Court Opinion

ID: 2716072
Source: CourtListenerOpinion
Date Created: 2014-08-07 19:03:48.967574+00
Date Added: 2024-06-11T08:02:45.497866
License: Public Domain

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.

                                                           _-Th)PLA-9 )43
                                                           Douglas

                 We concur:

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