Wells Fargo Bank v. Superior Court

• Decision Date: 13 January 2000
• Docket Number: No. S057324.,S057324.
• Citation: 990 P.2d 591,22 Cal.4th 201,91 Cal.Rptr.2d 716
• Court: California Supreme Court
• Parties: WELLS FARGO BANK, N.A., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent; Vickie Boltwood et al., Real Parties in Interest. O'Melveny & Myers LLP, Petitioner, v. The Superior Court of Los Angeles County, Respondent; Vickie Boltwood et al., Real Parties in Interest.

91 Cal.Rptr.2d 716

22 Cal.4th 201

990 P.2d 591

WELLS FARGO BANK, N.A., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent;

Vickie Boltwood et al., Real Parties in Interest.

O'Melveny & Myers LLP, Petitioner, v. The Superior Court of Los Angeles County, Respondent;

Vickie Boltwood et al., Real Parties in Interest.

No. S057324.

Supreme Court of California.

January 13, 2000.

White & Case, John A. Sturgeon, James R. Cairns, Los Angeles, and Carole C. Peterson, for Petitioner Wells Fargo Bank, N.A.

O'Melveny & Myers, Robert M. Schwartz, Craig A. Corman, Los Angeles, Nancy E. Sussman, Burbank, Richard D. Beller, Los Angeles, and Russell G. Allen, Newport Beach, for Petitioner O'Melveny & Myers.

Christopher Chenoweth; Steefel, Levitt & Weiss, Stephen S. Mayne, Lisa M. Carvalho and Mark Fogelman, San Francisco, for California Bankers Association as Amicus Curiae on behalf of Petitioners.

No appearance for Respondent.

Goldstein & Phillips, Goldstein & Musto, Alvin H. Goldstein, Jr., Mark L. Musto and Kelly J. Snowden, San Francisco, for Real Parties in Interest.

WERDEGAR, J.

In this action for an accounting, the beneficiaries of a private express trust seek to compel the trustee to disclose its privileged communications with attorneys. We conclude the trustee may assert the attorney-client privilege against the beneficiaries.

I. FACTS AND PROCEDURAL HISTORY

William A. Couch established the Couch Living Trust in October 1991. He served as the sole trustee until his death in March 1992. At that time, William's surviving spouse, Rosa Couch, and petitioner Wells Fargo Bank, N.A. (Wells Fargo) became cotrustees pursuant to the trust instrument. The beneficiaries of the trust are William's spouse, children and grandchildren. William's daughter, Vickie Boltwood, and her children (collectively the Boltwoods) are the real parties in interest.

In November 1994, the Boltwoods accused the trustees of a variety of misconduct. The Boltwoods' claims center around allegations that the trustees distributed less money to the Boltwoods than they requested, and that the trustees, over the Boltwoods' objection, decided not to sell certain real property in Anaheim. The Boltwoods also allege that Rosa Couch, shortly after her husband's death, removed money and jewelry from a safe deposit box. The other beneficiaries have not joined in the Boltwoods' claims.

In December 1994, Wells Fargo commenced this action by petitioning the probate court to settle its accounts and to approve its resignation as cotrustee. The Boltwoods filed objections to Wells Fargo's accounts and petitioned for removal of Rosa Couch as cotrustee, and for surcharge and damages.

In the course of the litigation, the Boltwoods requested that Wells Fargo produce documents related to the trust. Wells Fargo produced documents reflecting confidential communications with its attorneys on the subject of trust administration. Wells Fargo asserted the attorney-client privilege, however, as to documents reflecting communications with its attorneys about the Boltwoods' claims of misconduct. Wells Fargo's outside trust administration counsel, O'Melveny & Myers (O'Melveny), claimed the protection of the work product doctrine for other documents. For the documents not produced, Wells Fargo and O'Melveny provided a privilege log setting out for each document the privilege asserted and the document's sequential number, general nature, date, author and recipients. According to the log, the documents not produced include communications between Wells Fargo's employees and its attorneys, either in-house or at O'Melveny, and work product of O'Melveny.

The Boltwoods moved to compel production. The superior court granted the motion and ordered Wells Fargo to produce the remaining documents within 30 days. The court did not announce findings of fact or conclusions of law, either orally or in writing. Wells Fargo petitioned the Court of Appeal for a writ of mandate or prohibition and sought a stay of the superior court's order. O'Melveny also sought a stay and extraordinary relief. The Court of Appeal considered the petitions together and granted relief. Specifically, the court vacated the superior court's order compelling production of documents subject to the attorney-client privilege and directed the superior court to examine in camera the documents as to which O'Melveny had claimed the protection of the work product doctrine.

We granted the Boltwoods' petition for review and held the case for Moeller v. Superior Court (1997) 16 Cal.4th 1124, 69 Cal.Rptr.2d 317, 947 P.2d 279 (Moeller). We now affirm.

