California Court of Appeal, Bartel v. Chicago Title Insurance Co., Docket No. H052083

Insurance Law

 

Coverage

 

Genuine Dispute Doctrine

 

Third Party Duty to Defend

 

Bad Faith

 

California Law

 

 

 

(…)

 

(Chateau Chamberay, supra, 90 Cal.App.4th at p. 346; see Century Surety Co. v. Polisso (2006) 139 Cal.App.4th 922, 949 [genuine dispute doctrine “holds that an insurer does not act in bad faith when it mistakenly withholds policy benefits, if the mistake is reasonable or is based on a legitimate dispute as to the insurer’s liability”].) Numerous state and federal decisions have recognized the genuine dispute doctrine is not compatible with the principles that govern third party duty to defend cases, in which the possibility of coverage triggers the duty. (See, e.g., Mt. Hawley, supra, 215 Cal.App.4th at p.1424; Howard, supra,187 Cal.App.4th at p. 530; Harbison v. American Motorists Ins. Co. (E.D. Cal. 2009) 636 F.Supp.2d 1030, 1040.)

 

 

 

(California Court of Appeal, Bartel v. Chicago Title Insurance Co., May 30, 2025, Docket No. H052083, Certified for Publication)

 

California Court of Appeal, Bartel v. Chicago Title Insurance Co., Docket No. H052083

Insurance Law

 

Bad Faith Claim

 

Breach of the Implied Covenant of Good Faith and Fair Dealing

 

Range of Possible Damages

 

Availability of Tort Remedies

 

Recovery of Attorney Fees in This Context—Often Called Brandt Fees

 

Emotional Distress

 

Declaratory Relief

 

California Law

 

 

 

“The law implies in every contract, including insurance policies, a covenant of good faith and fair dealing.” (Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720.) “‘The implied promise requires each contracting party to refrain from doing anything to injure the right of the other to receive the agreement’s benefits.’” (Ibid.; see Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 818 (Egan).) In other words, it “ ‘imposes upon each party the obligation to do everything that the contract presupposes they will do to accomplish its purpose.’” (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 345 (Chateau Chamberay).) “An insurer is said to act in ‘bad faith’ when it not only breaches its policy contract but also breaches its implied covenant to deal fairly and in good faith with its insured.”  (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1071.) In this context, “the term ‘bad faith’ is used as “a shorthand reference to a claimed breach by the insurer of the covenant of good faith and fair dealing.” (Bosetti v. United States Life Ins. Co. in City of New York (2009) 175 Cal.App.4th 1208, 1235.) “An insurer’s tortious ‘breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself.’” (Howard, supra,187 Cal.App.4th at p. 528.) That is, “an insurer’s responsibility to act fairly and in good faith in handling an insured’s claim ‘is not the requirement mandated by the terms of the policy itself—to defend, settle, or pay. It is the obligation ...under which the insurer must act fairly and in good faith in discharging its contractual responsibilities.’” (California Shoppers, Inc. v. Royal Globe Ins. Co. (1985) 175 Cal.App.3d 1, 15, quoting Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573–574.)“ In simple terms, an insurer’s tortious bad faith conduct is conduct that is unreasonable.” (Howard, at p. 529.)

Reasonableness is an objective standard (Bosetti, at p.1237) and must be evaluated as of the time of the insurer’s decisions and actions, not “in the light of subsequent events that may provide evidence of the insurer’s errors.” (Chateau Chamberay, at p.347.)

 

 

“Ordinarily, reasonableness is a factual issue to be decided by a jury.”  (Fadeeff v. State Farm General Ins. Co. (2020) 50 Cal.App.5th 94, 102.)  However, the reasonableness of an insurer’s conduct “can be decided as a matter ‘of law where the evidence is undisputed and only one reasonable inference can be drawn from the evidence.’” (Ghazarian v. Magellan Health, Inc. (2020) 53 Cal.App.5th 171, 186–187; accord Chateau Chamberay, supra, 90 Cal.App.4th at pp.346, 350; Mt. Hawley Ins. Co. v. Lopez (2013) 215 Cal.App.4th 1385, 1424 (Mt. Hawley).)

 

 

