Low, Ball & Lynch’s

WEEKLY LAW RESUME

 Issue  February 19, 2004    By: Raymond Coates

Bad Faith - Anti-SLAPP Motion

Richard Slaney v. Ranger Insurance Company

Court of Appeal, Second District

(January 28, 2026)

Normally, litigation tactics do not subject one to liability.  However, this case shows that an insurer may not only be liable for bad faith for wrongfully denying a claim, but also possibly malicious prosecution in the way in which it defends the bad faith claim.

Ranger Insurance Company denied a claim by its insureds for damages to aircraft they owned.  Slaney was retained by the insureds to prepare a repair estimate.  Ranger denied the claim, asserting Slaney had prepared a fraudulently excessive claim.  The insureds sued Ranger for bad faith.  Ranger cross-complained against its insureds and Slaney alleging fraud.  Slaney unsuccessfully moved for summary judgment, but renewed the motion after discovery and was dismissed.  After a jury trial, the insureds obtained an award in excess of $1 million for bad faith and punitive damages of $7 million.

Slaney then sued Ranger and its defense firm for malicious prosecution.  Ranger moved to dismiss the case under the SLAPP statute.  This statute allows for the dismissal of actions based on constitutionally protected activities, such as speech and the right to petition.  The trial court concluded that the motion was not subject to dismissal.  Ranger appealed.

The Court of Appeal affirmed.  The Court noted that Code of Civil Procedure section 425.16, the anti-SLAPP statute, permits the court to dismiss claims that involve protected activity of speech or petition.  A malicious prosecution action falls within the scope of the statute's protection.  It involves the right of petition.

The Court then had the duty to determine whether Slaney had demonstrated the probability of prevailing on his claim.  If he did, the SLAPP protection was overcome.  Slaney had to show that the prior action was legally terminated in his favor, brought without probable cause, and initiated with malice.  The summary judgment motion in the underlying action favorably terminated the action.

The probable cause element turned on whether any reasonable attorney would have thought the claim tenable.  In support of the motion, Ranger and its attorneys showed that they prevailed on the original summary judgment motion.  However, no evidence was offered of an independent investigation to determine whether reasonable cause existed to support the cross-complaint for fraud.  The Court stated the original denial of the summary judgment motion in the underlying action did not necessarily establish probable cause.  However, the subsequent grant of summary judgment did show that Ranger was unable to support its claim.  Further, the fact that the prior action found Ranger denied coverage in bad faith and with malice supported the claim that the cross-complaint had been filed with malice.  It was thus reasonable to infer that Ranger's theory of fraud between Slaney and the insureds was itself fraudulent and prosecuted in bad faith.  This, along with the grant of summary judgment, was sufficient to support inferences of lack of probable cause and malice.  Thus, it was concluded the trial court did not err in denying the SLAPP motion.

The denial of the motion was affirmed.

COMMENT

This case shows the dangers of losing a bad faith case in which the insurer also filed a cross-complaint against the insured for fraud.  Not only did it lose the bad faith case, but it was potentially liable for malicious prosecution.

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