Department of Transp. v. Hardaway Co.

• Decision Date: 09 February 1995
• Docket Number: No. A94A2474,A94A2474
• Citation: 216 Ga.App. 262,454 S.E.2d 167
• Parties: DEPARTMENT OF TRANSPORTATION v. HARDAWAY COMPANY.
• Court: Georgia Court of Appeals

Page 167

454 S.E.2d 167

216 Ga.App. 262

DEPARTMENT OF TRANSPORTATION v. HARDAWAY COMPANY.

No. A94A2474.

Court of Appeals of Georgia.

Feb. 9, 1995.

Michael J. Bowers, Atty. Gen., George P. Shingler, Sr. Asst. Atty. Gen., Shapiro, Fussell, Wedge & Smotherman, Ira J. Smotherman, Jr., David L. Tank, Atlanta, for appellant.

King & Spalding, Joseph B. Haynes, Charles K. McKnight, Jr., Katharine F. Darnell, Webb, Carlock, Copeland, Semler & Stair, Kent T. Stair, Atlanta, for appellee.

Michael F. McKenna, Lewis & McKenna, Saddle River.

SMITH, Judge.

The Hardaway Company, the general contractor on a highway construction project for the Georgia Department of Transportation ("DOT"), brought this action seeking damages arising out of its work on the project. A discovery dispute arose concerning the production of documents in the personal possession of a DOT employee. After the employee damaged and discarded the documents, ^{1 1} he reconsidered his actions, retrieved the documents, and provided them to DOT's counsel for production to Hardaway. Two disputes then arose concerning, first, the cost of reconstruction of the damaged documents, and, second, the inadvertent production of several pages of a "discrepancy log" prepared by DOT in response to a co-defendant's claim. The trial court ordered DOT to pay a total of $24,000 for reconstruction of the documents, and ordered the production of the remainder of the "discrepancy log." DOT appeals from this order.

1. Hardaway contends this appeal should be dismissed for failure to follow the interlocutory application procedures of OCGA § 5-6-34(b). However, the trial court's order falls within the "collateral order" exception to the final judgment rule established in Scroggins v. Edmondson, 250 Ga. 430, 431-432(1)(c), 297 S.E.2d 469 (1982). Under this three-part test, a collateral order is directly appealable if it (1) completely and conclusively resolves the issue appealed; (2) concerns an issue which is "substantially separate" from the basic issues presented in the complaint; and (3) would result in the loss of an important right and is "effectively unreviewable on appeal." Id. The trial court's order compelling production of material alleged to be protected work product meets these requirements. It completely resolves the discovery issues, which are substantially separate from the main claim. Moreover, once produced, the material cannot be returned to its previous confidential state, and an order compelling its production would be effectively unreviewable after the litigation has concluded. In contrast, the assessment of costs, expenses, or attorney fees does not meet these requirements, because an erroneous or excessive payment may be refunded at a later time. However, this portion of the trial court's order is appealable pursuant to OCGA § 5-6-34(d). See Costanzo v. Jones, 200 Ga.App. 806, 811(3), 409 S.E.2d 686 (1991).

2. DOT contends the "discrepancy log" prepared by one of its employees as an analysis of a co-defendant's claim is protected work product because it was produced in anticipation of litigation.

OCGA § 9-11-26(b)(3) provides that "a party may obtain discovery of documents and tangible things otherwise discoverable ... and prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative (including his attorney, consultant, surety, indemnitor, insurer, or agent) only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of his case and that he is unable without undue hardship to obtain the substantial equivalent of the materials by other means." ² A trio of recent decisions has established a definition of material "prepared in anticipation of litigation." In essence, material obtained or collected by a party is protected from discovery as work product even "before claim is instituted" if "reasonable grounds exist to believe that litigation is probable...." Lowe's of Ga. v. Webb, 180 Ga.App. 755, 757, 350 S.E.2d 292 (1986). The material need not contain the mental impressions, conclusions, opinions, or legal theories of the preparer, but need only have been prepared in anticipation of litigation. Tobacco Road v. Callaghan, 174 Ga.App. 539, 330 S.E.2d 768 (1985).

In determining the existence of reasonable grounds to anticipate probable litigation, the decisions have focused on the conduct of the potential claimant and steps taken to respond to that conduct. In Warmack v. Mini-Skools, Ltd., 164 Ga.App. 737, 297 S.E.2d 365 (1982), an inquiry by a potential claimant regarding the existence of accidental insurance coverage was a sufficient ground for belief that litigation was probable. The witness statements and notes taken by a claims adjuster after the inquiry were held to be material prepared in anticipation of litigation. Warmack, 164 Ga.App. at 739, 297 S.E.2d 365. Where a potential claimant verbally indicated that a party "had not heard the last of the matter" and "would pay," and the party as a result took the written and oral statements of witnesses, the statements were protected. Webb, 180 Ga.App. at 757, 350 S.E.2d 292.

Hardaway contends these decisions are inapplicable because they involve personal injury claims, while this case arose in contract or quantum meruit. While Warmack and Webb involve tort claims for personal injury, the nature of the claim in Tobacco Road is not stated, and we see no basis for a distinction on this ground. Whether a claim sounds in tort or contract is irrelevant to the issue of whether a party has reasonable grounds to believe that litigation is probable.

For example, the defendant store in Webb routinely investigated every incident involving injury to a customer. "In most cases, the store owner knows only an injury has occurred and whether any 'claim' or 'litigation' will result surely could be nothing more than speculation until the demands of the injured visitor are made known." Webb, 180 Ga.App. at 757, 350 S.E.2d 292. However, the incident at issue was taken out of the category of a mere routine investigation by the customer's statement that the store "would hear more" and "would pay." Id. Similarly, the routine administration of a contract would give no reason to anticipate litigation, but notice of a contract dispute or claim outside the terms of the contract could provide reasonable grounds to believe that litigation is probable. We must determine whether DOT has met its burden of showing such reasonable grounds as a matter of law.

The "discrepancy log" was prepared in response to a claim for extra work submitted by Parsons, Brinckerhoff, Quade & Douglas, Inc., a consultant and co-defendant in this action. Employees of DOT testified at length regarding the unusual nature of this claim. The claim was for $834,798, an unusually large amount, and the type of claim was also unusual. One employee of DOT testified he had seen fewer than ten such claims since 1964. The amount was disputed, as was authorization for some of the extra work claimed. A DOT official not ordinarily involved in handling such claims was put in charge of investigating the claim. He had never seen a consultant claim of this size or type in his 30 years with DOT. He ordered the preparation of the "discrepancy log" to assist him in evaluating and responding to the claim. A DOT employee reviewed the project plans for revision dates and identified work based upon authorized revisions and that which appeared unauthorized. The material was not handled in the usual channels, but by direct communication between the supervisor and his assistant, bypassing the secretarial staff. This procedure was unusual in the supervisor's experience, and according to his assistant was a "unique situation" and not part of his regular duties. Asked if he anticipated litigation, the supervisor testified: "by the nature of the claim and magnitude of the monies involved, I was certainly thinking that they might." Although he did not "know that Parsons has ever threatened litigation as such ... it was certainly in my mind that they might and probably would."

Employing the analysis established in Warmack and Webb, there is...