First Union Natl. Bank v. Maenle

• Decision Date: 22 July 2005
• Docket Number: No. H-04-036.,H-04-036.
• Parties: FIRST UNION NATIONAL BANK OF DELAWARE, Appellant, v. MAENLE et al., Appellees.
• Court: Ohio Supreme Court

833 N.E.2d 1279

162 Ohio App.3d 479

2005 Ohio 4021

FIRST UNION NATIONAL BANK OF DELAWARE, Appellant, v. MAENLE et al., Appellees.

No. H-04-036.

Court of Appeals of Ohio, Sixth District, Huron County.

Decided July 22, 2005.

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James S. Wertheim and Barbara Friedman Yaksic, Beachwood, for appellant.

James J. Martin, Willard and Robert W. Gentzel, Norwalk, for appellees.

SKOW, Judge.

{¶ 1} Appellant, First Union National Bank of Delaware, N.A. — f.k.a. First Union Home Equity Bank, N.A., n.k.a. Wachovia National Bank of Delaware, N.A. — ("Wachovia"), appeals from an order by the Huron County Court of Common Pleas that granted appellant's motion to compel discovery. Because we agree with appellant that the trial court erred in finding only a partial waiver of the attorney-client privilege, we reverse.

{¶ 2} This case arises from a foreclosure action filed by Wachovia against appellees, Inez Maenle and her incompetent adult son, John Maenle, on May 13, 2002. Mrs. Maenle had been the guardian for John Maenle, who was incompetent because of mental retardation, since August 20, 1978. Robert W. Gentzel represented Mrs. Maenle in her capacity as John's guardian.

{¶ 3} In 1999, Mrs. Maenle entered into three loan contracts with Wachovia's predecessor in interest, First Union Home Equity Bank, N.A. ("FUHEB"). The first loan was made in April 1999 and was in the amount of $35,000. In October of that year, Mrs. Maenle refinanced the April loan by obtaining two additional loans from FUHEB, one for $54,000 and another for $14,500. Both Mrs. Maenle and her son, John, signed notes and related mortgages on the home that was owned solely by Mrs. Maenle. FUHEB asserts that it had no idea that John Maenle was incompetent.

{¶ 4} The October loans went into default, and on May 13, 2002, Wachovia initiated its action seeking foreclosure on the property and judgment on the $54,000 note. Soon after the lawsuit was filed, counsel for appellant filed a suggestion of death indicating that Mrs. Maenle had passed away. At Wachovia's request, the trial court entered an order adding as defendants in Wachovia's action "[u]nknown heirs and their spouses, the devisees, legatees, executors, administrators, spouses and assigns and the unknown guardians of minor and/or incompetent heirs of Inez Maenle."

{¶ 5} On June 14, 2002, Gentzel was appointed, at his request, to serve as administrator of Mrs. Maenle's estate. Soon after, on June 20, 2002, Gentzel moved for leave to plead in the matter, both as administrator of the estate and on behalf of John Maenle's guardian. The motion was granted, and, as a result, Gentzel, as administrator to the estate, was added as a party to the lawsuit.

{¶ 6} In response to the original complaint, counterclaimants Gentzel, as administrator, and John Maenle, by and through his guardian, asserted claims of slander of title and improvident lending and unconscionability.

{¶ 7} On December 12, 2002, Wachovia filed its first amended complaint, wherein it reasserted its claim for foreclosure on the property but dropped its claim seeking judgment on the note.

{¶ 8} In response to the first amended complaint, the counterclaimants asserted counterclaims for (1) vicarious liability, (2) fraud, (3) improvident lending and unconscionability, and (4) breach of fiduciary duty. In addition, the counterclaimants filed a third-party complaint against A.I.M. Agency, Inc., the mortgage broker that brokered the loans.

{¶ 9} About a year later, on December 18, 2003, the counterclaimants filed a second amended counterclaim adding two new claims: (1) civil conspiracy and (2) a class-action claim stating that members of the class were fraudulently charged for an appraisal of the property that was never conducted.

{¶ 10} On April 14, 2004, the probate court granted a request by Gentzel to substitute John Ball as administrator of the estate. Two weeks later, the counterclaimants filed a third amended counterclaim, this time adding a collection claim.

{¶ 11} On July 14, 2004, counsel for appellants sought a protective order to preclude Wachovia from taking Gentzel's deposition on grounds that Gentzel's testimony was protected by attorney-client privilege. The trial court denied the request, finding that Wachovia had the right to inquire into those matters in which Gentzel was involved as administrator of the estate.

