I respectfully dissent. Here, the insurer of a negligent defendant knowingly filed a meritless appeal and used it for the purpose of coercing the plaintiffs to settle for less than their rightful judgment. The plaintiffs certainly do have a cause of action against the insurer.

*798 I.

The facts are clear since the present appeal arises from the sustaining of a demurrer. Consequently, the facts alleged in the plaintiffs’ complaint are deemed to be true. (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 ]; Buckaloo v. Johnson (1975) 14 Cal.3d 815, 828 [ 122 Cal.Rptr. 745 , 537 P.2d 865 ].)

William Coleman drowned on August 3, 1975, while attempting to rescue his son from a swimming facility owned and operated by the City of Monrovia (hereafter the city). The death was caused by the city’s negligence. At the time, the city was covered under a liability insurance policy issued by defendants Gulf Insurance Group and Gulf Insurance Company (hereafter collectively referred to as Gulf).

William Coleman’s heirs, plaintiffs in the present action, brought a wrongful death suit against the city. In October of 1980, they obtained a jury verdict for $350,000. Following the denial of its new trial motion, the city appealed.

Throughout the proceedings, Gulf controlled the defense on behalf of the city. At the time of the appeal, Gulf lacked any reasonable basis for believing that the judgment would be reversed.

However, Gulf stood to gain by delaying payment as long as possible. Gulf was aware that plaintiffs were in dire financial straits, having lost their principal source of support when William Coleman died. By appealing, Gulf sought to postpone payment until plaintiffs were forced to settle for a fraction of the judgment.

Further, Gulf knew that the judgment accrued interest at the statutory rate of 7 percent per year, in contrast to the general market rate of over 15 percent. By investing the funds that would otherwise go to pay the judgment, Gulf could earn the higher rate, thus depriving plaintiffs of the return that they would have obtained had the judgment been promptly paid. For each year of delay, Gulf would gain—and plaintiffs would lose—over $28,000.

Sometime after filing the appeal, Gulf offered to pay plaintiffs an amount totalling less than half of the judgment awarded. Plaintiffs declined to settle. In January 1982, Gulf tried again, this time tendering to plaintiffs $300,000 in full satisfaction of the judgment. Under financial pressure, plaintiffs accepted.

*799 Plaintiffs filed the present action in June of 1982, alleging that Gulf had wrongfully refused to pay the judgment, using the appeal as a tool for delay and coercion. They sought general and punitive damages, as well as compensation for economic losses.

H.

Plaintiffs have asserted four causes of action: (1) breach of the covenant of good faith and fair dealing, (2) violation of the insurer’s statutory duty ' to attempt good faith settlement (Ins. Code, § 790.03, subd. (h)(5) 1 ), (3) malicious prosecution of an appeal, and (4) abuse of process. They argue that to deny them relief would be to carve out an anomalous loophole in the law. It is contended that strong legislative and common law policies oppose the use of delaying tactics to coerce vulnerable insurance claimants. (See, e.g., § 790.03, subd. (h)(5); Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 404 [ 89 Cal.Rptr. 78 , 47 A.L.R.3d 286 ].) It is unlawful to bring an appeal for the purpose of delay or harrassment. (See Code Civ. Proc., § 907; Cal. Rules of Court, rule 26(a); In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 [ 183 Cal.Rptr. 508 , 646 P.2d 179 ].) Unless plaintiffs are accorded relief in the present situation, nothing will prevent insurers from filing frivolous appeals, gaining the benefits of delay, wearing down a financially pressed plaintiff, and then settling so as to avoid sanctions. 2

*800 Gulf maintains that plaintiffs have failed to meet the requirements for any of their asserted causes of action. Further, Gulf suggests that the recognition of a cause of action in this situation would unconstitutionally chill insurers’ right to petition the courts for a redress of grievances.

Plaintiffs’ first cause of action is for breach of the covenant of good faith and fair dealing. Plaintiffs acknowledge that they cannot prevail under current law since they are not among the intended beneficiaries of the insurance contract. (See Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 940-941 [ 132 Cal.Rptr. 424 , 533 P.2d 584 ].) However, they urge this court to extend the duty to cover third party claimants.

