In re Bank of America N.A.
| Decision Date | 27 March 2001 |
| Citation | 45 S.W.3d 238 |
| Parties | <!--45 S.W.3d 238 (Tex.App.-Houston 2001) IN RE BANK OF AMERICA, N.A. (FORMERLY KNOWN AS NATIONSBANK, N.A.), Relator NO. 01-00-00944-CV In The Court of Appeals of Texas, Houston First District |
| Court | Texas Court of Appeals |
Panel consists of Justices Mirabal, Taft, and Nuchia.
The issue for this Court is whether plaintiff's counsel should be disqualified after extensively reviewing and digesting approximately 135 pages of defendant's privileged information, obtained through no wrongdoing. The trial court1 denied the motion to disqualify. We conclude the motion should have been granted and conditionally grant the writ of mandamus.
The discovery dispute below
Nitla S.A. de C. V. (Nitla), the plaintiff and real party in interest, sued several defendants below.2 The defendants included the relator, NationsBank, N.A., now known as Bank of America, N.A. (Bank of America). Nitla's causes of action are grounded in fraud.
On March 22, 1999, the trial court's predecessor ruled that approximately 158 specific, Bates-stamped pages of documents presented for in camera inspection pursuant to Bank of America's claims of attorney-client and work-product privilege, were not so privileged. At the March 22 hearing, the predecessor judge handed many of the in camera documents to counsel for Nitla at the time he made the ruling, over Bank of America's objection.3 Bank of America had no opportunity to seek mandamus relief before these in camera documents were given to Nitla.4 The remaining in camera documents were tendered to Nitla by the predecessor judge in April 1999, after Bank of America had filed its petition for writ of mandamus.
The first mandamus proceeding
Three days after the first in camera documents had been handed to Nitla, Bank of America sought mandamus relief. Ultimately, this Court stayed further dissemination of the documents, and the trial court ordered Nitla to return the in camera documents to the trial court.5 On June 19, 2000, this Court held6 that most of the in camera documents were privileged. See In re NationsBank, N.A. n/k/a Bank of America, N.A., No. 01-99-00278-CV (Tex. App.-Houston [1st Dist.], Jun. 19, 2000, orig. proceeding) (not designated for publication). After this Court's June 19, 2000 ruling, neither Bank of America nor Nitla sought mandamus relief in the Supreme Court of Texas.
Motion to disqualify
On July 14, 2000, in the trial court, Bank of America moved to disqualify Nitla's counsel. Bank of America argued disqualification was appropriate because (1) Nitla's lawyers had consistently disregarded their ethical and professional obligations to gain an unfair advantage, and (2) all the factors that the Supreme Court of Texas considered in In re Meador, 968 S.W.2d 346 (Tex. 1998) as supporting disqualification had been satisfied. Bank of America reminded the trial court and Nitla of what it had said at the March 22, 1999 hearing: an attorney who reviewed an opposing party's privileged documents could be subject to disqualification.
Following Nitla's response and a hearing, the trial court signed an order on August 21, 2000, denying Bank of America's motion to disqualify Nitla's counsel. In the order,7 the trial court concluded as follows:
(1) Counsel for Nitla obtained the in camera documents as a result of a judicial proceeding. The trial court noted that lawyers routinely argue that their clients need immediate relief when such really is not the case, and he declined to characterize such oral advocacy as unprofessional, unethical, or misleading.
(2) Nitla reasonably relied on the action of the predecessor judge in providing it with the in camera documents.
(3) Bank of America had "clean hands" in the dispute concerning the turning over of the in camera documents.
(4) Nitla's counsel extensively reviewed and digested the privileged information.
(5) There was no competent evidence to support Bank of America's assertion and argument that Nitla's lawyers developed their trial strategy based on their extensive discussion of the privileged documents in briefs filed with this Court in the first mandamus proceeding.
(6) The trial court was prepared and available to quash deposition notices and to sustain objections to specific questions lodged during any deposition to prevent the use of privileged information.
(7) Bank of America's argument that it had been prejudiced by the disclosure of its privileged information was nothing more than advocacy and conclusory statements.
(8) The trial court was not persuaded that Nitla's counsel should be disqualified, even absent evidence of harm to Nitla.
Bank of America filed this second mandamus proceeding after the trial court's August 21 ruling.