The relevant facts related to Bartel’s tender requests and Chicago Title’s investigation and denials of tender are neither in dispute nor susceptible to competing reasonable inferences. We therefore review the trial court’s determination on Bartel’s bad faith claim de novo, and we do not defer to the trial court’s determination that Chicago Title did not act in bad faith. Regarding the legal principles governing Bartel’s claim for damages in relation to Chicago Title’s alleged breach of the implied covenant of good faith and fair dealing, a finding of bad faith exposes the insurer to a broad range of possible damages. (See Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 400 [“The availability of tort remedies in the limited context of an insurer’s breach of the covenant [of good faith and fair dealing] advances the social policy of safeguarding an insured in an inferior bargaining position who contracts for calamity protection, not commercial advantage”].) Such damages include any damages, including attorney fees, that are the proximate result of the insurer’s breach of the implied covenant of good faith and fair dealing. (Brandt v. Superior Court (1985) 37 Cal.3d 813, 817(Brandt); see Civ. Code, § 3333.) The recovery of attorney fees in this context—often called Brandt fees—is an exception to the generally applicable rule that parties to a lawsuit must ordinarily pay their own fees. (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 806 (Cassim).) “If an insurer fails to act fairly and in good faith when discharging its responsibilities concerning an insurance contract, such breach may result in tort liability for proximately caused damages. Those damages can include the insured’s cost to hire an attorney to vindicate the insured’s legal rights under the insurance policy. ‘When an insurer’s tortious conduct reasonably compels the insured to retain an attorney to obtain the benefits due under a policy, it follows that the insurer should be liable in a tort action for that expense. The attorney’s fees are an economic loss—damages—proximately caused by the tort. [Citation.] These fees must be distinguished from recovery of attorney’s fees qua attorney’s fees, such as those attributable to the bringing of the bad faith action itself.’ ” (Ibid., quoting Brandt, supra, 37 Cal.3d at p. 817.) Stated differently, because the “entitlement to attorney fees as compensatory damages is premised on an insured’s need to hire an attorney to vindicate his or her contractual rights under an insurance policy” (Cassim, supra, 33 Cal.4th at p. 807), our high court has “placed a critical limitation on the amount of fees recoverable. ‘The fees recoverable, . . ., may not exceed the amount attributable to the attorney’s efforts to obtain the rejected payment due on the insurance contract. Fees attributable to obtaining any portion of the plaintiff’s award which exceeds the amount due under the policy are not recoverable.’ ” (Ibid., italics omitted.) To the extent the claimed legal fees for both the contract and tort recoveries are intertwined, the plaintiff bears “the burden of demonstrating how the fees for legal work attributable to both the contract and the tort recoveries should be apportioned.” (Cassim, supra, 33 Cal.4th at p. 813.) Further, “to the extent some overlap in legal work occurs, the trial court should exercise its discretion to apportion the fees” (id. at p. 811) to ensure that the Brandt fee award reflects only those fees attributable to the attorney’s efforts to recover under the breach of the insurance contract. (Id. at p. 813.) Similarly, while noneconomic damages such as for emotional distress are available, those damages must flow from the initial breach of the implied covenant and resulting economic loss. (Gourley v. State Farm Mut. Auto. Ins. Co. (1991) 53 Cal.3d 121, 128–129; see also Major v. Western Home Ins. Co. (2009) 169 Cal.App.4th 1197, 1215 (Major).) 

Whether a party is entitled to a particular measure of damages is a question of law. (Atkins v. City of Los Angeles (2017) 8 Cal.App.5th 696, 738).

 

 

(…) As our Supreme Court has stated in connection with the duty to defend, “an insurer must defend against a suit even ‘“where the evidence suggests, but does not conclusively establish, that the loss is not covered.”’” (Hartford, supra, 59 Cal.4th at p. 287.) Any doubt must be resolved in favor of the insured (ibid.), such that the insurer is excused from defending against a third party claim “only when ‘“the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.”’”(Id. at p. 288, italics added; see also Montrose, supra, 6 Cal.4th at p. 300, italics omitted [stating, to prevail in an action seeking declaratory relief on the issue of the duty to defend “the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot”].)

 

 

The implied covenant in this context did not require Chicago Title to divine the outcome or speculate as to unpleaded legal theories. Rather, in the face of a claim against the property based on ambiguous maps and road designations, Chicago Title had an implied promise to take reasonable steps to fulfill the expectations of its insured and provide a defense to the claim arising from circumstances conceivably within the scope of the policy. (See Lambert, supra, 53 Cal.3d at p.1081 [“The contract of insurance is unique in that the purchaser seeks not commercial advantage, but rather peace of mind and security in the event of unforeseen calamity.”].)

 

 

 

(California Court of Appeal, Bartel v. Chicago Title Insurance Co., May 30, 2025, Docket No. H052083, Certified for Publication)

 

U.S. Court of Appeals for the Federal Circuit, Communications Test Design, Inc. v. Contec, LLC, Docket No. 2019-1672

Declaratory Judgment Action (v. Complaint for Patent Infringement)

Declaratory Judgment Act

First-to-File Rule

Anticipatory filing was made in bad faith during active licensing discussions

Equitable considerations warranted departure from the first-to-file rule

Federal Comity

Forum Non Conveniens

Communications Test Design, Inc. (“CTDI”) filed suit in the United States District Court for the Eastern District of Pennsylvania, seeking declaratory judgment that its test systems do not infringe two of Contec, LLC’s patents (“the Pennsylvania action”). Six days later, Contec sued CTDI for patent infringement in the United States District Court for the Northern District of New York (“the New York action”). Contec moved to dismiss the Pennsylvania action, arguing that CTDI’s anticipatory filing was made in bad faith during active licensing discussions. The district court granted the motion, exercising its discretion to decline jurisdiction over CTDI’s declaratory judgment action. Commc’ns Test Design, Inc. v. Contec LLC, 367 F. Supp. 3d 350, 360 (E.D. Pa. 2019). In doing so, the court found that equitable considerations warranted departure from the first-to-file rule. CTDI appeals the district court’s dismissal of the Pennsylvania action. Because we conclude that the district court did not abuse the broad discretion accorded to it—both under the Declaratory Judgment Act, 28 U.S.C. § 2201(a) and pursuant to the first-to-file rule—we affirm.

