Foss Mar. Co. v. Brandewiede
| Decision Date | 14 September 2015 |
| Docket Number | No. 71611–5–I.,71611–5–I. |
| Citation | 359 P.3d 905,190 Wash.App. 186 |
| Parties | FOSS MARITIME COMPANY, Respondent, v. Jeff BRANDEWIEDE and Jane Doe Brandewiede and the marital community comprised thereof; Brandewiede Construction, Inc., Appellants, Core Logistic Services ; Lisa Long and John Doe Long and the marital community comprised thereof; Frank Gan and Jane Doe Gan and the marital community comprised thereof, Defendants. |
| Court | Washington Court of Appeals |
Gregory Mann Miller, Carney Badley Spellman PS, Seattle, WA, for Appellant.
John B. Crosetto, Tyler W. Arnold, Garvey Schubert Barer, Seattle, WA, for Respondent.
¶ 1 Disqualification of counsel is a drastic sanction, only to be imposed in compelling circumstances because it “exacts a harsh penalty from the parties as well as punishing counsel.”1 The trial court here disqualified Jeff Brandewiede's counsel for accessing and reviewing an opponent's privileged communications. But the trial court failed to consider on the record the principles and guidelines of In re Firestorm 19912 and Washington State Physicians Insurance Exchange & Ass'n v. Fisons Corp.3 regarding (1) prejudice, (2) counsel's fault, (3) counsel's knowledge of privileged information, and (4) possible lesser sanctions. We reverse the trial court's disqualification order and remand for further proceedings consistent with this opinion.
¶ 2 This case arose from a contract dispute for the renovation of the vessel Alucia. Foss Maritime subcontracted with Core Logistic Services to do the work. A key question in the underlying dispute is whether Jeff Brandewiede and Brandewiede Construction, Inc. were affiliated with Core Logistic Services or were an independent contractor.
¶ 3 Foss terminated Van Vorwerk, the project manager, in May 2012. In July 2012, Foss sued Core Logistic Services and Brandewiede for breach of contract, unjust enrichment, and fraud. During discovery, Foss identified Vorwerk as a person “likely to have discoverable information” and “who prepared, assisted with, or furnished information” used to prepare Foss's discovery response.4 Foss did not indicate that Vorwerk was no longer employed by Foss. Foss listed Vorwerk as a potential witness and identified his contact information as in care of Foss's counsel.
¶ 4 In September 2013, Brandewiede's counsel John Welch contacted Foss's counsel John Crosetto about setting Vorwerk's deposition. Crosetto explained that Vorwerk no longer worked for Foss and gave Welch contact information for Vorwerk. In late September 2013, Welch met Vorwerk for an interview “in lieu of sitting for a deposition.”5 Foss agrees the interview itself was proper.
¶ 5 During the interview, Vorwerk gave Welch a copy of a “wrongful termination” letter that Vorwerk drafted and gave to Foss after his employment was terminated. Vorwerk's letter recited facts about his work on the project. The letter included several e-mails between Vorwerk, Foss's in-house counsel Frank Williamson, and several other Foss employees. The e-mails were not designated as attorney-client privileged communications but did contain some privileged information. Brandewiede later identified the letter as a proposed trial exhibit. At the interview, Vorwerk offered to provide copies of his other e-mails with Foss management about the project.
¶ 6 In late October 2013, Welch again met with Vorwerk. Vorwerk gave Welch a thumb drive containing e-mails about all of his work as a project manager for Foss.
¶ 7 About two weeks later, Welch informed Crosetto of the materials he received from Vorwerk, stating he had “only reviewed a portion” of them.6 The record is unclear how much Welch reviewed. In his declaration, Welch stated he became aware that the termination letter contained “potential attorney-client communications” when Crosetto alerted him.7 Once Crosetto asserted that the thumb drive contained privileged information, Welch stopped further review.
¶ 8 Crosetto was concerned that Vorwerk had provided Welch with privileged information. On November 12, 2014, Crosetto requested that Brandewiede give Foss “all documents provided by Mr. Vorwerk.”8 Three days later, Welch gave Crosetto the thumb drive. Although Welch claims he stopped any further review of Vorwerk's materials on November 12, 2013, he e-mailed Crosetto on November 22, 2013, stating that he wanted to read Vorwerk's termination letter again.
