WINSTON LAMBERT v. CHRIS CARNEGHI

Filed 1/11/08

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

Story continues from Part I

We also find unpersuasive the Canadian case that appellants cite in their reply brief. (Ivarson v. Lloyd's Underwriters, Kelowna No. 39922 [2002] B.C.J. 2646, 2002 BCSC 1627 [2002 BC.C Lexis 5197].) First, we are of course not bound by a decision from a court in British Columbia, which obviously did not analyze Californias Insurance Code. Second, the court in Ivarson did not hold, as appellants claim, that an appraiser is not subject to arbitral immunity. The court specifically stated that [i]t may be that an appraiser does enjoy immunity against a claim for damages in negligence or breach of contract for his or her actions in an appraisal process, but that summary dismissal was inappropriate on the record before it. (Italics added.)

Appellants argue, once again for the first time in their reply brief, that because the appraisal proceeding at issue was an atypical anomaly among appraisals, setting the precedent of immunity for all appraisers based upon the record in this case would be very unwise. (Unnecessary capitalization removed.) They claim, without citation to any source whatsoever, that it is rare for an umpire to be selected in a fire insurance appraisal, and that almost no appraisals involve a hearing. Even assuming arguendo that those unsupported facts are true, it does not follow that an appraiser should not be subject to arbitral immunity. Appellants claim that providing arbitral immunity to appraisers could lead to unintended [and] disastrous results, because arbitrators may escape liability when they ignore irrefutable proof that supports a partys position. The remedy for arbitrator misconduct lies in vacation of the award under [Code of Civil Procedure] section 1286.2. (Coopers, supra, 212 Cal.App.3d at p. 536; see also Klubnikin v. California Fair Plan Assn., supra, 84 Cal.App.3d at p. 398.) Appellants were of course free to petition the trial court pursuant to the Arbitration Act to vacate the appraisal award. (E.g. Jefferson Ins. Co. v. Superior Court, supra, 3 Cal.3d at p. 401; Gebers v. State Farm General Ins. Co., supra, 38 Cal.App.4th at p. 1650.) Again, having failed to do so, they may not now collaterally attack the award by suing an appraiser for any alleged acts or omissions in the appraisal process.

Finally, as respondent Carneghi correctly notes, appellants did not seek leave from the trial court to amend their complaint, and they do not argue on appeal that the trial court abused its discretion in sustaining Carneghis demurrer without leave to amend. Although appellants were not required to request below to amend their pleading in order to raise the issue on appeal (Code Civ. Proc.,  472c, subd. (a)), they have not presented any reason that they should have been granted leave to amend their complaint, and our review has revealed none. The trial court did not err in sustaining Carneghis demurrer without leave to amend.

A.     Sustaining Daileys Demurrer Was Error.

In arguing that the trial court should sustain his demurrer without leave to amend, respondent Dailey argued below that his expert testimony was protected by the litigation privilege. (Civ. Code,  47, subd. (b).) In their opposition, appellants argued that the litigation privilege protects only experts of a party opponent, not experts hired by a plaintiff. They relied on Mattco Forge, Inc. v. Arthur Young & Co. (1992) 5 Cal.App.4th 392 (Mattco), which held that the litigation privilege does not protect a negligent expert witness from liability to the party who hired him. At the hearing on Daileys demurrer, the trial court stated that it was inclined to overrule the demurrer. The trial court did not rule on the demurrer at the hearing (as it had done with Carneghis demurrer), but ultimately sustained Daileys demurrer without leave to amend. Appellants contend that the trial court erred by sustaining Daileys demurrer.

Appellants first argue that because the appraisal proceeding did not constitute an arbitration, the litigation privilege did not apply.[1] We have already rejected appellants argument that the appraisal proceeding did not constitute an arbitration. Additionally, appellants again argue on appeal, relying on Mattco, supra, 5 Cal.App.4th 392, that the litigation privilege does not apply where a plaintiff sues his own expert for negligence. This contention has merit.

