Price v. Charles Brown Charitable Remainder Unitrust Trust

• Decision Date: 18 March 2015
• Docket Number: No. 74A01–1409–TR–401.,74A01–1409–TR–401.
• Citation: 27 N.E.3d 1168
• Parties: David E. PRICE, Price & Associates, LLC, and Price & Collins, LLP, Appellants–Defendants, v. CHARLES BROWN CHARITABLE REMAINDER UNITRUST TRUST, Charles Brown, and Charlotte Brown, Appellees–Plaintiffs.
• Court: Indiana Appellate Court

27 N.E.3d 1168

David E. PRICE, Price & Associates, LLC, and Price & Collins, LLP, Appellants–Defendants

v.CHARLES BROWN CHARITABLE REMAINDER UNITRUST TRUST, Charles Brown, and Charlotte Brown, Appellees–Plaintiffs.

No. 74A01–1409–TR–401.

Court of Appeals of Indiana.

March 18, 2015.

Jeremy B. Morris, Danny E. Glass, Fine & Hatfield, P.C., Evansville, IN, Attorneys for Appellants.

Kevin R. Patmore, Patmore Law Office, Santa Claus, IN, Attorney for Appellees.

SHARPNACK

, Senior Judge.

Statement of the Case

[1] In this interlocutory appeal, David E. Price, Price & Associates, LLC, and Price & Collins, LLP (collectively, Price), seek review of the trial court's denial of their motion for summary judgment. We affirm and remand.

Issue

[2] Price raises one issue, which we restate as: whether Price is entitled to judgment as a matter of law.¹

Facts and Procedural History

[3] Charles Brown hired Price, a lawyer, to assist him in creating a trust. Price's firm drafted a trust agreement. Brown executed the agreement on March 9, 1995, creating the “Charles Brown Charitable Remainder Unitrust Trust” (the Trust). Appellants' App. p. 28. Brown's brother was the first trustee, but he was replaced by Brown's daughter. On January 1, 2000, Brown named Price as trustee of the Trust.

[4] In 2006, the United States Department of Justice (DOJ) initiated a criminal case against Brown in the United States District Court for the Southern District of Indiana. In 2007, the DOJ amended the indictment to add charges against Price. The DOJ alleged that Brown and Price conspired to defraud the Internal Revenue Service, violated the prudent investor rule in making Trust investments, engaged in self-dealing from the Trust, distributed funds from the Trust contrary to statute, and diverted Trust funds for personal use. The DOJ further alleged that Brown and Price filed false tax returns in an attempt to underreport income.

[5] On March 7, 2008, Brown and Price, through their attorneys, executed a Joint Defense Agreement (JDA) with an effective date of September 19, 2007. The stated purpose of the JDA was to allow Brown and Price to bolster their defenses against the criminal charges by sharing “information which is privileged and/or confidential in nature” “without waiver of any applicable privilege or other protection against disclosure.” Id. at 152. The JDA further provided that Brown and Price believed:

[T]he law permits those who are pursuing a common interest to share and exchange information in a common effort to prepare for litigation in which they are parties, and to enhance their respective counsels' ability to provide informed legal advice, without thereby waiving any privilege or confidentiality with respect to such information.

Id. at 152–53.

[6] Brown and Price agreed to “share and exchange documents, factual information, oral statements, mental impressions, expert reports, correspondence, memoranda, summaries or reports of interviews with prospective witnesses, investigative reports, deposition summaries, deposition preparation materials and drafts of pleadings or other litigation documents and other materials, in whatever form (‘Joint Defense Materials').” Id. at 153. Further, “the exchange pursuant to this Agreement of Joint Defense Materials will not waive any applicable privilege or protection from disclosure. The joint defense privilege created by this Agreement may not be waived by the action of any single Party or its counsel.” Id. at 154.

[7] Among other caveats, the parties agreed in the JDA:

[S]haring and exchange is premised on the understanding and agreement that (a) Joint Defense Materials transmitted among the Parties contain privileged, protected and/or confidential communications and/or privileged attorney work product; and (b) in accordance with applicable legal standards, exchanges have been and will be made only of information as to which the exchanging Parties believe they share common interests with respect to the Litigation.

Id. at 153–54.

[8] In addition, Brown and Price agreed, “Any shared or exchanged information shall not be used for any purpose other than with respect to this litigation. Any party receiving Materials under this Agreement agrees not to use such materials against the Party that delivered or shared them.” Id.

