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Case of the Month Archive

February 2022

Nondisparagement clause in mediation agreement related to a civil harassment restraining order did not apply to statements in subsequent civil lawsuit. . .

 

In a reversal, the California Supreme Court held that a nondisparagement clause in a handwritten mediation agreement arising from a civil harassment restraining order proceeding did not apply to statements made in a civil lawsuit arising from the same alleged misconduct.

 

Olson v. Doe

(January 13, 2022)

Supreme Court of California, S258498 12 Cal.5th 669, 288 Cal.Rptr.3d 753, 2022 FA 2020, per Liu, J. (Cantil-Sakauye, C.J., Corrigan, J.; Kruger, J.; Groban, J.; Jenkins, J.; and Moor, J.). Los Angeles County: Karlan, J. For Respondent (Doe): Paul Kujawsky, Mitchell Keiter, and Jean-Claude Andre. For Appellant (Olson): Eric Michael Kennedy, Robert M. Dato, and Robert Collings Little. CFLP §C.160.5.

 

Jane Doe and Curtis Olson met in 2002 while they worked to preserve a historic apartment building in Los Angeles. Olson later purchased the building and converted it into condominiums. Olson lived part-time in one of the units and also served as the president of the homeowners' association (HOA) from 2013 to 2016. Doe lived in a separate unit within the building.

 

In October 2015, Doe filed a petition for a civil harassment restraining order against Olson pursuant to CCP §527.6, alleging a pattern of sexual harassment. This included an allegation that while Doe was visiting Olson at his unit, Olson "'forced himself on top of'" her and "'started touching her face, hair, and breasts and tried to kiss'" her. Doe alleged that Olson followed these rejected advances with retaliatory conduct. Olson denied these allegations and asserted that the HOA "'and its vendors have had a well-documented history of problems with [Doe] in connection with her use and residency'" at the building. The day of the hearing on December 10, 2015, the trial court ordered the parties to mediation with a volunteer mediator from the California Academy of Mediation Professionals. The parties reached an agreement that same day. Due to the mediator not having any standard-issue, typed mediation agreements, the mediator handwrote the one-page agreement. In relevant part, the parties agreed not to contact or communicate with each other as well as agreed "'not to disparage one another.'" Per this agreement, Doe's request for a civil harassment restraining order was dismissed without prejudice.

 

In August 2016, Doe filed an administrative complaint with HUD, alleging that Olson "'stalked her,'" "'subjected her to unwanted sexual comments and touching,'" and took "'pictures of [her] while she [wa]s in the bathroom and in her bedroom.'" Doe further alleged that Olson and the HOA board demanded that Doe pay a percentage of Olson's legal fees that he incurred from defending the civil harassment action. Doe lastly alleged that Olson and the HOA attempted to tie the charge for Olson's attorney fees to Doe's home and threatened that if the balance was not paid in full, a 10% monthly fee would be added to the unpaid balance and the HOA could foreclose on her property.

 

In December 2016, Doe filed a civil lawsuit against Olson, the HOA, the property management company, and various residents of the building. In her civil lawsuit, Doe sought damages for sexual battery; assault; and discrimination based on perceived ethnicity, religion, and marital status. Olson filed a cross-complaint against Doe for breach of contract and specific performance, arguing that by Doe repeating the allegations against Olson, she had violated the mediation agreement's nondisparagement clause. Doe moved to strike Olson's cross-complaint under the anti-SLAPP statute, arguing that Olson's cross-complaint constituted "'retaliatory litigation'" that "'attempt[ed] to chill Doe's exercise of her rights of free speech…and right to petition the courts.'" The trial court granted Doe's special motion to strike Olson's cross-complaint for breach of contract and specific performance. Olson appealed, and the Second District affirmed in part and reversed in part. Specifically, the Second District concluded that the litigation privilege per CC §47 protected the statements in Doe's administrative complaint to HUD but did not shield Doe's civil lawsuit. The California Supreme Court granted review and reversed and remanded.

 

The justices began with a brief review of the anti-SLAPP analysis. Specifically, per CCP §425.16, a party may file a special motion to strike a cause of action or claims that arise from activity protected by the anti-SLAPP statute. Since Olson conceded that Doe's HUD and civil complaints constituted petitioning activity protected by the statute, the burden next shifted to him to demonstrate a minimal merit by establishing the probability of success with respect to his breach of contract claim.

 

The nondisparagement clause was intended to prevent third-party gossip, not prevent further litigation between the parties. . .
On appeal, Olson argued for a broad reading of the nondisparagement clause, asking the justices to find that the provision in question effectively constituted a waiver of claims. But the Supreme Court declined such a broad reading and instead held that the clause did not apply to statements made by Doe in the litigation context. In reaching its conclusion, the justices noted that the language in the handwritten mediation agreement mirrored the language in the standard-issue, printed agreement forms that are often used but that were unavailable to the mediator the day of the agreement. The justices noted that the nondisparagement clause in the standard form is intended to prevent "third party 'gossip' and rumor-spreading," not litigation conduct. The justices also noted the absence of any express waiver of claims in the mediation agreement.

The justices next found that despite the settlement, the parties contemplated subsequent litigation, thereby contradicting Olson's assertion that Doe's lawsuit constituted a breach of contract. First, the mediation agreement itself read in part that "'evidence presented during this mediation may be verified outside of the mediation process and used as evidence in subsequent legal proceedings.'" The agreement also provided a statement immediately above the signature line that read "'this written settlement may be disclosed in a court of law.'" Second, as part of the settlement agreement, Doe's dismissal of the CCP §527.6 action was without prejudice and, the justices noted, such dismissal without prejudice would be rendered meaningless if she were liable to Olson for breach of contract if she sought further CCP §527.6 relief. And third, the justices took note of the narrow scope of CCP §527.6 actions, finding that such proceedings are not intended to provide "global resolution" of all underlying claims. In fact, the statute was intended to prevent future wrongs and "'not intended to punish the restrained party for past acts of harassment.'"

 

Olson's reading of the nondisparagement clause would impair Doe's constitutionally protected petitioning activity. . .
Finally, the justices returned to the fact that Doe's complaints constituted petitioning activity protected by CCP §425.16 and the California Constitution. They noted that the fact that Olson's broad reading of the nondisparagement clause would "impair Doe's exercise of constitutional rights remains an important consideration." Accordingly, the Supreme Court reversed the Second District's judgment insofar as it reversed the trial court's order granting Doe's special motion to strike the breach of contract with respect to statements in Doe's civil complaint.

 

 

COMMENT:

  

Although the Supreme Court had granted review of the issue relating to whether the litigation privilege of CC §47(b) also barred Olson's claims, the justices ultimately declined to decide this issue after deciding that Olson failed to show the requisite minimal merit on a critical element of his breach of contract claim. They did note, however, that the approach they took in their analysis is similar to the approach other courts have taken when assessing the application of the litigation privilege in such contract disputes.

 

Library References
5 Witkin, Summary of Cal. Law (11th ed. 2021) Torts, §558

 

 

 
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