Coleman v. Gulf Insurance Group

718 P.2d 77, 41 Cal. 3d 782, 226 Cal. Rptr. 90, 62 A.L.R. 4th 1083, 1986 Cal. LEXIS 175

• Court: California Supreme Court
• Decided: May 22, 1986
• Docket: L.A. 31916
• Status: Published

Opinions

Opinion

GRODIN, J.

Plaintiffs obtain a judgment against defendant, defendant appeals, and the parties settle while the appeal is pending. May plaintiffs then bring a new suit to recover additional damages against the defendant’s insurer, claiming that the insurer was responsible for instigating the appeal, and that it did so knowing the appeal was without merit but in order to achieve delay and coerce settlement?

As we shall explain, while the prosecution of a frivolous appeal for the purpose of delay is clearly improper, the Legislature has provided a remedy for such frivolous and delaying conduct in section 907 of the Code of Civil Procedure,¹ which authorizes an appellate court in which a frivolous appeal is filed to assess “such damages as may be just” for such misconduct. Past cases applying section 907 have recognized that the assessment of damages in this context is a particularly delicate task because of the potential danger of improperly “chilling” valid appeals (In re Marriage of Flaherty (1982) 31 Cal.3d 637 [183 Cal.Rptr. 508, 646 P.2d 179]), and section 907 leaves the determination of this matter to a reviewing court which is generally in the best position both to evaluate the frivolousness of the appeal and to gauge damages so as to avoid the deterrence of legitimate appeals. Although plaintiffs proffer a number of theories to support their attempt to obtain damages for an improper appeal in a new and separate lawsuit, rather than through section 907, we conclude that none of the theories can be sustained. Accordingly, we affirm the trial court judgment in favor of defendant.

I.

Plaintiffs are the survivors of William Coleman who drowned in a swimming facility owned and operated by the City of Monrovia in August 1975. After the accident, plaintiffs brought a wrongful death action against the city, and a jury found the city liable and awarded plaintiffs $350,000 in damages. Following denial of its motion for a new trial, the city appealed.

Sometime after filing the appeal, the city’s insurer, Gulf Insurance Group (Gulf), offered plaintiffs an amount equal to less than one-half of the judgment award to settle the case. Plaintiffs declined to settle. Later, in January 1982, Gulf tendered and plaintiffs accepted $300,000 in full settlement of the judgment. As a result, the appeal was dismissed.

Six months later, plaintiffs filed the present action against Gulf, seeking to recover additional compensatory and punitive damages on the basis of Gulf’s conduct in the original appeal. The complaint alleged that Gulf controlled all aspects of the initial proceedings, including appeal and settlement, and that when Gulf instituted the appeal it had no reasonable basis for believing that the judgment would be reversed but simply desired to postpone payment of the judgment. The complaint claimed that Gulf had two objectives in mind. First, the complaint alleged that Gulf, knowing that plaintiffs were of modest financial means and had lost their principal source of financial support with the death of William Coleman, hoped by postponing payment to force plaintiffs to settle for a fraction of the judgment. Second, the complaint alleged that Gulf intended to capitalize during the pendency of the appeal on the significant differential between the statutory rate of interest and the general market rate. The complaint suggested that because Gulf was not required to post an appeal bond as a result of the city’s status as a public entity, Gulf could invest the $350,000 at the general market rate of over 15 percent while having to pay plaintiffs only 7 percent during the pendency of the appeal, thereby depriving plaintiffs of the higher return they would have obtained had the judgment been promptly paid. The complaint alleged that in adopting this course of conduct, Gulf acted with “malicious” and “oppressive” intent.

On the basis of these allegations, plaintiff claimed that it was entitled to recover damages on four separate causes of action: (1) bad faith refusal to pay insurance benefits; (2) violation of Insurance Code section 790.03, subdivision (h)(5)’s requirement to attempt good faith settlement; (3) malicious prosecution of an appeal; and (4) abuse of process.² The trial court sustained Gulf’s demurrer as to all causes of action without leave to amend and dismissed the action. Plaintiffs appeal from the judgment.³

II.

