The opinion
Filed 4/15/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
DP PHAM, LLC,
Cross-complainant, Cross-defendant, G050964
and Respondent,
(Super. Ct. No. 30-2013-00645166)
v.
OPINION
C. TUCKER CHEADLE, as Administrator,
etc.,
Cross-defendant, Cross-complainant,
and Appellant.
Appeal from an order of the Superior Court of Orange County, Linda S.
Marks, Judge. Reversed and remanded.
C. Tucker Cheadle, in pro. per.; Callahan, Thompson, Sherman & Caudill,
Robert W. Thompson and Bryan S. Owens for Cross-defendant, Cross-complainant, and
Appellant.
Phan Trial Group and Luan K. Phan for Cross-complainant,
Cross-defendant, and Respondent.
* * *
Appellant C. Tucker Cheadle (Cheadle), as administrator of the estate of
Robert F. Obarr (Obarr), appeals from an order denying his motion to disqualify counsel
for respondent DP Pham LLC (Pham). Cheadle contends disqualification was required
because Pham’s counsel improperly obtained copies of privileged communications
between Obarr and his attorney, and used those communications to oppose another
party’s summary adjudication motion in this case. The trial court denied the
disqualification motion because it concluded the communications were not privileged.
We reverse. After reviewing copies of the communications, the trial court
concluded they were not privileged based on their content. A court, however, may not
review the contents of a communication to determine whether the attorney-client
privilege protects that communication. The attorney-client privilege is an absolute
privilege that prevents disclosure, no matter how necessary or relevant to the lawsuit.
The privilege attaches to all confidential communications between an attorney and a
client regardless of whether the information communicated is in fact privileged.
Accordingly, it is neither necessary nor appropriate to review a communication to
determine whether the attorney-client privilege protects it.
Once the proponent makes a prima facie showing of a confidential
attorney-client communication, it is presumed the communication is privileged and the
burden shifts to the opponent to establish waiver, an exception, or that the privilege does
not for some other reason apply. The opponent may not rely on the communication’s
content to make that showing.
Here, the trial court relied exclusively on the content of the
communications to conclude they were not privileged and Pham points to no other
evidence to support the trial court’s determination. The court also concluded the
communications fell with certain statutory exceptions the Evidence Code establishes for
2
the privilege.1 As explained below, we conclude the trial court erred in applying these
statutory exceptions because to do so here would expand them well beyond their intended
scope.
Although we reverse the trial court’s order denying the disqualification
motion, we remand for the trial court to determine whether the receipt and use of the
privileged communications by Pham’s counsel warrants disqualification. As explained
below, the decision whether to disqualify counsel is vested in the trial court’s sound
discretion based on its careful balancing of a variety of factors concerning the disclosure
and use of the privileged information. The court never considered those factors based on
its determination the communications were not privileged.
I
FACTS AND PROCEDURAL HISTORY
Pham made three loans toObarr totaling nearly $3 million, and Obarr
secured each loan by granting Pham a lien on a mobilehome park he owned in
Westminster, California (Property). This action arose when Obarr allegedly agreed to
sell the Property to two different buyers.
In March 2013, Obarr allegedly contracted to sell the Property to S.C.D.
Enterprises (SCD) for $7 million based on a right of first refusal under a lease SCD held
on the Property. SCD promptly assigned the purchase agreement to Westminster MHP
Associates, LP (Westminster), which allegedly opened escrow on the Property with
Obarr. According to Westminster, it satisfied all contingencies for the sale within
10 days of opening escrow.
Shortly after Westminster opened escrow, Obarr allegedly contracted to sell
the Property to Pham for $8 million, which included the balance due on Pham’s loansto
1
All statutory references are to the Evidence Code unless otherwise stated.
3
Obarr. According to Pham, it opened escrow with a separate escrow company and
deposited $25,000 toward its purchase of the Property a few days after contracting with
Obarr. Obarr also allegedly executed a deed conveying the Property to Pham and
deposited the deed with this escrow.
Christi Torres Galla served as Obarr’s bookkeeper and personal assistant,
managing his business affairs and communicating with others on his behalf. She
regularly opened and reviewed Obarr’s mail and also typed letters and e-mails for him.
At Obarr’s instructions, people who communicated with him often copied Galla on their
written communications.Obarr regularly discussed his business affairs with Galla and
sought her advice. She also attended business meetings with Obarr, and he asked her to
witness his signature whenever he signed important documents. Shapleigh Kimes is a
licensed attorney who represented Obarr on a variety of matters, and Al Gausewitz was a
broker Obarr hired to market and sell the Property.
In April 2013, Westminster filed this action, alleging claims against Obarr
for specific performance of the SCD purchase agreement, breach of the SCD purchase
agreement (as an alternative to specific performance), breach of the implied covenant of
good faith and fair dealing, and declaratory relief. Westminster also alleged claims
against Pham and Galla for intentional interference with the SCD purchase contract, and
against Pham for declaratory relief.2 Pham answered Westminster’s complaint and filed
a cross-complaint against Obarr, alleging claims for specific performance of Pham’s
purchase agreement, breach of contract, intentional interference with a written contract,
breach of the implied covenant of good faith and fair dealing, declaratory relief, and
constructive trust.