Civil Code section 47, subdivision (b) provides that a privileged publication is one made [i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure, with exceptions not relevant here.

Several policies underlie the privilege. First, it affords litigants free access to the courts to secure and defend their rights without fear of harassment by later suits. Second, the courts rely on the privilege to prevent the proliferation of lawsuits after the first one is resolved. Third, the privilege facilitates crucial functions of the trier of fact. (Mattco, supra, 5 Cal.App.4th at p. 402.) [I]n immunizing participants from liability for torts arising from communications made during judicial proceedings, the law places upon litigants the burden of exposing during trial the bias of witnesses and the falsity of evidence, thereby enhancing the finality of judgments and avoiding an unending roundelay of litigation, an evil far worse than an occasional unfair result. (Silberg v. Anderson (1990) 50 Cal.3d 205, 214.)

The statutory privilege protects attorneys, judges, jurors, witnesses, and other court personnel from liability arising from publications made during a judicial proceeding. [Citation.] Although originally enacted in the context of defamation actions, the privilege now applies to any communication, whether or not it amounts to a publication [citations], and all torts except malicious prosecution. [Citations.] Further, it applies to any publication required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is involved. [Citations.]  (Mattco, supra, 5 Cal.App.4th at p. 402.)

The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. (Silberg v. Anderson, supra, 50 Cal.3d at p. 212.) The litigation privilege is broadly applied [citation] and doubts are resolved in favor of the privilege [citation]. (Ramalingam v. Thompson (2007) 151 Cal.App.4th 491, 500.) The privilege protects statements made in private, contractual arbitration proceedings in order to encourage witnesses to provide open and candid testimony. (Moore v. Conliffe, supra, 7 Cal.4th at p. 649.) It has been used to protect the expert witness of a party opponent (id. at pp. 637-639), as well as experts jointly hired by parties (e.g., Ramalingam v. Thompson, supra, 151 Cal.App.4th at p. 494; Gootee v. Lightner (1990) 224 Cal.App.3d 587, 589).

The court in Mattco held that the litigation privilege does not bar a plaintiffs lawsuit against an expert witness hired by the plaintiff to assist him in litigation. (5 Cal.App.4th at page 406.) Mattco Forge, Inc. (Mattco) hired an accounting firm to provide litigation support in a federal action against an electric company, including calculating and testifying about profits Mattco allegedly lost because of the electric companys conduct. (Id. at pp. 396, 399.) To calculate estimated lost profits, Mattco recreated estimate sheets and gave them to their accountants. (Id. at p. 397.) The federal district court held that Mattco created and produced fraudulent documents, with an intent to deceive its party opponent and the court. (Ibid.) The court ruled that Mattco had engaged in fraudulent conduct, and ordered the company to pay defendant electric company $1.4 million in sanctions or have its case dismissed. (Ibid.) The accounting firm never participated in the federal court proceedings. (Id. at p. 398.) Mattco later sued the firm, alleging professional malpractice and other torts. (Id. at pp. 395-396.)

The Mattco court reversed a grant of summary judgment, finding that the litigation privilege did not bar the lawsuit against the accounting firm. (Mattco, supra, 5 Cal.App.4th at p. 406.) The court concluded that although the privilege bars suits against the expert witness of a party opponent, and against an expert jointly retained by the parties, it does not protect ones own expert witnesses. (Id. at pp. 404-405.) The court explained, In such a situation, policy considerations that would usually favor the privilege here argue against applying it. Distinguishing cases holding the privilege applies to jointly retained experts, the court stated,  Freedom of access to the courts and encouragement of witnesses to testify truthfully will be harmed if neutral experts must fear retaliatory lawsuits from litigants whose disagreement with an experts opinions perforce convinces them the expert must have been negligent in forming such opinion. (Gootee v. Lightner, supra, 224 Cal.App.3d at p. 593.) (Id. at p. 404, italics added.) In both Mattco and the present case, the expert witness being sued was not a neutral expert, but rather was retained by the party suing him. The Mattco court concluded that none of the cases that have applied the litigation privilege to jointly retained experts provides a precedent for applying the statutory privilege to protect a friendly expert witness. (Id. at p. 405.)

