Leen v. Defoe ex rel. Marital Cmty. Comprised of Brian B. Defoe, 75225-1-I
| Decision Date | 29 January 2018 |
| Docket Number | No. 75225-1-I,75225-1-I |
| Parties | MONTE A. LEEN, Individually, and; TDE, INC., f/k/a The DESIGNERS EDGE, INC., a Washington Corporation, Appellants, v. BRIAN B. DEFOE, Individually and on Behalf of the Marital Community Comprised of BRIAN B. DEFOE and JANE DOE DEFOE, and; LANE POWELL, P.C., a Washington Professional Corporation, Respondents. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
MANN, J. — Monte Leen and his company, TDE, Inc. (collectively Leen), sued Brian Defoe and Lane Powell, P.C. (Lane Powell) for legal malpractice. During discovery, Lane Powell requested documents and communications from Byrnes Keller Cromwell (BKC), a law firm that represented Leen in litigation that Leen alleges was caused by Lane Powell's malpractice. Leen asserted that some of the requested documents were protected as work product and by attorney-client privilege. Lane Powell moved to compel production. After hearing oral argument, and reviewing the documents in camera, the trial court granted in part Lane Powell's motion to compel. Leen sought, and we granted, discretionary review of the trial court's order.
Leen contends that the trial court erred as a matter of law by concluding that he waived his attorney-client privilege and work-product privilege. We disagree. Leen waived his attorney-client privilege by suing Lane Powell for malpractice. In addition, the work-product doctrine does not protect the requested information. We affirm the trial court's order granting Lane Powell's motion to compel production.
FACTS
Underlying Litigation
Monte Leen was the controlling majority owner of The Designers Edge, Inc. (TDE), a manufacturer of lighting fixtures. In 2009, Coleman Cable, Inc. (Coleman) indicated interest in buying TDE's assets, including accounts receivable and related intellectual property rights. Negotiations intensified by late January 2011. On February 4, 2011, Leen hired Brian Defoe, an attorney at Lane Powell, to represent him in the sale of TDE's assets to Coleman. The negotiations resulted in an Asset Purchase Agreement (APA) between TDE and Coleman. The APA was designed to transfer TDE's assets as listed in a balance sheet dated December 31, 2010. But because the APA was negotiated in the first quarter of 2011, it contained a purchase price adjustment mechanism that adjusted the final purchase price based on a final accounting of TDE's assets.Clark Nuber, an accounting firm that TDE retained before the sale occurred, provided accounting support for TDE and the sale.
The sale closed on April 1, 2011. After closing, Coleman requested that the sale price be adjusted downward by $300,000, the difference between the balance sheet dated December 31, 2010, and the final accounting. Leen objected to the reduction, but after arbitration the purchase price was adjusted downward by $833,000. Lane Powell represented Leen during this time.
At this same time, Coleman also sought indemnification from TDE under the APA related to a number of new and ongoing lawsuits and claims—including one with Home Depot, USA, Inc. (Home Depot).1 Leen sought representation from Lane Powell to defend against Home Depot's claims. On June 27, 2012, Lane Powell notified Leen that it could not represent Leen in the indemnification matters because the firm had a pre-existing attorney-client relationship with Home Depot. Consequently, Leen retained BKC to represent him in the third-party indemnification litigation and Lane Powell withdrew.
BKC continued to represent TDE and Leen on the remaining APA issues, including the third-party indemnification litigation. With BKC's legal counsel, and ongoing support from Clark Nuber, Leen eventually resolved the third-party claims with a $295,000 settlement payment.
On October 10, 2014, Leen filed the underlying litigation against Defoe and Lane Powell for malpractice and breach of fiduciary duty. Leen's complaint alleges that Lane Powell failed to review the APA and that the APA should have limited his personal liabilities to $500,000. Leen also alleges that Lane Powell's malpractice caused Leen to become (1) "personally exposed to liability and drawn into litigation with third parties for personal injuries arising from product liability claims" that he claims should have been limited by the APA and (2) "unnecessarily drawn into litigation that involved Home Depot."
Leen claims $1,866,000 in damages due to Lane Powell's misconduct. This includes (1) $291,000 in attorney fees paid to BKC for its representation of Leen after Lane Powell identified the conflict with in the litigation filed by Coleman to indemnify it against claims by Home Depot, (2) $295,000 for a settlement that released Leen from Coleman's lawsuit seeking indemnification, and (3) $333,000 paid to Clark Nuber for accounting fees for work relative to the APA and ensuing litigation.
