Thursday, February 23, 2012

Pleading Properly--Saving $$$ By Careful Pleading

An ounce of prevention is worth a pound of cure. Lawyers could save claims adjusters thousands of dollars by taking to carefully plead their pleadings, especially by pleading Complaints, Cross-Complaints, and Answers more carefully. I am not advocating needlessly billing time for the "routine" pleadings the start a lawsuit. I am suggesting that taking the time to carefully and fully plead a cause of action or an affirmative defense in initial pleadings may avoid pleading attacks that needless "churn" the file, and that clearer pleadings will more quickly and effectively move cases closer to settlement or other resolution. Here I discuss some basic pleading rules and standards as a cautionary tale to both plaintiff and defense attorneys who practice in California state and federal courts.

As a matter of practice, a Complaint or Cross-Complaint should tell a compelling story. If you tell a tale that is compelling, a judge is less likely to accept pleading attacks on your pleading, and is more likely to give you leave to amend. Telling a compelling story isn't hard. The facts may be boring but there has to be some kind of injustice done the client otherwise there would be no legal basis for the suit--even if you are seeking indemnity, the justice of the case is that is unfair for your client to bear the costs and expenses of a loss caused entirely or primarily by someone else. Talk to the client/insured, they have a lot of information you will never get by reading a cold file. 

Use a plain, easy to understand writing style. Imagine your writing to a high school senior, not another lawyer. It's always better if the insured, insurer, opposing counsel, and the busy judge can quickly understand what your trying to tell them without any of them repairing to their libraries or Googling words to understand what you wrote. Write in complicated legalese and courts are more likely to sustain a demurrer for uncertainty or to grant a 12(b)(6) motion in federal court. Pleadings should avoid useless legal words like heretofore, hereunder, aforesaid, etc., and write in the active voice: "John kicked the ball": NOT, "The ball was kicked" or "kicked was the ball." Rather than the droll, "Plaintiff incorporates by reference paragraphs one through twenty-five aforesaid as though fully set out in this paragraph," write: "Plaintiff adopts paragraphs 1-25 here." The two sentences mean exactly the same thing. Really.

In drafting pleadings, there are technical requirements that have to be met. Nearly all the technical pleading requirements are found in Code of Civil Procedure, §§ 420-475 in state practice and in Federal Rules of Civil Procedure, rules 7-15 for federal practice. Also check the California Rules of Court and the local federal district court rules for formatting an other technical requirements. These rules constantly change so it's always a good time to go over the technical requirements to make sure little things don't get over looked and turn into big problems. For example, failing to plead the factual bases for jurisdiction or venue invite venue and jurisdictional challenges that otherwise could not be made if the pleader had included these allegations in the pleading.

Once your pleading tells a compelling story, meets the technical pleading requirements, the next important thing to keep in mind is to "show, don't tell." In ruling on demurrers, motions to strike, and federal 12(b)(6) motions, courts must accept the factual allegations as true. (There is an exception, however, for special, Anti-SLAPP Motions to Strike, which I discuss in my blog posting on this subject.) 

What I mean is that courts do not admit or accept conclusions of fact or law in pleadings, whether you are in California or federal court. (See Aubry v. Tri–City Hosp. Dist. (1992) 2 Cal.4th 962, 966–967; Ashcroft v. Iqbal (2009) 556 U.S. 662, __, 129 S. Ct. 1937, 
1949. Pleading that, "defendant Jones' conduct was despicable so as to warrant the imposition of punitive damages" tells the reader nothing other than the writer's irrelevant opinion about Jones' conduct. Pleading that, "defendant Jones' was licensed securities dealer with a no record of discipline. Jones defrauded plaintiff Smith by representing that the investment had no "no risk" and by "guaranteeing" a 30% return on investment. In reality, no such investment existed, and Jones pocketed and the spent plaintiff's life savings, leaving plaintiff with no retirement." A court is more likely to find these detailed factual allegations "despicable" or "fraudulent" so as to warrant punitive damages under Civil Code, § 3294 at the pleadings stage.  That's not to say you can never plead conclusions. You can. But only after you've pled facts that would plausibly support the conclusion your making. And while courts generally must take facts pled as true, no matter how implausible, the more factual details provided will make the claim less implausible and therefore less likely to be attacked.

These rules and suggestions do not just apply to Complaints and Cross-Complaints. They apply to Answers too. (FPI Development, Inc. v. Nakashima (1991) 231 CA3d 367, 384 [holding affirmative defenses must plead facts sufficient to state a defense to avoid demurrer];  Wyshak v. City Nat'l Bank (9th Cir. (Cal.) 1979) 607 F.2d 824, 827 [affirmative defense must plead facts to give "fair notice" of the defense]; see Barnes v. AT & T Pension Benefit Plan–Nonbargained Program (N.D. Cal., 2010) 718 F.Supp.2d 1167, 1172 [applying Iqbal to affirmative defenses].) Yes Virginia, you can demurrer to or make a 12(b)(6) motion against affirmative defenses, and there are strategic reasons for doing so. Limiting defenses eliminates needless discovery. So it is better to meet the client/insured and discuss meritorious defenses than to immediately file an Answer alleging legal conclusions devoid of facts (unless your trying to avoid a default). If time pressures force you to file an Answer to avoid a default, consider filing an amended Answer with factual allegations supporting the defenses. It makes for a stronger defense, and possibly an earlier and better settlement once the "real" issues in a case are fully vetted.




No comments:

Post a Comment