(…) In September 2017, Contec sent a letter to CTDI to determine whether CTDI’s test systems infringed any claims of the asserted patents. Over the course of the following year, the parties exchanged numerous emails and letters. In June 2018, counsel for both parties met in person, and CTDI disclosed certain information about its test systems pursuant to a confidentiality agreement.

In September 2018, Contec’s counsel sent a letter to CTDI stating that “the parties’ extrajudicial process for obtaining information about CTDI’s systems, without the full discovery obligations that would be imposed during litigation, has proved unsatisfactory.” Counsel explained that Contec had a good faith basis to believe that CTDI infringes at least one claim of the asserted patents. The letter asked CTDI to indicate, by September 19, 2018, whether it was willing to “discuss potential terms for a patent license agreement.” Contec warned that, if it did not receive such confirmation, it would sue for patent infringement. Contec attached to its letter a draft of its proposed complaint.

On September 19—Contec’s stated deadline—Jerry Parsons, CTDI’s Chairman and chief executive officer (CEO), spoke on the phone with Hari Pillai, Contec’s CEO, about a possible license for Contec’s patents. During that conversation, Pillai proposed initial terms, and the executives agreed to talk again on September 24, when Parsons would make a counterproposal. After their discussion, Pillai emailed Parsons, confirming the follow-up call and indicating that he looked forward to the counterproposal.

Later that same day, CTDI’s counsel sent an email to Contec’s counsel, confirming that “CTDI will consider potential terms as requested in your most recent letter.” Counsel reiterated that, “despite our firm position on non- infringement and without admission, in an attempt to avoid an impasse, we remain willing to consider reasonable licensing terms and so, we encourage a continued conversation between the executives.”

On September 21—two days after accepting Contec’s request to discuss licensing terms—CTDI filed a declaratory judgment action in Pennsylvania. Later that afternoon, Parsons sent an email to Pillai, confirming that CTDI would put a licensing proposal together and accepting Pillai’s suggested time for their follow-up call on September 24. Parsons made no mention of the fact that CTDI had filed its declaratory judgment complaint.

On September 24—the day the CEOs were scheduled to talk—CTDI’s counsel emailed Contec’s counsel a copy of the declaratory judgment complaint. Counsel stated that official service would be held for a period of time to allow further discussion between the executives.

CTDI ultimately served its declaratory judgment complaint on October 15, 2018.

On September 27, 2018, Contec filed its complaint for patent infringement in the Northern District of New York.

On February 15, 2019, the district court granted Contec’s motion and dismissed CTDI’s complaint. At the outset, the court noted that “neither party disputes that an actual controversy exists here.” Commc’ns Test Design, 367 F. Supp. 3d at 355. Both the Pennsylvania and New York actions involve the same parties, the same patents, the same allegedly infringing products, and the same issue: whether CTDI’s test systems infringe Contec’s patents. The court recognized that, between CTDI’s first-filed declaratory judgment action and Contec’s subsequently filed patent infringement action, CTDI’s first-filed action is preferred “unless considerations of judicial and litigant economy, and the just and effective disposition of disputes, require otherwise.” Id. at 356 (quoting Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993), abrogated on other grounds by Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)).

Recognizing that the anticipatory nature of CTDI’s suit is “merely one factor in the analysis” under the first-to-file rule, the district court explained that “interference with ongoing negotiations constitutes another ‘sound reason that would make it unjust’ to exercise jurisdiction over the declaratory judgment action.” The court also considered the convenience of the parties and availability of witnesses and determined that, “on balance the Northern District of New York is a more convenient forum to resolve the dispute between the parties.” Given these considerations, the district court dismissed the Pennsylvania action in favor of Contec’s later- filed infringement action.

(…) The district court dismissed CTDI’s declaratory judgment action so that Contec’s patent infringement action— filed six days later—could proceed in New York. In these circumstances, where the issue is whether a suit for declaration of patent rights should yield to a later-filed infringement suit, the trial court’s discretion is guided by the first- to-file rule, “whereby the forum of the first-filed case is favored.” Genentech, 998 F.2d at 937. “The ‘first-to-file’ rule is a doctrine of federal comity, intended to avoid conflicting decisions and promote judicial efficiency, that generally favors pursuing only the first-filed action when multiple lawsuits involving the same claims are filed in different jurisdictions.” Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1299 (Fed. Cir. 2012) (citing Genentech, 998 F.2d at 937– 38). The filing date of an action derives from the filing of the complaint. Id. (citing Fed. R. Civ. P. 3). Under the first-to-file rule, a district court may choose to stay, transfer, or dismiss a later-filed duplicative action. Id.