II. DISCUSSION

A. The Attorney-client Privilege

Wells Fargo has already produced to the Boltwoods documents reflecting privileged communications with attorneys on the subject of trust administration. The Boltwoods contend that Wells Fargo must produce additional privileged documents of that type, as well as privileged documents concerning the Boltwoods' claims of misconduct. As will appear, there is no authority in California law for requiring a trustee to produce communications protected by the attorney-client privilege, regardless of their subject matter.

The Boltwoods contend Wells Fargo must produce privileged communications to fulfill its statutory and common law duties as a trustee to report to the beneficiaries about the trust and its administration. (See Prob.Code, §§ 16060, 16061; Strauss v. Superior Court (1950) 36 Cal.2d 396, 401, 224 P.2d 726; Union Trust Co. v. Superior Court (1938) 11 Cal.2d 449, 460-462, 81 P.2d 150.) Wells Fargo's duties as a trustee, the Boltwoods argue, take precedence over its privilege as the client of an attorney. (Evid.Code, § 954.) The argument lacks merit. The privileges set out in the Evidence Code are legislative creations; the courts of this state have no power to expand them or to recognize implied exceptions. (Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 373, 20 Cal.Rptr.2d 330, 853 P.2d 496; see also Moeller, supra, 16 Cal.4th at p. 1129, 69 Cal.Rptr.2d 317, 947 P.2d 279.) The Boltwoods' argument is nothing more than a plea for an implied exception.

If the relevant sections of the Probate Code imposed duties a trustee literally could not perform without disclosing privileged communications, one might have reason to ask whether the Legislature had, in fact, created an exception to the attorney-client privilege. But the relevant statutes cannot fairly be read to require disclosure of privileged communications. Probate Code section 16060 provides simply that "[t]he trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration." (Italics added.) Probate Code section 16061 in pertinent part says only that, "[e]xcept as provided in Section 16064, on reasonable request by a beneficiary, the trustee shall provide the beneficiary with a report of information about the assets, liabilities, receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the administration of the trust relevant to the beneficiary's interest, including the terms of the trust...." (Italics added.) Certainly a trustee can keep beneficiaries "reasonably informed" (id., § 16060) and provide "a report of information" (id., § 16061) without necessarily having to disclose privileged communications. The attorney-client privilege is commonly regarded as "fundamental to ... the proper functioning of our judicial system" (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 611, 208 Cal.Rptr. 886, 691 P.2d 642) and thought to "promote broader public interests in the observance of law and administration of justice" (Up john Co. v. United States (1981) 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584). If the Legislature had intended to restrict a privilege of this importance, it would likely have declared that intention unmistakably, rather than leaving it to courts to find the restriction by inference and guesswork in the interstices of the Probate Code.

Nor does the Boltwoods' argument for limiting the attorney-client privilege find support in Strauss v. Superior Court, supra, 36 Cal.2d 396, 224 P.2d 726. In that decision, we acknowledged the trustee's common law duty to report to beneficiaries, a duty later codified in Probate Code sections 16060 and 16061.¹ More specifically, we held that "[a] trustee has the duty to the beneficiaries to give them upon their request at reasonable times complete and accurate information relative to the administration of the trust" (Strauss v. Superior Court, supra, at p. 401, 224 P.2d 726) and that "the trustee's records as to the administration of the trust are deemed a part of the trust estate, and the right of the beneficiaries to an inspection of them stems from their common interest in the property along with the trustee" (id. at p. 402, 224 P.2d 726). Our earlier decision in Union Trust Co. v. Superior Court, supra, 11 Cal.2d at pages 460-462, 81 P.2d 150, is to the same effect. In neither Strauss nor Union Trust Co., however, did we address any question concerning the attorneyclient privilege. To attempt to use those decisions as the foundation for an implied exception to the attorney-client privilege would, moreover, be inconsistent with the rule that we have no power to create such exceptions. (See Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 373, 20 Cal.Rptr.2d 330, 853 P.2d 496.)

In most of the other jurisdictions in which this question has arisen, courts have given the trustee's reporting duties precedence over the attorney-client privilege. (See, e.g., Hoopes v. Carota (1988) 142 A.D.2d 906, 531 N.Y.S.2d 407, 409, affd. (1989) 74 N.Y.2d 716, 544 N.Y.S.2d 808, 543 N.E.2d 73; Riggs Nat. Bank of Washington, B.C. v. Zimmer (Del.Ch.1976) 355 A.2d 709, 712-714; United States v. Evans (9th Cir.1986) 796 F.2d 264, 265-266; Washington-Baltimore, etc. v. Washington Star Co. (D.D.C.1982) 543 F.Supp. 906, 908-909.) But ...