Hill, Kertscher & Wharton, LLP v. Moody

• Decision Date: 28 February 2020
• Docket Number: S18G1436
• Citation: 839 S.E.2d 535,308 Ga. 74
• Parties: HILL, KERTSCHER & WHARTON, LLP et al. v. MOODY et al.
• Court: Georgia Supreme Court

308 Ga. 74

839 S.E.2d 535

HILL, KERTSCHER & WHARTON, LLP et al.

v.MOODY et al.

S18G1436

Supreme Court of Georgia.

Decided: February 28, 2020

Mark Alan Rogers, NCR Corp., 864 Spring Street, NE, 20th Floor, Atlanta, Georgia 30308, Johannes S. Kingma, John Colquitt Rogers, Carlock, Copeland & Stair, LLP, One Ninety One Peachtree Tower, 191 Peachtree Street NE, Suite 3600, Atlanta, Georgia 30303, for Appellants.

Douglas Vincent Chandler, Shaun P. Rooney, Chandler Law, LLC, 2900 Chamblee Tucker Rd., Bldg. 14 Suite 200, Atlanta, Georgia 30341, for Appellees.

Matthew D. Friedlander, Caroline Johnson Tanner, Holland & Knight, LLP, 1180 West Peachtree Street, N.W., Suite 1800 Atlanta, Georgia 30309-3407, for Amicus Appellee.

Boggs, Justice.

Under longstanding Georgia law, when a client sues his former attorney for legal malpractice, the client impliedly waives the attorney-client privilege with respect to the underlying matter or matters to the extent necessary for the attorney to defend against the legal malpractice claim. The issue presented in this appeal is whether the implied waiver extends to the client’s communications with other attorneys who represented the client with respect to the same underlying matter, but whom the client chose not to sue. The trial court held that the waiver does extend to such other counsel and therefore denied a motion for a protective order in this legal malpractice case. The Court of Appeals reversed, see Moody v. Hill, Kertscher & Wharton, LLP , 346 Ga. App. 129, 813 S.E.2d 790 (2018), and we granted certiorari to decide this issue of first impression. We hold that when a client sues his former attorney for legal malpractice, the implied waiver of the attorney-client privilege extends to the client’s communications with other attorneys who represented the client with respect to the same underlying transaction or litigation. For the reasons described below, we reverse in part and vacate in part the Court of Appeals’ judgment, and we remand the case with direction.

1. (a) This case started with a complaint for legal malpractice and breach of fiduciary duty. The complaint alleged as follows. Daryl Moody and two associated business entities, Mast Nine, Inc. and UAS Investments, LLC ("UAS"), had invested in Leucadia Group, LLC, a California-based aerospace company that was owned by Robert Miller and Sean Frisbee. Moody, Mast Nine, and UAS sought legal advice from Hill, Kertscher & Wharton, LLP and attorneys Douglas Kertscher and Robert Joseph (collectively, "HKW") about terminating Miller as Leucadia Group’s president. On or about January 15, 2015, HKW advised Moody, Mast Nine, and UAS to do the following, all without notice to Miller: appoint Moody to Leucadia Group’s board of directors; form a new company named Leucadia Investment Holdings, Inc. ("LIH"); have Leucadia Group issue shares to LIH; and terminate Miller as president of Leucadia Group. Moody, Mast Nine, and UAS followed HKW’s advice, and HKW prepared the necessary corporate documents. HKW also recommended filing a lawsuit against Miller and Leucadia Group in Fulton County Superior Court, which HKW then filed on behalf of UAS and Frisbee on January 16, 2015. On February 11, 2015, Miller responded by filing a lawsuit in California against Moody, LIH, Leucadia Group, and Frisbee, whom HKW then represented in the California litigation. Despite Moody’s specific requests, HKW failed to assert certain defenses properly, including that the California court lacked personal jurisdiction over Moody. HKW did not disclose or obtain written waivers of any potential or actual conflicts of interest resulting from prior or ongoing representation of Leucadia Group and Miller. Miller filed a motion in the Fulton County lawsuit to disqualify HKW, which was granted, and HKW then withdrew from the California lawsuit. The California court ultimately ruled that Moody’s appointment to Leucadia Group’s board of directors, Leucadia Group’s issuance of shares to LIH, and Miller’s termination as president of Leucadia Group were all void.

