Borgwardt v. Redlin

• Citation: 538 N.W.2d 581,196 Wis.2d 342
• Decision Date: 08 August 1995
• Docket Number: No. 94-2701,94-2701
• Parties: G. Curt BORGWARDT and C & S Graphics, Plaintiffs-Appellants, v. Ralph REDLIN, C.P.A., Michael Browne, C.P.A., Gregory Ksicinski, C.P.A., Redlin, Browne & Company Certified Public Accountants, S.C., and Crum & Foster Managers, Defendants-Respondents, M & W, Ltd., c/o Charles Mulcahy, esq., Charles C. Mulcahy, esq., Michael R. Wherry, esq., Nelson S. Weine, esq., and ABC Insurance Company, Defendants.
• Court: Court of Appeals of Wisconsin

Page 581

538 N.W.2d 581

196 Wis.2d 342

G. Curt BORGWARDT and C & S Graphics, Plaintiffs-Appellants, v. Ralph REDLIN, C.P.A., Michael Browne, C.P.A., Gregory Ksicinski, C.P.A., Redlin, Browne & Company Certified Public Accountants, S.C., and Crum & Foster Managers Defendants-Respondents M & W, Ltd., c/o Charles Mulcahy, esq., Charles C. Mulcahy esq., Michael R. Wherry, esq., Nelson S. Weine esq., and ABC Insurance Company, Defendants.

No. 94-2701.

Court of Appeals of Wisconsin.

Submitted on Briefs July 11, 1995.

Opinion Released Aug. 8, 1995.

Opinion Filed Aug. 8, 1995.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Paul R. Erickson and Bradley I. Dallet of Gutglass, Erickson & Bonville, S.C., of Milwaukee.

On behalf of the defendants-respondents, the cause was submitted on the briefs of Barbara J. Janaszek and Ann M. Maher of Whyte Hirschboeck Dudek S.C., of Milwaukee.

Before SULLIVAN, FINE and SCHUDSON, JJ.

FINE, Judge.

This is an appeal from the trial court's non-final order directing Nelson S. Weine, Esq., a non-party deposition witness, to produce documents that the plaintiffs claim are protected by the attorney-client privilege and the work-product doctrine. ¹ We reverse.

I.

This is an accounting and legal malpractice action. The complaint filed by G. Curt Borgwardt and C & S Graphics alleged, inter alia, that the law firm of M & W, Ltd., and three named attorneys employed by the firm, including Weine, were negligent in connection with the plaintiffs' purchase of another business, which subsequently failed. At the time of the alleged professional malpractice, the M & W attorneys represented Borgwardt and C & S Graphics.

All claims against the M & W attorneys were dismissed without prejudice on June 11, 1992, by stipulation. Before that dismissal, however, Borgwardt and C & S Graphics sought from M & W and the three lawyers "[a]ny and all documents or things in writing relating to Curt Borgwardt or C & S Graphics in the [lawyers'] possession or control." No other party either joined in that request or made an independent request for the documents. Counsel for M & W responded that the documents were available for either inspection or copying, as provided for by RULE 804.09, STATS. Although the record is not clear, presumably counsel for Borgwardt and C & S Graphics examined or copied the documents.

After the M & W attorneys were dismissed from this action, the accounting defendants deposed Weine pursuant to a subpoena duces tecum. See RULES 804.05(1) & 805.07, STATS. At his deposition, Weine produced the M & W file relating to Borgwardt and C & S Graphics, but withheld two sets of documents, identified at the deposition as exhibits 161 and 162, which he claimed were protected from disclosure by the attorney-client privilege belonging to Borgwardt and C & S Graphics and by the work-product doctrine. The accounting defendants moved the trial court to compel discovery of the two exhibits.

The trial court held a hearing on the accounting defendants' motion to compel discovery of the Weine deposition exhibits 161 and 162, but did not examine the documents in camera to determine whether either the attorney-client privilege or the work-product doctrine applied. Rather, the trial court held that whatever privileges that might have protected the documents from disclosure were waived by virtue of RULE 905.11, STATS. ² The trial court concluded in an oral decision that once Borgwardt and C & S Graphics requested production of their file from M & W, "all parties [were] made privy to that discovery." Further the trial court ruled, apparently without examining the documents, that the work-product doctrine did not apply because the documents were not prepared "in anticipation of this litigation." (Emphasis added.) ³

II.

A trial court's decision whether to order discovery is vested in its sound discretion. Vincent & Vincent, Inc. v. Spacek, 102 Wis.2d 266, 270, 306 N.W.2d 85, 87 (Ct.App.1981). A trial court's discretionary determination will be upheld on appeal if it is "consistent with the facts of record and established legal principles." Lievrouw v. Roth, 157 Wis.2d 332, 358-359, 459 N.W.2d 850, 859-860 (Ct.App.1990). We reverse because the trial court misconstrued the law of waiver as applied to the attorney-client privilege and the work-product doctrine.