The duty of good faith and fair dealing is implied in all contractual relationships. (Sea man’s Direct Buying Service, Inc. v. Standard Oil Co. (1984) 36 Cal.3d 752, 768 [ 206 Cal.Rptr. 354 , 686 P.2d 1158 ].) Although, on occasion, implied contract terms have been extended to protect persons who were not among the intended beneficiaries of the contract (see generally, Escola v. Coca Cola Bottling Co. (1944) 24 Cal.2d 453, 461-468 [ 150 P.2d 436 ] (conc. opn. of Traynor, J.)), plaintiffs have not presented sufficiently compelling reasons to justify such an extension in the present case. 3

Plaintiffs’ reliance on Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 [ 153 Cal.Rptr. 842 , 592 P.2d 329 ] (hereafter Royal Globe) is misplaced. In Royal Globe, this court held that an insurance claimant who was not an intended beneficiary of the insurance contract could sue the insurer under the Unfair Practices Act (§ 790 et seq.). (Royal Globe, supra, 23 Cal.3d at p. 884 .) The opinion was based entirely on that statute. It did not disturb the rule barring third party claimants from recovering for breach of the covenant. The court distinguished that rule as being “based primarily upon contractual principles.” (Id., at p. 889.)

Next, plaintiffs claim that they may recover under the Unfair Practices Act. Section 790.03, subdivision (h)(5) requires insurers to attempt to settle *801 claims “in which liability has become reasonably clear.” This language is ambiguous as to the applicability of the subdivision to appeals. 4

However, the standard of “reasonably clear” liability is nonsensical when applied to an appeal, since liability is—at least arguably—“reasonably clear” in virtually all cases that have yielded a judgment in favor of the plaintiff. Thus, subdivision (h)(5)’s standard would subject insurers to the risk of suit every time they exercised their right of appeal. It is unlikely that the Legislature intended such a result.

In their third cause of action, plaintiffs contend that Gulf committed the tort of malicious prosecution. To prevail in an action for malicious prosecution, a plaintiff must plead and prove, among other elements, that “the prior action . . . was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff’s, favor [citations] [].” (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 [ 118 Cal.Rptr. 184 , 529 P.2d 608 , 65 A.L.R.3d 878 ].) An appeal is merely the continuation of an action. (See generally, 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 1, p. 4019.)

Plaintiffs acknowledge that the California courts have not recognized a cause of action for the “malicious prosecution of an appeal,” but suggest that such recognition flows logically from this court’s decision in Bertero v. National General Corp., supra, 13 Cal.3d 43 . Bertero held that the malicious filing of a cross-complaint could support an action for malicious prosecution. However, the reasoning of the opinion clearly excluded the possibility of a cause of action for the malicious filing of an appeal; “Defendants invoke a line of cases ... in which various courts have refused to recognize a tort of malicious defense. [Citation.] We do not propose to establish such a tort by our holding here. ... By seeking affirmative relief, however, defendants in the instant case did more than attempt to repel Bertero’s attack; they took the offensive in attempting to prosecute a cause of action of their own.” (Id., at pp. 52-53, italics added.) 5

*802 Finally, plaintiffs assert a cause of action for abuse of process. This court has described abuse of process as a “ ‘catch-all’ ” tort that evolved “to cover improper uses of the judicial machinery that did not fit within the earlier established, but narrowly circumscribed, action of malicious prosecution.” (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 104, fn. 4 [ 101 Cal.Rptr. 745 , 496 P.2d 817 ]; see also Twyford v. Twyford (1976) 63 Cal.App.3d 916, 923 [ 134 Cal.Rptr. 145 ].)

“‘Process,’ as used in the tort ‘abuse of process,’ has never been limited to the strict sense of the term, but instead has been interpreted broadly to encompass the entire range of ‘procedures’ incident to litigation." (Barquis v. Merchants Collection Assn., supra, 1 Cal.3d at p. 104, fn. 4.) In particular, “the taking of an appeal [may] give rise to an abuse of process.” (Ibid., italics in original, citing Tellefsen v. Key System Transit Lines (1961) 198 Cal.App.2d 611 [ 17 Cal.Rptr. 919 ].)

To state a cause of action for abuse of process, a plaintiff must allege two elements: “‘first, an ulterior purpose, and second, a wilful act in the use of the process not proper in the regular conduct of the proceeding. Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the process is required .... The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance [of] any formal use of the process itself, which constitutes the tort.’” (Spellens v. Spellens (1957) 49 Cal.2d 210, 232-233 [ 317 P.2d 613 ], italics omitted [hereafter Spellens); accord Clark Equipment Co. v. Wheat (1979) 92 Cal.App.3d 503, 524 [ 154 Cal.Rptr. 874 ].)