Before examining each of the disparate causes of action which plaintiffs seek to invoke to support their present suit, it is important that we emphasize at the outset that the conduct in which Gulf allegedly engaged during the earlier proceedings—filing an appeal maliciously and in bad faith, solely for the purpose of delay—is clearly improper conduct which is subject to sanctions under California law. Section 907 of the Code of Civil Procedure, one of the general provisions included in the portion of the code dealing with “Appeals in Civil Actions,” specifically provides: “When it appears to the reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just.” (See also Cal. Rules of Court, rules 26(a), 135(a).)⁴ Thus, if plaintiffs had requested sanctions under section 907 in the initial appeal and had established the facts alleged in the present complaint, the appellate court could have awarded damages on this basis.⁵

We discussed the proper interpretation and application of section 907 at some length in In re Marriage of Flaherty, supra, 31 Cal.3d 637, 645-654. In Flaherty we recognized the deleterious consequences—both to the opposing party and to the administration of justice—that result from the filing of frivolous appeals, and noted that appellate courts had in the past justifiably imposed sanctions pursuant to section 907 on a number of occasions. (See, e.g., Estate ofWempe (1921) 185 Cal. 557, 564 [197 P. 949]; Seidell v. Tuxedo Land Co. (1932) 216 Cal. 165, 171 [13 P.2d 686]; Miller v. R.K.A. Management Corp. (1979) 99 Cal.App.3d 460, 469-470 [160 Cal.Rptr. 164]; In re Marriage of Schwander (1978) 79 Cal.App.3d 1013, 1022 [145 Cal.Rptr. 325].) At the same time, however, we stressed the difficulty in distinguishing frivolous and nonfrivolous appeals and cautioned that any definition of “frivolousness” must be applied “so as to avoid a serious chilling effect on the assertion of litigants’ rights on appeal. Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal. An appeal that is simply without merit is not by definition frivolous and should not incur sanctions. Counsel should not be deterred from filing such appeals out of a fear of reprisals.” (31 Cal.3d at p. 650.) “The difficulty,” we emphasized, “is in striking a balance that will ensure both that indefensible conduct does not occur and that attorneys are not deterred from the vigorous assertion of clients’ rights.” (Id., at p. 648.)

In Flaherty we established a general standard for determining “frivolousness”⁶ and relied on the good judgment of appellate courts to strike the proper balance, emphasizing that in light of the competing interests “the punishment should be used most sparingly to deter only the most egregious conduct.” {Id.., at p. 651.)⁷

Flaherty did not directly address the issue presented by this case; whether, after the settlement of an appeal, a plaintiff may bring an independent action to recover compensatory and punitive damages on the basis of the defendant’s alleged bad faith prosecution of the earlier appeal. The reasoning of Flaherty, however, appears substantially at odds with the recognition of such a cause of action. Unlike section 907, which leaves the determination of frivolousness to an appellate court which is qualified to judge the degree of meritlessness of the arguments raised on appeal, plaintiffs’ proposed causes of action would require that determination to be made by a lay jury. Although there are many contexts in which jury determinations may be superior to those of trial or appellate judges, the determination of the frivolousness of an appeal is not one. And the potential “chilling effect” on appeals—an effect that Flaherty struggled to minimize—would be greatly exacerbated if every appellant faced the prospect that a jury might impose additional damages—compensatory and punitive—in a subsequent action based on its assessment of his or her motive in prosecuting the appeal. Thus, although the issue presented here was not before us in Flaherty, the thrust of that decision certainly counsels that we approach plaintiffs’ present claims with a healthy degree of skepticism.

III.

Plaintiffs acknowledge that in no previous case has a litigant who has settled a case on appeal been permitted to maintain a separate action for damages based on the opposing party’s allegedly bad faith conduct in prosecuting the appeal. Nonetheless, they maintain that such a cause of action should be recognized under any one of a number of theories. Because the closest authority on point involved an abuse of process action, we consider that theory first.

A. Abuse of process.

To establish a cause of action for abuse of process, a plaintiff must plead two essential elements: that the defendant (1) entertained an ulterior motive in using the process and (2) committed a wilful act in a wrongful manner. (See Templeton Feed & Grain v. Ralston Purina Co. (1968) 69 Cal.2d 461, 466 [72 Cal.Rptr. 344, 446 P.2d 152]; 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 709, p. 158.) Gulf’s alleged conduct clearly embraces the first element of ulterior motive; according to the complaint, Gulf knowingly filed a meritless appeal solely to gain the benefit of delay and to coerce plaintiffs into settling for less than the amount to which they were entitled. It is the second element, improper use of the process, that is the problem.