(…) Here, the district court carefully considered the record of the parties’ dispute, up to and including the competing filings, and concluded that several factors warranted departure from the first-to-file rule. Specifically, the court found that: (1) CTDI filed its declaratory judgment complaint in anticipation of Contec’s patent infringement complaint; (2) CTDI’s suit interfered with ongoing negotiations between the parties and did not serve the objectives of the Declaratory Judgment Act; and (3) on balance, the Northern District of New York is a more convenient forum. As explained below, we find no abuse of discretion in the district court’s analysis.

(…) As to Contec, the district court considered that: (1) its corporate headquarters are in New York; (2) it has no witnesses, physical facilities or place of business in Pennsylvania; (3) Contec’s employee files for its current and former employees, its email server and its record databases are maintained in its New York facility; (4) three of the six inventors of the patents at issue are current residents of New York; and (5) five of the inventors, “who would serve as key witnesses,” are beyond the subpoena power of the district court. On balance, the court found that these factors favored Contec’s later-filed New York action.

(…) We find no error in the district court’s balancing of the convenience factors, which is committed to the court’s sound discretion. These factors, coupled with the district court’s findings that CTDI’s complaint interfered with ongoing negotiations and was filed in anticipation of Contec’s infringement suit, support the district court’s decision to depart from the first-to-file rule and dismiss CTDI’s complaint.

(U.S. Court of Appeals for the Federal Circuit, March 13, 2020, Communications Test Design, Inc. v. Contec, LLC, Docket No. 2019-1672, Circuit Judge O’Malley)

Parrish v. Latham & Watkins, S228277

Malicious prosecution: Tort: Interim adverse judgment rule: Bad faith: Malice: Frivolous claim: SLAPP: Ethics:

The common law tort of malicious prosecution originated as a remedy for an individual who had been subjected to a maliciously instituted criminal charge, but in California, as in most common law jurisdictions, the tort was long ago extended to afford a remedy for the malicious prosecution of a civil action. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (Sheldon Appel).) The tort consists of three elements. The underlying action must have been: (i) initiated or maintained by, or at the direction of, the defendant, and pursued to a legal termination in favor of the malicious prosecution plaintiff; (ii) initiated or maintained without probable cause; and (iii) initiated or maintained with malice. (Ibid.; see Zamos v. Stroud (2004) 32 Cal.4th 958, 970 (Zamos); see also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 297 (Soukup).)

A malicious prosecution claim will also lie if the defendant brought an action charging multiple grounds of liability when some but not all of those grounds were asserted with malice and without probable cause. (Crowley v. Katleman (1994) 8 Cal.4th 666, 671 (Crowley).) 

To establish liability for the tort of malicious prosecution, a plaintiff must demonstrate, among other things, that the defendant previously caused the commencement or continuation of an action against the plaintiff that was not supported by probable cause. We have held that if an action succeeds after a hearing on the merits, that success ordinarily establishes the existence of probable cause (and thus forecloses a later malicious prosecution suit), even if the result is overturned on appeal or by later ruling of the trial court. (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 818 (Wilson).) This principle has come to be known as the interim adverse judgment rule.

The existence of probable cause is a question of law to be determined as an objective matter. (Sheldon Appel, supra, 47 Cal.3d at pp. 874, 875.). (…) A claim is unsupported by probable cause only if any reasonable attorney would agree that it is totally and completely without merit. (Wilson, supra, 28 Cal.4th at p. 817; accord, Sheldon Appel, at p. 885; In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650; see also Zamos, supra, 32 Cal.4th at p. 970.). This rather lenient standard for bringing a civil action reflects the important public policy of avoiding the chilling of novel or debatable legal claims. (Wilson, supra, at p. 817.) The standard safeguards the right of both attorneys and their clients to present issues that are arguably correct, even if it is extremely unlikely that they will win. (Ibid., quoting Flaherty, supra, at p. 650.)

In this case we are asked to decide whether the interim adverse judgment rule applies when a trial court had initially denied summary judgment, finding that a lawsuit had sufficient potential merit to proceed to trial, but concluded after trial that the suit had been brought in bad faith because the claim, even if superficially meritorious, in fact lacked evidentiary support. The Court of Appeal answered that question in the affirmative. We agree and affirm.

((…) Brought a malicious prosecution claim against FLIR‘s and Indigo‘s lawyers in the trade secrets case: defendants Latham & Watkins LLP (Latham) and Latham partner Daniel Scott Schecter. Defendants filed an anti-SLAPP motion under Code of Civil Procedure section 425.16 — that is, a special motion to strike a strategic lawsuit against public participation (SLAPP). (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.) To prevail on such a motion, a defendant must establish that the challenged claim arises from protected activity. (Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral).) If a defendant is able to do so, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. (Ibid.)).

((…) The Court of Appeal decided Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660. In pertinent part, that case held that the one-year limitations period does not apply to a malicious prosecution suit filed against a former litigation adversary‘s attorney. (Id. at p. 677.) Instead, the court concluded, a two-year limitations period controls.)

