Rosenthal v. Irell & Manella

• Decision Date: 17 August 1982
• Citation: 185 Cal.Rptr. 92,135 Cal.App.3d 121
• Court: California Court of Appeals Court of Appeals
• Parties: Jerome B. ROSENTHAL, et al., Plaintiffs and Appellants, v. IRELL & MANELLA, et al., Defendants and Respondents. Civ. 63270.

Page 92

185 Cal.Rptr. 92

135 Cal.App.3d 121

Jerome B. ROSENTHAL, et al., Plaintiffs and Appellants, v. IRELL & MANELLA, et al., Defendants and Respondents.

Civ. 63270.

Court of Appeal, Second District, Division 2, California.

Aug. 17, 1982.

Hearing Denied October 13, 1982.

Gerald Goldfarb, Los Angeles, for plaintiffs and appellants.

Irell & Manella by Robert L. Winslow, Thomas W. Johnson, Jr., Peter J. Gregora, Scott D. Baskin, Los Angeles, in pro. per.

COMPTON, Acting Presiding Justice.

Plaintiff in an action for inducing breach of contract, intentional interference with prospective economic advantage and intentional infliction of emotional distress, appeals from a judgment of dismissal entered after the trial court sustained a demurrer without leave to amend. We affirm.

During a period of some eighteen years, from 1950 until 1968, plaintiff Jerome B. Rosenthal (Rosenthal), an attorney, and the law firms with which he was associated, acted as legal counsel for entertainer Doris Day, her husband Martin Melcher and their various family corporations.

Following the death of Melcher in 1968, extensive litigation erupted, which for purposes of simplicity we shall describe as being between Day and Rosenthal. These controversies, consisting of eleven suits filed by Rosenthal and two filed by Day, most of which contained cross-complaints, and all of which involved the relationship between the parties for the period described, were ultimately consolidated for trial without a jury in 1974.

Since Rosenthal was insured against professional liability by six insurance companies, the latter undertook his defense and provided counsel for that purpose. ¹ Day was represented at all times during this litigation by the firm of Irell & Manella who are the defendants in the instant action.

On March 31, 1975, a judgment was rendered against Rosenthal and in favor of Day for more than 26 million dollars, upon findings of fact and conclusions of law to the effect Rosenthal had been negligent, had breached his fiduciary duties and, to some extent, has been guilty of fraudulent conduct.

Thereafter, five of the insurance carriers [the Insurer Group] continued with Rosenthal in perfecting an appeal of the judgment. ² While the appeal was pending, Irell & Manella and Robert L. Winslow [Irell & Manella], attorneys for Day and respondents herein, entered into discussions with the Insurer Group which culminated in a settlement in August of 1977 whereby, in general, the judgment against Rosenthal would be satisfied. Based thereon, counsel which had been supplied for Rosenthal by the Insurer Group sought and obtained from Division Three of this court, where the appeal was pending, leave to withdraw.

Rosenthal rejected this apparent disposition of the matter based on his contentions (a) that each of the Insurer Group's policies of insurance provided specifically that settlement could be effected only with his written consent and (b) that the purported settlement was arrived at without his knowledge or agreement. ³

In permitting counsel to withdraw, Division Three ordered that briefing in the matter be held in abeyance to permit Rosenthal to institute a declaratory relief action in the superior court to determine the duty, if any, of the insurer group to continue to provide him with counsel on the appeal.

Such an action was instituted but its parameters were considerably expanded when Rosenthal joined as defendants in the action, Day's lawyers, the firm of Irell & Manella and Robert Winslow, a member of that firm. It is this latter facet of the litigation which now engages our attention.

Rosenthal, in his complaint, in effect accuses his adversary's lawyers of inducing his insurance carriers to breach their contract with him by settling his financial liability and withdrawing from their representation of him in the appeal all without his consent.

It should be observed that the appeal in the underlying case is still pending and viable. The nature of the judgment appealed from is such that a resolution of the validity of Rosenthal's affirmative claims, claims on which he has supplied his own counsel, will in large measure determine the validity of Day's claims against him.