RULE 804.01(2)(a), STATS., provides that parties to civil litigation "may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action" even though the information sought would not be admissible at trial as long as "the information sought appears reasonably calculated to lead to the discovery of admissible evidence." (Emphasis added.) Privileges in Wisconsin are governed by CHAPTER 905, STATS. RULE 905.01, STATS., reaffirms that parties in litigation are entitled to every person's evidence, except when a person from whom evidence is sought has a privilege not to give evidence that is "inherent or implicit in statute or in rules adopted by the supreme court or required by the constitution of the United States or Wisconsin." ⁴ There are two privileges operative here: the attorney-client privilege codified in RULE 905.03, STATS., and the work-product doctrine, as adopted in Wisconsin by State ex rel. Dudek v. Circuit Court, 34 Wis.2d 559, 150 N.W.2d 387 (1967), and partially codified by RULE 804.01(2)(c), STATS. ⁵

The attorney-client privilege applies to confidential communications from the client to the lawyer, and from the lawyer to the client if disclosure of the lawyer-to-client communications would directly or indirectly reveal the substance of the client's confidential communications to the lawyer. Journal/Sentinel, Inc. v. School Bd., 186 Wis.2d 443, 460, 521 N.W.2d 165, 173 (Ct.App.1994). The privilege is "absolute" unless it either does not apply because of one or more of the exceptions set out in RULE 905.03(4), STATS., or is waived by operation of Rule 905.11, STATS. See Dudek, 34 Wis.2d at 581, 150 N.W.2d at 399-400.

The work-product doctrine is a "qualified privilege," United States v. Nobles, 422 U.S. 225, 237-238, 95 S.Ct. 2160, 2169-70, 45 L.Ed.2d 141 (1975), and applies to matters "prepared in anticipation of litigation or for trial." RULE 804.01(2)(c), STATS. The "litigation" need not have been commenced at the time the documents were prepared:

Prudent parties anticipate litigation, and begin preparation prior to the time suit is formally commenced. Thus the test should be whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation.

See 8 C.A. WRIGHT, A.R. MILLER, & R.L. MARCUS, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2d § 2024 at 343 (1994) (interpreting the federal analogue to RULE 804.01(2)(c), FED.R.CIV.P. 26(b)(3)). Moreover, the "litigation" need not be the proceeding in which the doctrine is asserted. See Federal Trade Comm'n v. Grolier Inc., 462 U.S. 19, 25-26, 103 S.Ct. 2209, 2213, 76 L.Ed.2d 387 (1983) (interpreting the federal analogue to RULE 804.01(2)(c), FED.R.CIV.P. 26(b)(3)); see also id., 462 U.S. at 29-30, 103 S.Ct. at 2215 (Brennan, J., concurring). Unlike the attorney-client privilege, the qualified privilege afforded by the work-product doctrine gives way "upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the case and that the party seeking discovery is unable without undue hardship to obtain the substantial equivalent of the materials by other means." RULE 804.01(2)(c)1, STATS.

An otherwise valid privilege is waived "if the person ... while holder of the privilege, voluntarily discloses or consents to disclosure of any significant part of the matter or communication." RULE 905.11, STATS. There must be actual disclosure; mere "consent to disclosure" that is withdrawn prior to actual disclosure is not a waiver. Cf. 2 J.B. WEINSTEIN & M.A. BERGER, WEINSTEIN'S EVIDENCE, p 511 at 511--8 (1995) ("waiver occurs only if 'any significant part of the matter or communication' is disclosed") (interpreting Supreme Court Standard 511, adopted verbatim in Wisconsin as RULE 905.11, STATS.). Further, there is no waiver "if the disclosure is itself a privileged communication." RULE 905.11. We examine the impact of this rule on both the attorney-client privilege and the work-product doctrine.

The attorney-client privilege belongs to the client. RULE 905.03(2), STATS. The client is therefore the privilege's "holder," as that term is used in RULE 905.11, STATS. Only the client or someone authorized by the client to do so may waive the privilege. Dudek, 34 Wis.2d at 605, 150 N.W.2d at 412 (An attorney "may not waive any objections to discovery which are based upon the attorney-client privilege. Only the client can waive these objections."); Swan Sales Corp. v. Jos. Schlitz Brewing Co., 126 Wis.2d 16, 31-32, 374 N.W.2d 640, 648 (Ct.App.1985) (Both the attorney-client privilege and the work-product doctrine "are owned by the attorney's client and can only be waived voluntarily at the client's direction."). ⁶ There is nothing in the record here that demonstrates that Borgwardt and C & S Graphics either personally waived their attorney-client privilege in connection with the documents or that they directed their attorneys to waive the privilege. Certainly, a client's request to see his or her file that is in the possession of current or former counsel does not waive the attorney-client privilege as to that file, even if the request is made under RULE 804.09, STATS. The rule provides: "Any party may serve on any other party a request (a) to produce and permit the party making the request, or someone acting on the party's behalf, to inspect and copy, any designated documents." RULE 804.09(1), STATS. (Emphasis added.) Thus,...