455 F.2d 337 (5th Cir. 1972), 71-1759, Hyde Const. Co. v. Koehring Co.

Docket Nº:71-1759.
Citation:455 F.2d 337
Party Name:HYDE CONSTRUCTION COMPANY, Inc., Plaintiff-Appellee-Cross Appellant, v. KOEHRING COMPANY, Defendant-Appellant-Cross Appellee. Vardaman S. DUNN, Plaintiff-Appellee-Cross Appellant, v. KOEHRING COMPANY, Defendant-Appellant-Cross Appellee.
Case Date:February 10, 1972
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 337

455 F.2d 337 (5th Cir. 1972)

HYDE CONSTRUCTION COMPANY, Inc., Plaintiff-Appellee-Cross Appellant,

v.

KOEHRING COMPANY, Defendant-Appellant-Cross Appellee.

Vardaman S. DUNN, Plaintiff-Appellee-Cross Appellant,

v.

KOEHRING COMPANY, Defendant-Appellant-Cross Appellee.

No. 71-1759.

United States Court of Appeals, Fifth Circuit.

February 10, 1972

Page 338

Dan H. Shell, Scott Tennyson, Jackson, Miss., for Koehring Co.; Satterfield, Shell, Williams & Buford, Tennyson & Britt, Jackson, Miss., of counsel.

Vardaman S. Dunn, W. E. Suddath, Jr., Jackson, Miss., for plaintiffs-appellees; Watkins & Eager, Cox & Dunn, Ltd., Jackson, Miss., of counsel.

Before BELL, AINSWORTH and GODBOLD, Circuit Judges.

BELL, Circuit Judge:

This is an interlocutory appeal and cross-appeal allowed under 28 U.S.C.A.§ 1292(b) to settle a discovery problem which lies at the heart of a pending controversy. It is indeed that rare case where the issue presented in the context of discovery and a foreordained trial of

Page 339

unusual length, involves a controlling question of law and where an immediate appeal may materially advance the ultimate termination of the litigation. 1

Two suits are involved, both removed from a Mississippi state court. The defendant in each is Koehring Company. The plaintiff in one suit is Hyde Construction Company, Inc.; the plaintiff in the other is Vardaman S. Dunn, former and present counsel for Hyde. The cause of action in each is alleged to be abuse of process which arose out of a long course of litigation between Hyde and Koehring. The abuse of process is said to have been at the hands of counsel for Koehring, acting as its alter ego.

The discovery problem involves 81 documents as to which Koehring claims the attorney-client privilege. The district court found that 48 were privileged but that the remaining 33 were not. Each party claims total error; i. e., Hyde and Dunn say none are privileged; Koehring says all are privileged.

As will be seen, after following meanderings of the parties to arrive at the center of gravity, and after considering the law of privilege to the extent of deciding what the Supreme Court of Mississippi has not decided on the same subject, we affirm the district court in part and reverse in part.

I.

We need only a brief outline of the prior litigation between the parties as a background to the issue presented. The full history is contained in many pages of federal and state reports. See Hyde Construction Company, Inc. v. Koehring Company, S.D.Miss., 1969, 321 F.Supp. 1193 and cases cited therein (opinion of district court denying motions to dismiss in these matters).

In 1961, Hyde commenced an ordinary suit for breach of warranty in the Chancery Court of Hinds County, Mississippi. A few days earlier, Hyde had filed suit asserting the same cause of action under diversity jurisdiction in the United States District Court for the Southern District of Mississippi. Koehring's motion to transfer that action to the Northern District of Oklahoma, pursuant to 28 U.S.C.A. § 1404(a), was denied. We reversed and ordered the case transferred. Koehring Company v. Hyde Construction Company, Inc., 5 Cir., 1963, 324 F.2d 295. While having the right to do so under 28 U.S.C.A.§ 1441(a), Koehring failed to remove the Chancery Court action to the federal court and instead, some months later, answered on the merits.

Having consented to the jurisdiction of the Chancery Court, Koehring nevertheless resisted exercise of that jurisdiction by other means. It first prevailed upon the Oklahoma federal district court to enjoin the Chancery Court proceedings. When this did not suffice to halt the Chancery Court, Koehring obtained another injunction from the Oklahoma district court enjoining Hyde's collection of the Chancery Court judgment which had been rendered in the interim. All of these injunction proceedings were held to be in violation of 28 U.S.C.A. § 2283 in Hyde Construction Company, Inc. v. Koehring Company, 10 Cir., 1968, 388 F.2d 501, cert. den., 391 U.S. 905, 88 S.Ct. 1654, 20 L.Ed.2d 419.

Koehring also participated in civil and criminal contempt proceedings against Hyde and Dunn in the Oklahoma district court. The civil contempt charge against Hyde was vacated. 388 F.2d 501, supra. Dunn's conviction of the criminal contempt was reversed in order

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that the district court might reconsider its decision to punish Dunn in light of the invalidity of the order which Dunn had violated, although the court specifically pointed out Dunn's wrongdoing in having violated the order. Dunn v. United States, 10 Cir., 1968, 388 F.2d 511. On remand, the district court dismissed all charges of contempt still pending.

At this point, Hyde again attempted to enforce the Mississippi judgment. Koehring, alleging fear of exposure to multiple claims, commenced an interpleader action in the District Court for the Eastern District of Wisconsin. That court granted a temporary injunction against enforcement of the Mississippi judgment. On appeal, the Seventh Circuit dissolved the injunction which had remained in effect pending disposition of the appeal. The dismissal of the interpleader action was affirmed. Koehring Company v. Hyde Construction Company, 7 Cir., 1970, 424 F.2d 1200. This action by the Seventh Circuit was on March 19, 1970, nearly ten years after Hyde instituted its suit. Hyde thereafter collected the Mississippi judgment. Meanwhile, the instant suits claiming abuse of process were filed in October, 1969.

II.

The question of privilege which is presented must be decided on the basis of the peculiar facts of a claim of abuse of process through the conversion of the privileged matter from a shield into a sword. As will be seen, this gives rise to consideration of waiver concepts.

One sharply contested fact is whether Mr. Dunn represented to counsel for Koehring that the Chancery Court action was protective in nature in that it was to be maintained only in the event federal jurisdiction was lacking. It is contended by Hyde and Dunn that no such representation was made but that Koehring asserted to the contrary in the various proceedings in the Oklahoma federal court in explanation of its failure to remove the chancery action.

An additional example of the claimed sword-like nature of the privileged matter is said to be Koehring's use of the federal court processes to its own end in provoking criminal contempt proceedings against Hyde and Dunn.

Having these facts in mind, we turn to the applicable law. This is a diversity case and in this connection it is settled that Mississippi law controls. This is for the reason that in diversity cases legislative created privileges must be treated as substantive.

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