¶ 9 On November 22, 2013, Foss filed a motion to disqualify Welch and his firm. Foss argued that Vorwerk's materials contained privileged information and that Welch's possession and use of the documents prejudiced Foss in violation of both RPC 4.2 and 4.4(a). Foss also sought a CR 26(b) discovery sanction excluding all evidence “tainted” by Vorwerk's and Welch's “wrongful conduct.”9
¶ 10 The trial court heard the parties' argument on Foss's motion to disqualify counsel and for sanctions.10 Foss filed the allegedly privileged documents under seal with a privilege log per the trial court's order.
¶ 11 The trial court reviewed the documents in camera and issued an order disqualifying Welch and his firm. The trial court determined that “Brandewiede's counsel did not address case law cited in [Foss's] brief and that “some (but not all) documents he reviewed were clearly attorney-client communications.”11 The trial court also excluded evidence “tainted” by Welch's “wrongful conduct,” including Vorwerk's letter, the thumb drive, and any further information containing or derived from privileged information belonging to Foss that might be in Brandewiede's, his counsel's, or Vorwerk's possession, unless Brandewiede obtained the information from a source “untainted by the wrongful conduct.”12 The trial court neither identified what conduct was wrongful nor made findings or entered conclusions identifying what discovery or ethical rules were violated.
¶ 12 Brandewiede sought discretionary review of the trial court's order disqualifying counsel and excluding evidence. This court granted discretionary review and a temporary stay.
¶ 13 We generally review a disqualification order for an abuse of discretion.13 But to the extent this case involves questions of law regarding “the application of a court rule to a set of particular facts,”14 and “whether an attorney's conduct violates the relevant Rules of Professional Conduct,”15 our review is de novo.16
¶ 14 Brandewiede contends the trial court erred in not conducting an on-the-record analysis of the Burnet v. Spokane Ambulance factors before disqualifying his counsel and excluding evidence.17 Specifically, Brandewiede contends Burnet and its progeny apply not only to discovery sanctions under CR 37(b) but also to discovery sanctions based on a CR 26(b) violation. We disagree.
¶ 15 CR 26(b)(1) limits the scope of discovery, allowing for discovery of anything material and relevant to the litigation except for privileged matters.18 CR 26(b)(6) also imposes obligations on attorneys who receive information an opposing party claims is privileged:
If information produced in discovery is subject to a claim of privilege ..., the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; and must take reasonable steps to retrieve the information if the party disclosed it before being notified. Either party may promptly present the information in camera to the court for a determination of the claim. The producing party must preserve the information until the claim is resolved.
¶ 16 The trial court here neither made findings nor entered conclusions as to whether any discovery or ethical rules were violated. The trial court determined Vorwerk's and Welch's conduct was wrongful but did not state what conduct was wrongful and whether that conduct violated any rules.
¶ 17 Burnet and its progeny constrain a trial court's discretion to order “dismissal, default, and the exclusion of testimony” as a CR 37(b)(2) discovery sanction.19 In Burnet, the trial court imposed a protective order limiting discovery under CR 37(b)(2)(B).20 Burnet specifically involved a CR 26(f) violation, which triggered sanctions under CR 37(b)(2). Burnet held that before imposing “ ‘one of the harsher remedies allowable under CR 37(b),’ ” the trial court must consider on the record (1) whether a lesser sanction would probably suffice, (2) whether the violation at issue was willful or deliberate, and (3) whether the violation substantially prejudiced the opposing party's ability to prepare for trial.21
¶ 18 Mayer v. Sto Industries, Inc. held that a trial court need not apply the Burnet factors when imposing lesser sanctions, e.g., monetary sanctions, but must do so when imposing severe sanctions under CR 37(b).22 Mayer refused to apply Burnet to a CR 26(g) violation because Fisons governed CR 26(g) violations, and Burnet is limited to CR 37(b)(2) violations.23 CR 37(b)(2) does not list disqualification of counsel as a sanction.
¶ 19 Washington courts have applied Burnet to a trial court's orders excluding witnesses,24 dismissing claims,25 and granting a default judgment.26 But “nothing in Burnet suggests that trial courts must go through the Burnet factors every time they impose sanctions for discovery abuses.”27 And no case law suggests that a trial court must apply Burnet for discovery sanctions based on a CR 26(b) violation. Burnet is limited to CR 37(b)(2) sanctions. Although some similar concerns apply to a disqualification of counsel, we conclude that Burnet does not apply here.
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