Moeller v. Superior Court

• Decision Date: 04 December 1997
• Docket Number: No. S054624,S054624
• Citation: 69 Cal.Rptr.2d 317,16 Cal.4th 1124,947 P.2d 279
• Parties: , 947 P.2d 279, 97 Cal. Daily Op. Serv. 9085, 97 Daily Journal D.A.R. 14,679 Roger D. MOELLER, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent. SANWA BANK, Real Party in Interest.
• Court: California Supreme Court

Page 317

69 Cal.Rptr.2d 317

16 Cal.4th 1124, 947 P.2d 279, 97 Cal. Daily Op. Serv. 9085,

97 Daily Journal D.A.R. 14,679

Roger D. MOELLER, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent.

SANWA BANK, Real Party in Interest.

No. S054624.

Supreme Court of California.

Dec. 4, 1997.

Lynch & Lynch, Kevin G. Lynch, San Fernando, Craig M. Lynch, Ross, Sacks & Glazier, Bruce R. Ross and Terrence M. Franklin, Los Angeles, for Petitioner.

No appearance for Respondent.

Stephen H. Weiss, Jill Switzer, Phyllis A. Siegel, Mitchell, Silberberg & Knupp, Hayward J. Kaiser, Allan B. Cutrow, Richard B. Sheldon, Los Angeles, Greines, Martin, Stein & Richland, Kent L. Richland and Carolyn Oill, Beverly Hills, for Real Party in Interest.

Christopher Chenoweth, Haight, Brown & Bonesteel, Roy G. Weatherup, R. Roy Finkle, Santa Monica, Bronson, Bronson & McKinnon, James C. Krieg, Elizabeth A. Erskine, Loeb & Loeb, Andrew S. Garb, Jeffrey M. Loeb and David C. Nelson, Los Angeles, as Amici Curiae on behalf of Real Party in Interest.

WERDEGAR, Justice.

In this proceeding for an accounting, the successor trustee of a private express trust seeks to discover from the predecessor trustee documents reflecting confidential communications between the predecessor and an attorney on matters of trust administration. The question before us is whether the predecessor trustee may assert the attorney-client privilege as to such documents and thereby withhold them from the successor. We conclude the answer is no. Upon taking office, a successor trustee assumes all of the powers of trustee, including the power to assert the attorney-client privilege as to confidential communications on the subject of trust administration. Therefore, we affirm the judgment of the Court of Appeal.

FACTUAL AND PROCEDURAL BACKGROUND

George J. Moeller and his wife Grace Todd Moeller, as trustors, established a trust. Initially George was trustee; later, real party in interest Sanwa Bank (hereafter Sanwa) succeeded to this position. Among the beneficiaries of the trust is the Moellers's son, petitioner Roger D. Moeller (hereafter Moeller). The trust property consisted of certain interests in real estate in Southern California, including an undivided one-quarter interest in certain real property in the City of Los Angeles. Sanwa's management of this interest is the subject matter underlying the instant dispute.

For many years, a chrome plating business was operated on the property in Los Angeles. The Environmental Protection Agency eventually ordered the removal of certain toxins that had been deposited on the property as a result of the business. The costs of this cleanup and associated litigation depleted the trust of assets.

Subsequently Sanwa resigned as trustee, and Moeller succeeded to that position. Upon its resignation, Sanwa submitted a final accounting, petitioned for settlement, and sought to recover from the trust the expenses it had incurred in the cleanup of the Los Angeles property, a trustee's fee, and attorney fees.

Moeller objected to Sanwa's accounting and petition on several grounds. He complained that the accounting contained errors and omissions and lacked supporting evidence for alleged commitments, the assets and liabilities of the trust were not enumerated properly or described adequately, major contingent obligations that were alleged exceeded the trust resources and were not disclosed adequately to the beneficiaries or the successor trustee, and certain expenditures and advances had resulted from imprudent decisions by Sanwa.

Soon thereafter, Moeller formally demanded production and inspection of certain documents and records related to Sanwa's administration of the trust. The requested papers included: (1) engagement letters, agreements, letters, notes, memoranda, files, telephone notes, invoices, and billings pertaining to legal services provided to the trust; (2) files, memoranda, notes, accountings, billings, and invoices pertaining to any entity that performed services for the trust, including Sanwa, environmental consulting firms, accounting firms, contractors, and subcontractors; and (3) communications, notes, and memoranda between Sanwa and any governmental agency pertaining to trust assets.