((…) This court issued its decision in Lee v. Hanley (2015) 61 Cal.4th 1225, which (i) held that the one-year statute of limitations in section 340.6(a) applies to claims whose merits necessarily depend on proof that an attorney violated a professional obligation in the course of providing professional services (Lee, at pp. 1236–1237); and (ii) disapproved Roger Cleveland to the extent it was inconsistent with our opinion (Lee, at p. 1239). In particular, Lee criticized Roger Cleveland‘s premise that section 340.6(a) should be understood as a professional negligence statute (Lee, at p. 1239) without analyzing Roger Cleveland‘s ultimate conclusion that section 340.6(a) is inapplicable to claims filed against a former litigation adversary‘s attorney. The answer to the petition argued that Lee provides an alternative basis for upholding the trial court‘s grant of defendants‘ special motion to strike.

We granted the petition for review. We now conclude that the Court of Appeal was correct to hold that the interim adverse judgment rule applies. Because we conclude the malicious prosecution suit was barred on that basis, we do not reach the limitations issue.)

(…) We also recognized that the interim adverse judgment rule has its limits. The rule applies only to rulings regarding the merits of the claim, not those that rest solely on technical or procedural grounds. (Wilson, supra, 28 Cal.4th at p. 823.) And even where a ruling is based on the court‘s evaluation of the merits of the claim, the ruling does not establish the existence of probable cause if the ruling is shown to have been obtained by fraud or perjury. (Id. at p. 820.) While plaintiffs and their attorneys have the right to bring a claim they think unlikely to succeed, so long as it is arguably meritorious (id. at p. 822), they have no right to mislead a court about the merits of a claim in an attempt to procure a favorable ruling, and such a ruling can provide no reliable indication that the claim was objectively tenable.

(…) For purposes of the malicious prosecution tort, the existence of subjective bad faith is relevant to the question whether the suit was brought with malice, which, as our cases have made clear, concerns a litigant‘s subjective belief. (E.g., Sheldon Appel, supra, 47 Cal.3d at p. 874.) But it is a separate question whether, objectively speaking, defendants‘ suit was supported by probable cause. And as to that point, the trial court‘s finding of objective bad faith in the underlying action was not a finding that the action completely lacked merit.

(…) We have made clear that only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit. (Zamos, supra, 32 Cal.4th at p. 970.)

(…) We have made clear that a court determining whether a claim was supported by probable cause should rely on the facts known to the litigant accused of malicious prosecution. (Sheldon Appel, supra, 47 Cal.3d at p. 878.) Litigants, we have explained, need not attempt to predict how a trier of fact will weigh the competing evidence, nor to abandon their claims if they think it likely the evidence will ultimately weigh against them. (Wilson, supra, 28 Cal.4th at p. 822; see id. at p. 822, fn. 6 [litigant may have incomplete information at the outset of a case]; see also Soukup, supra, 39 Cal.4th at p. 292 [A litigant will lack probable cause for his action . . . if he relies upon facts which he has no reasonable cause to believe to be true. (quoting Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 164–165)].)

(…) As we held in Zamos, the tort of malicious prosecution . . . includes continuing to prosecute a lawsuit discovered to lack probable cause. (Zamos, supra, 32 Cal.4th at p. 966.) That means that there may be circumstances in which an interim ruling rendered at one point in the litigation will not, due to intervening circumstances, establish the existence of probable cause to continue the litigation.

The denial of summary judgment in the underlying trade secrets action established probable cause to bring that action. Because that action was supported by probable cause, Parrish and Fitzgibbons cannot establish a probability of success on their malicious prosecution claim. (Baral, supra, 1 Cal.5th at p. 384.) We thus affirm the judgment of the Court of Appeal.

(Cal. S.C., Aug. 10, 2017, Parrish v. Latham & Watkins, S228277).

Action civile dépourvue de chances de succès, poursuite pénale infondée : toutes deux peuvent faire l'objet d'une action en dommages-intérêts, en Californie comme dans la plupart des systèmes appliquant la Common law. Les quatre conditions objectives et subjective : l'action frivole doit avoir été initiée ou maintenue par le défendeur, un jugement défavorable au défendeur doit l'avoir terminée, l'action frivole n'était basée sur aucun motif raisonnable, et elle doit subjectivement avoir été initiée ou continuée avec l'intention de nuire.

Une telle action en réparation peut également être déposée si l'action qui en forme le substrat n'était dépourvue de fondement que dans certaines de ses conclusions.

La jurisprudence a précisé que si l'action "de base" conduit à un jugement favorable au demandeur à cette action, ce jugement favorable constitue la condition du motif raisonnable, même si ce jugement est renversé ultérieurement par le même Tribunal ou par une autorité supérieure. Ce principe porte le nom de "interim adverse judgment rule".

L'existence de la condition du motif raisonnable s'apprécie objectivement. Il s'agit d'une question de droit et non de fait pour le Jury. Une conclusion n'est pas supportée par un motif raisonnable si tout avocat raisonnable estime dite conclusion intégralement sans mérite. Le but est ici d'éviter de dissuader un plaideur de saisir la Justice dans des cas qui présentent des questions juridiques nouvelles ou qui présentent des arguments contestables, même si les chances de succès sont extrêmement faibles.

