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The People Ex Rel. Fire Insurance Exchange et al v. Neil R. Anapol et al

December 6, 2012

THE PEOPLE EX REL. FIRE INSURANCE EXCHANGE ET AL., PLAINTIFFS AND RESPONDENTS,
v.
NEIL R. ANAPOL ET AL., DEFENDANTS AND APPELLANTS.



APPEAL from orders of the Superior Court of Los Angeles County, William F. Highberger, Judge. (Los Angeles County Super. Ct. No. BC444827)

The opinion of the court was delivered by: Croskey, Acting P. J.

CERTIFIED FOR PUBLICATION

Affirmed.

Fire Insurance Exchange and Mid Century Insurance Company (collectively Farmers) uncovered what it believed to be a massive insurance fraud ring engaged in the submission of false and/or inflated claims for smoke and ash damage arising from several Southern California wildfires. It brought the instant qui tam action against several members of the alleged ring, including two attorneys, Neil R. Anapol and Robert B. Amidon, who submitted the purportedly false insurance claims on the part of Farmers's insureds. As against the attorneys, Farmers alleged both the submission of false claims and the use of cappers to obtain insureds willing to pursue such claims.

The attorneys brought motions to strike the complaint under Code of Civil Procedure section 425.16 (anti-SLAPP motions), arguing that their pursuit of insurance claims and acts in obtaining clients constituted prelitigation conduct protected by their First Amendment right to petition. The trial court denied the motions, on the basis that the attorneys had failed to establish protected conduct, specifically relying on authority holding that the submission of insurance claims does not constitute protected conduct under the anti-SLAPP law. (People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.4th 280, 285 (BPC).)

The attorneys appeal, arguing that BPC was wrongly decided, or should be distinguished when the underlying insurance claim was submitted in expectation of litigation against the insurance company for the anticipated bad faith denial of the claim. We agree with the attorneys that, under the proper circumstances, submission of an insurance claim can constitute prelitigation conduct protected by the anti-SLAPP law. However, we conclude that bald assertions that the claims were submitted with the subjective intent that litigation would follow are insufficient, without more, to constitute prima facie evidence that the insurance claims constituted prelitigation conduct. As the attorneys submitted no additional evidence in this case, they failed in their burden to show that the anti-SLAPP statute applied, and their motions were properly denied. We therefore affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Underlying Facts

There is little agreement between Farmers and the attorneys as to the underlying facts. This much is clear: (1) There were wildfires in Southern California in 2003, 2007, 2008, and 2009; (2) Attorney Anapol represented a number of Farmers's insureds in their pursuit of smoke and ash claims arising out of the 2003 wildfire; (3) Attorney Amidon represented a number of Farmers's insureds in their pursuit of smoke and ash claims arising out of the wildfires in 2007, 2008, and 2009; (4) Glenn Sims, and/or one of the companies with which he was affiliated, was involved to some degree in the claim handling process on behalf of the insureds; (5) Farmers paid on some, but not all, of the claims; when it did pay, it often did not pay the full amount sought by the insureds; and (6) Attorneys Anapol and Amidon represented Farmers's insureds in bad faith actions arising out of Farmers's handling of the smoke and ash claims, some of which are still pending.*fn1

According to Farmers,*fn2 however, there was a conspiracy to defraud Farmers (and other insurance companies), which was the brainchild of Sims.*fn3 Sims was what is known as a "catastrophe chaser." He travelled the country, following natural disasters. After a disaster, he would advertise in the area for clients, letting them know that he could obtain substantial insurance benefits for them for damages about which they may have been unaware.*fn4 Sims was not a public adjuster, however, and chose to conduct his business through the use of attorneys. Thus, when a homeowner would contact him, Sims would have the client execute a retainer agreement with an attorney with whom Sims worked. Sims would then submit to the insurer a letter from the attorney designating Sims as a "property damage consultant" on the claim, and requesting the insurer to negotiate directly with Sims.*fn5 Sims would then send someone to "scope" the claim and create a repair estimate, often based only on the size and contents of the home, with no attention paid to whether there was evidence of actual damage.*fn6 Sims would submit the estimate and negotiate a settlement of the claim. Once a settlement was received by the attorney from the insurance company, it was divided, on a percentage basis, between the client, the attorney, and Sims (and his associates).*fn7 In sum, according to Farmers, the part played by the attorneys in this conspiracy included: (1) paying Sims to obtain clients to submit insurance claims; and (2) submitting false and/or inflated damage estimates in support of claims.*fn8

