Mediation Confidentiality Statute Bars Malpractice Claim Where Breach Allegedly Occurred During Mediation

In Amis v. Greenberg Traurig LLP (No. B248447 – filed March 18, 2015), Division Three of the Second District Court of Appeal held that a malpractice plaintiff cannot circumvent mediation confidentiality by advancing inferences about his former attorney’s supposed acts or omissions during an underlying mediation. In effect, the court followed a 2011 California Supreme Court precedent that established the near categorical prohibition against judicially crafted exceptions to mediation confidentiality statutes.

Plaintiff John Amis (“Amis”) alleged that Greenberg Traurig LLP’s (“GT”) committed “malpractice” in the underlying action by failing to advise him of the risks involved for his personal liability under the proposed settlement agreement and caused him to sign said settlement agreement, which converted his company’s corporate obligations into Amis’s personal obligations. GT’s summary judgment motion was based on Amis’s undisputed admission that all advice he received from GT regarding the settlement agreement was given during a mediation. Based on this undisputed fact, GT argued that Amis could not obtain evidence to support his claims, and GT could not produce evidence to defend itself, based on the prohibition against disclosure of such evidence in the applicable mediation confidentiality statutes, California Evidence Code sections 1115, et seq.

Amis sought to oppose the motion with declarations from himself and counsel in the underlying litigation to establish that he never would have attended the mediation, nor would have agreed to be jointly and severally liable for his company’s obligations, had he been advised prior to the mediation that he had little to no risk of being held personally liable for the underlying claims. Amis also submitted the declaration of his legal malpractice expert who opined that GT’s conduct fell below the standard of care and that “no advice” GT could have given Amis during mediation would have justified making him personally liable to the company’s $2.4 million obligation. The trial court, however, granted GT’s motion for summary judgment, agreeing that Amis could not establish an essential element of his claims because it was undisputed that any act or omission by GT that purportedly caused Amis to execute the settlement agreement occurred during the mediation. The court also refused to accept an inference that GT caused Amis to execute the settlement agreement during the mediation because the applicable statutes effectively barred GT from defending itself against such inference.

Following the California Supreme Court’s decision in Cassel v. Superior Court (2011) 51 Cal.4th 113 (“Cassel”) with a hint of reluctance, the appellate court affirmed the trial court’s decision. Cassel also involved a claim by the plaintiff against his former attorneys for legal malpractice arising from a settlement reached during mediation which the plaintiff contended was inadequate. Therein, the Supreme Court upheld the trial court’s order precluding evidence related to the mediation, including private discussions the plaintiff had with his attorneys about the settlement; in so doing, the high court rejected the Court of Appeal majority’s view that “[t[he mediation confidentiality statutes do not extend to communications between a mediation participant and his or her own attorneys outside the presence of other participants in the mediation.” Despite recognizing that its holding could hinder a client’s ability to prove a legal malpractice claim, the Cassel court emphasized that the judiciary had no authority to craft exceptions to the mediation confidentiality statutes despite the equities which might appear to favor such an approach. The Cassel decision effectively shielded attorneys’ actions during mediation from a malpractice action, even if such actions were incompetent or deceptive.

In Amis, the court also examined Amis’s contention that it was reasonable to infer from the fact that GT advised him regarding the settlement agreement that GT had “consented” to Amis executing the agreement at the mediation. The court, however, found that the “proposed inference [was] fundamentally at odds with the mediation confidentiality statute” by “allow[ing] Amis to accomplish indirectly what the statutes prohibit him from doing directly, namely proving that GT advised him to sign the settlement agreement during the mediation.” It would also prevent GT from rebutting that inference with the advice that it actually gave Amis during the mediation.

This decision tackles yet another attempted “end-run” around the mediation confidentiality statutes by rejecting Amis’s inference argument. Courts considering these statutes have made it clear that only the California Legislature may enact exceptions, such as the one unsuccessfully employed by the since de-published Court of Appeal decision prior to the Supreme Court’s holding in Cassel. The Legislature saw fit to enact Evidence Code section 958, which holds that the attorney-client privilege does not apply to communications relevant to the issue of breach of a duty arising out of the lawyer-client relationship. Perhaps it will take on the mediation confidentiality issue as it affects legal malpractice actions.

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March 20, 2015