Lawyer Admonished

Jay Shah appealed from a judgment entered in favor of Fidelity National Title Insurance Company after the trial court granted summary judgment. After two trials and a second appeal the Court of Appeals dealt with improper and contumacious conduct by plaintiff's counsel. In Jay C. Shah v. Fidelity National Title Insurance Company, A165816, California Court of Appeals, First District, First Division (November 30, 2022) resolved the title insurance issue based on the evidence and California Codes and precedent.Show more

BACKGROUND

In 1959, non-party Mary Silva acquired a life estate in the property that is the subject of this action near Quimby Road in San Jose, California (the property). In December 1995, Shah entered a contract to purchase the property from Silva for $350,000. Silva transferred her interest in the property via a grant deed to "Jay C. Shah, Living Trust Dated June 8, 1993," (the Trust) as grantee. When he purchased the property, Shah did not know that Silva held only a life estate.

Fidelity issued the title insurance policy in connection with Shah's 1995 purchase. The title policy was effective December 29, 1995. Schedule A of the title policy listed the named insured as the Trust. The title policy stated that the "estate or interest in the land described herein and which is covered by this policy is: A Fee."

Suit Against Fidelity

The trial court granted Fidelity's motion for summary judgment and determined Shah's motion for summary adjudication was moot. The court concluded that Fidelity met its burden to show coverage terminated under section 2(b) of the title policy before Shah's 2009 tender because Shah had voluntarily transferred the property to his parents in 2002, and the transfer became effective by operation of law in May 2007 when Shah obtained fee title through adverse possession, under the after acquired title doctrine (Civ. Code, § 1106).

The Court of Appeal, concluding that it was not at liberty to rewrite the policy to achieve the result Shah sought & Fidelity met its initial burden to demonstrate coverage under the title insurance policy terminated under section 2(b) when Shah voluntarily transferred the property to his parents in the 2002 grant deed and subsequently acquired fee title by adverse possession in May 2007. Because Shah failed to present evidence raising a triable issue of material fact, Fidelity was entitled to judgment as a matter of law on Shah's causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing.

CIVILITY

In addition to deciding the insurance issue the California Court of Appeal concluded that they were obligated to admonish Shah's counsel, Craig J. Bassett, for making repeated, unfounded personal attacks on the trial court and opposing counsel in his appellate papers, apparently because he disagreed with the trial court's decision. To illustrate, the Court of Appeal quoted a few excerpts from the opening and reply briefs that were damning.

Excerpts

About the court:

"Thus far, the trial court has favored Fidelity because that court does not understand, and refuses to learn, the principles of the law applicable to the facts of this case. The lower court unlawfully sides with the wrongdoer and throws Shah out the courtroom door, twice now!"

"The lower court wrests [the] holding [of Marriage v. Keener, supra, 26 Cal.App.4th 186], misrepresents it, and misuses it to knowingly err to achieve a preconceived outcome harmful to Shah. It wanted to vindicate the judge of the same court who in error prejudicially sustained Fidelity's demurrer to Shah's FAC on the same erroneous grounds, despite the successful appeal and reversal of that decision."

"In rendering its decision on the MSJ [(motion for summary judgment)], the lower court acted like a magical mystery trial had been held without a jury while Shah was in absentia and that it was decided based on one single document alone ...."

"The duplicity of the lower court, however, exposes its pervasive error."

"The lower court's short-sighted derogation of the policy of the law explained above and its total disregard for the relevant statutes in order to achieve a wrongful outcome to favor the title insurance industry and knowingly harm the innocent insured, twice now, means that something is terribly wrong and that the courts have lost their way."

"The lower court knowingly erred here to protect itself rather than enforce the law as was its sworn duty." The trial court "refuses to get the facts straight, refuses to interpret the clause properly, and refuses to follow the law."

About defendant, and by implication, opposing counsel:

"Because it knows that it can with success, as this case proves, engage in bad faith insurance tactics to seduce gullible courts who have little experience and no training in such matters ...."

"Is it not the goal here to consider and discover the truth, the whole truth, and nothing but the truth drawing inferences from and accepting evidence in the light most favorable to Shah? Why would Fidelity think itself above this law? Because it believes it is a law unto itself not subject to the law so that it can in bad faith seek exoneration on spurious grounds when its liability is clear. The sophistry of Fidelity cannot be passed off as truth in this proceeding."

"This court should respect and adopt [Shah's] absolutely correct analysis, no matter what bag of tricks, lies, and misdirection Fidelity throws at the Court at this juncture, which is all that Fidelity has done judging by the content of its respondent's brief."

These quotes were a sampling of the numerous inappropriate arguments scattered throughout counsel's briefs. Perhaps not surprisingly, these unhelpful remarks are unsupported by any evidence in the record. Such bombastic, ad hominem attacks have no place in an appellate brief and are potentially contemptuous and sanctionable behavior.

The Court of Appeal further noted that:

"[d]isparaging the trial judge is a tactic that is not taken lightly by a reviewing court. Counsel better make sure he or she has the facts right before venturing into such dangerous territory because it is contemptuous for an attorney to make the unsupported assertion that the judge was 'act[ing] out of bias toward a party.'" (In re S.C. (2006) 138 Cal.App.4th 396, 422.)

The Court of Appeal noted that "ironically, the extremely argumentative nature of his two briefs on appeal makes it more time-consuming for this court to sift through the unjustified personal attacks and hyperbolic rhetoric to get to the legal issues that need to be resolved."

For counsel's benefit the Court of Appeal repeated the admonition of the Board of Governors of the State Bar that:

attorneys have an obligation to be professional with . . . other parties and counsel, [and] the courts .... This obligation includes civility, professional integrity, personal dignity, candor, diligence, respect, courtesy, and cooperation, all of which are essential to the fair administration of justice and conflict resolution." (Cal. Atty. Guidelines of Civility &Professionalism (July 20, 2007) Introduction., p. 3; id., § 4, p. 5 ["An attorney should not disparage the intelligence, integrity, ethics, morals or behavior of the court or other counsel, parties or participants when those characteristics are not at issue. [¶] . . . [¶] . . . An attorney should avoid hostile, demeaning or humiliating words."].) The kind of conduct displayed in counsel's appellate briefing "not only disserves the individual involved, it demeans the profession as a whole and our system of justice." Rather, counsel must "strive for the highest standards of attorney behavior to elevate and enhance our service to justice." (Ibid.) [emphasis added]

The Court of Appeal strongly admonished plaintiff's counsel to conduct himself in a more professional manner when appearing before the Court of Appeal or any other court and noted that such conduct in a future case may subject him to sanctions much harsher than the warning.

ZALMA OPINION

The insurance issue was resolved with a detailed analysis that clearly established that Fidelity owed nothing to Shah. The reason for this article is to point out that the Court of Appeal was kind to plaintiff's counsel by only admonishing his conduct. Lawyers, should never get emotionally involved in their cases and, when they lose at trial, should never question the integrity of the court or opposing counsel. A dispute over a Title Insurance Contract is a legal issue that was resolved by the Court of Appeal by review of the facts and the applicable statutory law and precedent. For an appellate court to add the warnings it did is quite unusual. The Court, in my opinion, should have done more than admonish counsel and in my opinion, issued more than a warning.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com

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