Litigation Privilege Extends to Post-Judgment Collection Efforts

Here’s a bad idea. Allow a default judgment to be entered against you. Then, when your judgment creditor starts to levy on your property, claim you never got notice of the action, accuse your opponent of filing a false proof of service, and then sue your opponent for abuse of process.

Everyone can now agree it’s a bad idea because the California Supreme Court recently rejected that ploy in Rusheen v. Cohen et al. (2006) California Supreme Court, Case No.S123203. But for a while there, it looked as if it just might work.

FACTS IN RUSHEEN V. COHEN

In Rusheen v. Cohen, supra, Niki and Maurice bought a house from Rusheen’s father. But Rusheen, who lived in the house, refused to leave after escrow closed. So Niki and Maurice applied for a writ of possession and a temporary restraining order to get him out. Rusheen sought his own restraining order to make them stop bothering him. But the court ruled against Rusheen and ordered him to leave.

Next, Niki and Maurice moved to declare Rusheen a vexatious litigant so he would have to post a bond to continue filing pleadings. While the vexatious-litigant motion was pending, Cohen (Niki’s lawyer) filed a new action against Rusheen for property damage, fraud, and other claims.

Rusheen failed to oppose the vexatious-litigant motion. The court found Rusheen a vexatious litigant and ordered him to post a $15,000 bond before filing any more pleadings. Rusheen failed to appear at the hearing, defaulted to the new complaint for property damage, etc., and moved out of state to Nevada.

Armed with a default judgment, Niki began to execute on Rusheen’s property. Rusheen moved to vacate the default and set aside the vexatious litigant order, claiming he had no notice of the proceedings. Cohen submitted proofs of service and the trial court rejected Rusheen’s attempt to vacate the default judgment. The appellate court reversed the trial court.

Now, with momentum on his side, Rusheen filed an ambitious cross-complaint against Cohen personally for abuse of process based on his actions as Niki’s lawyer. Rusheen alleged that Cohen failed to properly serve the complaint, took an “improper” default, filed false proofs of service and wrongly executed on Rusheen’s Nevada property. Rusheen, however, should have quit while he was ahead.

On Cohen’s motion, the trial court struck Rusheen’s cross-complaint under the anti- SLAPP statute. Cohen’s actions, ruled the trial court, were privileged under Civil Code §47, subdivision (b): the litigation privilege.

Rusheen appealed.

APPELLATE OPINION

The issue before the Second Appellate District was whether the litigation privilege applied to Cohen’s post-judgment collection efforts. The appellate court faced a diametric split in decisions by other appellate courts.

On the one hand, Brown v. Kennard (2001) 94 Cal.App.4th 40 (“Brown”), arising from the Third Appellate District, held that the litigation privilege applied to both the process of applying for the writ of execution and the levy on the judgment debtor’s property.

On the other hand, Drum v. Bleau, Fox & Associates (2003) 107 Cal.App.4th 1009 (“Drum”), by 107 Cal.App.4th 1009 (“Drum”), by the Second Appellate District, Division Eight, held that although applying for a writ of execution is privileged, the act of levying on a judgment is not.

The Rusheen v. Cohen appellate court decided to follow the Drum decision and reinstated Rusheen’s cross-complaint against Cohen. The stage thus set, like a hypo on obtaining high-court review, the California Supreme Court took the case to address the clear split among the Appellate District Courts.

CALIFORNIA SUPREME COURT DECISION

The Supreme Court’s Decision in a unanimous opinion drafted by Justice Chin found that endless rounds of sour grapes litigation are a social evil far worse than allegedly false evidence occasionally submitted in underlying actions. False evidence, after all, is susceptible of cross-examination in the underlying action.

Without the litigation privilege to encourage candor and insulate the litigants, generations of litigation could conceivably spew forth to avenge unpopular testimony given in prior actions. Such vengeful litigation would chill the assertion of rights and discourage the orderly resolution of civil disputes.

The Supreme Court noted that although the litigation privilege originated “with reference to defamation [citation], the privilege is now held applicable to any communication, whether or not it amounts to a publication [citations], and all torts except malicious prosecution.”

Rusheen v. Cohen, supra, at p. 8, citing Silberg v. Anderson (1990) 50 Cal.3d 205, 212. The litigation privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other authorized participants; (3) to achieve the objects of the litigation; and (4) that have “some connection or logical relation to the action.”

Ibid. The Rusheen Court felt that a threshold issue to the privilege’s application was to determine whether the defendant’s conduct was “communicative” or “non-communicative.” Finding the allegedly false proof of service to be communicative, the Court easily found the threshold factor to be satisfied.

The next issue was whether post-judgment collection activities fell within the privilege. The Court found they did, reasoning that such activities have recently been found privileged in several courts of appeal citing various cases.

The Supreme Court reversed the Court of Appeal’s decision and disapproved the Drum opinion to the extent that it found the gravamen of collection activities to be “the taking” of property, as opposed to the filing of privileged communications in support of collection activities. The Court’s holding, then, was that “where the gravamen of the complaint is a privileged communication (i.e., allegedly perjured declarations of service) the privilege extends to necessarily related non-communicative acts (i.e., the act of levying).”

Rusheen v. Cohen, supra at p. 15. Thus, the enforcement of the judgment in reliance on privileged actions such as filing pleadings, giving testimony and the like, is a derivative action which is also privileged. In this author’s opinion, the Supreme Court raised more questions than it answered by attempting to distinguish “communicative” from “non-communicative” acts to determine whether the privilege applies. It should have been enough to strike Rusheen’s cross-complaint on the public policy grounds that it is repugnant to orderly dispute resolution, and by strictly applying the elements of the litigation privilege.

Cohen’s proof of service was unquestionably filed (1) in a judicial proceeding, (2) by a litigant, (3) to achieve the object of the litigation, and (4) logically related thereto. By first asking whether the proof of service was “communicative”, the Court missed an opportunity to head off future arguments about whether particular litigation tools – say, for example, subpoenas or notices of appeal – are or are not “communicative.”

Another question left unanswered in the Rusheen decision is: What exactly has become of the tort of abuse of process? The Supreme Court stated that “expansion of the litigation privilege here necessarily narrows the scope of the tort of abuse of process in the judgment enforcement process.” Rusheen v. Cohen, supra, at p. 16.

But truly, I defy you to concoct a viable claim of abuse of process that cannot be trumped by the litigation privilege in the post-Rusheen era. Remember, the privilege is “absolute,” meaning malicious conduct is still immune from liability. Rubin v. Green (1993) 4 Cal.4th 1187, 1193. Not that I think that’s a bad thing.

In the final analysis, it is far more desirable to eliminate post-litigation challenges to what happened before than it is to encourage them. If you have a problem with a motion, oppose it. If you think the other side is lying, expose them on the stand. Suing them in a subsequent action makes it seem as though you didn’t have the merits the first time around, and now you are just disgruntled. Disgruntled to the point of being vexatious.

MEET THE AUTHOR

Gordon Levinson is a former insurance defense and personal injury attorney. He has represented some of the largest insurance companies in North America. Over the course of his career, Mr. Levinson successfully represented more than 3,000 unique clients. Now, he owns and operates the Levinson Law Group, a practice specializing in representing the victims and family members of life-changing tragedies.

If you have questions about how Mr. Levinson and team can help you with your case, contact us today at 760-642-5475