It is not disputed that plaintiffs have alleged the first element, an ulterior purpose. The complaint avers that Gulf filed the appeal both to coerce plaintiffs into accepting less than the payment to which they were entitled and to gain the benefit of the funds that should have gone to pay the judgment.

The second element presents a more complex problem. It is well established that the wilful act requirement is not satisfied where the defendant has merely obtained process on nonmeritorious grounds. (See Tellefsen v. Key System Transit Lines, supra, 198 Cal.App.2d at p. 616 ; see also Pimentel v. Houk (1951) 101 Cal.App.2d 884, 886-887 [ 226 P.2d 739 ].) However, the courts have not clearly specified the nature of the additional allegation that is required.

*803 A degree of definitional imprecision is inevitable with regard to a “catchall” tort: “‘It has been observed by the courts on several occasions that the elements necessary for an action for abuse of process are not clearly defined, either by the cases or by writers on the subject. The reason apparently is that the term has been used as a label for a variety of dissimilar situations which have in common only the fact that actionable injury was inflicted in connection with the use of judicial process and under such circumstances that the narrowly circumscribed action of malicious prosecution was inapplicable.’” (Fairfield v. Hamilton (1962) 206 Cal.App.2d 594, 603 [ 24 Cal.Rptr. 73 ], quoting 1 Cal.Jur.2d, Abuse of Process, § 5, pp. 213-214.)

In construing the requirement of a wilful act, the courts have endeavored to curb and remedy serious abuses of the judicial process while avoiding undue restraints on the ability of litigants to vigorously assert their interests. The requirement that plaintiffs prove something more than an improper motive and the absence of meritorious grounds ensures against an uncontrolled expansion of liability. (See generally, Miller v. Stem (1941) 262 App.Div. 5 [ 27 N.Y.S.2d 374, 375-376 ]; 72 C.J.S., Process, § 120, p. 1189.)

Tranchina v. Arciñas (1947) 78 Cal.App.2d 522 [ 178 P.2d 65 ] (hereafter Tranchina) is instructive. In Tranchina , the defendant landlords evicted the plaintiff tenant under wartime regulations that permitted evictions only where, inter alia, the landlord sought to recover possession for the purpose of occupying the property as his own residence. When the defendants failed to occupy the property immediately after the eviction, the plaintiff sued, claiming abuse of process. The court rejected the defendants’ contention that since process was properly obtained, the plaintiff was barred from enforcing the statutory policy against unauthorized evictions. The court reasoned that the wilful use of the process for a purpose not authorized by law constituted a “perversion” of that process. (Id., at p. 526; see also Pimentel v. Houk, supra, 101 Cal.App.2d at pp. 888-889.)

In the present case, plaintiffs have alleged that Gulf filed an appeal and subsequently used it for purposes that are prohibited by law and disfavored as a matter of public policy. Code of Civil Procedure section 907 and California Rules of Court, rule 26(a), prohibit the taking of an appeal for purposes of delay or harassment. Gulf escaped the operation of these provisions only because it successfully forced the plaintiffs to abandon their full judgment before the merits of the appeal were determined. (See ante, fn. 2.)

Furthermore, Gulf has violated the strong public policy favoring the prompt settlement of insurance claims. As explained above, Gulf’s conduct slips into a crack between the statutory and common law prohibitions against the use of dilatory settlement tactics to exploit the vulnerable position of *804 insurance claimants. Plaintiffs cannot recover under the common law cause of action for breach of the covenant of good faith and fair dealing since they are third party claimants, not intended beneficiaries of the insurance policy. (See Murphy v. Allstate Ins. Co., supra, 17 Cal.3d at pp. 940-941.) Although the Unfair Practices Act does protect third party claimants (see Royal Globe, supra, 23 Cal.3d 880 ), it was not designed to remedy abuses of the appellate process. (See ante, at pp. 800-801.)

Yet, the need for special protection clearly extends to the present situation. In upholding jury awards of punitive damages for bad faith refusal to settle, the courts have recognized that insurance claimants need special protection against dilatory insurer tactics: “The very risks insured against presuppose that if and when a claim is made, the insured will be disabled and in strait financial circumstances and, therefore, particularly vulnerable to oppressive tactics on the part of an economically powerful entity.” (Fletcher v. Western National Life Ins. Co., supra, 10 Cal.App.3d at p. 404 ; see also Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 820-821 [ 169 Cal.Rptr. 691 , 620 P.2d 141 ]; Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 923 [ 148 Cal.Rptr. 389 , 582 P.2d 980 ],) 6 Third party claimants are no less vulnerable than policyholder claimants.