The Mattco court discussed at length one case which did apply the litigation privilege to a friendly expert, the Washington state Supreme Court decision in Bruce v. Byrne-Stevens & Associates Eng. (Wash. 1989) 776 P.2d 666 (Bruce). After noting that Bruce is not controlling precedent in California and that it relied on the common law immunity of parties and witnesses (not on a statute, as in California), the Mattco court emphasized that the suit in Bruce followed the experts trial testimony, while the suit in Mattco never proceeded to trial. If an expert witnesss negligence and breach of contract cause dismissal of the party who hired that expert witness, that does not expand freedom of access to the courts. Applying the privilege in this circumstance does not encourage witnesses to testify truthfully; indeed, by shielding a negligent expert witness from liability, it has the opposite effect. Applying the privilege where the underlying suit never reached the trial stage would also mean that the party hiring the expert witness would have to bear the penalty for the expert witnesss negligence. That result would scarcely encourage the future presentation of truthful testimony by that witness to the trier of fact. (Mattco, supra, 5 Cal.App.4th at p. 404.)

The Mattco court further noted that the policy of placing  upon litigants the burden of exposing during trial the bias of witnesses and the falsity of evidence, thereby enhancing the finality of judgments and avoiding an unending roundelay of litigation  did not logically apply in a pretrial dispute between a party and its own expert witness that arose during discovery. (Mattco, supra, 5 Cal.App.4th at p. 406.) In the present case, appellants complaint primarily focused on Daileys testimony at the appraisal proceeding at issue. Appellants alleged that they hired Dailey to define, describe and estimate the replacement cost of their home, and that Dailey was negligent in failing to correct the umpires fundamental misunderstanding of the term replacement cost.[2] (Italics omitted.)

Appellants argue that Mattco was not limited in its application to those cases where the expert does not testify, and that it held generally that the policies underlying the litigation privilege never apply where a party sues his own expert. Subsequent California appellate cases have cited Mattcowith approval, without necessarily limiting its application to cases where the expert does not testify. (Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1541 [Mattco, supra, 5 Cal.App.4th 392, considered whether the litigation privilege protected an expert witness who was sued for malpractice by his client based on the experts testimony at trial and held that the privilege did not apply; key purpose of promoting freedom of access to courts and encouraging truthful testimony without fear of retaliatory lawsuits not furthered by shielding expert from malpractice suit by own client]; Wentland v. Wass (2005) 126 Cal.App.4th 1484, 1493 [Mattco found policies underlying litigation privilege not furthered in suit in contract and tort against expert hired to assist hiring party; encouraging expert to testify truthfully advanced only by shielding neutral or adverse experts from liability]; Ramalingam v. Thompson, supra, 151 Cal.App.4th at p. 501 [where a party brought an accounting malpractice action against its own allegedly negligent experts, it was held that the litigation privilege did not apply . . . . [T]he litigation privilege does not exist to protect ones own expert witness, but to protect adverse witnesses from suit by opposing parties,  citing Mattco, supra, 5 Cal.App.4th at pp. 395, 405].)

