Connecticut Appellate Court Limits Scope of Litigation Privilege to Exclude Allegations That Fall Outside the Judicial Process
For more than a century, Connecticut courts have applied the litigation privilege doctrine to protect lawyers and other parties from civil liability for offensive or harmful statements made during a judicial or quasi-judicial proceeding. The thinking is that attorneys and others should be encouraged to bring legal actions, speak frankly, and argue fiercely during the adversarial process without fear of getting sued. In recent years, Connecticut courts have generally broadened protections under the litigation privilege doctrine, but in a recent case involving a plaintiff trying to collect on an uninsured motorist claim, a Connecticut appeals court limited the litigation privilege scope to exclude alleged conduct that occurs outside the judicial proceeding or prior to the commencement of litigation.
Bouazza v. GEICO General Insurance Co.
In Bouazza v. GEICO General Insurance Co., the plaintiff was a passenger in a motor vehicle accident that was caused by the driver of another vehicle. The other driver was insured for liability up to $20,000 per person/$40,000 per accident. The plaintiff settled with the other driver for all available coverage limits and then filed a claim with GEICO, with whom the plaintiff had uninsured and underinsured motorist benefits in the amount of $100,000 per person/$300,000 per occurrence. The plaintiff later filed an offer of compromise indicating her willingness to settle her claims against GEICO for $50,000, but GEICO offered $20,000, which was not accepted by the plaintiff. The case proceeded to trial, and the day before the scheduled jury selection, the plaintiff added a second count alleging that the insurer breached the implied covenant of good faith and fear dealing. The court bifurcated the trial, allowing the underinsured motorist claim to proceed to trial. In that case, the jury found in favor of the plaintiff, awarding her $2.3 million, which the judge reduced to $79,000.
Bad Faith Claim
Separately, GEICO filed a motion to dismiss the bad faith count of the plaintiff’s complaint, arguing it was entitled to immunity under the litigation privilege doctrine. The trial court sided with the insurer, stating that the allegations pertaining to the bad faith count “all stem from the defendant’s communications and conduct in negotiating the settlement of the plaintiff’s [underinsured motorist] claim in the course of and related to a judicial proceeding.” The court concluded that, since the plaintiff’s claim challenged the defendant’s conduct in negotiating the underinsured motorist claim settlement, that litigation privilege provided the defendant with absolute immunity from the bad faith claim. The court relied on a previous case, Dorfman v. Smith, supra, 342 Conn. 582, in making its ruling.
In Connecticut, absolute immunity does not apply to causes of action that allege improper use of the judicial system. Because they frustrate the purpose of the judicial system, claims of abuse of process, vexatious litigation, and malicious prosecution are exempt from litigation privilege.
On appeal, the plaintiff contended that her bad faith claims were premised on an abuse of process. She alleged that GEICO refused to make a reasonable offer on her underinsured motorist claim, refused to accept her offer of compromise, delayed the resolution of her claim, evaluated her claim in the same manner that it would a claim from someone without underinsured motorist coverage, and harassed her to accept a less than fair settlement.
Citing Dorfman, the appellate court agreed with the trial court that some of these allegations related to GEICO’s communications and conduct during a judicial proceeding, and therefore were protected by litigation privilege. These included the allegations concerning the defendant’s refusal to accept the plaintiff’s offer of compromise and to make a reasonable offer on the plaintiff's underinsured motorist claim once litigation had commenced. However, the court diverged from the lower court in ruling that some of the allegations were not made during the course of a judicial proceeding and therefore were not protected. While recognizing that litigation privilege extends beyond statements made during a judicial proceeding to preparatory communications that may be directed to the goal of the proceeding, the court concluded that some allegations pertained to the defendant’s conduct during the claim evaluation process and therefore fell outside the context of a judicial proceeding. These included the defendant’s alleged refusal to adjust the claim promptly, alleged evaluation of the plaintiff’s claim in the same manner that it would adjust all other claims, and alleged harassment of the plaintiff. Indeed, the plaintiff alleged that she “was forced to file” the present action due to the defendant’s alleged bad faith in the claim evaluation process.
“We disagree with the defendant that the plaintiff’s allegations are grounded solely in a disagreement that occurred during the litigation over settlement negotiations and fair value. [Some of the allegations] have no connection or logical relation to any ongoing judicial proceeding [and, therefore] are not covered by the litigation privilege,” the court stated in overturning the lower court’s decision.
The Takeaway
Plaintiffs and defendants need to understand that there are limits to litigation privilege, and in light of Bouazza, it is more important than ever to work with an experienced attorney on litigation privilege matters. As this case has made plain, allegations of wrongdoing must be analyzed separately to determine what the privilege does and does not apply to. Unless the Connecticut Supreme Court takes up the case and overturns the ruling, courts have been put in a position where, going forward, they will be slicing and dicing allegations to determine at the time of trial what is covered by litigation privilege and what is not. If, for example, you have 10 factual allegations that lead to bad faith, but only five of them apply to conduct that was part of litigation, then you're going to have to build your case based on the latter five. This raises some interesting questions about what discovery and pre-trial motions will be allowed and may impact how depositions are used. Although this decision follows the general rule that litigation privilege only protects what’s said and done as part of a judicial process, it creates a hornet's nest of issues and potentially provides a way for clever plaintiffs’ lawyers to plead their way around the litigation privilege doctrine.
Joshua M. Auxier, a partner at FLB Law in Westport, Conn., is a litigator with nearly two decades of experience representing clients in professional liability, directors and officers liability, and general liability matters. He is retained by some of the country’s most prominent insurance companies to defend their insureds, including lawyers and other professionals. Contact Josh at auxier@flb.law or 203.635.2200. For more information about FLB Law, click here.