Nor is the need for protection limited to the prejudgment period. Indeed, claimants may be even more helpless against coercive tactics after judgment, when they have already undergone pretrial and trial proceedings without any compensation to ameliorate the effect of their injuries.

In short, as in Tranchina, supra, 78 Cal.App.2d 522 , Gulf has used the process for purposes directly contrary to law and public policy. In these circumstances, it is appropriate for the tort of abuse of process to fulfill its “catchall” function. 7

*805 Gulf contends that unless insurers are permitted to employ meritless appeals as coercive tools in this situation, their right to pursue valid appeals will be chilled by the threat of lawsuits. It is argued that this chilling effect would violate both public policy and the state and federal Constitutions.

This court has recently had occasion to discuss the chilling effect of damages and penalties imposed for the taking of groundless appeals. The opinion in In re Marriage of Flaherty, supra, 31 Cal.3d 637 (hereafter Flaherty) addressed the application of Code of Civil Procedure section 907. That section empowers reviewing courts to assess damages against parties who bring frivolous appeals. California Rules of Court, rule 26(a), was also discussed. It authorizes reviewing courts to impose sanctions on attorneys or parties for frivolous appeals.

This court noted that the imposition of damages or sanctions for bringing an appeal poses delicate problems. “The difficulty 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.” (Flaherty, supra, 31 Cal.3d at p. 648 .) It was observed that, on one side of the balance, frivolous appeals burden the appellate courts with unproductive work and impede the functioning of the appellate process. (See id., at pp. 645-646, 648.) On the other side, the imposition of damage liability and sanctions might have a chilling effect on the legitimate use of the appellate process. (Id., at p. 647.)

The court concluded that “an 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.” (Flaherty, supra, 31 Cal.3d at p. 650 , italics added.) In applying this standard, the lower courts were urged to proceed with extreme caution. “[A]ny definition must be read so as to avoid a serious chilling effect on the assertion of litigants’ rights on appeal. . . . [T]he punishment should be used most sparingly to deter only the most egregious conduct.” (Id., at pp. 650-651.)

*806 The requirements for establishing tortious abuse of process are more demanding than the Flaherty test. Not only must the plaintiff show that the defendant pursued its appeal for an improper purpose—the equivalent of the first alternative prong of the Flaherty test—but also that the defendant committed a wilful and improper act in the use of the process. (See Spellens, supra, 49 Cal.2d at pp. 232-233.)

Gulf argues that the cause of action for abuse of process nevertheless poses a greater danger of chilling legitimate appeals since it, unlike the Flaherty sanctions, would be determined by a jury. In Gulf’s view, trial by jury is the real concern. However, the danger of chilling valid appeals is not a serious one and the policies favoring a remedy are most compelling.

The statute and rule discussed in Flaherty were directed primarily at reducing the burden of frivolous appeals on the appellate courts. (See Flaherty, supra, 31 Cal.3d at pp. 645-646, 648.) The present cause of action not only advances that important policy, but it furthers the public policy against bad faith settlement practices in the insurance field. (See ante, at pp. 799-800.)

In Flaherty, this court was principally concerned with the danger that personal sanctions imposed on individual attorneys would inject “ ‘undesirable self-protective reservations into the attorney’s counseling role.’” (Flaherty, supra, 31 Cal.3d at p. 647 .) The present cause of action does not impinge upon the representative role of attorneys. 8 It affects insurers, a group not easily chilled from pursuing its interests through litigation. 9 In *807 sur anee claimants need not be stripped of all protection in order to avoid discouraging valid appeals by insurers.