The facts before us bear a striking resemblance to those in Tellefsen v. Key System Transit Lines (1961) 198 Cal.App.2d 611, 613 [17 Cal.Rptr. 919], where the court found there could be no abuse of process because plaintiff had failed to allege a wilful act of improper use of process. Like plaintiffs in the instant case, plaintiffs in Tellefsen had recovered a judgment against defendant in a prior action where, allegedly, there was nothing that could reasonably be thought to constitute reversible error. Nonetheless, defendant “maliciously, frivolously, ‘with intent to advantage themselves of plaintiff’s need, and with intent to set an example for other litigants and with intent to pursue a common plan for the cheap compromise settlement of verdicts against them . . . and with other improper motives',’” appealed from the judgment. (Ibid.) Plaintiff contended that in so doing defendant abused the process of the appellate court. The Tellefsen court found that “[e]ven though the rule of abuse of process could be applied to the appellate process the complaint here fails to state a cause of action .... [Defendant] did nothing more than exercise its right to appeal, even though with alleged malicious intent.” (Id., at p. 613.)

The court accepted plaintiff’s contention that the appeal was taken frivolously, but held: “merely taking a frivolous appeal is not enough to constitute an abuse of process.” (Id., at p. 615.) Despite plaintiff’s contention that defendants had filed an appeal to “advantage themselves” and to pursue a plan for “cheap compromise settlement of verdicts” (id., at pp. 612-613), the court held “[t]here is no allegation of any act of defendant using such appeal for other than its proper purpose. For taking that kind of appeal the party may be fined by the appellate court or damages may be awarded therefor to the respondent on appeal.” (Id., at p. 615.)

As in Tellefsen, plaintiffs in the present case allege nothing more than the taking of an appeal to which the city was entitled. They assert no facts to support a finding that the use of process was done in an unauthorized manner, but only that Gulf’s motive was improper.

The dissent suggests that Tellefsen is distinguishable from this case on the ground that “there was no allegation that the defendant [in Tellefsen] had actually threatened plaintiff or offered to settle.” (Post, p. 804.) With all respect, we find the distinction untenable. The only “threat” which plaintiffs here can be said to have alleged is the threat that is implicit in every appeal—that it will be pursued to finality unless settlement is reached. And in view of the strong state interest in encouraging the settlement of litigation, it would clearly be improper to hold that the making of an offer to settle is itself sufficient to supply the missing element in an abuse of process action. Such a holding would inevitably have a devastating effect on the settlement process which many of our appellate courts have struggled hard to encourage, for no appellate counsel could properly advise his client to propose a settlement on appeal if that very proposal would itself provide the essential ingredient to subject the client to a second lawsuit for abuse of process.

Accordingly, we conclude that the abuse of process claim is without merit.

B. Malicious prosecution of appeal.

Plaintiffs alternatively maintain that recovery is permissible under the tort of malicious prosecution. Although they acknowledge that no California decision has approved a cause of action for the malicious prosecution of an appeal, they suggest this court’s decision in Bertero v. National General Corp. (1974) 13 Cal.3d 43 [118 Cal.Rptr. 184, 529 P.2d 608, 53 A.L.R.3d 878] supports the creation of such a cause of action.

To prevail in an action for malicious prosecution, a plaintiff must prove—among other elements—that the “prior action . . . was commenced by or at the direction of the defendant.” (Id., at p. 50.)⁸ In Bertero, we recognized that that element need not be interpreted so narrowly as to encompass only the plaintiff in the original action, but could also apply to a defendant who maliciously filed a cross-complaint in the prior proceeding. Bertero explained: “By seeking affirmative relief [through a cross-complaint] . . . defendants . . . did more than attempt to repel [plaintiff’s] attack; they took the offensive in attempting to prosecute a cause of action of their own.” (13 Cal.3d at p. 53.)