{¶ 12} Wachovia attempted to depose Gentzel on July 19, 2004. However, Gentzel refused to answer the majority of questions posed, repeatedly asserting that his answers were protected by attorney-client privilege. Gentzel admitted at the deposition that he was unable to determine whether the knowledge he had was obtained as a result of his role as attorney or as a result of his role as administrator.

{¶ 13} Gentzel also invoked the privilege when asked to identify documents that he had produced in connection with his responses to Wachovia's document requests. Wachovia had previously submitted separate document requests to appellee Catholic Charities as guardian of John Maenle, and to Gentzel as administrator. Although Wachovia received separate written responses from each, the counterclaimants produced only one set of documents, without distinguishing which party had produced which documents. After Gentzel invoked the attorney-client privilege to avoid testifying about the documents, Wachovia recessed the deposition to seek relief from the court.

{¶ 14} On August 26, 2004, Wachovia filed a "Motion and Incorporated Memorandum to Strike Counterclaims and Defenses of the Administrator of the Estate of Inez Maenle, or Alternatively, to Compel Discovery" in which it alternatively asked the court to order Gentzel, as former administrator of the estate, and Ball, as successor administrator, to fully and completely answer Wachovia's deposition questions and discovery requests.

{¶ 15} On September 14, 2004, the trial court entered a judgment ruling that the attorney-client privilege was waived as to those matters for which Gentzel had responsibility as administrator, but not for knowledge that was acquired before Gentzel's appointment as administrator or for knowledge that was acquired after he stopped being administrator. Specifically, the court wrote:

{¶ 16} "When an attorney intertwines his role as attorney with his role in another capacity, such as the administrator of an estate or as guardian of the estate or of the person of his client, the attorney-client privilege is waived as to those matters for which he had responsibility as administrator or guardian. * * * {¶ 17} "The problem that arises in the dual capacity situation is that when one person takes on two different roles, it becomes difficult for that person to know or later recall in what capacity he obtained certain information. That which may have been privileged becomes blended with that which may not have been privileged and the attorney in good conscience cannot later distinguish which is which. As Mr. Gentzel testified: `I'm going to assert, again, attorney-client privilege. My role as administrator also was . . . I was also attorney for the Estate and I can't disentangle those two relationships in answer to your question.' So Mr. Gentzel, an attorney, erred on the side of caution and essentially made his deposition as administrator useless.

{¶ 18} "* * * If the administrator or guardian chooses to appoint himself as his own attorney, then public policy requires that by doing so, he waives the attorney-client privilege and thereafter as administrator he cannot assert that privilege. To hold otherwise would totally frustrate the ability of an opponent to obtain legitimate discovery from the administrator.

{¶ 19} "* * * [T]he principle of necessity makes it imperative that the administrator of Mrs. Maenle's estate not be able to hide behind the attorney-client privilege to avoid answering questions pertaining to the prosecution and factual undergirding of Defendants' affirmative defenses and counterclaim [sic].

{¶ 20} "This case is made more complicated by the fact that Mr. Gentzel was the attorney for Mrs. Maenle before her death and remains one of the attorneys for her estate after a substitute administrator was appointed to replace him as administrator of Mrs. Maenle's estate. The complication occurs because as Mr. Gentzel testified, he `can't disentangle those two relationships' of administrator and attorney. Thus, while there are three distinct time periods (1) while Mrs. Maenle was alive and Mr. Gentzel was her attorney, (2) while Mr. Gentzel served as both administrator of and attorney to Mrs. Maenle's estate, and (3) while Mr. Gentzel has served only as co-counsel for Mrs. Maenle's estate), it may not be possible for Mr. Gentzel to sort out in his own mind when he acquired the knowledge that he presently has. To the extent that he cannot do that, the Court holds the attorney-client privilege is waived. Furthermore, the protection of the Civil Rules for attorney work product as to those matters that are factual, as opposed to legal, is also waived to the extent that Mr. Gentzel cannot establish that his knowledge was the result of a client communication from Mrs. Maenle, when she was living, or from Mr. Ball, the successor administrator of her estate.

{¶ 21} "Based on the above analysis, Plaintiff may not inquire of Mr. Gentzel as to communications between Mrs. Maenle and him when he was acting in his capacity as her attorney, but can inquire into those facts not protected by the attorney-client privilege for that period when she was living. * * * As to the second period when Mr. Gentzel served as both administrator of and attorney to Mrs. Maenle's estate, Mr. Gentzel must answer all questions calling for factual responses because by having held both positions and having testified that he cannot disentangle in his own mind what he knows as the estate's attorney from what he knows as the...