Additionally, as appellant notes, the majority of out-of-state cases addressing the issue of the applicability of the litigation privilege to a partys own witness have reached a similar conclusion. (Pollock v. Panjabi (Conn.Super. 2000) 781 A.2d 518 [policy upon which witness immunity in Connecticut basedhaving witnesses speak freelynot implicated in suit against partys own expert]; Boyes-Bogie v. Horvitz & Associates (Mass.Super.Ct. 2001) 14 Mass.L.Rptr. 208 [2001 Mass.Super. Lexis 582] [doctrine of witness immunity does not bar claim for negligence against expert retained to provide litigation support services by retaining party]; LLMD of Michigan Inc. v. Jackson-Cross Co. (Pa. 1999) 740 A.2d 186 [doctrine of witness immunity does not bar professional malpractice action by party who hired expert]; Murphy v. A.A. Mathews (Mo. 1992) 841 S.W.2d 671 [witness immunity not applicable to litigation support services; court declines to reach applicability to actual testimony of expert]; Levine v. Wiss & Co. (N.J. 1984) 478 A.2d 397 [court-appointed accountants not immune from suit]; Marrogi v. Howard (La. 2002) 805 So.2d 1118 [expert who provided pretrial analysis and litigation support services not immune from suit merely because he or she provides testimony]; James v. Brown (Tex. 1982) 637 S.W.2d 914 [negligent diagnoses may be actionable despite reports to probate judge being privileged].) Two out-of-state cases have, however, reached a contrary conclusion. (Bruce, supra, 776 P.2d 666 [expert witness who testified for party immune from suit by that party]; Panitz v. Behrend (Pa. Super. 1993) 632 A.2d 562 [expert medical witnesses have absolute immunity for testimony given, even if adverse to party hiring them].) Although policy arguments may be made on both sides, we believe that the majority view is the better reasoned approach to this issue.

As the court in Boyes-Bogie, supra, 14 Mass.L.Rptr. 208 [2001 Super. Lexis 582] explained, In Bruce v. Byrne-Stevens & Assocs. Engrs., Inc. [citation] a plurality of the Washington Supreme Court held that witness immunity barred a malpractice suit by plaintiffs against an expert they had retained to calculate the costs of corrective work. . . . [] The plurality in Bruce focused on the chilling effect that the threat of subsequent litigation would have on the experts testimony. . . . [A] loss of objectivity would result because experts would be encouraged to assert the most extreme position favorable to the party for whom they testify. [Citation.] Moreover, imposition of civil liability on expert witnesses would discourage anyone who is not a professional expert witness from testifying because only professional witnesses will be in a position to carry insurance covering such liability. (Ibid.) The Boyes-Bogie court was not persuaded by the first argument, and although the second caused it greater concern, it ultimately disagreed with the Bruce, supra, 776 P. 2d 666 conclusion, stating, Like other courts which have considered the issue, I do not agree with the reasoning of the plurality in Bruce that the prospect of civil liability . . . will discourage frank and objective testimony by experts. First, it ignores the reality that, by definition, expert witnesses retained by a party are not objective witnesses. . . . Moreover, the existence of liability will . . . encourage experts to be more careful and thorough resulting in more accurate, reliable testimony. . . . [] The second factor relied on by the plurality in Bruce . . . is more troublesome. . . . Although this issue could presumably be addressed by contract, the prospect of liability may well hamper the ability of the parties to secure the litigation services of an expert who does not derive a significant portion of his income from providing such services. (Ibid.) The Boyes-Bogie court balanced this concern against the fact that witness immunity is an exception to the general rules of liability. . . .  and against the fact that the negligent expert would enjoy immunity at the expense of the right of the party who hired and paid him to obtain competent performance, and ultimately concluded that witness immunity does not bar a claim for negligence against an expert by the party who retained him. (Ibid.) We agree.