The attorneys, not surprisingly, have a different view of the facts. According to the attorneys, all of their clients were legitimate referrals; the attorneys did not pay Sims for obtaining clients. Moreover, according to the attorneys, all of the damage estimates submitted were legitimate. In the alternative, the attorneys take the position that if Sims submitted fraudulent documents in support of the claims, the attorneys had no knowledge of this fact, and believed all of the claims to be legitimate. Finally, the attorneys argue that Farmers improperly denied or undervalued the claims, causing the attorneys to bring bad faith actions.

2. Allegations of the Complaint

On September 2, 2010, Farmers brought the instant action, both on behalf of itself, and on behalf of the People. It named as defendants Sims, Attorney Anapol, Attorney Amidon, and several related entities. The complaint alleged three similar fraudulent schemes, one involving the 2003 wildfire, one involving the 2007 wildfire, and one involving the 2008 and 2009 wildfires.*fn9 With respect to each scheme, a cause of action for violation Insurance Code section 1871.7 was alleged.*fn10 Specifically, the defendants were alleged to have violated Insurance Code section 1871.7, subdivision (a), which provides that it is unlawful "to knowingly employ . . . cappers . . . to procure clients . . . to . . . obtain services or benefits under a contract of insurance . . . . " Additionally, the defendants were alleged to have violated Insurance Code section 1871.7, subdivision (b), which incorporates violations of Penal Code section 550. Defendants were alleged to have violated Penal Code section 550, subdivision (a)(1), which prohibits the knowing presentation of a false or fraudulent insurance claim, and Penal Code section 550, subdivision (a)(5), which prohibits knowingly making, preparing or subscribing any writing with the intent to present it, or allow it to be presented, in support of a false or fraudulent claim.*fn11

3. The Anti-SLAPP Motions

Both Attorney Anapol and Attorney Amidon brought anti-SLAPP motions. Each attorney argued that the instant action was brought in retaliation for the attorneys' pursuit of legitimate claims and bad faith actions against Farmers. As to the issue of whether the conduct for which they were sued was protected by the anti-SLAPP statute,*fn12 each attorney made a slightly different argument.*fn13 Attorney Anapol argued that all of his alleged conduct underlying Farmers's complaint was protected prelitigation conduct, as his submission of claims constituted prelitigation negotiations to settle the smoke and ash claims without the need of lawsuits. In support of his motion, Attorney Anapol submitted a declaration indicating that of the 42 insurance claims at issue from the 2003 wildfire, 29 were settled, 5 were ultimately dropped, and 8 were resolved in favor of the insureds after arbitration.

Attorney Amidon, in contrast, argued that his alleged conduct constituted both protected petitioning activity and protected speech. As to petitioning conduct, Attorney Amidon argued that the submission of the claims constituted prelitigation conduct as each claim ultimately did ripen into a bad faith lawsuit. Attorney Amidon also argued that the submission of claims constitutes prelitigation conduct as the submission of a claim is a statutory prerequisite to proceeding to arbitration or litigation. As to the issue of protected speech, Attorney Amidon argued that his supposed capping activity constituted protected speech on an issue of public interest, in that soliciting clients constitutes speech and the wildfires were of considerable public interest.

The issues in this case became focused when Farmers responded with a motion to strike the attorneys' anti-SLAPP motions. Farmers argued that the motions were frivolous, as they were barred by the holding in BPC that the submission of insurance claims does not constitute prelitigation conduct. Farmers's motion was ultimately denied. However, in response to the motion, Attorney Amidon argued that his submission of claims was not the routine submission of insurance claims in the ordinary course of business, but the submission of claims as a necessary prerequisite to inevitable litigation. He submitted an additional declaration, in which he stated that, by late 2009, Farmers "was denying virtually every claim with little if any scrutiny. Therefore, it was then clear to me litigation would be necessary. My submitting claims after approximately mid-2009[*fn14 ] was simply to comply with statutory requirements . . . as a prerequisite to inevitable litigation."

4. Farmers's Opposition

In opposition to the motions, Farmers argued that the attorneys' activity at issue in its complaint was not protected petitioning activity. Farmers ...


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