Canarelli v. Eighth Judicial Dist. Court of State, No. 78883

Docket NºNo. 78883
Citation464 P.3d 114
Case DateMay 28, 2020
CourtSupreme Court of Nevada

464 P.3d 114

Lawrence D. CANARELLI; Heidi Canarelli; and Frank Martin, Special Administrator for the Estate of Edward C. Lubbers, Former Trustees, Petitioners,
v.
The EIGHTH JUDICIAL DISTRICT COURT of the State of Nevada, IN AND FOR the COUNTY OF CLARK; and the Honorable Gloria Sturman, District Judge, Respondents,
and
Scott Canarelli, Beneficiary of the Scott Lyle Graves Canarelli Irrevocable Trust Dated February 24, 1998, Real Party in Interest.

No. 78883

Supreme Court of Nevada.

FILED MAY 28, 2020


Campbell & Williams and J. Colby Williams, Donald J. Campbell, and Philip R. Erwin, Las Vegas, for Petitioners.

Marquis Aurbach Coffing and Liane K. Wakayama, Las Vegas, for Petitioner Frank Martin, Special Administrator for the Estate of Edward C. Lubbers.

Solomon Dwiggins & Freer, Ltd., and Dana A. Dwiggins and Tess E. Johnson, Las Vegas, for Real Party in Interest.

BEFORE THE COURT EN BANC.

OPINION

By the Court, STIGLICH, J.:

464 P.3d 117

This court has not had the opportunity to address whether there is a fiduciary exception to the attorney-client privilege, whereby a fiduciary such as a trustee is prohibited from asserting the attorney-client privilege against a beneficiary on matters of trust administration. Because the Legislature created five specific exceptions to the attorney-client privilege, none of which are the fiduciary exception, we expressly decline to recognize the fiduciary exception in Nevada.

Petitioners are former trustees challenging a district court order compelling the production of allegedly privileged documents in a trust dispute with a beneficiary. The first group of documents at issue contains a former trustee's notes related to a phone call with counsel, and the second group of documents contains the former trustee's notes taken during a meeting with the other trustees, counsel, the opposing party, and an independent appraiser. Because the former trustee communicated the content of the first group of documents to counsel, we determine that these documents are protected by the attorney-client privilege and are therefore undiscoverable. Because the former trustee created the second group of documents in anticipation of litigation and the substantial-need exception to the work-product doctrine does not apply, we determine that these documents are protected by the work-product doctrine and are therefore undiscoverable. Accordingly, the district court acted in excess of its jurisdiction in compelling the partial production of the disputed documents, and we therefore grant a writ of prohibition.

BACKGROUND

Underlying trust dispute

Real party in interest Scott Canarelli is the beneficiary of the Scott Lyle Graves Canarelli Irrevocable Trust, dated February 24, 1998 (the Trust). Scott's parents, petitioners Lawrence and Heidi Canarelli, conveyed minority interests in their various business entities to Scott, which Scott in turn contributed to the Trust. Lawrence and Heidi served as the Trust's family trustees and, as such, made discretionary payments from the Trust to Scott for his health, education, support, and maintenance. In addition to the two family trustees, the Trust had one independent trustee, Edward Lubbers. Lubbers also served as Lawrence and Heidi's personal attorney; in this litigation, his interests are represented by petitioner Frank Martin as Special Administrator of the Estate of Edward C. Lubbers.

Scott alleges that the trustees unlawfully withheld Trust distributions. In 2012, Scott's attorney sent a letter to Lubbers stating that the trustees were demanding receipts from Scott's purchases in a manner that was per se bad faith. The letter also threatened a lawsuit to redress the trustees’ discretionary payment decisions and remove them from their roles as trustees. After receiving the letter, Lubbers listed "Scott—lawsuit threatened" as a line item on one of Lawrence and Heidi's business entities’ meeting agendas.

In May 2013, Lawrence and Heidi resigned from their roles as family trustees, and Lubbers became successor family trustee. A week after Lawrence and Heidi resigned, Lubbers entered into a purchase agreement exceeding $25 million on behalf of the Trust to sell off the Trust's ownership in Lawrence and Heidi's business entities.

Scott subsequently filed a petition asking the district court to compel Lubbers to provide all information related to the purchase agreement and an inventory and accounting for the Trust. Less than two weeks later, Lubbers retained attorneys David Lee and Carlene Renwick. According to billing records, Lee and Renwick spoke on the phone with Lubbers for approximately half an hour on October 14, 2013, about Lubbers’ "responses to petition." Lee and Renwick continued to correspond with Lubbers via phone and email over the next two days, and Lubbers

464 P.3d 118

filed a response to Scott's petition on October 16, 2013. Scott filed a supplemental petition asserting new claims of breach of fiduciary duty against Lawrence, Heidi, and Lubbers. Lubbers resigned from his role as trustee in 2017 and died six months later.

Disputed documents

During discovery, Lawrence, Heidi, and Lubbers inadvertently disclosed documents containing Lubbers’ notes. They attempted to claw back the documents, citing the attorney-client privilege and work-product doctrine.

The first group of disputed documents (Group 1 documents) contains Lubbers’ notes related to his phone call with Lee and Renwick on October 14, 2013. One document contains Lubbers’ typed notes composed in preparation of this conversation. The other documents contain Lubbers’ handwritten notes contemporaneously memorializing the call. Lee and Renwick confirmed in declarations that on their October 14, 2013, call with Lubbers, Lubbers asked about his potential response to Scott's petitions, of which there were three pending. They also verified that Lubbers stated "his views about several matters related to the petitions and potential strategies for defending against certain of the allegations contained therein."

The second group of disputed documents (Group 2 documents) contains Lubbers’ notes contemporaneously memorializing an in-person meeting he attended on December 19, 2013, with the other trustees, counsel, Scott, and an independent trust appraiser.