Like the court in Boyes-Bogie, supra, 14 Mass.L.Rptr. 208 [2001 Super. Lexis 582], we have considered the policy reasons behind the litigation privilege and their applicability if the privilege is applied to a partys own expert witness. First, it is argued that application of the privilege would promote truthful testimony. As noted in Boyes-Bogie, this ignores the reality that an expert retained by one party is not an unbiased witness to begin with, and that threat of liability for negligence may actually encourage more careful and reliable evaluation of the case by the expert. The threat of a charge of perjury, argued by proponents of the application of the privilege to be an alternative deterrent to untruthful testimony, may not be sufficient. Perjury requires that the witness willfully state as true a material matter which he knows to be false. (E.g., Chein v. Shumsky (9th Cir. 2004) 373 F.3d 978.) Claims of negligence by an expert witness may be based, in many cases, on qualitative differences of opinion. The fact that the party who hired the expert disagrees with his opinion, that other experts disagree with it, or even that the expert in question later changes his mind, does not suffice to prove an allegation of perjury. As the California Supreme Court has explained, opinion testimony does not constitute perjury merely because the witness later changes his or her opinion, nor does it constitute perjury merely because the initial opinion later proves to be incorrect. Testimony is perjured only if the witness does not honestly hold the opinion to which he or she testifies. (In re Robbins (1998) 18 Cal.4th 770, 800-801, fn. 24.) In fact, the court in Robbins noted that even if the expert later indicated that he felt unqualified, uncomfortable, and pressured into testifying, this does not in itself suggest, much less does it demonstrate, that his trial testimony was in any way false or that he committed perjury. . . . (Ibid.) Thus, a charge of perjury based upon an experts opinion is quite difficult to prove. Since a criminal charge of perjury has to be proven beyond a reasonable doubt, and must be established either by testimony of two witnesses or one witness and corroborating circumstances (Pen. Code,  118, subd. (b); People v. Trotter (1999) 71 Cal.App.4th 436; People v. Di Giacomo (1961) 193 Cal.App.2d 688), a party might find it quite difficult to convince a prosecutor to file a perjury charge based upon an experts stated opinion.[3] Further, professional experts derive a substantial portion of their income from this line of work, and their reputation for honesty and integrity would logically impact the frequency of their future retention as expert witnesses. Their financial stake in their reputation would arguably, therefore, outweigh their interest in shading their testimony in order to avoid a subsequent lawsuit by one individual party who has retained them.

Another policy favoring application of the litigation privilege is the need to promote finality of judgments by discouraging endless collateral litigation. The litigation privilege does not, however, prevent attorneys from being subject to malpractice claims by their former clients, based upon the attorneys alleged negligent representation, for if it also protected an attorney from any suit by a former client, no malpractice suit could be brought. [Citation.] (Kolar v. Donahue McIntosh & Hammerton, supra, 45 Cal.App.4th at pp. 1541-1542, italics omitted; Mattco, supra, 5 Cal.App.4th at p. 406.) If an expert chosen by a partys attorney is negligent, one might surmise that the dissatisfied client will sue his attorney (especially if the party is prevented from suing the expert due to the application of the litigation privilege), leading to collateral litigation in any event. Further, we see no reason why the attorney should be liable for choosing the allegedly negligent expert, while the expert himself would be protected from liability by application of the litigation privilege. If the litigation privilege were to apply to an expert retained by the party attempting to sue him, the partys attorney would potentially bear the entire financial responsibility for the experts negligence and yet the most culpable party, the expert, would totally escape accountability.

It is also argued that fewer experts would be willing to become involved in litigation if they could later be sued by the party who retained them. We doubt that disallowing the application of the litigation privilege in this situation would substantially impact the number of experts willing to testify in court cases. Boyes-Bogie, supra, 14 Mass.L.Rptr. 208 [2001 Super. Lexis 582] discusses this issue, both as to expert witnesses who derive the majority of their income from litigation work (professional expert witnesses) and as to nonprofessional expert witnesses. First, the professional expert witness industry, undeniably a large part of our court system, could lessen the potential financial impact of future suits by the party retaining them. Individuals who testify as professional experts can obtain liability insurance to cover such potential liability; the cost of such insurance could be passed along to the client. If the expert is not a professional one who derives most of his income from litigation-related work, the issue of potential liability of the expert for negligence could certainly be addressed contractually.

Finally, we are not concerned that our refusal to extend the litigation privilege to a partys own expert will negatively impact the integrity of the judicial process. Again, experts retained by a party are partisan witnesses, and we fail to see how permitting them to be sued would undermine the judicial process any more than permitting attorneys to be sued by their own clients. In this regard, an individually retained expert must be distinguished from a jointly retained, or court appointed, expert. The litigation privilege has been held to apply to jointly retained or court-appointed experts. (E.g., Ramalingam v. Thompson, supra, 151 Cal.App.4th at p. 494; Gootee v. Lightner, supra, 224 Cal.App.3d at p. 589.) These neutral experts, whose testimony and opinions are intended to assist the trier of fact rather than to advocate a position for a party, are arguably an integral part of the judicial process. We view their role in the judicial system as distinct from that of a partisan expert retained by an individual party and conclude that permitting individually and privately retained expert witnesses to be sued for their negligence will not undermine the judicial process.

