsel to justify an attorney’s legal fees. Id. at 387. In the present case the offensive remarks were about a hired expert, offered for the basis to refuse his fees. While there are some superficial differences between the facts of this case and those in Golden, it is not apparent why this distinction is material. Both statements were explanations to the client regarding some aspect of the prior proceeding. In fact, the Golden court specifically noted that, in addition to opposing counsel and others, protected post-trial attorney-client communication might involve an assessment of the conduct of witnesses as well. Id. at 390.
FOLEY, Judge (dissenting)
I respectfully dissent. I submit that as applied here by the majority judicial privilege protects the attorney involved even if he defamed and misrepresented appellant after the case was settled. This case was settled. Appellant claims he was defamed by respondent’s attorney who purportedly told the insurance company that appellant would not testify at trial as to the contents of his investigative report and thus respondent was forced to settle the case. Appellant contends this was a misrepresentation by respondent’s attorney and has resulted in a negative economic impact on appellant. All that remained when the case was settled was for appellant, respondent’s own expert witness, to be compensated for his time and expenses.
The protection by the doctrine of judicial privilege, as I understand it, is extended to attorneys for the interest and benefit of the party they represent. See Mathis v. Kennedy, 243 Minn. 219, 67 N.W.2d 413 (1954). The Mathis court spoke of allowing attorneys full freedom of speech in advocating the rights of their clients. Id. at 224-25, 67 N.W.2d at 417.
My concern with this doctrine under the facts here is whether misrepresentation by an attorney after settlement of a case should be protected. The high standard imposed on attorneys by the canons should come into play. “It is professional misconduct for a lawyer to: * * * (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation.” Minn. R. Prof. Conduct 8.4(c) (emphasis added). The privilege should not apply here and fact issues as to misrepresentation should be submitted to a jury.
This case provides an excellent opportunity for the supreme court to revisit the doctrine of judicial privilege and set out the limitations of the protection in the light of the Canons of Ethics.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.