Arguments of the parties
In this mandamus proceeding, Bank of America argues that, by failing to properly review the evidence in the record supporting disqualification, the trial court abused its discretion in denying its motion to disqualify. Bank of America maintains that this is a "factually unique case . . . because it combines the erroneous actions of a trial court in releasing privileged documents and the inexcusable attempts of Nitla and its counsel to gain an unfair advantage."
According to Bank of America, the standards of Meador apply to this case. Applying Meador, Bank of America insists that the trial court abused its discretion by not disqualifying Nitla's counsel: (1) because the evidence in the record established that (a) Nitla made a strategic decision to risk disqualification by insisting upon immediate receipt of the in camera documents, and then proceeding to review and analyze them, and (b) Bank of America was prejudiced by the disclosure of the privileged information; and (2) because there is no evidence in the record to support prejudice to Nitla if its counsel is disqualified.
Nitla responds that there is no legal precedent where a court has disqualified counsel after counsel obtained review of documents by court order and pursuant to the discovery process. According to Nitla, Meador is distinguishable because, in that case, information was improperly obtained outside of the legal process. Nitla contends, as the trial court concluded, that its counsel did not violate the Texas Disciplinary Rules or the ABA Formal Opinion 94-382. Even if Meador does apply, Nitla argues that application of the Meador factors does not lead to disqualification and that it will be severely prejudiced if its attorneys are disqualified.
Standard of review
An order denying a motion to disqualify counsel is reviewable by a petition for writ of mandamus. See, e.g., Meador, 968 S.W.2d at 348; National Med. Enters., Inc. v. Godbey, 924 S.W.2d 123, 133 (Tex. 1996). Appellate relief is generally deemed inadequate. See Godbey, 924 S.W.2d at 133.
In Meador, an attorney received unsolicited, privileged and confidential information of the opposing party. 968 S.W.2d at 349. The attorney was not directly involved in improperly obtaining the confidential information. 968 S.W.2d at 351, 354. We find that these facts are not substantively different from those before us in this mandamus proceeding. Nitla did not obtain Bank of America's privileged, in camera documents through any wrongdoing on its part or that of its counsel. See, e.g., Contico Int'l, Inc. v. Alvarez, 910 S.W.2d 29, 35 (Tex. App.-El Paso 1995, orig. proceeding) (misconduct to continue representation when lawyer has gained confidences of opposing party through theft, deceit, inadvertence, or other means), overruled in part by Meador, 968 S.W.2d at 354 (). Nor did Nitla obtain the in camera documents through any inadvertence of Bank of America. See, e.g., Granada Corp. v. First Court of Appeals, 844 S.W.2d 223, 226 (Tex. 1992) (). The fact that the disclosure of the privileged documents to Nitla in 1999 did not become unauthorized until this Court reversed the trial court's ruling in 2000, does not, in our view, impact the application of Meador.
Accordingly, we conclude that whether the trial court's decision to deny the motion to disqualify Nitla's counsel constituted an abuse of discretion depends upon an application of the factors set forth in Meador. Our review of the trial court's decision will be based on whether, under Meador, given the evidence presented to the trial court, the trial court could have reasonably decided only to disqualify Nitla's counsel. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) ().
With respect to resolution of factual issues or matters committed to the trial court's discretion, we may not substitute our judgment for that of the trial court, unless the trial court's decision is shown to be arbitrary and unreasonable. Id. at 839-40. Our review of a trial court's determination of the legal principles controlling its ruling is much less deferential. A trial court has no discretion in determining what the law is or in applying the law to the facts. Id. at 840.
Mention must also be made of the relative importance of the "severity of disqualification" versus protection of privileged information. The supreme court stated in Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990), citing NCNB Texas Nat'l Bank v. Coker, 765 S.W.2d 398, 399 (Tex. 1989):
Disqualification is a severe remedy. The courts must adhere to an exacting standard when considering motions to disqualify so as to discourage their use as a dilatory trial tactic.
(Citations omitted.)
However, the supreme court also stated in Coker: "The preservation of clients' secrets and confidences is not an option." 765 S.W.2d at 399. The supreme...
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In re Nitla S.A. De C.V.
...produce. The court of appeals issued mandamus, ordering the trial court to disqualify Nitla's counsel. In re Bank of Am., N.A., 45 S.W.3d 238, 245 (Tex.App.-Houston [1st Dist.] 2001). However, in so doing, the court of appeals misapplied the law and thus abused its discretion. Accordingly, ......