Gulf has raised only speculative fears of a chilling impact on the right of appeal. In Royal Globe, supra, 23 Cal.3d 880 , it was argued that a third party cause of action against insurers for failure to settle would spawn widespread and damaging litigation. (See id., at p. 898 (dis. opn. of Richardson, J.).) Gulf has not provided this court with any information indicating either that this threat has actually materialized or that it has discouraged insurers from vigorously asserting their rights or those of their policyholders. 10

Gulf nevertheless maintains that the recognition of a cause of action in the present situation would violate insurers’ constitutional right of access to the judicial process. The right to petition the courts for redress of grievances is protected under the due process and free speech provisions of the United States and California Constitutions. (U.S. Const., 1st and 14th Amends.; Cal. Const., art. I, §§ 3, 7, subd. (a).) The constitutional right of effective access to the courts is applicable not only in actions against a government entity, but also where the opposing litigants are private parties. (See Mine Workers v. Illinois Bar Assn. (1967) 389 U.S. 217, 222-223 [ 19 L.Ed.2d 426, 430-431 , 88 S.Ct. 353 ]; California Transport v. Trucking Unlimited (1972) 404 U.S. 508, 510-511 [ 30 L.Ed.2d 642, 646-647 , 92 S.Ct. 609 ]; see also Payne v. Superior Court (1976) 17 Cal.3d 908, 914 [ 132 Cal.Rptr. 405 , 553 P.2d 565 ].)

However, in the judicial context, the right to petition is tempered by the necessity for restrictions designed to ensure a fair process. (See California Transport v. Trucking Unlimited, supra, 404 U.S. at pp. 512-513 [30 L.Ed.2d at pp. 647-648].) According to the complaint, Gulf did not actually seek a redress of grievances. It pursued its appeal not to obtain a favorable decision on the merits, but to coerce plaintiffs into abandoning their rightful judgment. Gulf thereby interfered with plaintiffs’ right of effective access to the courts. Moreover, Gulf has failed to establish that the recognition of a cause of action in the present situation would have an undesirable chilling effect on insurers’ rights of appeal. Hence, Gulf’s claim of a constitutional violation is without merit. (Cf. id., at pp. 511-512 [30 L.Ed.2d at pp. 646-647].)

*808 One question remains to be resolved. Plaintiffs seek punitive damages. Civil Code section 3294, subdivision (a) provides that the plaintiff in an action for the breach of a noncontractual obligation may recover punitive damages “where the defendant has been guilty of oppression, fraud, or malice.” The present action is based on a noncontractual theory: tortious abuse of process. Hence, plaintiffs are entitled to seek punitive damages provided they have properly pleaded malice, fraud, or oppression. (Cf. Davis v. Local Union No. 11, Internat. etc. of Elec. Workers (1971) 16 Cal.App.3d 686, 697-698 [ 94 Cal.Rptr. 562 ] [approving award of punitive damages in action for malicious prosecution]; Metzenbaum v. Metzenbaum (1953) 121 Cal.App.2d 64, 69 [ 262 P.2d 596 ] [same].)

“Malice” means “conduct which is intended by the defendant to cause injury to the plaintiff or conduct which is carried on by the defendant with a conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “Oppression” is defined as “subjecting a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294, subd. (c)(2).)

Plaintiffs have alleged that Gulf deliberately embarked on a concerted course of conduct designed to exploit their financial misfortunes, to coerce them into abandoning the judgment, which Gulf knew to be valid, and to reap the interest from the award during the period of delay. Accordingly, plaintiffs have alleged that Gulf was guilty of malice and oppression as defined in Civil Code section 3294, subdivision (c). They should be permitted to seek punitive damages.

m.

In conclusion, plaintiffs have failed to meet the requirements for any of their first three asserted causes of action: breach of the covenant of good faith and fair dealing, violation of the statutory duty to settle, and malicious prosecution. However, plaintiffs should be permitted to maintain an action for abuse of process. Their complaint alleges that Gulf: (1) filed an appeal for purposes of coercion and delay, and (2) subsequently used the appeal to force plaintiffs into accepting a payment less than the judgment, in violation of the strong public policy against the use of dilatory settlement practices to exploit the vulnerable position of insurance claimants. These allegations make out the two elements of abuse of process: an ulterior purpose and a wilful and improper act in the use of the process. (See Spellens, supra, 49 Cal.2d at p. 232 .) 11

*809 Further, plaintiffs have alleged that Gulf was guilty of malice and oppression as defined in Civil Code section 3294, subdivision (c). Hence, they should be permitted to seek punitive damages.

Since I would reverse the judgment of dismissal as to the cause of action alleging abuse of process and the prayer for punitive damages, I do not join my colleagues’ opinion.

Unless otherwise noted, all statutory references are to the Insurance Code.

Since Code of Civil Procedure section 907 and California Rules of Court, rule 26(a) are enforceable only by the reviewing court, they are ineffective where, as here, an insurer successfully coerces plaintiffs into accepting partial payment prior to a decision by that court.

