State ex rel. Southwestern Bell Publications v. Ryan

• Court: Missouri Court of Appeals
• Writing for the Court: CARL R. GAERTNER; GRIMM, P.J., and SIMEONE
• Citation: State ex rel. Southwestern Bell Publications v. Ryan, 754 S.W.2d 30 (Mo. App. 1988)
• Decision Date: 26 July 1988
• Docket Number: No. 54519,54519
• Parties: STATE of Missouri, ex rel., SOUTHWESTERN BELL PUBLICATIONS, Relators, v. Honorable Brendan RYAN, Respondent.

Page 30

754 S.W.2d 30

STATE of Missouri, ex rel., SOUTHWESTERN BELL PUBLICATIONS, Relators, v. Honorable Brendan RYAN, Respondent.

No. 54519.

Missouri Court of Appeals,

Eastern District,

Division Five.

July 26, 1988.

Raymond R. Fournie, Shepherd, Sandberg, & Phoenix, Debra Ann Carlson-Wood, Shepherd, Sandberg, & Phoenix, St. Louis, for appellant.

Thomas Jeffrey Horn, St. Louis, Richard K. Coffin, Michael R. Torrence, Phelps, Coffin & Andreatta, Clayton, for respondent.

CARL R. GAERTNER, Judge.

Relators seek a writ of mandamus ordering respondent to compel discovery from plaintiff's accountant. The trial court denied relators' motion to compel based on the accountant-client privilege, § 326.151 RSMo 1986. Our preliminary order in mandamus is hereby made permanent.

Plaintiff, Erker Brothers Optical Company, filed suit against Southwestern Bell Telephone Company, Southwestern Bell Publications Incorporated, and Ad-Vent Information Services Incorporated. Count I, a tort claim, alleged that defendants intentionally disclosed confidential information concerning plaintiff to plaintiff's competitors. Count II alleged that defendants breached their contract with plaintiff by disclosing confidential information about plaintiff's company to third parties. Erker seeks actual damages in the amount of $3,000,000 and punitive damages in the amount of $10,000,000.

The allegations of Erker's fourth amended petition are devoid of any specifics regarding the nature of the claimed damages. Rather than filing a motion for more definite statement, relators ascertained through pre-trial discovery that Erker's evidence of actual damages would consist of an expert witness's calculations intended to show a loss of profits and a loss of Erker's share of the market beginning in 1983 and extending into the 1990's. Erker was compelled by order of court to furnish relators with tax returns, financial statements, and accountant's review reports which had been prepared by, or under the direction of, Hal Stone, a partner of the accounting firm of Baird, Kurtz, and Dobson. When relators attempted to take Stone's deposition, Erker's attorney instructed him not to answer any questions pertaining to its tax returns, financial reports, or financial condition. Pursuant to section 326.151 RSMo 1986, the respondent judge overruled relators' motion to compel Erker's to instruct its accountant to testify regarding its financial information and to produce documents related to or used in the preparation of tax returns and financial statements. Relators then filed this petition for Writ of Mandamus and we issued our Preliminary Order.

Section 326.151 RSMo 1986 provides:

Communications of client to accountant or employee privileged-shall not be examined thereon without client's consent -A certified public accountant or a public accountant shall not be examined by judicial process or proceedings without the consent of his client as to any communication made by the client to him in person or through the media of books of account and financial records, or his advice, reports or working papers given or made thereon in the course of professional employment, nor shall a secretary, stenographer, clerk or assistant of a certified public accountant, or a public accountant, be examined, without the consent of the client concerned, concerning any fact the knowledge of which he has acquired in his capacity. This privilege shall exist in all cases except when material to the defense of an action against an accountant. (Emphasis added)

Relators argue that, by seeking damages for loss of profits, Erker has voluntarily placed in issue its past, present, and future financial condition thereby implicitly waiving the statutory privilege in the same fashion as a personal injury plaintiff is held to have waived the physician-patient privilege. State ex rel. McNutt v. Keet, 432 S.W.2d 597 (Mo. banc 1968). On behalf of respondent, Erker contends that the McNutt principle is inapplicable to the accountant's privilege statute because it provides for waiver of the privilege exclusively in actions against an accountant. We reject Erker's contention as we perceive it to be predicated upon a misreading of the statute and because the construction plaintiff places upon the statutory exception runs contrary to the established policy of full and open pre-trial discovery in a spirit of fundamental fairness.

No accountant-client privilege existed at common law. In Missouri the privilege was created by the 1967 legislative enactment of section 326.151. A claim of privilege, because it presents an exception to the usual rules of evidence and may constitute an impediment to the discovery of truth, is subject to careful scrutiny. State ex rel. Chandra v. Sprinkle, 678 S.W.2d 804, 807 (Mo. banc 1984). When viewed with careful scrutiny, it is apparent that Erker's argument fails to...