Although plaintiffs suggest that the reasoning of Bertero supports a cause of action for the malicious filing of an appeal, we cannot agree. In Bertero, we emphasized that for many purposes cross-pleadings are treated as distinct and independent actions (13 Cal.3d at pp. 51-52; see also Skaff v. Small Claims Court (1968) 68 Cal.2d 76, 78-79 [65 Cal.Rptr. 65 , 435 P.2d 825]; Pacific Finance Corp. v. Superior Court (1933) 219 Cal. 179, 182-183 [25 P.2d 983, 90 A.L.R. 384]; McLellan v. McLellan (1972) 23 Cal.App.3d 343, 353 [100 Cal.Rptr. 258]) and concluded that “no sound reason appears for treating a cause of action initiated by a cross-pleading as only an integral part of the cause initiated by the complaint.” (13 Cal.3d at p. 51.) By contrast, filing an appeal “is not a separate proceeding and has no independent existence” (Twyford v. Twyford (1976) 63 Cal.App.3d 916, 922 [134 Cal.Rptr. 145] [rejecting malicious prosecution claim based on filing of request for admission]); it is merely the continuation of an action. (See generally, 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 1, p. 33.) Based on the reasoning of Bertero, a defendant’s appeal cannot be considered a separate action “seeking affirmative relief,” but rather is merely the continuation of an attempt “to repel” plaintiff’s attack.⁹

C. Breach of covenant of good faith and fair dealing.

Plaintiffs also assert that their current suit is sustainable as an action for breach of the covenant of good faith and fair dealing which is implied by law in every contract, including insurance contracts. (See, e.g., Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 573 [108 Cal.Rptr. 480, 510 P.2d 1032]; Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 429 [58 Cal.Rptr. 13, 426 P.2d 173]; Communale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328 P.2d 198, 68 A.L.R.2d 883].) Even if we were to assume, however, that Gulf’s alleged conduct would constitute a breach of the covenant of good faith and fair dealing if it occurred in the context of litigation brought by an insured (cf. White v. Western Title Ins. Co. (1985) 40 Cal.3d 870 [221 Cal.Rptr. 509, 710 P.2d 309]), we held in Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 943-944 [221 Cal.Rptr. 509, 710 P.2d 309] that an alleged breach of the covenant does not give rise to a cause of action by third party claimants such as plaintiffs herein. Murphy explains that because such a claimant “is not a contracting party[,] his right to performance is predicated on the contracting parties’ intent to benefit him. [Citations.]” (Id., at p. 944.) Furthermore, we observed that the third party beneficiary doctrine does not generally provide a basis for a third party claimant to recover in this context, because the implied duty to settle is ordinarily intended to benefit the insured and not the injured claimant. (Ibid.) Thus, we concluded in Murphy that an injured claimant may proceed directly against the insurer only to the extent that the insured party has assigned the claimant his cause of action for a breach of the duty to settle. (Id., at p. 942; Communale, supra, 50 Cal.2d at pp. 661-662.)

Plaintiffs acknowledge this relatively recent precedent, but argue that our decision in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [153 Cal.Rptr. 842, 592 P.2d 329] points toward a relaxation of the Murphy rule. It is true that in Royal Globe we held that a third party claimant may sue an insurer under the statutory good faith requirements of the Unfair Practices Act (Ins. Code, § 790.03, subd. (h)), but we did so on the basis of statutory language and legislative history evidencing a legislative intent to afford such a right. Nothing in our Royal Globe decision suggests expansion of the common law cause of action for breach of the covenant of good faith and fair dealing to embrace third party claimants; on the contrary, in that case we took note of the common law rule and distinguished Murphy as “being based primarily on contractual principles.” (23 Cal.3d at p. 889.) Thus, plaintiffs’ good-faith-and-fair-dealing theory cannot be sustained.

D. Violations of Insurance Code provision.

Finally, plaintiffs contend that their present action can be sustained on the basis of the statutory provision we considered in Royal Globe, supra, 23 Cal.3d 880, asserting that Gulf’s alleged conduct falls within the terms of Insurance Code section 790.03, subdivision (h)(5): “Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”¹⁰ We cannot agree that this provision was intended to apply to the facts alleged here.

To begin with, subdivision (h)(5) speaks of “claims” and “claimants,” and while those terms arguably could be stretched to include claims that have been reduced to judgment, other language in subdivision (h) suggests that is not what the Legislature had in mind. Subdivision (h)(10) describes as an unfair practice “[mjaking known to insureds or claimants a practice of the insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.” Subsection (10) is the only part of subdivision (h) that mentions “appeals” or “awards.” This suggests that subsection (5) was not intended to apply to judgments.