En l'espèce, la Cour doit déterminer si la règle de l'"interim adverse judgment rule" s'applique dans le cas où la cour de première instance refuse de prononcer un jugement sommaire, considérant que l'affaire présente des chances de succès suffisantes permettant un procès au fond, puis juge, après l'administration des preuves, que l'action a été déposée de mauvaise foi. La réponse donnée par la Cour est affirmative : la règle de l'"interim judgment rule" s'applique, barrant la route à une action subséquente en dédommagement.

(Est donné comme exemple une action en réparation dirigée contre l'avocat adverse. Celui-ci répond en déposant une motion anti-SLAPP. Dans ce cadre sont discutées deux jurisprudences récentes, l'affaire Roger Cleveland (2014) et Lee (2015), qui traitent en outre du délai pour déposer dite action en réparation (deux ans et non une année selon Roger Cleveland, peut-être une année selon Lee, la question restant ouverte car la présente espèce ne tranche pas à cet égard, se limitant à rejeter la présente action en réparation par application de l'"interim adverse judgment rule")).

Goodyear Tire & Rubber Co. v. Haeger, Docket 15-1406

Discovery misconduct: Contempt of court: Frivolous claims: Bad faith: Attorney's fees (shifting): Punitive damages:

Federal courts possess certain “inherent powers,” not conferred by rule or statute, “to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Link v. Wabash R. Co., 370 U. S. 626, 630–631 (1962). That authority includes “the ability to fashion an appropriate sanction for conduct which abuses the judicial process.” Chambers v. NASCO, Inc., 501 U. S. 32, 44–45 (1991). And one permissible sanction is an “assessment of attorney’s fees”—an order, like the one issued here, in­structing a party that has acted in bad faith to reimburse legal fees and costs incurred by the other side. Id., at 45. This Court has made clear that such a sanction, when imposed pursuant to civil procedures, must be compensa­tory rather than punitive in nature. See Mine Workers v. Bagwell, 512 U. S. 821, 826–830 (1994) (distinguishing compensatory from punitive sanctions and specifying the procedures needed to impose each kind). In other words, the fee award may go no further than to redress the wronged party “for losses sustained”; it may not impose an additional amount as punishment for the sanctioned party’s misbehavior. Id., at 829 (quoting United States v. Mine Workers, 330 U. S. 258, 304 (1947)). To level that kind of separate penalty, a court would need to provide procedural guarantees applicable in criminal cases, such as a “beyond a reasonable doubt” standard of proof. See id., at 826, 832–834, 838–839. When (as in this case) those criminal-type protections are missing, a court’s shifting of fees is limited to reimbursing the victim.

That means, pretty much by definition, that the court can shift only those attorney’s fees incurred because of the misconduct at issue. Compensation for a wrong, after all, tracks the loss resulting from that wrong. So as we have previously noted, a sanction counts as compensatory only if it is “calibrated to the damages caused by” the bad-faith acts on which it is based. A fee award is so calibrated if it covers the legal bills that the litigation abuse occasioned. But if an award extends further than that—to fees that would have been incurred without the misconduct—then it crosses the boundary from compensa­tion to punishment. Hence the need for a court, when using its inherent sanctioning authority (and civil proce­dures), to establish a causal link between the litigant’s misbehavior and legal fees paid by the opposing party.

Rule-based and statutory sanction regimes similarly require courts to find such a causal connection before shifting fees. For example, the Federal Rules of Civil Procedure provide that a district court may order a party to pay attorney’s fees “caused by” discovery misconduct, Rule 37(b)(2)(C), or “directly resulting from” misrepresentations in pleadings, motions, and other papers, Rule 11(c)(4). And under 28 U. S. C. §1927, a court may require an attorney who unreasonably multiplies proceedings to pay attorney’s fees incurred “because of” that misconduct. Those provisions confirm the need to establish a causal link between misconduct and fees when acting under inherent authority, given that such undelegated powers should be exercised with especial “restraint and discretion.” Roadway Express, Inc. v. Piper, 447 U. S. 752, 764 (1980).

That kind of causal connection, as this Court explained in another attorney’s fees case, is appropriately framed as a but-for test: The complaining party (here, the Haegers) may recover “only the portion of his fees that he would not have paid but for” the misconduct. Fox v. Vice, 563 U. S. 826, 836 (2011); see Paroline v. United States, 572 U. S. ___, ___ (2014) (slip op., at 12).

In Fox, a prevailing defendant sought reim­bursement under a fee-shifting statute for legal expenses incurred in defending against several frivolous claims. See 563 U. S., at 830; 42 U. S. C. §1988.

Substitute “discovery abuse” for “frivolous claim” (…), and the same thing goes in this case.

Bagwell (Mine Workers v. Bagwell, 512 U. S. 821) also addressed “coercive” sanctions, designed to make a party comply with a court order. 512 U. S., at 829. That kind of sanction is not at issue here.