The majority maintain that plaintiffs can avoid the delay inherent in the normal course of appeal by moving for dismissal. (See maj. opn., ante, at fn. 5.) Although the majority admit that the power to dismiss is rarely exercised, they fail to explain why. The reader may be left with the misleading impression that this court can solve the problem of meritless, coercive appeals with a friendly reminder to the appellate courts that they have the power to dismiss them with dispatch.

The problem is not so simple. As Witkin explains, “[recognition of the power to dismiss or summarily affirm . . . tells us little of the practice. Except for a brief and unsuccessful experiment between 1932 and 1939 with summary affirmance or dismissal by rule (see 17 So. Cal. L. Rev. 259), the courts have dismissed few appeals as frivolous. The reason is that to determine the unsubstantial character of the appeal almost always requires an examination of the record, and this results in double labor for the court or unwarranted advancement of the case on the calendar. [Citations.]” (6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 476, p. 4431.)

Because of the “double labor” involved, our overburdened appellate courts are about as likely to act on the majority’s suggestion as they did in response to this court’s last statement on the subject, “emphasizing] that the appellate courts possess the . . . inherent power to summarily dismiss any action or appeal which has as its object to delay, vex or harass the opposing party or the court, or is based upon wholly sham or frivolous grounds.” (Ferguson v. Keays (1971) 4 Cal.3d 649, 658 [ 94 Cal.Rptr. 398 , 484 P.2d 70 ].) In the intervening 15 *800 years, that statement has not been cited in a single published opinion.

The majority also suggest that when an appellate court does dismiss an appeal as frivolous, it may award damages under Code of Civil Procedure section 907. (Maj. opn., ante, fn. 5; see Cal. Rules of Court, rule 26(a).) Yet, consideration of such an award will almost inevitably draw the court into a full review of the merits of the appeal, even if it somehow managed to avoid that task in the initial determination to dismiss. As this court held in In re Marriage of Flaherty, supra, due process requires that “[penalties for prosecuting frivolous appeals should not be imposed without giving fair warning, affording the attorney an opportunity to respond to the charge, . . . holding a hearing [and] providing] the attorney with a written statement of the reasons for the penalty.” ( 31 Cal.3d at p. 654 .) Again, there is little incentive for the appellate court to depart from the normal course of waiting to decide the appeal on the merits.

This conclusion is strengthened by the fact that plaintiffs may recover under an alternative theory. (See post, at pp. 802-807.)

Subdivision (h)(5) applies only to “claims.” Viewed solely as a matter of semantics, the term “claims” might or might not include claims that have been reduced to judgment. This ambiguity becomes apparent when subdivision (h)(5) is contrasted with subdivision (h)(10), which specifically prohibits “[m]aking 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. ”

Plaintiffs criticize the distinction between the offensive and defensive use of process as artificial and meaningless. However, there is no need to alter the longstanding elements of the cause of action for malicious prosecution. Where a complaint alleges misuse of the judicial process but lacks one or more of the elements of malicious prosecution, it may properly be considered under the doctrine of tortious abuse of process. (See, e.g., White Lighting Co. v. Wolfson (1968) 68 Cal.2d 336, 350 [ 66 Cal.Rptr. 697 , 438 P.2d 345 ].)

The necessity for special protection is also reflected in an exception to the general rule against the award of attorney fees in civil actions—the allowance of compensation to insurance claimants for attorney fees incurred in obtaining benefits withheld by insurers in bad faith. (See Brandt v. Superior Ct. (1985) 37 Cal.3d 813 [ 210 Cal.Rptr. 211 , 693 P.2d 796 ]; Mustachio v. Ohio Farmers Ins. Co. (1975) 44 Cal.App.3d 358 [ 118 Cal.Rptr. 581 ].)

Gulf relies heavily on Tellefsen v. Key System Transit Lines, supra, 198 Cal.App.2d 611 . In Tellefsen , the plaintiff alleged that the defendant had refused to pay a personal injury judgment and instead had filed a groundless appeal for coercive purposes. There was no allegation that the defendant had actually threatened the plaintiff or offered to settle. On the contrary, the defendant had merely pursued its appeal to a resolution, paying the judgment in full after the appellate court issued its ruling. {Id., at p. 612, fn. 2.)