(b) On April 28, 2017, Daryl Moody, Mast Nine, UAS, and LIH (collectively, "Plaintiffs") filed a complaint against HKW in Cobb County State Court (the "trial court"). The complaint contained counts for legal malpractice and breach of fiduciary duty based on HKW’s legal advice and services in connection with the corporate matter involving Leucadia Group and the Fulton County and California lawsuits. On May 30, 2017, HKW filed an answer and counterclaim for unpaid legal fees. HKW admitted representing Mast Nine in connection with certain corporate actions over the course of 2014; representing LIH after it was formed to receive preferred stock from Leucadia Group; representing UAS in the Fulton County lawsuit and with respect to certain corporate acts; and representing Moody, who was the corporate representative of Mast Nine, UAS, and LIH, in the California lawsuit. HKW denied having previously represented Leucadia Group or Miller but admitted that in September 2015, the Fulton County Superior Court granted Miller’s motion to disqualify HKW and that HKW then withdrew from the California lawsuit. HKW asserted numerous defenses, including that non-parties caused some or all of the damages alleged and that Plaintiffs had separate counsel who provided "confirmatory advice." HKW also alleged that Moody directed HKW to "follow the instructions of Holland & Knight LLP over the course of its interaction with Mr. Moody."

(c) On June 6, 2017, HKW served a request for production of documents on non-party Holland & Knight under the Civil Practice Act. See OCGA § 9-11-34 (c) (1) (authorizing requests for production of documents directed to "persons, firms, or corporations who are not parties"). See also OCGA § 9-11-26 (b) (1) (authorizing parties in civil litigation to "obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party"). HKW requested, among other things: (1) Holland & Knight’s file for any corporate work performed for Plaintiffs regarding Leucadia Group, Miller, another named individual, and another named company; (2) Holland & Knight’s litigation file for the Fulton County lawsuit; (3) Holland & Knight’s litigation file for the California lawsuit; and (4) all correspondence related to that corporate work and the Fulton County and California lawsuits, including communications between Plaintiffs and Holland & Knight. On July 31, 2017, Holland & Knight responded to HKW’s discovery request, producing numerous redacted documents and withholding others based on specified objections, including attorney-client privilege and work product protection; Holland & Knight did not object that any of the materials sought were not "relevant to the subject matter involved in the pending action." OCGA § 9-11-26 (b) (1).

Also on July 31, 2017, Plaintiffs filed a motion for a protective order on the same grounds raised by Holland & Knight. On September 12, 2017, HKW filed a response to Plaintiffs’ motion with multiple exhibits, including an affidavit by Kertscher concerning Holland & Knight’s involvement in HKW’s corporate work for Plaintiffs related to Leucadia Group and Holland & Knight’s involvement in the Fulton County and California lawsuits. In its response, HKW argued that Plaintiffs’ filing of a complaint for legal malpractice against HKW based on HKW’s legal advice and services in those three matters constituted an implied waiver of the attorney-client privilege and work product protection with respect to all counsel, including Holland & Knight, that assisted Plaintiffs in those same matters.

No hearing was requested, and on September 19, 2017, the trial court denied Plaintiffs’ motion for a protective order. The trial court found that it was undisputed that Holland & Knight together with HKW represented Moody in connection with the matters that are the subject of the legal malpractice complaint and held that Plaintiffs therefore had "waived the attorney-client privilege and work product protection concerning Holland & Knight ... by asserting the present legal malpractice claims." In support of its ruling, the trial court cited Christenbury v. Locke Lord Bissell & Liddell, LLP , 285 F.R.D. 675 (N.D. Ga. 2012). The trial court then granted Plaintiffs’ request for a certificate of immediate review; the Court of Appeals granted Plaintiffs’ application for interlocutory appeal; and Plaintiffs filed a timely notice of appeal.

(d) The Court of Appeals reversed the trial court’s order denying Plaintiffs’ motion for a protective order. See Moody , 346 Ga. App. at 129, 813 S.E.2d 790. The Court of Appeals recognized that when a client sues his former attorney for legal malpractice, the client impliedly waives the attorney-client privilege to the extent necessary for the attorney to defend against the legal malpractice claim. See id. at 130, 813 S.E.2d 790. However, the Court of Appeals expressed doubt that the implied waiver extends to other attorneys who represented the client in the same underlying matter, stating that this Court has "indicated" that implied waivers of the attorney-client privilege should be narrowly drawn, citing Waldrip v. Head , 272 Ga. 572, 578-579, 532 S.E.2d 380 (2000) (holding that habeas petitioner who asserts claim of ineffective assistance of counsel waives attorney-client privilege and work product protection only to extent necessary for attorney to defend against specific charges of misconduct), overruled on other grounds by Duke v. State , 306 Ga. 171, 829 S.E.2d 348 (2019). See Moody , 346 Ga. App. at 130, 813 S.E.2d 790. The Court of Appeals then tried to distinguish Christenbury on its facts, stating that the plaintiffs in Christenbury also had sued one of the non-party attorneys from whom discovery was sought (albeit in a...