Discovery Dispute
During discovery, Lane Powell requested information concerning Leen's communications with Clark Nuber and BKC after it took over representation of Leen in post-APA litigation. Leen asserted privilege over several responsive documents.2 Leen produced some documents, but withheld documents it deemed privileged. While Leen produced a privilege log, the parties disagree asto whether the log is adequate. Lane Powell offered to enter into a stipulated protective order covering the documents that Leen claims as privileged, but negotiations failed.
On March 30, 2016, Lane Powell moved to compel production of the withheld BKC and Clark Nuber documents. Leen objected on several grounds. The trial court held oral argument to consider the dispute under Pappas v. Halloway, 114 Wn.2d 198, 787 P.2d 30 (1990). Dana v. Piper, 173 Wn. App. 761, 295 P.3d 305 (2013), and the equitable rule of indemnity referred to as the ABC Rule. After reviewing the withheld documents in camera, the trial court issued a written order granting the motion in part. After analyzing the parties' claims, the trial court concluded:
By claiming damages fees and costs charged by BKC and Clark Nuber in the subsequent litigation, Plaintiffs have placed at issue the reasons for that litigation, i.e., whether the litigation can be attributed to circumstances other than the alleged malpractice. Therefore in addition to BKC files that relate to their attorney fees, Defendants are also entitled to any BKC documents, including legal analysis, that broadly relate to the ABC Rule. The court will not order the disclosure of the entire BKC and Clark Nuber files. Certain documents may not be relevant to the issues identified above. If Plaintiffs withhold such documents, however, they must provide a privilege log that is sufficiently detailed to demonstrate that the withhold documents are outside the scope of the court's order.3
We granted Leen's motion for discretionary, interlocutory appeal.
ANALYSIS
Generally we review a trial court's discovery rulings for abuse of discretion. Dana, 173 Wn. App. at 769. Dana, 173 Wn. App. at 769. We review questions of law, including the trial court's interpretation of the privilege statute de novo. Cedell v. Farmers Ins. Co. of Wash, 157 Wn. App. 267, 272, 237 P.3d 309 (2010), aff'd in part, rev'd in part, 176 Wn.2d 686, 295 P.3d 239 (2013).
Attorney-client privilege
Leen argues that the trial court erred as a matter of law by concluding that Leen waived his attorney-client privilege as to his communications with BKC. We disagree.
Attorney-client communications are privileged: an attorney "shall not, without the consent of his or her client, be examined as to any communication made by the client to him or her, or his or her advice given thereon in the course of professional employment." RCW 5.60.060(2)(a). "The privilege is imperative to preserve the sanctity of communications between clients and attorneys." Dietz v. Doe, 131 Wn.2d 835, 851, 935 P.2d 611 (1997). A party is entitled to discovery regarding any nonprivileged matter. CR 26(b)(1).
The attorney-client privilege can be waived. "By suing his attorney for malpractice, a client impliedly waives the privilege with respect to the defendant attorney and with respect to all other attorneys who represented the client in the underlying matter of the malpractice suit." Dana, 173 Wn. App. at 770 (citing Pappas, 114 Wn.2d at 206). "Where it would be manifest injustice to allow theclient to take advantage of the rule of privileges to the prejudice of the attorney, or when it would be carried to the extent of depriving the attorney of the means of obtaining or defending his own rights, this court has ruled the privilege is waived." Pappas, 114 Wn.2d at 204.
Leen argues that the trial court misapplied Pappas, the Hearn test, Dana, and a rule of equitable indemnity known as the ABC Rule. We address each in turn.
In Pappas, the Holloways were sued in Lewis and Whatcom Counties for selling diseased cattle. The Holloways hired Larry Fagerness to represent them in Lewis County and John Pappas to represent them in Whatcom County. After the lawsuits were consolidated in Whatcom County, Pappas took over representation of the entire case. Later, the Holloways hired another attorney, James Thompson, to represent them jointly with Pappas. One month before trial, however, Pappas withdrew. The Holloways then hired Douglas Shepard to help Thompson try the case. At trial, the Holloways lost, suffering an adverse judgment of $2.9 million. Pappas, 114 Wn.2d at 200.
Pappas then sued the Holloways to recover his attorney fees. The Holloways counterclaimed against Pappas for malpractice. Pappas, 114 Wn.2d at 200-01. Pappas responded by bringing third-party malpractice claims against all of the attorneys who represented the Holloways in the litigation over...
To continue reading
Request your trial