Thus, Rosenthal has not been left naked of representation on appeal. It appears simply that he is desirous of having counsel provided by the insurer group to handle the laboring oar. The damages he allegedly suffered at the hands of defendants are said to flow simply from the delay in the resolution of the appeal and his ultimate vindication, a delay occasioned by the need to litigate the insurer group's duty to participate in the appeal.

The trial court's order sustaining the demurrer was based on application of Civil Code section 47 ⁴ and the statute of limitations prescribed in Code of Civil Procedure section 340.6. We do not reach the latter issue since we have concluded that Civil Code section 47 bars Rosenthal's action against these lawyer defendants.

The privilege created by Civil Code section 47, though part of the statutory law dealing with defamation, has evolved through case law application into a rather broad protective device which attaches to various classes of persons and applies to types of publications and in types of actions not traditionally identified with the field of defamation.

The initial departure from limiting the privilege to defamation actions came in Albertson v. Raboff (1956) 46 Cal.2d 375, 295 P.2d 405, where it was held that the privilege would serve to bar an action for disparagement of title based on the filing of a lis pendens.

In Albertson, at page 379, 295 P.2d 405, it was held, " 'The publication of the pleadings is unquestionably clothed with absolute privilege, and we have concluded that the republication thereof by recording a notice of lis pendens is similarly privileged.' "

From that point application of the privilege has branched out in essentially two directions. First, it has been applied to defeat tort actions based on publications in protected proceedings but grounded on differing theories of liability, to wit, abuse of process (Thornton v. Rhoden (1966) 245 Cal.App.2d 80, 53 Cal.Rptr. 706; Twyford v. Twyford (1976) 63 Cal.App.3d 916, 134 Cal.Rptr. 145; Younger v. Solomon (1974) 38 Cal.App.3d 289, 113 Cal.Rptr. 113; Umansky v. Urquhart (1978) 84 Cal.App.3d 368 148 Cal.Rptr. 547, intentional infliction of mental distress (Kachig v. Boothe (1971) 22 Cal.App.3d 626, 99 Cal.Rptr. 393; Lerette v. Dean Witter Organization, Inc. (1976) 60 Cal.App.3d 573, 131 Cal.Rptr. 592; Pettitt v. Levy (1972) 28 Cal.App.3d 484, 104 Cal.Rptr. 650; Scott v. McDonnell Douglas Corp. (1974) 37 Cal.App.3d 277, 112 Cal.Rptr. 609, inducing breach of contracts (Agostini v. Strycula (1965) 231 Cal.App.2d 804, 42 Cal.Rptr. 314; Scott v. McDonnell Douglas Corp., supra); interference with prospective economic advantage (Brody v. Montalbano (1978) 87 Cal.App.3d 725, 151 Cal.Rptr. 206; fraud and negligence (Pettitt v. Levy, supra).

Secondly, the privilege has been applied to publications which were private communications between parties and which communications were related not only to actual but potential court actions.

"The absolute privilege attaches to any publication that has any reasonable relation to the action and is made to achieve the objects of the litigation, even though published outside the courtroom and no function of the court or its officers is involved." (Pettitt v. Levy, supra, 28 Cal.App.3d 484, at 489, 104 Cal.Rptr. 650; also see O'Neil v. Cunningham (1981) 118 Cal.App.3d 466, 173 Cal.Rptr. 422; Izzi v. Rellas (1980) 104 Cal.App.3d 254, 163 Cal.Rptr. 689; Larmour v. Campanale (1979) 96 Cal.App.3d 566, 158 Cal.Rptr. 143; Lerette v. Dean Witter Organization, Inc., supra.)

In the case at bench Rosenthal pleaded in conclusionary fashion that defendants intentionally "induced" the insurer group to breach its contract with Rosenthal. It is this inducement which is at the heart of all of Rosenthal's theories of liability.

Since the complaint does not further enlighten us as to the nature of the inducement we can only conclude that it took the form of utterances, either written or oral--hence "publications". We assume that if Irell & Manella had held a gun to the head of the insurer group or held the presidents of the various carriers hostage, such facts would have been pleaded.

Reduced to its...