Greenberg Traurig v. Frias Holding Co. , 2014 NV 67 ( 2014 )

130 Nev;, Advance Opinion 407
IN THE SUPREME COURT OF THE STATE OF NEVADA
GREENBERG TRAURIG, LLP, A No, 61820
LIMITED LIABILITY PARTNERSHIP;
GREENBERG TRAURIG, P.A., A
PROFESSIONAL ASSOCIATION; AND
FILED
SCOTT D. BERTZYK, AN INDIVIDUAL, AUG 0 7 2014
Appellants, cLETRAET L .LINDEJoAN
<
vs.
FRIAS HOLDING COMPANY, A BY-1
CORPORATION; AND MARK A.
JAMES, AN INDIVIDUAL,
Respondents.
Certified question, in accordance with NRAP 5, regarding the
legal-malpractice exception to the litigation privilege. United States
District Court for the District of Nevada; Gloria M. Navarro, Judge.
Question answered.
Brownstein Hyatt Farber Schreck, LLP, and Anthony J. DiRaimondo and
Kirk B. Lenhard, Las Vegas; Steptoe & Johnson and Jon T. Neumann,
Phoenix, Arizona; Bennett Evan Cooper, Esq., Paradise Valley, Arizona,
for Appellants.
Carbajal & McNutt, LLP, and Daniel R. McNutt, Las Vegas,
for Respondents.
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BEFORE THE COURT EN BANC.'
OPINION
By the Court, DOUGLAS, J.:
The United States District Court for thefl District of Nevada
has certified a question of law to this court regarding the legal-malpractice
exception to the litigation privilege. The litigation privilege immunizes
from civil liability communicative acts occurring in the course of judicial
proceedings, even if those acts would otherwise be tortious. Although
Nevada has long recognized this common law privilege, we have not before
determined whether it applies to preclude claims of legal malpractice or
professional negligence based on communicative acts occurring in the
course of judicial proceedings. The federal court asks "[w]hether Nevada
law recognizes an exception to the common law litigation privilege for
legal malpractice and professional negligence actions." We conclude that
Nevada law recognizes the exception.
FACTS
In May 2005, Scott Bertzyk and Mark James were opposing
counsel in a commercial real estate litigation matter. Bertzyk, an attorney
at Greenberg Traurig, LLP, represented the buyer, L.A. Pacific Center,
Inc. (LAP). James, an attorney at Bullivant Houser Bailey, P.C., at the
time, represented the sellers, Hotels Nevada, LLC, and Inns Nevada, LLC
(Hotels and Inns) LAP filed a complaint in both Nevada and California
against Hotels and Inns on related claims. However, in 2006, James
'The Honorable Kristina Pickering, Justice, voluntarily recused
herself from participation in the decision of this matter.
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transitioned out of active involvement in both litigations, and became
president and CEO of Frias Holding Company (FHC), a taxi and limousine
service company.
In June 2008, the California suit went to arbitration, during
which Bertzyk allegedly attacked James's character—asserting that
James committed fraud and concealed or manipulated evidence. 2 In
October 2009, the arbitration panel found in LAP's favor and awarded
damages against Hotels and Inns According to James, before the panel
issued the final arbitration award, Bertzyk suggested to one of Hotel and
Inns' attorneys that Hotel and Inns should explore filing a legal
malpractice suit against its former attorneys, including James.
Meanwhile, in September 2008, James, in his capacity as
FHC's president and CEO, retained attorney Mark Tratos of Greenberg
Traurig to handle some intellectual property matters for FHC. And in
July 2009, James retained attorney Michael Bonner (also of Greenberg
Traurig) to personally represent him for his Nevada gaming license
application. James was aware that Greenberg Traurig represented LAP
in the litigation, but the firm did not inform James about the statements
Bertzyk made during the arbitration. Moreover, during Greenberg
Traurig's representation of James, LAP filed a lawsuit against Bullivant
Houser Bailey, alleging attorney misconduct. In the misconduct matter,
Bertzyk provided a declaration that reasserted the negative statements
that he made about James during the arbitration.
After learning of Bertzyk's actions, James and FHC
(collectively, respondents) terminated their respective relationships with
2 This court stayed the proceedings in the Nevada litigation.
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Greenberg Traurig in August 2010 and filed a complaint against Bertzyk
and Greenberg Traurig, LLP (collectively, appellants) in the Nevada
district court, alleging that appellants committed malpractice and
breached their professional and fiduciary duties by impugning James and
FHC in furtherance of appellants' representation of LAP, which adversely
affected their representation of James and FHC. The parties removed the
case to federal district court pursuant to 28 U.S.C. §§ 1441 and 1446.
Appellants filed a motion to dismiss, alleging that the litigation privilege
barred respondents' claims.
The federal district court denied appellants' motion without
prejudice because Nevada had not addressed the legal-malpractice
exception to the litigation privilege. Then, pursuant to NEAP 5, the
federal court certified the following question to this court: "Whether
Nevada law recognizes an exception to the common law litigation privilege
for legal malpractice and professional negligence actions." We previously
accepted the question and now issue this opinion in answer.
DISCUSSION
Appellants argue that the legal-malpractice exception is not
applicable to this matter because respondents' claims actually allege
defamation, which the litigation privilege clearly bars. 3 To support their
assertion, appellants note that respondents do not allege that appellants
provided inadequate legal representation; rather, respondents'
3 VVhile we acknowledge that the litigation privilege bars a
defamation claim, the question presented by the United States District
Court, pursuant to NRAP 5, characterizes the claim as one for legal
malpractice and professional negligence. We do not resolve in this opinion
how respondents' claim should be characterized.
