The Ninth Circuit continues its apparent vacation -- only one published opinion since December 28, 2018 -- but. fortunately, the California Court of Appeal continues to crank things out.
This opinion takes a very restrictive view of the litigation privilege. I'm not saying that Justice Kline is wrong in that regard; this is a demurrer after all, and it may well be appropriate to wait until the summary judgment stage to decide whether there was "really" a threat of litigation here sufficient to establish the privilege.
But, on these facts, I gotta say, I'm much more confident that there was in fact a privilege than Justice Kline appears to be. Yeah, the insured hadn't yet filed a lawsuit, or expressly said he was going to do so. But the guy's property burned down, the guy was being criminally investigated for arson, and the insurance company was thinking about not paying due to arson.
There's no doubt whatsoever in my mind that, on these facts, the insurance company knew full well that there was not only a likelihood of litigation if it denied the claim on the basis of arson, but that there was a super high likelihood of litigation. Of course the guy's going to sue if you don't pay him (and he's not eventually convicted of arson). Why wouldn't he? No doubt whatsoever.
Hence the privilege.
Justice Kline's opinion seems to hint that something more might be required. Which I'm not certain is true. On these facts -- at least at the summary judgment stage -- I have extraordinarily little doubt as to how I'd come out on whether the litigation privilege applies.
Because I'm confident that the insurer both recognized and fully anticipated the threat of litigation.
As would any insurance company not staffed by morons.