In addition, and perhaps more importantly, the standard provided in subdivision (h)(5)—sanctioning an insurer for not attempting to effectuate settlements of claims “in which liability has become reasonably clear”—affords no meaningful guidance once judgment is entered. In almost every case it could be argued that liability is “reasonably clear” once a trial judgment is entered in favor of a claimant, but—in light of the fundamental nature of the right to appeal and the general considerations discussed at length in In re Marriage of Flaherty, supra, —it appears quite unlikely that the Legislature intended to subject an insurer to the risk of a subsequent suit every time it exercised its right to appeal from an adverse judgment. Instead, we conclude that the more plausible interpretation of subdivision (h)(5) is that the provision was intended to apply only to prejudgment conduct.

IV.

The abuse of the litigation process for the purpose of delay is unquestionably a serious problem. Although, from a defendant’s personal perspective, justice delayed may not be justice denied but a consummation devoutly to be wished, our legal system has long struggled—not always successfully— to eliminate such dilatory tactics. Recent legislation has expanded the judicial tools for dealing with the matter by explicitly authorizing the imposition of sanctions for frivolous and delaying conduct in the course of pretrial and trial proceedings (§ 128.5) and by increasing the judgment rate of interest to reduce a defendant’s incentive to delay payment. (§ 685.010.) Additional remedial measures have been proposed—such as the inclusion of at least some portion of attorney fees as an item of costs routinely recoverable by the prevailing party on appeal (see Rep. of the Chief Justice’s Special Com. on App. Practices and Procedures in the First App. Dist. (1981) p. 32)— which also appear deserving of thoughtful legislative consideration.

As we have seen, section 907 has long afforded a remedy for frivolous or delaying actions in the appeal process, and, in recent years, appellate courts, increasingly sensitized to the incentives for delay and the adverse consequences resulting from wholly meritless appeals, have begun to impose significant sanctions when they find that appeals have been pursued frivolously or for the improper purpose of delay. (See, ante, p. 791, fn. 7.) Nonetheless, as we have also explained, the imposition of sanctions in this context remains a delicate task, because an overbroad exaction of damages may significantly chill every litigant’s enjoyment of the fundamental protections of the right to appeal. Given the complex and specialized nature of the task of distinguishing frivolous and nonfrivolous appeals, we conclude that—in the absence of an explicit legislative authorization of an independent cause of action for “malicious appeal”—an aggrieved party’s remedy properly lies in the provisions of section 907.

The judgment is affirmed.

Mosk, J., Broussard, J., Reynoso, J., and Lucas, J., concurred.

1 Unless otherwise noted, all statutory references are to the Code of Civil Procedure.

2 Plaintiffs asserted a fifth cause of action for punitive damages, incorporating each of the four prior causes of action and then characterizing defendant’s conduct as malicious and cruel. Of course, there is no separate or independent cause of action for punitive damages. The Court of Appeal treated this purported fifth cause of action as a prayer for damages. In light of our conclusion that plaintiffs have failed to establish any of the first four causes of action, it is unnecessary to address this claim for punitive damages.

3 Because the appeal arises after the sustaining of a demurrer, for purposes of the appeal we must, of course, assume the truth of the facts alleged in the complaint and the reasonable inferences that may be drawn therefrom. (See, e.g., Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746 [167 Cal.Rptr. 70, 614 P.2d 728, 12 A.L.R.4th 701].)

4 Both rules 26(a) and 135(a) provide in relevant part: “Where the appeal is frivolous or taken solely for the purpose of delay ... the reviewing court may impose upon offending attorneys or parties such penalties ... as the circumstances of the case and the discouragement of like conduct in the future may require.”

5 While sanctions pursuant to section 907 are ordinarily imposed in conjunction with an opinion on affirmance, there is nothing in section 907 which precludes an aggrieved respondent on appeal from seeking such damages, or even dismissal of the appeal, at an earlier point in the process. (See generally 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 530, pp. 514-515 and cases cited.) Although the power summarily to dismiss a frivolous appeal is seldom exercised (id., Appeal, § 531, pp. 515-516), past cases have on occasion awarded damages in connection with such dismissals. (See, e.g., McFadden v. Dietz (1897) 115 Cal. 697, 699 [47 P. 777]; Toohey v. Toohey (1950) 97 Cal.App.2d 84, 88-89 [217 P.2d 108].) Perhaps even more importantly, if an appellant is put on notice early in the process that the respondent is seeking damages under section 907, the potential award of such damages should reduce the appellant’s leverage to coerce an unreasonable settlement and increase the appellant’s incentive to abandon an appeal that is in fact frivolous. This may be particularly true since California Rules of Court, rules 26(a) and 135(a) (see fn. 4, ante), authorize the appellate court to impose penalties for the prosecution of a frivolous appeal on offending attorneys as well as on the appellant.