2
The operative complaint also named the escrow company Pham used as a
defendant on the specific performance and intentional interference with contract claims.
4
Obarr died unexpectedly in August 2013. The trial court appointed
Cheadle as a special administrator for Obarr’s estate and in that capacity substituted
Cheadle for Obarr as a party to this action. Cheadle then filed a cross-complaint alleging
an interpleader claim against both Westminster and Pham concerning the Property.
Based on Pham’s loans to Obarr, Cheadle also alleged claims against Pham for usury,
intentional misrepresentation, negligent misrepresentation, money had and received,
unjust enrichment, reformation, and violation of the unfair competition law (Bus. & Prof.
Code, § 17200).
In July 2014, Westminster sought summary adjudication on its specific
performance claim. In opposition, Pham submitted Galla’s declaration that described her
working relationship with Obarr and her rolein his efforts to sell the Property.She also
described Obarr’s relationship with Kimes, when Kimes stopped representing Obarr
regarding the Property’s sale, and Kimes’s knowledge about certain offers to purchase
the Property. The exhibits Galla attached to her declaration included a September 2012
e-mail from Kimes to Obarr, and a January 2013 letter from Kimes to Obarr. Galla was
copied on both communications and both clearly identified Kimes as an attorney.
Cheadle promptly filed evidentiary objections, claiming the January letter
and a paragraph in Galla’s declaration discussing it were inadmissible because the letter
was a privileged attorney-client communication between Obarr and Kimes. A few days
later, Cheadle filed an ex parte application for an order (1) excluding as evidence the
letter and the paragraph discussing it, and (2) disqualifying Pham’s counsel. According
to Cheadle, Pham’s counsel improperly interviewed Galla and “coerce[d]” her to disclose
privileged attorney-client communications between Obarr and Kimes to which she was
privy as Obarr’s bookkeeper and personal assistant. Cheadle argued disqualification was
required because Pham’s counsel inadvertently received materials that were clearly
privileged and confidential, but failed to notify Cheadle and used them to oppose the
summary adjudication motion. Pham opposed the ex parte application, arguing Galla
5
voluntarily provided Pham’s counsel with the communications, the January 2013 letter
was not privileged on its face, and Obarr and Cheadle nonetheless waived the privilege
by disclosing the letter and other communications to third parties, by failing to make
reasonable efforts to preserve the privilege, and by putting the communications at issue.
The trial court heard Westminster’s summary adjudication motion and
Cheadle’s ex parte application at the same time. The court sustained Cheadle’s
evidentiary objections and denied Westminster’s motion without considering the January
letter or the paragraph in Galla’s declaration discussing it, but the courtdeclined to decide
the disqualification request on an ex parte basis and ordered Cheadle to file a noticed
motion to address the issue. Cheadle filed the motion, and based on the attorney-client
privilege sought to (1) exclude as evidence the September e-mail, the January letter, and
three paragraphs in Galla’s declaration discussing those communications; (2) disqualify
Pham’s counsel for obtaining and using Obarr’s privileged communications; and (3) seal
Galla’s declaration. The trial court twice continued the hearing on Cheadle’s motion to
allow supplemental briefing on whether any statutory exception to the attorney-client
privilege applied to the e-mail and letter.
After considering the supplemental briefs, the trial court denied the motion
in its entirety because it found the attorney-client privilege did not protect the e-mail and
letter.The court explained Cheadle presented evidence making a prima facie showing the
e-mail and letter were confidential communications between an attorney and a client, but
the court’s incamera review of the communications led it to conclude the privilege did
not apply because Kimes’s statements in the communications suggested he was not
representing Obarr concerning the potential sale of the Property, and therefore as to the
Property no attorney-client relationship existed. As authority permitting it to review the
e-mail and letter “to determine if [they] are privileged,” the trial court cited OXY
Resources California LLC v. Superior Court (2004) 115 Cal.App.4th 874 (OXY).
6
The court further explained the attorney-clientprivilege did not apply to the
e-mail and letter based on the statutory exceptions to the privilege established by
sections 957, 960, and 961, which provide the privilege does not protect a communication
relevant to an issue (1) “between parties all of whom claim through a deceased client”
(§ 957); (2) “concerning the intention of a client, now deceased, with respect to a deed of
conveyance, will or other writing, executed by the client, purporting to affect an interest
in property” (§ 960); or (3) “concerning the validity of a deed of conveyance, will, or
other writing, executed by a client, now deceased, purporting to affect an interest in
property” (§ 961).
Cheadle timely appealed from the court’s order denying his motion to
disqualify Pham’s counsel.
