Earlier this week, Kerr & Wagstaffe’s Ivo Labar and Dan Veroff prevailed on an important issue of the first impression regarding the scope of California’s anti-SLAPP statute in the property insurance context. The court’s ruling in favor of KW’s client means that insurance companies cannot use the anti-SLAPP statute as an excuse for failing to protect public adjusters’ liens on insurance claims settlements, even when the settlement is for both the claim and a related bad faith lawsuit. This ruling is important as PAs typically work for a percentage of the ultimate claim recovery, but often see their claims pushed into bad faith litigation by insurance companies. KW’s victory helps remove a barrier to PAs recovering unpaid fees on claims that only settle after bad faith litigation.
KW’s victory is also important for anti-SLAPP law generally. The anti-SLAPP statute blocks lawsuits arising out of protected petitioning activity unless the plaintiff can present admissible evidence demonstrating a likelihood of success on the merits. Petitioning activity includes nearly all litigation-related conduct, but the statute does not apply where that conduct is only collateral to the gravamen of the complaint. Existing California appellate case law makes clear that settlement negotiations are almost always protected under the statute, but appellate courts have yet to address whether the act of making a settlement payment in and of itself is protected. In this case, the Madera County Superior Court agreed with KW that the statute does not apply to claims of conversion that arise out a settlement payment made without regard to a third party’s lien on that settlement. Notably, the defendant insurance company did not present any evidence that the settlement payment was made without regard to the lien as a result of an agreement between it and the insured during the settlement discussions.
As this is an issue of the first impression, KW anticipates the insurance company will appeal the decision. KW expects the appellate court will uphold the trial court’s decision, establishing new binding law on this subject. For now, the trial court’s decision remains only persuasive authority.