6 “[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit.” (31 Cal.3d at p. 650.)

7 Since Flaherty, appellate courts have imposed sanctions—at times quite sizeable—under section 907 in a number of instances. (See, e.g., Maple Properties v. Harris (1984) 158 Cal.App.3d 997, 1005-1012 [205 Cal.Rptr. 532] [$20,000 in sanctions assessed]; Corona v. Lundigan (1984) 158 Cal.App.3d 764, 767-769 [204 Cal.Rptr. 846] [$2,000]; Menasco v. Snyder (1984) 157 Cal.App.3d 729, 734-735 [203 Cal.Rptr. 748] [$1,000]; Cosenza v. Kramer (1984) 152 Cal.App.3d 1100 [200 Cal.Rptr. 18] [$3,000]; Kapelus v. Newport Equity Funds, Inc. (1983) 147 Cal.App.3d 1, 9 [194 Cal.Rptr. 893] [$5,000]; Hersch v. Citizens Sav. & Loan Assn. (1983) 146 Cal.App.3d 1002, 1011-1013 [194 Cal.Rptr. 628] [$125,000]; Custom Crafts Carpets, Inc. v. Miller (1982) 137 Cal.App.3d 120 [187 Cal.Rptr. 78] [$10,000]; People v. Beverly Bail Bonds (1982) 134 Cal.App.3d 906, 913-915 [185 Cal.Rptr. 36] [$2,000], See generally Eiscnberg, Sanctions on Appeal: A Survey and a Proposal for Computation Guidelines (1985) 20 U.S.F. L.Rev. 13.)

8 Bertero succinctly noted the elements necessary to establish a cause of action for malicious prosecution of a civil proceeding: “[A] plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff’s, favor [citations]; (2) was brought without probable cause |citations]; and (3) was initiated with malice [citations].” (Ibid.)

9 Bertero noted that courts have long “refused to recognize a tort of malicious defense” (13 Cal.3d at p. 52). Two commentators have recently advocated that such a tort be recognized (see Van Patten & Willard, The Limits of Advocacy: A Proposal for the Tort of Malicious Defense in Civil Litigation (1984) 35 Hastings L.J. 891), but plaintiffs have not asserted that contention here. Moreover, even if such a tort were recognized, it would presumably include the requirement from malicious prosecution doctrine that the prior proceeding have terminated in favor of the present plaintiff. (Id., at p. 927.) Plaintiffs in all probability could not meet that requirement here as regards the allegedly frivolous appeals since termination of an action by compromise or settlement has been held to be an insufficient basis for a malicious prosecution action. (See Weaver v. Superior Court (1979) 95 Cal.App.3d 166, 184-185 [156 Cal.Rptr. 745]; Minasian v. Sapse (1978) 80 Cal.App.3d 823, 827, fn. 4 [145 Cal.Rptr. 829], citing Prosser, Law of Torts (4th ed. 1971) § 119, p. 840; Webb v. Youmans (1967) 248 Cal.App.2d 851, 853 [57 Cal.Rptr. 11].)

10 Section 790.03, subdivision (h) reads in full: “(h) knowingly committing or performing with such frequency as to indicate a general business practice any of the following unfair claims settlement practices: [fl (1) Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverages at issue, [fl (2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies. [5] (3) Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies, [f] (4) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured, [f] (5) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. [1] (6) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds, when such insureds have made claims for amounts reasonably similar to the amounts ultimately recovered. [1] (7) Attempting to settle a claim by an insured for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application, [t] (8) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured, his representative, agent, or broker. [1] (9) Failing, after payment of a claim, to inform insureds or beneficiaries, upon request by them, of the coverage under which payment has been made. [*[] (10) Making known to insureds or claimants a practice of the insurer appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration. [1] (11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information. [1] (12) Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage. [1] (13) Failing to provide promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement. [1] (14) Directly advising a claimant not to obtain the services of an attorney. [1] (15) Misleading a claimant as to the applicable statute of limitations.”