(U.S.S.C., April 18, 2017, Goodyear Tire & Rubber Co. v. Haeger, Docket 15-1406, J. Kagan delivered the opinion of the Court, in which all other Members joined, except J. Gorsuch, who took no part in the considera­tion or decision of the case).

Aux cours fédérales sont attachées certaines compétences inhérentes, conférées non par la loi, de gérer leurs affaires internes ou le cours des procédures, pour permettre une résolution diligente et sans retard des dossiers. Parmi ces compétences, on compte l'autorité de déterminer une sanction appropriée pour une conduite qui abuse du système judiciaire. L'une de ces sanctions est la condamnation d'une partie qui s'est comportée de mauvaise foi au paiement des honoraires d'avocat et des frais de l'autre partie. Ce type de condamnation, dans le cadre de procédures civiles, doit être de nature compensatoire et non punitive. Elle ne peut que compenser la partie de ses pertes effectives, et ne permet pas d'imposer un montant additionnel comme punition du comportement abusif. Si elle entendait condamner à des dommages punitifs, la cour devrait conférer à la partie à condamner les garanties de procédure applicables aux procédures pénales, telles que l'exigence de la condamnation possible qu'en cas de "preuve au-delà d'un doute raisonnable".

(Une décision de 1994 distingue les dommages compensatoires des dommages punitifs et spécifie les procédures nécessaires pour condamner à payer ces deux types de dommage).

De ce qui précède découle que la cour ne peut condamner à payer que la fraction des honoraires et frais de la cause due en raison de la conduite inadmissible de l'autre partie. La cour doit établir le lien de causalité à cet égard.

Ce qui précède concerne certes le pouvoir inhérent du Tribunal de sanctionner, mais dans le cas où le pouvoir de sanctionner découle de la loi, la cour devra aussi établir un tel lien de causalité avant de condamner à payer les honoraires d'avocat de l'autre partie. Par exemple, les Règles fédérales de procédure civile disposent qu'une cour de district peut condamner une partie aux frais d'avocat en cas d'inconduite dans la phase de "discovery", ou résultant d'un défaut de diligence dans la préparation et le dépôt des mémoires, requêtes, et autres pièces (Rules 37(b)(2)(C) et 11(c)(4)). Et selon 28 U.S.C. §1927, une cour peut condamner au paiement des honoraires adverse un avocat qui multiplie sans raison les procédures. Ces dispositions confirment la nécessité d'établir un lien causal entre la conduite répréhensible et les honoraires de l'adverse partie, considérant que les pouvoirs inhérents doivent être exercés avec une retenue toute spéciale.

Le lien de causalité est de type "but-for" : la partie ne peut obtenir paiement de son adversaire que de la fraction des honoraires qui n'aurait pas été due en l'absence du comportement inadmissible.

(Un exemple qui traite de la prise en charge des frais et honoraires de celui qui l'emporte contre son adversaire qui avait procédé témérairement : Fox v. Vice, 563 U. S. 826, 830 (2011) ; cf. U.S.C. §1988). La procédure téméraire et l'abus de la procédure de "discovery" sont des notions de même nature s'agissant de la question de la prise en charge des frais et honoraires par la partie adverse.

(Quant à elle, la décision Mine Workers v. Bagwell, 512 U. S. 821 porte sur les mesures de contrainte qu'une cour peut prendre en vue d'obtenir l'exécution de ses ordonnances).

Octane Fitness, LLC v. ICON Health & Fitness, Inc.

Fee-shifting provision in a statute:  the Patent Act’s fee-shifting provision authorizes district courts to award attorney’s fees to prevailing parties in “exceptional cases.” 35 U. S. C. §285;  Section 285 imposes one and only one constraint on district courts’ discretion to award attorney’s fees: the power is reserved for “exceptional” cases. Because the Patent Act does not define “excep­tional,” the term is construed “in accordance with its ordinary meaning.” Sebelius v. Cloer, 569 U. S. ___, ___;  in 1952, when Con­gress used the word in §285 (and today, for that matter),“exceptional” meant “uncommon,” “rare,” or “not ordinary.” Web­ster’s New International Dictionary 889 (2d ed. 1934). An “excep­tional” case, then, is simply one that stands out from others with re­spect to the substantive strength of a party’s litigating position (con­sidering both the governing law and the facts of the case) or the un­reasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circum­stances. Cf. Fogerty v. Fantasy, Inc., 510 U. S. 517.

Courts already possess the inherent power to award fees in cases involving misconduct or bad faith, see Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 258–259 (…) this Court has declined to construe fee-shifting provi­sions narrowly so as to avoid rendering them superfluous. See, e.g., Christiansburg Garment Co. v. EEOC, 434 U. S. 412, 419; (…)

proof of entitlement to fees be made by clear and convincing evidence is not justified by §285, which imposes no specific evidentiary burden. Nor has this Court interpreted comparable fee-shifting statutes to require such a burden of proof. See, e.g., Fogerty, 510 U. S, at 519 (U.S.S.Ct., 29.04.2014, Octane Fitness, LLC v. ICON Health & Fitness, Inc., Docket  12-1184, J. Sotomayor).