II
DISCUSSION
A. The Trial Court Erred In Finding the Attorney-Client Privilege Did Not Apply
1. Attorney-Client Privilege Governing Principles
Based on the attorney-client privilege, a client may refuse to disclose, and
may prevent others from disclosing, confidential communications between a client and
his or her attorney. (§ 954; Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 111
(Kerner).) A “‘client’” is statutorily defined as “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.” (§ 951.)
A“‘confidential communication between client and lawyer’” is statutorily defined as
“information transmitted between a client and his or her lawyer in the course of that
relationship and in confidence by a means which, so far as the client is aware, discloses
the information to no third persons other than those who are present to further the interest
7
of the client in the consultation or those to whom disclosure is reasonably necessary for
the transmission of the information or the accomplishment of the purpose for which the
lawyer is consulted, and includes a legal opinion formed and the advice given by the
lawyer in the course of that relationship.” (§ 952.)
The privilege’s “fundamental purpose ‘is to safeguard the confidential
relationship between clients and their attorneys so as to promote full and open discussion
of the facts and tactics surrounding individual legal matters. [Citation.] . . . [¶] Although
exercise of the privilege may occasionally result in the suppression of relevant evidence,
the Legislature of this state has determined that these concerns are outweighed by the
importance of preserving confidentiality in the attorney-client relationship. . . . “The
privilege is given on grounds of public policy in the belief that the benefits derived
therefrom justify the risk that unjust decisions may sometimes result from the suppression
of relevant evidence.”’” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th
725, 732 (Costco).) “The privilege is absolute and prevents disclosure of the
communication regardless of its relevance, necessity or other circumstances peculiar to
the case.” (Kerner, supra, 206 Cal.App.4th at p. 111.)
The attorney-client privilege protects the transmission of information
regardless of the contentor whether the information is discoverable from other sources.
(Costco, supra, 47 Cal.4th at pp. 735, 739.) It attaches to a confidential communication
between the attorney and the client and bars discovery of the entire communication,
including unprivileged material. (Id. at pp. 734, 736.) “‘Neither the statutes articulating
the attorney-client privilege nor the cases which have interpreted it make any
differentiation between “factual” and “legal” information.’” (Id. at p. 734.) For example,
the Supreme Court has explained, “‘[T]he privilege covers the transmission of documents
which are available to the public, and not merely information in the sole possession of the
attorney or client. In this regard, it is the actual fact of the transmission which merits
8
protection, since discovery of the transmission of specific public documents might very
well reveal the transmitter’s intended strategy.’”(Ibid.)
“The question whether the attorney-client privilege applies to a particular
communication is a question of fact if the evidence is in conflict.” (Kerner, supra,
206 Cal.App.4th at p. 117.) “‘When the facts, or reasonable inferences from the facts,
shown in support of or in opposition to the claim of privilege are in conflict, the
determination of whether the evidence supports one conclusion or the other is for the trial
court, and a reviewing court may not disturb such finding if there is any substantial
evidence to support it.’” (People v. Gionis(1995) 9 Cal.4th 1196, 1208 (Gionis).)
2. Pham Failed to Overcome Cheadle’s Prima Facie Showing the E-mail and
Letter Were Confidential Attorney-Client Communications
Cheadle contends he made a prima facie showing the e-mail and letter were
confidential attorney-client communications between Obarr and Kimes, and the trial
court then impermissibly reviewed the contents of those communications to rule on
Cheadle’s privilege claim. Cheadle asserts Pham and the trial court identified no
evidence other than the contents of the e-mail and letter to show the communications
were not privileged, and therefore Pham failed to overcome Cheadle’s prima facie
showing and the resulting presumption the communications were privileged. We agree.
“The party claiming the privilege has the burden of establishing the
preliminary facts necessary to support its exercise, i.e., a communication made in the
course of an attorney-client relationship. [Citations.] Once that party establishes facts
necessary to support a prima facie claim of privilege, the communication is presumed to
have been made in confidence and the opponent of the claim of privilege has the burden
of proof to establish the communication was not confidential or that the privilege does
not for other reasons apply.” (Costco, supra, 47 Cal.4th at p. 733; see § 917, subd. (a).)
Here, it is undisputed the e-mail and letter were communications from
Kimes to Obarr, and Galla was the only other party to those communications. Cheadle
9
submitted Kimes’s declaration explaining Kimes was a licensed attorney who had an
ongoing attorney-client relationship with Obarr and represented him on the sale of the
Property. Kimes also explained he copied Galla on his communications with Obarr
because she was Obarr’s assistant and Obarr instructed him to do so.Galla’s declaration
also acknowledged Kimes was an attorney who represented Obarr on various legal
matters and she received communications from Kimes on Obarr’s behalf about those
matters.3As the trial court acknowledged, this evidence satisfied Cheadle’s initial burden
and gave rise to a presumption the e-mail and letter were confidential, attorney-client
communications. (See Costco, supra, 47 Cal.4th at p. 733 [evidence showed client hired
attorney to represent it and therefore attorney’s letter to client met prima facie threshold
that letter was a privileged communication].)