For all these reasons, we hold that the litigation privilege does not apply to prevent a party from suing his own expert witness, even if that suit is based upon the experts testimony.[4]

III.
Disposition

The judgment is reversed to the extent the trial court sustained respondent Daileys demurrer. In all other respects the judgment is affirmed. The cause is remanded to the trial court for further proceedings consistent with this opinion. Each party shall bear its own costs on appeal.

_________________________

Sepulveda, J.

We concur:

_________________________

Ruvolo, P. J.

_________________________

Rivera, J.

Lambert v. Carneghi (A113388)

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[1] In fact, this is the only argument they raised in their opening brief, and they did not address the application of the litigation privilege until their reply to Daileys brief. They claim that they did not address the litigation privilege sooner because they believe that the difference between an appraisal and an arbitration is sufficiently clear so as to make the extension of either of the drastic shields of arbitral immunity or the litigation privilege to an appraiser in an appraisal so wholly inappropriate and unjustified as to merit no finer a point or further discussion. We disagree with appellants analysis, but nonetheless provided Dailey the opportunity to brief the issue pursuant to Government Code section 68081.

[2] Although not specifically addressed in Mattco, supra, 5 Cal.App.4th, 392, the litigation privilege protects only communicative conduct, as opposed to noncommunicative acts. (Jacob B. v. County of Shasta (2007) 40 Cal.4th 948, 956-957 [litigation privilege protects letter written in connection with family law proceeding]; Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1058 [privilege protects actions taken to collect a judgment]; Kimmel v. Goland (1990) 51 Cal.3d 202, 211 [privilege does not protect noncommunicative act of unlawfully tape recording conversation in preparation for litigation]; Ramalingam v. Thompson, supra, 151 Cal.App.4th at p. 503 [malpractice action based on communication of expert opinion barred by litigation privilege].) [T]he key in determining whether the [litigation] privilege applies is whether the injury allegedly resulted from an act that was communicative in its essential nature. (Rusheen v. Cohen, supra, 37 Cal.4th at p. 1058.) Here the allegations of appellants complaint focused primarily on Daileys alleged failure to explain the correct meaning of replacement cost at the appraisal hearing. The gravamen of his complaint is thus clearly communicative conduct. The complaint also includes allegations regarding Daileys negligence in prelitigation activities. However, preparatory activity leading to a witnesss testimony is protected by the litigation privilege, to the extent that it otherwise applies. (Gootee v. Lightner, supra, 224 Cal.App.3d at pp. 593-594.)

[3] There is no civil cause of action for perjury; it is a criminal wrong only. (Pollack v. University of Southern California (2003) 112 Cal.App.4th 1416, 1429.)

[4] Our decision that appellants claim against respondent Dailey is not barred by the litigation privilege is consistent with a later ruling by the trial court as to another defendant in this action. Appellants originally sued another expert, who demurred to the complaint several months after appellants filed their notice of appeal challenging the sustaining of respondents demurrers. In its order overruling that defendants demurrer, the trial court stated, Acknowledge prior ruling to contrary but upon reflection believe this is correct reading of Mattco. Appellants have filed a motion to augment the record on appeal with the moving and opposition papers filed in the trial court, as well as the trial courts order as to the other defendant. Augmentation does not function to supplement the record with materials not before the trial court, and a reviewing court considers only matters which were part of the record at the time the judgment was entered. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) We may, however, take judicial notice of the court records of any court of this state. (Evid. Code,  452, subd. (d), 459, subd. (a); In re Karen G. (2004) 121 Cal.App.4th 1384, 1390 [appellate court may take judicial notice of subsequent minute order in juvenile court].) We construe appellants request to augment the record as a request for judicial notice, and hereby grant the request.