CONCEALMENT OF CLIENT'S BANKRUPTCY IN SETTLEMENT IS PRIVILEGED ACTIVITY AND LAWSUIT WAS DISMISSED AS A SLAPP

 In a recent SLAPP case, Livingiston v. Ballantine (B250110), attorney Ballantine failed to disclose his client's bankruptcy in the course of settlement negotiations in the underlying action.  As a result, Livingston was never listed as a creditor in the Bankruptcy.   Livingston then sued the attorney, Ballantine for fraud for concealing his client's bankruptcy in inducing the settlement.  In a case, that reasons remarkably similar to Navellier v. Sletten (2002) 29 Cal.4th 82, the court of appeal held that the act of concealing the bankruptcy was protected activity under CCP 425.16, subdivision (e)(2), the anti-SLAPP statute, and that the fraud claim was barred by the litigation privilege of CC 47(b) - similar to Navellier v. Sletten.  The most curious aspect of this case is that the court of appeal held that failure to disclose the bankruptcy (a negative fraud) was a "communicative act" for purposes of the litigation privilege.  The litigation privilege has been held not to cover "noncomunicative" conduct in other contexts.  But the significance of this case is that a lawyer has no legal duty to disclose his client's bankruptcy in the midst of settling pending litigation and may conceal the fact of the bankruptcy to induce the settlement without penalty because it is part and parcel of his right to petition on behalf of his client.