Dépens : usuellement chaque partie conserve ses frais d’avocat. Certaines lois prévoient, comme ici en droit des brevets, que le Tribunal peut attribuer des dépens à la partie qui l’emporte, mais seulement dans des circonstances exceptionnelles. La loi fédérale sur les brevets d’invention ne définit pas le terme « exceptionnel ». Dès lors, le sens de ce terme correspond à son sens ordinaire. Selon le dictionnaire, « exceptionnel » signifie non commun, rare, non ordinaire. Une affaire exceptionnelle est donc une affaire qui se distingue, qui peut se placer à l’écart, des autres affaires à l’aune des chances de succès (déterminées aussi bien sur la base de l’état de fait que de droit). Une affaire exceptionnelle est aussi celle qui est traitée déraisonnablement au niveau procédural. Les cours de districts fédérales peuvent déterminer au cas par cas, selon leur pouvoir discrétionnaire, si une affaire est exceptionnelle, en considérant la totalité des circonstances.

Il est rappelé que les Tribunaux détiennent déjà la compétence implicite d’allouer des dépens en cas de mauvaise conduite ou en cas de mauvaise foi.

Dans la présente affaire qui applique le droit fédéral des brevets d’invention, la partie qui entend prouver que son adversaire doit être condamné à des dépens ne doit pas satisfaire au standard de la « preuve claire et convaincante » comme certains Tribunaux l’avait prétendu à tort. Le droit fédéral est muet s’agissant du standard de la preuve. Par ailleurs, la jurisprudence de la Cour n’a jamais interprété des lois comparables comme imposant un tel fardeau de la preuve.

Zhang v. Super. Ct., S178542

Insurance law: the question is whether insurance practices that violate the UIPA can support a UCL action? This case arises at the intersection of the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.) and the Unfair Insurance Practices Act (UIPA; Ins. Code, § 790 et seq.).  The question is whether insurance practices that violate the UIPA can support a UCL action.  In Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 304 (Moradi-Shalal) we held that when the Legislature enacted the UIPA, it did not intend to create a private cause of action for commission of the various unfair practices listed in Insurance Code section 790.03, subdivision (h).  In the wake of Moradi-Shalal, a split has developed in the Courts of Appeal regarding the viability of UCL claims based on insurer conduct covered by section 790.03.

We hold that Moradi-Shalal does not preclude first party UCL actions based on grounds independent from section 790.03, even when the insurer’s conduct also violates section 790.03.  We have made it clear that while a plaintiff may not use the UCL to “plead around” an absolute bar to relief, the UIPA does not immunize insurers from UCL liability for conduct that violates other laws in addition to the UIPA.  (Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 283-284 (Manufacturers Life); see also Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 182-183 (Cel-Tech); Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43 (Quelimane); Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, 565 (Stop Youth Addiction).)

Here, plaintiff alleges causes of action for false advertising and insurance bad faith, both of which provide grounds for a UCL claim independent from the UIPA.  Allowing her also to sue under the UCL does no harm to the rule established in Moradi-Shalal.  The Moradi-Shalal court made it plain that while violations of section 790.03(h) are themselves not actionable, insureds retain other causes of action against insurers, including common law bad faith claims.  Furthermore, UCL actions by private parties are equitable proceedings, with limited remedies.  They are thus quite distinct from the claims for damages with which Moradi-Shalal was concerned. (A first party claim is one brought by the insured against the insurer.  Claims by injured parties against a liable party’s insurer are third party claims.  (See Zephyr Park v. Superior Court (1989) 213 Cal.App.3d 833, 835, fn. 2.)  Our holding here is confined to the first party context.  Third party claims raise distinct analytical and policy issues, which are not involved in this case.  (See Moradi-Shalal, supra, 46 Cal.3d at pp. 301-304.)) (Cal. S.Ct., 01.08.2013, Zhang v. Super. Ct., S178542).

Droit des assurances (application du droit californien) : ce cas concerne la possibilité pour une partie qui s’estime lésée par les pratiques (déloyales) d’une compagnie d’assurance de l’actionner sur la base de la loi relative à la concurrence déloyale, considérant que les pratiques illicites commises par une compagnie d’assurance sont avant tout régies par la loi sur les pratiques d’assurance déloyales, dite loi ne prévoyant pas de droit d’action par un particulier contre les compagnies d’assurance. La réponse est qu’il est possible pour un particulier d’agir contre une compagnie d’assurance sur la base d’autres dispositions légales que la loi sur les pratiques d’assurance ou sur la base de principes découlant de la common law. Cela même si les comportements prohibés par ces autres bases légales sont également prohibés par la loi sur les pratiques d’assurance déloyales. Dans la présente espèce, le demandeur fonde ses prétentions sur des allégations de publicité mensongère et de mauvaise foi. Son droit d’action direct est préservé : ces deux moyens sont prévus par la loi sur la concurrence déloyale indépendamment de la loi sur les pratiques d’assurance. L’action basée sur la mauvaise foi découle en outre de la common law.