The trial court found Pham overcame this presumption based on the
contents of the e-mail and letter. The court explained itsincamera review of the
communications revealed they were not privileged because “Mr. Kimes doesn’t really
provide Mr. Obarr with any advice, counsel, sharing of information, and certainly
Mr. Obarr has not provided any information to Mr. Kimes.”The court further explained
the communications showed they were not privileged because they stated Kimes was not
currently representing Obarr in selling the Property, Obarr failed to sign a retainer
agreement, and Kimes stated he would refund the unused portion of Obarr’s deposit. The
trial court, however, erred when it reviewed the contents of the e-mail and letter to
determine whether they were privileged attorney-client communications.
As explained above, the fundamental purpose of the attorney-client
privilege is to safeguard the confidential relationship between an attorney and a client to
3
Pham does not claim on appeal that copying Galla on Kimes’s
communications to Obarr excluded them from the attorney-client privilege, and therefore
Pham forfeited that issue. (In re S.C. (2006) 138 Cal.App.4th 396, 408 [appellant forfeits
claim of error by failing to cite authority and provide legal analysis addressing claim].)
10
promote the open discussion of all matters relating to the representation. (Costco, supra,
47 Cal.4th at p. 732.) The privilege therefore protects the confidential communication or
transmission of information between an attorney and a client regardless of whether the
information transmitted is otherwise privileged. (Id. at pp. 734, 736.) The protection the
privilege provides is absolute and prevents the disclosure of any part of a privileged
communication regardless of its content or any particularized need for disclosure.
(Kerner, supra, 206 Cal.App.4th at p. 111.)
Consequently, “it is neither customary nor necessary to review the contents
of the communication in order to determine whether the [attorney-client] privilege
applies.” (Cornish v. Superior Court (1989) 209 Cal.App.3d 467, 480 (Cornish).) A
court’s determination on whether the privilege applies “does not involve the nature of the
communications or the effect of disclosure but rather the existence of the relationship at
the time the communication was made, the intent of the client and whether the
communication emanates from the client.” (Ibid.; see Costco, supra, 47 Cal.4th at p. 739
[“because the privilege protects a transmission irrespective of its content, there should be
no need to examine the content in order to rule on a claim of privilege”].)
Consistent with these principles, California courts have recognized “we
must approach th[e] issue [of whether documents are protected by the attorney-client
privilege] without inspection of the documents themselves.” (Cooke v. Superior Court
(1978) 83 Cal.App.3d 582, 588 (Cooke); see State Farm Fire & Casualty Co. v. Superior
Court (1997) 54 Cal.App.4th 625, 640 (State Farm) [“We will not take into consideration
the actual privileged information in aid of our determination”].) Similarly, the Legislature
has prohibited court-ordered disclosure of disputed documents for in camera review to
resolve an attorney-client privilege claim. (§ 915, subd. (a); see Costco, supra,
47 Cal.4th at pp. 736-740.)
The trial court justifiedits in camera review by citing the OXY decision. In
OXY, the Court of Appeal crafted an exception to section 915 and its prohibition against
11
in camera review when the review is necessary to determine whether there was a waiver
of the claimed privileged or whether an exception to the privilege applied. (OXY, supra,
115 Cal.App.4th at pp. 895-896.)OXY is inapposite, however, because the trial court
reviewed Kimes’s e-mail and letter to determine whether they were privileged, not to
determine whether Obarr or Cheadle waived the attorney-client privilege or whether an
exception to the privilege applied.
More importantly, this aspect of OXY is no longer good law after the
Supreme Court’s Costco decision. In Costco, the Court explained the in camera review
the OXY court ordered was not appropriate because “section 915 prohibits disclosure of
information claimed to be privileged in order to determine if a communication is
privileged.” (Costco, supra, 47 Cal.4th at p. 740.) The Costco court explained, “after the
court has determined the privilege is waived or an exception applies generally, the court
to protect the claimant’s privacy may conduct or order an in camera review of the
communication at issue to determine if some protection is warranted notwithstanding the
waiver or exception.” (Ibid.) A review, however, may not be conducted for any reason
until the court determines the privilege does not apply or has been waived. (Ibid.)
Pham contends the trial court was allowed to review the e-mail and letter
because Galla had publicly disclosed the communications when she provided Pham
copies of the communications and Pham filed them with the court in opposition to
Westminster’s summary adjudication motion. According to Pham, “section 915 does not
prevent consideration of a privileged communication that has already been
disclosed.”4The argument is meritless.
4
To support this contention, Pham relies on Roe v. Superior Court (1991)
229 Cal.App.3d 832, 843, fn. 9. There, the appellate court concluded the trial court did
not violate section 915 by ordering disclosure of the allegedly privileged information
because the information already had been disclosed by other parties and therefore the
court did nothing to force the disclosure. Roe is inapposite for two reasons. First, even
though the trial court in Roe referred to section 915, it did not review any privileged
information to determine whether a privilege applied. Second, Roe involved the right to
12
As explained above, section 915 prohibits a court from reviewing an
allegedly privileged attorney-client communication to determine whether it is privileged
because the nature of the attorney-client privilege requires absolute protection for all
confidential communications between an attorney and a client regardless of their content.