Sanwa responded it had already produced many of the documents and records Moeller demanded. Sanwa also claimed those it had not produced were protected from disclosure by the attorney-client privilege. Sanwa asserted the privilege as to all the demanded documents and records except those containing communications between Sanwa and any governmental agency pertaining to trust assets.

Moeller moved for an order to compel full compliance with his demand for production and inspection. He contended Sanwa could not invoke the attorney-client privilege because that privilege belongs to the office of trustee, not to any particular person who at one time or another serves as the trustee. In opposition, Sanwa argued that when a trustee retains counsel, the client for purposes of the attorney-client privilege is the trustee personally and not the trust or the office of trustee. The trial court agreed with Sanwa and ruled that "Sanwa Bank, as former trustee, held and properly asserted an attorney-client privilege and that said privilege neither inured nor transferred to Sanwa's successor, [Moeller]."

Moeller petitioned the Court of Appeal to issue a writ of mandate to compel the trial court to order the production and inspection of the documents and records he had demanded. That court held, "Because the predecessor trustee has a duty to transfer the trust property to the successor trustee, because the successor trustee has a duty to take and keep control of the trust property, and if necessary, to take reasonable steps to compel a previous trustee to deliver the trust property to the successor trustee, and because Strauss [v. Superior Court In and For Los Angeles County (1950) 36 Cal.2d 396, 224 P.2d 726] holds that trust property includes a trustee's records regarding the administration of the trust, it is clear that petitioner, in his capacity as trustee, has the right and duty to compel Sanwa to transfer its Trust records to him." Accordingly, the Court of Appeal issued the writ.

We granted Sanwa's petition for review.

DISCUSSION

This case presents the following question: Does the attorney-client privilege permit a predecessor trustee to withhold from a successor trustee documents related to trust administration? Both settled law and practical considerations lead us to conclude the answer is no.

Before addressing the dispute between the predecessor trustee and the successor, however, we address a threshold issue: Can a trustee be a holder of the attorney-client privilege? In other words does a trustee generally have the power to assert the attorney-client privilege to prevent disclosure of confidential communications between the trustee and an attorney consulted on behalf of the trust? As common sense suggests, the answer is yes.

Evidentiary privileges are creatures of statute. (Evid.Code, § 911; Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 373, 20 Cal.Rptr.2d 330, 853 P.2d 496.) Consequently, whether a trustee can claim the attorney-client privilege, and thereby prevent discovery of confidential communications it has had with an attorney, depends upon statute. A "client" ordinarily has a privilege to refuse to disclose confidential communications the client has had with an attorney. (Evid.Code, § 954.) For purposes of the attorney-client privilege, the term " 'client' means a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity...." (Evid.Code, § 951.) A trustee therefore can claim the attorney-client privilege if the trustee, qua trustee, has the power to become an attorney's client.

A trustee's powers include those specified in the trust instrument, those conferred by statute, and those needed to satisfy the reasonable person and prudent investor standards of care in managing the trust. (Prob.Code, §§ 16200, 16040, subd. (a), 16047, subd. (a).) ¹ Although the Moeller trust instrument does not expressly authorize its trustee to claim the attorney-client privilege, it does expressly bestow on its trustee all powers the law confers upon trustees. It provides, "[i]n addition to all other powers and discretions granted to or vested in the trustee by law or by this instrument, the trustee shall have the following powers and discretions...." (Italics added.) Consequently, if a statute so permits, the trustee of the Moeller trust may become an attorney's client and, correlatively, exercise the attorney-client privilege.

The Probate Code implicitly authorizes a trustee to become an attorney's client and to claim the attorney-client privilege. A trustee may hire an attorney "to advise or assist the trustee in the performance of administrative duties." (§ 16247.) A trustee may also "prosecute or defend actions, claims, or proceedings for the protection of trust property and of the trustee in the performance of the trustee's duties." (§ 16249, subd. (a).) Of course, a trustee involved in litigation concerning the trust may hire a lawyer--indeed, the trustee often would be well advised to do so. Any trustee who exercises the powers granted in sections 16247 and 16249 "consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity" (Evid.Code, § 951), and the trustee does so on behalf of the trust. Therefore, the trustee, qua trustee, becomes the attorney's client.

The attorney-client privilege follows from the establishment of the professional relationship between client and attorney. Once this relationship is established, the attorney-client privilege attaches to communications made in confidence during the...