The court accepted the notion that “the rule of abuse of process could be applied to the appellate process.” (Tellefsen, supra, 198 Cal.App.2d at p. 613 .) Nevertheless, the court held that the plaintiff had failed to state a cause of action, reasoning that the defendant had “ ‘done nothing more than carry out the process ... to its authorized conclusion, even *805 though with bad intentions.’ ” {Id., at p. 615, quoting Prosser on Torts, supra, at p. 669.)

Gulf’s reliance on Tellefsen is misplaced in two respects. First, the present complaint, unlike the complaint in Tellefsen , alleges that Gulf not only filed an appeal for an improper purpose, but also attempted to effectuate that purpose by inducing the plaintiffs to accept partial payment under the threat of continued delays in payment. (Cf. Spellens, supra, 49 Cal.2d at pp. 230-233.) Although an offer to settle could not by itself transform a frivolous appeal into an abuse of process, it is significant that the plaintiff in Tellefsen failed to allege any act by the defendant other than the pursuit of the appeal itself.

Second, the present case—again unlike Tellefsen—implicates the strong judicial and legislative policies against the use of delaying tactics to exploit the vulnerable position of insurance claimants.

Gulf attempts to draw an analogy between the attorney-client relationship and the duty of defense owed by an insurer to its policyholder. It is argued that even if insurers can be relied upon to pursue their own interests, they may be discouraged from advancing their policyholders’ interests. In many reported cases, however, the insurer insisted on pursuing a vigorous defense even though the interest of the insured lay in a prompt settlement within the policy limits. (See, e.g., Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654 [ 328 P.2d 198 , 68 A.L.R.2d 883 ]; Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425 [ 58 Cal.Rptr. 13 , 426 P.2d 173 ].) In such cases, the present cause of action will increase the insurers’ incentive to represent the interests of their policyholders. Some degree of conflicting interests is inherent in the relationship of insurer and insured. Gulf has failed to show that the problems would be worse with the present cause of action than without it.

The defense of insurance claims is an integral aspect of the insurance business. Insurers possess both the means and the incentive to litigate valid appeals. (Cf. Va. Pharmacy Bd. v. Va. Consumer Council (1976) 425 U.S. 748, 771-772, fn. 24 [ 48 L.Ed.2d 346, 364 , 96 S.Ct. 1817 ] [commercial speech is not easily chilled since it is the “sine qua non of commercial profits”]; Central Hudson Gas & Elec. v. Public Serv. Comm’n (1980) 447 U.S. 557, 564, fn. 6 [ 65 L.Ed.2d 341, 349 , 100 S.Ct. 2343 ] [same].) As expert “repeat players” in the litigation process, insurers are well equipped to assess the risk of liability and to spread costs over a large number of appeals. (See generally, Galanter, Why the “Haves” Come Out Ahead: Speculations on the Limits of Legal Change (1974) 9 Law & Soc’y Rev. 95, 98-103.)

Gulf points to a few large judgments assessed against insurers under Royal Globe . However, the mere existence of large judgments does not, by itself, establish an undesirable chilling effect. As noted above, insurers are well equipped to recognize and pursue valid appeals. (See ante, fn. 9.) Further, the award of large judgments cuts both ways. From the claimants’ point of view, it underscores the magnitude of insurer abuses and, hence, the need for a remedy.

I am at a loss to understand the majority’s reluctance to encourage the several benefits that recognition of such a tort would imply. The policy favoring settlement and the policy *809 opposing frivolous appeals serve the same ultimate purposes. Both policies serve to reduce the workload of the appellate courts and to provide prompt relief to plaintiffs possessing valid claims. Recognizing a cause of action for abuse of process would advance those purposes by discouraging the filing of meritless appeals by insurance companies in the first instance.

It would do so by substantially increasing the risks of attempts to gain unfair settlement leverage. The deterrent effect would be particularly strong in egregious cases such as this one, where the insurer was motivated to exploit a financial crisis brought upon the plaintiffs by the veiy conduct of its insured that supported the underlying judgment.

An insurer considering a frivolous appeal would be left with a clear choice: pay the judgment, or appeal and wait for a decision on the merits. An unfair, coercive settlement offer would no longer be an attractive way to avoid payment of the full judgment or to escape judicial scrutiny of the appeal to determine whether it is frivolous. Denied the cheap settlement option, the insurer would be forced to face squarely the possibility that the appellate court will deprive it of the other principal advantage of a dilatory appeal—the market/ judgment interest differential—by awarding Flaherty damages. As a result, fewer frivolous appeals would be filed and justice would be more fully and promptly served.