(Cornish, supra, 209 Cal.App.3d at p. 480; see Costco, supra, 47 Cal.4th at pp. 734, 736,
739.) Courts have no power to create exceptions to section 915’s mandate. (Costco, at
p. 739.) The court therefore may not review the content of the communication to
determine whether it is privileged. It simply does not matter that a third party disclosed
the communication. (Seeid. at pp. 737-740; State Farm, supra, 54 Cal.App.4th at p. 640;
Cooke, supra, 83 Cal.App.3d at p. 588; Cornish, at p. 480.)
Moreover, Pham’s argument assumes Galla’s disclosure to Pham, and
Pham’s disclosure to the court, were authorized disclosures that waived the privilege and
allowed the court to review the communications. The attorney-client privilege, however,
may be waived only by the holder of the privilege. (§ 912, subd. (a); Gionis, supra,
9 Cal.4th at p. 1207.)As relevant here, the holder is the client, a guardian or conservator
of the client, or the personal representative of the client if the client is deceased. (§ 953.)
Pham points to no evidence in the record showing either Obarr or Cheadle waived the
attorney-client privilege as to these or any other communications, or that either of them
authorized Galla to waive the privilege by disclosing these communications. The
privilege is not waived when the client’s agent discloses a privileged communication
privacy. (Roe, at p. 843.) The right to privacy provides a party with a qualified
protection; it is not an absolute privilege like the attorney-client privilege. (John B. v.
Superior Court (2006) 38 Cal.4th 1177, 1198-1199.) Case authority expressly authorizes
a court to conduct an in camera review to determine whether the party challenging the
right to privacy made a sufficiently strong showing of need for the information to
overcome the qualified protection the right provides. (See e.g., Schnabel v. Superior
Court (1993) 5 Cal.4th 704, 714; Babcock v. Superior Court (1994) 29 Cal.App.4th 721,
727-728.)
13
without the client’s authorization. (State Comp. Ins. Fund v. WPS, Inc.(1999)
70 Cal.App.4th 644, 652-654 (State Fund) [no waiver of attorney-client privilege when
attorney inadvertently and without client’s authorization disclosed otherwise privileged
communications because client did not intentionally or voluntarily relinquishknown
right].)
The trial court therefore was not permitted to review the contents of the
e-mail and letter, and the court’s ruling they were not privileged attorney-client
communications must stand or fall based on other evidence in the record. Pham,
however, points to no other evidence showing the e-mail and letter were not confidential
communications between an attorney and a client made during the course of the
attorney-client relationship. In contrast, prima facie evidence supports the existence of an
attorney-client relationship between Kimes and Obarr.
Other than her summary of the e-mail and letter, nothing in Galla’s
declaration definitively shows Kimes did not represent Obarr regarding the Property’s
sale. Moreover,Galla’s declaration acknowledged Kimes represented Obarr on a number
of legal matters, and therefore acknowledged an attorney-client relationship existed
between Obarr and Kimes. Galla’s declaration also attached an April 2013 letter from
Kimes to John Defalco, stating Kimes represented Obarr on the Property’s sale and Obarr
instructed him to contact Defalco to inquire whether he would match the current offer to
purchase the Property. Galla and Pham do not address this letter. Thus, Pham failed to
overcome Cheadle’s prima facie showing and the presumption the communications were
privileged.5
5
We express no opinion on whether the contents of the e-mail and letter
constitute substantial evidence sufficient to support the trial court’s ruling because we
may not properly consider that information.
14
3. No Statutory Exception to the Attorney-Client Privilege Excludes the
E-mail and Letter from the Privilege’s Protection
Cheadle contends the trial court erred in ruling the statutory exceptions to
the attorney-client privilege established by sections 957, 960, and 961 excluded the
e-mail and letter from protection. We agree.
a. Section 957’s Exception for Parties Claiming Througha Deceased
Client
Section 957 provides the attorney-client privilege does not apply “to a
communication relevant to an issue between parties all of whom claim through a
deceased client, regardless of whether the claims are by testate or intestate succession,
nonprobate transfer, or inter vivos transaction.” Pham contends this exception applies
because both it and Westminster claim to be owners of the Property through separate
inter vivos transactionswith Obarr, and the communications between Obarr and Kimes
are relevant to whether Obarr intended to sell the Property to SCD (and therefore
Westminster) or Pham.6 In contrast, Cheadle contends this exception does not apply
based on the statutory requirement the communications must be relevant to an issue
between “‘parties all of whom claim through a deceased client.’” According to Cheadle,
Westminster and Pham make claims against rather than through Obarr because they both
seek monetary damages against Obarr’s estate.