Procedural history

Scott moved for a determination of privilege. The discovery commissioner found that each of the disputed documents appeared to contain Lubbers’ notes. The commissioner then concluded that a portion of the Group 1 documents were protected by the attorney-client privilege and the work-product doctrine, but that other portions were discoverable. For the discoverable portions, the commissioner found that Lubbers’ notes contained factual statements or information unrelated to the Trust. Alternatively, to the extent the factual statements intertwined with attorney-client privileged communications or work product, discovery was nonetheless permitted because of the fiduciary and common-interest exceptions to the attorney-client privilege and the substantial-need exception to the work-product doctrine. The commissioner concluded that the Group 2 documents were discoverable because, even if they constituted work product and contained primarily factual information, the substantial-need exception to the work-product doctrine applied.

The district court generally adopted the commissioner's findings.1 However, the district court concluded that the commissioner's findings as to the Group 1 document containing Lubbers’ typed notes were based upon assumptions that the notes were communicated to counsel and therefore protected by the attorney-client privilege. Nevertheless, the district court agreed with the commissioner's conclusion that a portion of the document was discoverable.

Lawrence, Heidi, and Lubbers petition this court for a writ of prohibition preventing the district court from compelling production of the disputed documents and a writ of mandamus directing the district court to find the disputed documents undiscoverable and order their return or destruction.

DISCUSSION

This original proceeding asks us to determine whether the district court acted in excess of its jurisdiction in compelling the production of allegedly privileged material. Because the disclosure of privileged information is immediately harmful and this petition provides an opportunity to address a novel issue of law, we consider the petition. In doing so, we first consider whether the Group 1 documents are protected by the attorney-client privilege, thereby evaluating

464 P.3d 119

whether petitioners proved that the documents were communicated to counsel, whether the fiduciary exception to the attorney-client privilege exists in Nevada, and whether the common-interest exception to the attorney-client privilege applies. We then decide whether the Group 2 documents are protected by the work-product doctrine and assess whether the substantial-need exception to the work-product doctrine is applicable.

Writ...

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13 practice notes
  • In re McAleer, No. 6 WAP 2019
    • United States
    • United States State Supreme Court of Pennsylvania
    • April 7, 2021
    ...to the attorney client privilege" under Nevada law. Canarelli v. Eighth Judicial Dist. Ct. in and for Cty. of Clark , 136 Nev. 247, 464 P.3d 114, 121 (2020). It must be noted, however, that these courts predicated their decisions upon the existence of statutes codifying both the privilege a......
  • Canarelli v. Eighth Judicial Dist. Court of Nev., 82299
    • United States
    • Nevada Supreme Court of Nevada
    • March 24, 2022
    ...produced in discovery, that we later determined were privileged. See Canarelli v. Eighth Judicial Dist. Court (Canarelli I), 136 Nev. 247, 464 P.3d 114 (2020). Because the alleged questionable impartiality does not arise from an extrajudicial source, we determine that the disqualification s......
  • Canarelli v. The Eighth Judicial Dist. Court of the State, 82299
    • United States
    • Nevada Supreme Court of Nevada
    • March 24, 2022
    ...produced in discovery, that we later determined were privileged. See Canarelli v. Eighth Judicial Dist. Court (Canarelli I), 136 Nev. 247, 464 P.3d 114 (2020). Because the alleged questionable impartiality does not arise from an extrajudicial source, we determine that the disqualification s......
  • Superpumper, Inc. v. Leonard, 79355
    • United States
    • Nevada Supreme Court of Nevada
    • September 16, 2021
    ...regarding discovery unless the court has clearly abused its discretion." Canarelli v. Eighth Judicial Dist . Court , 136 Nev. 247, 251, 464 P.3d 114, 119 (2020) (internal quotation marks omitted). Similarly, the decision to admit evidence is committed to the district court's discretion, "an......
  • Request a trial to view additional results
13 cases
  • In re McAleer, No. 6 WAP 2019
    • United States
    • United States State Supreme Court of Pennsylvania
    • April 7, 2021
    ...to the attorney client privilege" under Nevada law. Canarelli v. Eighth Judicial Dist. Ct. in and for Cty. of Clark , 136 Nev. 247, 464 P.3d 114, 121 (2020). It must be noted, however, that these courts predicated their decisions upon the existence of statutes codifying both the privilege a......
  • Canarelli v. Eighth Judicial Dist. Court of Nev., 82299
    • United States
    • Nevada Supreme Court of Nevada
    • March 24, 2022
    ...produced in discovery, that we later determined were privileged. See Canarelli v. Eighth Judicial Dist. Court (Canarelli I), 136 Nev. 247, 464 P.3d 114 (2020). Because the alleged questionable impartiality does not arise from an extrajudicial source, we determine that the disqualification s......
  • Canarelli v. The Eighth Judicial Dist. Court of the State, 82299
    • United States
    • Nevada Supreme Court of Nevada
    • March 24, 2022
    ...produced in discovery, that we later determined were privileged. See Canarelli v. Eighth Judicial Dist. Court (Canarelli I), 136 Nev. 247, 464 P.3d 114 (2020). Because the alleged questionable impartiality does not arise from an extrajudicial source, we determine that the disqualification s......
  • Superpumper, Inc. v. Leonard, 79355
    • United States
    • Nevada Supreme Court of Nevada
    • September 16, 2021
    ...regarding discovery unless the court has clearly abused its discretion." Canarelli v. Eighth Judicial Dist . Court , 136 Nev. 247, 251, 464 P.3d 114, 119 (2020) (internal quotation marks omitted). Similarly, the decision to admit evidence is committed to the district court's discretion, "an......
  • Request a trial to view additional results

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