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malpractice claim is based on Bertzyk's negative comments about James.
Appellants also contend that adopting the legal-malpractice exception
would undermine the litigation privilege's absolute nature and that state
bar disciplinary measures are the appropriate remedy for alleged lawyer
misconduct during judicial proceedings, not tort liability.
Respondents insist that adopting the legal-malpractice
exception would not undermine the litigation privilege because the
privilege was not intended to apply to an attorney-client relationship.
Respondents argue that applying the legal-malpractice exception would
not hinder an attorney from zealously advocating for his or her client and
that an attorney should not be given protection for breaching his or her
duties to a client.
Litigation privilege
This court has recognized 'the long-standing common law rule
that communications uttered or published in the course of judicial
proceedings are absolutely privileged,' rendering those who made the
communications immune from civil liability. Fink v. Oshins, 118 Nev. 428,
432-33, 49 P.3d 640, 643 (2002) (quoting Circus Circus Hotels v.
Witherspoon, 99 Nev. 56, 60, 657 P.2d 101, 104 (1983)). "The policy behind
the [litigation] privilege, as it applies to attorneys participating in judicial
proceedings, is to grant them 'as officers of the court the utmost freedom
in their efforts to obtain justice for their clients." Id. at 433, 49 P.3d at
643 (quoting Bull v. McCuskey, 96 Nev. 706, 712, 615 P.2d 957, 961(1980)
abrogated on other grounds by Ace Truck & Equip. Rentals, Inc. v. Kahn,
103 Nev. 503, 746 P.2d 132 (1987), abrogated by Bongiovi v. Sullivan, 122
Nev. 556, 138 P.3d 433 (2006)).
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The privilege applies as long as the statements are "in some
way pertinent to the subject of the controversy." Id. at 433, 49 P.3d at 644
(internal quotation omitted). Although this court has stated that the
privilege is absolute, in that it applies even if the communications were
made with knowledge and malice, id., 49 P.3d at 643, we have recognized
that the privilege has limitations. See Bull, 96 Nev. at 712, 615 P.2d at
962 (stating that litigation privilege does not shield an attorney from bar
discipline stemming from the attorney's misconduct).
The legal-malpractice exception to the litigation privilege
Whether the litigation privilege applies to communicative acts
that form the basis of legal-malpractice and professional negligence
actions is a matter of first impression in Nevada; therefore, it is
appropriate to look to outside jurisdictions for guidance. Many courts—
including those in New Jersey and California—have held that the
litigation privilege is inapplicable to a client's malpractice or professional
negligence claim against his or her attorney. Kolar v. Donahue, McIntosh
& Hammerton, 52 Cal. Rptr. 3d 712, 719 (Ct. App. 2006); Buchanan v.
Leonard, 52 A.3d 1064, 1070 (N.J. Super. Ct. App. Div. 2012). In doing so,
these courts have determined that applying the privilege to such claims
would not further the privilege's purpose of ensuring that an attorney can
zealously defend his or her client during litigation. Kolar, 52 Cal. Rptr. 3d
at 719 (noting that if the privilege protected the attorney from suit by the
client, no client could ever bring a malpractice suit against his or her
attorney); Buchanan, 52 A.3d at 1070. However, a few courts have
determined that the litigation privilege is absolute and there are no
exceptions to its applicability in civil actions, even as to a former client's
malpractice suit against his or her former attorney based upon the
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attorney's communications during litigation. See O'Neil v. Cunningham,
173 Cal. Rptr. 422 (Ct. App. 1981) (applying a California statute to bar a
client's defamation action against his attorney); Hugel v. Milberg, Weiss,
Bershad, Hynes, & Lerach, LLP, 175 F.3d 14, 17 (1st Cir. 1999) (applying
New Hampshire Law and concluding that the litigation privilege barred
"legal malpractice claims").
Nevada recognizes the legal-malpractice exception
We find the rationale of the New Jersey and California courts
persuasive and now adopt the legal-malpractice exception to the litigation
privilege because the exception harmonizes with the privilege's underlying
purpose. In the attorney-client context, the litigation privilege applies to
attorneys primarily for the client's benefit. Although the privilege
provides attorneys substantial protection, that protection is contingent on
the attorney's representation of his or her client because the privilege is
designed to ensure that attorneys have the utmost freedom to engage in
zealous advocacy and are not constrained in their quest to fully pursue the
interests of, and obtain justice for, their clients. In contrast, while
allowing attorneys to breach their professional duties to their clients with
impunity and then assert the privilege against the clients' legal
malpractice action might benefit the attorney, this impairs the attorney-
client relationship, hinders the client, and runs afoul of the privilege's
underlying policy assisting the attorney in pursuing the client's interests.
See Fremont Reorganizing Corp. v. Faigin, 131 Cal. Rptr. 3d 478, 495 (Ct.
App. 2011). Therefore, we conclude that it is unsound policy to allow an
attorney to assert a privilege designed to ensure unimpeded advocacy for a
client as a shield against the client's claim that the attorney provided
inadequate legal representation.
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Finally, our rationale extends to the scenario in this case,
where advocacy on one• client's behalf adversely affects another client.
Attorneys must zealously pursue the interests of all of their clients, and
attorneys who breach their professional responsibilities to their client are
not entitled to hide behind the litigation privilege with impunity, even if
the breach occurred in the course of competent advocacy on behalf of
another client.
Accordingly, while we make no comment on the viability or
merits of the legal malpractice and professional negligence claims
asserted, we answer the federal district court's question in the affirmative
and conclude that, generally, an attorney cannot assert the litigation
privilege as a defense to legal malpractice and professional negligence
claims.
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Douglas
We concur:
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