There is no California case law interpreting section 957’s relevant
language, but the Law Revision Commission Comments concerning the statute’s original
6
In addition to the statutory language extending this exception to parties who
claim through a deceased client by inter vivos transaction, Pham also relies on the
language applying the exception to parties who claim through a deceased client by
nonprobate transfer. The inter vivos transaction language is the relevant language here
because both Westminster and Pham claim through contracts or deeds Obarr allegedly
executed to sell or transfer the Property during his lifetime. A nonprobate transfer occurs
upon death, but outside the probate context, such as through a trust. (See generally Estate
of Gardner (2010) 187 Cal.App.4th 543, 549.) The alleged transfers to Westminster and
Pham do not qualify as nonprobate transfers.
15
enactment in 1965 explain the underlying rationale for this exception: “Th[is] traditional
exception [to the attorney-client privilege] . . . is based on the theory that claimants in
privity with the estate claim through the client, not adversely, and the deceased client
presumably would want his communications disclosed in litigation between such
claimants so that his desires in regard to the disposition of his estate might be correctly
ascertained and carried out.”(Cal. Law Revision Com. com. 29B Pt. 3A, West’s Ann.
Evid. Code (2009 ed.) foll. § 957, p. 387, second italics added.)7
In 2009, the Law Revision Commission again examined this exception
when the Legislature directed the Commission to study application of the attorney-client
privilege after a client’s death. (Recommendation: Attorney-Client Privilege After
Client’s Death (Feb. 2009) 38 Cal. Law Revision Com. Rep. (2008) p. 166.) In
recommending the Legislature clarify that this exception applies to nonprobate transfers,
the Commission further explained the exception’s purpose and application: “The
exception is based on the assumption that a decedent would have wanted the
attorney-client communication disclosed in litigation between the decedent’s
beneficiaries (as opposed to litigation in which a third party, such as a creditor, claims
against the decedent). Such disclosure helps to ensure the client’s intent regarding
disposition of the client’s assets ‘might be correctly ascertained and carried out.’” (Id. at
p. 196, fn. omitted; seeFletcher v. Superior Court (1996) 44 Cal.App.4th 773, 779,
quoting Clark v. Second Judicial Dist. Court (1985) 101 Nev. 58, 62 [“‘“in a suit
between devisees under a will, statements made by the deceased to counsel respecting the
execution of the will, or other similar document, are not privileged. While such
communications might be privileged, if offered by third persons to establish claims
7
“‘Explanatory comments by a law revision commission are persuasive
evidence of the intent of the Legislature in subsequently enacting its recommendations
into law.’” (Donkin v. Donkin (2013) 58 Cal.4th 412, 424, fn. 8.)
16
against an estate, they are not within the reason of the rule requiring their exclusion,
when the contest is between the heirs or next of kin”’” (italics omitted)].)
This case presents a hybrid situation involving claims both through and
against the deceased client and his estate. Westminster and Pham each claim title to the
Property through Obarr based on separate inter vivos transactions with Obarr, but both
also assert adverse claims against Obarr’s estate seeking monetary damages based on
Obarr’s contract to sell the Property to the other buyer. Westminster’s complaint alleged
claims against Obarr’s estate for specific performance, breach of contract, breach of the
implied covenant of good faith and fair dealing, and declaratory relief. It seeks monetary
damages and attorney fees against the estate even if Westminster succeeds on the specific
performance claim. Pham’s cross-complaint similarly alleged claims against Obarr’s
estate for specific performance, breach of contract, intentional interference with contract,
breach of the implied covenant of good faith and fair dealing, declaratory relief, and
constructive trust. It too seeks monetary damages and attorney fees against Obarr’s estate
even if Pham succeeds on the specific performance claim.
Based on these adverse claims seeking affirmative relief against Obarr’s
estate beyond simply resolving to whom he intended to sell the Property, we conclude
section 957’s exception to the attorney-client privilege does not apply here. If the
otherwise privileged communications between Obarr and Kimes are not protected by the
privilege, then the parties will use the communications both to identify to whom Obarr
intended to sell the Property and to establish a claim for damages against Obarr’s estate.
For example, if one of the communications showed Obarr intended to sell the Property to
SCD (and therefore Westminster), then Pham would use that communication to show
Obarr’s estate was liable for inducing Pham to purchase the Property after Obarr already
had sold it. That result is inconsistent with the exception’s purpose.
As explained above, the Legislature’s based this exception on the
reasonable assumption the deceased client would want privileged communications
17
disclosed to ensure distribution of the client’s estate was consistent with the client’s
wishes. In that context, the court is confronted with gifts of property that would not
result in potential liability for the deceased client’s estate. Unlike here, that situation
does not involve a sale of property that may result in liability for the deceased client’s
estate.
In codifying the exception, the Legislature expanded it to include inter
vivos transactions in addition to transfers through testate or intestate succession because a
deceased client presumably would want his assets distributed according to his wishes
regardless of whether the transfers were made through an inter vivos transaction or either
testate or intestate succession. The legislative history, however, demonstrates the
Legislature did not intend the expanded exception to apply in cases involving claims
against the deceased client’s estate based on inter vivos transactions.
