On March 18, 2015, the Second Appellate District of the California Court of Appeal ruled in Amis v. Greenberg Traurig LLP that the mediation privilege bars a plaintiff in a legal malpractice action from advancing inferences about an attorney defendant's acts or omissions during an underlying mediation.
John Amis was a minority shareholder and officer of Pacific Marketing Works, Inc. (Pacific). Pacific was engaged in litigation with Path Productions. During the course of such litigation, Sojitz Corporation (represented by Greenberg Traurig) was engaged in discussions to purchase Pacific; however, Sojitz refused to complete the purchase absent resolution of the Pacific/Path litigation. Accordingly, Sojitz and Greenberg agreed to have Greenberg represent Amis and Pacific in settlement discussions with Path. Greenberg represented Amis and Pacific at a mediation that resulted in an agreement whereby Amis and Pacific parties would pay, jointly and severally, USD 2.4 million to Path on an agreed payment schedule. Pursuant to the terms of the settlement agreement, Pacific's failure to make the payments would result in a judgment of USD 2.4 million being entered in Path's favor.
After the parties executed the settlement agreement, Sojitz decided not to complete the purchase of Pacific, leaving Pacific without sufficient funds to pay the first installment of the settlement. This led to Path obtaining a USD 2.4 million judgment against Amis and Pacific pursuant to the settlement terms, causing Amis and Pacific to declare bankruptcy. Amis later filed suit against Greenberg for malpractice, alleging that Amis would not have agreed to the settlement terms had Greenberg advised him that he had a risk of personal liability based on the terms of the settlement agreement.
During his deposition, Amis admitted that his only discussions with the firm regarding the proposed settlement took place during the mediation. Greenberg proceeded to file a motion for summary judgment and argued that the mediation privilege barred Amis from using as evidence any discussions that occurred during mediation. Accordingly, Amis was unable to establish an essential element of his claim for malpractice against Greenberg. Conversely, Amis argued that the mediation privilege did not preclude him from arguing that the jury was permitted to draw an inference of malpractice based upon the fact that Greenberg represented Amis at the mediation and the resulting settlement. The trial court ruled in Greenberg's favor, and the Court of Appeal confirmed.
Citing to California cases Cassel v. Superior Court (2011) 51 Cal. 4th 113, Wimsat v. Superior Court (2007) 152 Cal. App. 4th 137, and In re Marriage of Woolsey (2013) 220 Cal App. 4th 881, the 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." The Court of Appeal explained that permitting Amis's proposed inference "would turn mediation confidentiality into a sword by which Amis could claim he received negligent legal advice during the mediation, while precluding [Greenberg Traurig] from rebutting the inference by explaining the context and content of the advice that was actually given." The Court recognized that holding firm to the very broadly applied confidential mediation statutes can create "situations where justice seems to call for a different result," but that it was the role of the Legislature, not the courts, to rewrite these statutes, as the courts "[have] no authority to craft [their] own exceptions." We expect that the Plaintiffs' bar will lobby the Legislature vigorously to amend the statutes to carve out an exception for attorney malpractice, but that until that happens, any advice or action undertaken by a lawyer during a mediation will not serve as evidence in a malpractice action.