[9] The JDA further provided:

The joint defense privilege described above and recognized by this Agreement shall not be destroyed or impaired as to any Joint Defense Materials exchanged pursuant to this Agreement if adversary positions should subsequently arise between some or all of the Parties and regardless of whether the joint defense privilege becomes inapplicable after the emergence of adversary positions among Parties or this Agreement is terminated for any reason.

Id. at 155.

[10] The parties agreed in the JDA that not all information in their possession would be considered privileged:

Nothing in this Agreement prohibits any Party of [sic] its counsel from sharing any materials or information obtained from a source other than one of the other parties to this Agreement (whether previously exchanged among the Parties as Joint Defense Materials or not) with any persons or entity not a party to this Agreement, and the sharing or disclosure of such information does not constitute and shall not be considered to be a waiver of any privilege or protection as to any other Joint Defense Materials exchanged between and among the Parties pursuant to this Agreement.

Id. at 156–57.

[11] Finally, the JDA provided, in relevant part:

The exchange of Joint Defense Materials pursuant to this Agreement shall not preclude any of the Parties from pursuing subject matters reflected in Joint Defense Materials (even as against other Parties), so long as all applicable privileges or protections from disclosure are preserved.

Id. at 157.

[12] Both before and after the execution of the JDA, Brown, Price, and their attorneys participated in strategy sessions where they exchanged documents and information. Brown and Price's attorneys also conferred without their clients and shared information.

[13] On April 9, 2009, Brown removed Price as trustee of the Trust. On that same date, while the criminal cases were pending, Brown and his wife, Charlotte, sued Price, alleging breach of trust, theft, criminal conversion, deception, attorney malpractice, and breach of fiduciary duty.

[14] On May 21, 2009, Price filed, under a separate cause number, a Petition to Docket Trust Agreement, for Trust Accounting, and Appointment of Trustee. Brown, Charlotte, and the Trust cross-petitioned for an accounting from Price for his services as trustee, for ratification of Brown's termination of Price as trustee, and for “disgorgement of any and all fees or other monies lost, mismanaged or misappropriated by Price.” Id. at 91. The trial court consolidated the Browns' lawsuit and Price's trust accounting action under the lower cause number set forth above.

[15] On October 14, 2009, Brown, by counsel, notified Price of the termination of the JDA. Brown and Price were subsequently acquitted of all criminal charges.

[16] Price filed a motion for summary judgment in this case. The Browns and the Trust did not file a response, but they appeared at oral argument and presented argument against Price's motion. The trial court denied Price's motion. Next, Price requested and received certification of the trial court's summary judgment order for interlocutory appeal. This Court's motions panel accepted the appeal for interlocutory review pursuant to Indiana Appellate Rule 14(B)

.

Discussion and Decision

[17] Price argues that the Browns and the Trust's claims cannot go forward because the information and materials Brown and Price shared pursuant to the JDA to defend against the indictment “could never be separated from matters relevant to prosecution of the civil claims.” Appellants' Br. p. 18. He thus concludes that the terms of the JDA and the sharing of information under the JDA bar the Browns and the Trust's claims, and “the only appropriate remedy available to Price is dismissal” of their claims. Id. at 20.

[18] An appellate court applies the same standard as the trial court when reviewing a grant or denial of summary judgment. Herron v. Anigbo, 897 N.E.2d 444, 448 (Ind.2008)

. Summary judgment is appropriate only “if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Ind. Trial Rule 56(C). The Browns and the Trust did not file a response to Price's motion for summary judgment, so the parties agree that there are no disputes of material fact. Tr. p. 13. This case presents questions of law, which we review de novo. Robinson v. Erie Ins. Exch., 9 N.E.3d 673, 674 (Ind.2014)

.

[19] We first turn to the provisions of the JDA. The parties do not direct us to any Indiana authorities discussing such agreements, and our research has not uncovered any Indiana cases that address such agreements in detail,² so we look to other jurisdictions for guidance.

[20] Joint defense agreements are based on the common interest privilege, also known as the common interest doctrine. The common interest privilege is an extension of the attorney-client privilege. United States v. BDO Seidman, LLP, 492 F.3d 806, 815 (7th Cir.2007)

. In effect, the common interest privilege extends the attorney-client privilege to otherwise nonconfidential communications between parties represented by separate attorneys. Id. The common interest privilege “treats all involved attorneys and clients as a single attorney-client unit, at least insofar as a common interest is pursued.” 2 Stephen A. Saltzberg, et al., Federal Rules of Evidence Manual 501–30 (10th ed. 2011). The privilege is an exception to the general rule that the attorney-client privilege is waived when privileged information is disclosed to a third party. BDO Seidman, 492 F.3d at 815 ; see

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