The underlying rationale for section 957 does not apply to claims against
the deceased’s estate because it does not necessarily follow that a client would want his
or her privileged communications disclosed when disclosure may expose the estate to
liability. Moreover, when, as here, there are allegedly two arm’s length transactions
involving the sale of property, as opposed to a gift of property, the client does not have
the same interest in ensuring a particular party receives the property. The client may
want to see the property go to the buyer willing to pay the highest price, but the client is
not necessarily willing to expose his estate to liability to ensure that outcome.
Of course, a deceased client’s personal representative could waive the
attorney-client privilege for certain communications if the representative determines
doing so would be in the best interest of the client’s estate. (§§ 912, 953 [decease client’s
personal representative is holder of privilege with standing to waive it].) That waiver,
however, would be made during the litigation based on a careful determination of
whether disclosing a particular communication would serve the client’s best interest. In
contrast, applying the exception in this situation would result in a wholesale exclusion of
18
an entire category of communications from the attorney-client privilege without any
analysis or consideration of whether doing so would serve the client’s best interests or
ensure the client’s wishes were carried out. The underlying rationale for the exception
does not support its application in this situation.
b. ExceptionsUnder Sections 960 and 961 for a Deceased Client’s
Intention Regarding a Writing Affecting a Property Interest or the
Validity of a Writing
Section 960 and 961 establish two related exceptions to the attorney-client
privilege concerning a deceased client’s writing affecting an interest in property.
Section 960 provides the privilege does not apply to “a communication relevant to an
issue concerning the intention of a client, now deceased, with respect to a deed of
conveyance, will, or other writing, executed by the client, purporting to affect an interest
in property.” Section 961 states the privilege does not apply to “a communication
relevant to an issue concerning the validity of a deed of conveyance, will, or other
writing, executed by a client, now deceased, purporting to affect an interest in property.”
As with section 957’s exception, there is no case law construing the
language of these statutes, but the joint Law Revision Commission Comments explain the
intended purpose and scope of these exceptions: “Although the attesting witness
exception stated in Section 959 is limited to information of the kind to which one would
expect an attesting witness to testify, there is merit to having an exception that applies to
all dispositive instruments. A client ordinarily would desire his lawyer to communicate
his true intention with regard to a dispositive instrument if the instrument itself leaves the
matter in doubt and the client is deceased. Likewise, the client ordinarily would desire his
attorney to testify to communications relevant to the validity of such instruments after the
client dies. Accordingly, two additional exceptions—Sections 960 and 961—are provided
for this purpose. These exceptions have been recognized by the California decisions only
19
in cases where the lawyer is an attesting witness.”8(Cal. Law Revision Com. com. 29B
Pt. 3A, West’s Ann. Evid. Code (2009 ed.) foll. § 960, p. 394.)
This comment reveals the purpose of these exceptions is to allow an
attorney to provide testimony about a client’s intention regarding any instrument
affecting an interest in property in the same way the exception codified in section 959
allows an attorney to testify about a client’s intention about an attested document on
which the attorney served as an attesting witness. The Law Revision Commission
Comments to section 959 make clear this narrow exception is limited to the types of
communications to which an ordinary attesting witness would testify, rather than a
wholesale exception for all communications concerning the attested document or related
transaction: “This exception relates to the type of communication about which an
attesting witness would testify. The mere fact that an attorney acts as an attesting witness
should not destroy the lawyer-client privilege as to all statements made concerning the
document attested; but the privilege should not prohibit the lawyer from performing the
duties expected of an attesting witness.” (Cal. Law Revision Com. com. 29B Pt. 3A,
West’s Ann. Evid. Code (2009 ed.) foll. § 959, p. 392.)
Based on the Comments of the Law Revision Commission, we conclude the
exceptions do not apply to Kimes’s e-mail and letter to Obarr because there is no
showing those communications are the type of communications about which an attesting
witness would testify. The e-mail is dated September 2012, and the letter is dated
January 2013, but Obarr did not allegedly enter into the purchase agreement with SCD
until March 2013, or the purchase agreement with Pham until April 2013. At most, the
e-mail and letter therefore would reflect general information about Obarr’s intent
8
Section 959 provides the attorney-client privilege does not apply to “a
communication relevant to an issue concerning the intention or competence of a client
executing an attested document of which the lawyer is an attesting witness, or concerning
the execution or attestation of such a document.”
20
concerning the Property’s sale months before he executed either purchase agreement,
rather than the sort of information an attesting witness would have about the purchase
agreements and their execution.
Applying these exceptions with the breadth Pham advocates would
essentially eliminate the privilege for all communications relating to the underlying
transaction or transfer.That is well beyond the intended scope reflected in the foregoing
Law Review Commission Comments.
Moreover, Pham contends Kimes had no role in the negotiation and
execution of either of the purchase agreements, and therefore Pham made no showing
Kimes would have any information about these agreements and their execution. As the
party asserting an exception to the attorney-client privilege, Pham bore the burden to
show the exception applied. (Venture Law Group v. Superior Court (2004)
118 Cal.App.4th 96, 102.)
B. Pham Did Not Establish Obarr or Cheadle Waived the Attorney-Client Privilege
Although the trial court did not rule on its waiver argument, Pham contends
we should affirm the trial court’s ruling on the ground Obarr and Cheadle waived the
attorney-client privilege. Pham posits three separate waiver theories, but fails to
adequately support any of them with legal authority, argument, and evidence.
First, Pham argues Obarr and Cheadle waived the attorney-client privilege
because they did not act reasonably and diligently to preserve the privilege. According to
Pham, Obarr and Cheadle knew Galla held many of Obarr’s privileged documents
relevant to this litigation, but they did nothing to recover those documents and preserve
the privilege until Pham obtained copies from Galla and filed them with the court.Pham
cites no authority establishing a client waives the privilege by failing to retrieve his or her
privileged documents from an agent entrusted with them. Pham therefore forfeited this
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argument by failing to adequately support it with argument and relevant legal authority.
(In re S.C., supra, 138 Cal.App.4th at p. 408.)
Second, Pham claims Obarr waived the privilege by freely authorizing
Galla and others to share communications about the Property’s sale with third parties. As
an example, Pham contends the evidence showed Galla sent the January 2014 letter at
issue to the escrow company for Westminster’s purchase of the Property.Pham’s record
citation, however, is to one of its opposition briefs rather than to any evidence in the
record.An exhibit to that brief appears to be an e-mail from Galla to the escrow company,
but there is no declaration or other testimony to authenticate or otherwise explain the e-
mail, and Pham therefore forfeited this claim as well. (Century Surety Co. v. Polisso
(2006) 139 Cal.App.4th 922, 956 [failure to citesupporting evidence in record forfeits
claim].)
Finally, Pham contends Obarr waived the privilege by “put[ting] matters at
issue that are contained in allegedly privileged documents.”Although fundamental
fairness may require disclosure of privileged information when a plaintiff places in issue
a communication that “goes to the heart of the claim in controversy” (Mitchell v.
Superior Court (1984) 37 Cal.3d 591, 604), Pham made no showing and provided no
argument on how the e-mail and letter shed light on any matter that Obarr or Cheadle
placed in issue. It is difficult to see how Pham could prevail on this argument because
Westminster and Pham are the parties who initiated this case against Obarr. In any event,
Pham forfeited the claim by failing to provide any analysis or support for it. (In re S.C.,
supra, 138 Cal.App.4th at p. 408.)
C. The Trial Court Must Decide the Disqualification Issue
Cheadle contends we must disqualify Pham’s counsel because he
improperly obtained Obarr’s attorney-client privileged communications from Galla,
carefully reviewed and analyzed the communications, and used them to oppose
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Westminster’s summary adjudication motion without notifying Cheadle and giving him
an opportunity to prevent disclosure. We remand for the trial court to decide the
disqualification issue because the court never resolved the matter based on its conclusion
the e-mail and letter were not privileged. As we explain, this issue is vested in the trial
court’s sound discretion in the first instance.
“‘Protecting the confidentiality of communications between attorney and
client is fundamental to our legal system. The attorney-client privilege is a hallmark of
our jurisprudence that furthers the public policy of ensuring “‘the right of every person to
freely and fully confer and confide in one having knowledge of the law, and skilled in its
practice, in order that the former may have adequate advice and a proper defense.’”’”
(Clark v. Superior Court (2011) 196 Cal.App.4th 37, 48 (Clark).) To protect the sanctity
of the privilege and to discourage unprofessional conduct, an attorney has an ethical
obligation to protect an opponent’s privileged and confidential information, and those of
third parties, when the attorney receives the information without a waiver from the holder
of the privilege. (Ibid.)
Specifically, “[w]hen a lawyer who receives materials that obviously
appear to be subject to an attorney-client privilege or otherwise clearly appear to be
confidential and privileged and where it is reasonably apparent that the materials were
provided or made available through inadvertence, the lawyer receiving such materials
should refrain from examining the materials any more than is essential to ascertain if the
materials are privileged, and shall immediately notify the sender that he or she possesses
material that appears to be privileged. The parties may then proceed to resolve the
situation by agreement or may resort to the court for guidance with the benefit of
protective orders and other judicial intervention as may be justified. . . . [W]henever a
lawyer ascertains that he or she may have privileged attorney-client material that was
inadvertently provided by another, that lawyer must notify the party entitled to the
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privilege of that fact.” (State Comp., supra, 70 Cal.App.4th at pp. 656-657; see Rico v.
Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817-818 (Rico).)
This so-called “State Fund rule” establishes an objective standard that
“holds attorneys to a reasonable standard of professional conduct when confidential or
privileged materials are inadvertently disclosed.” (Rico, supra, 42 Cal.4th at p. 818.) “In
applying the rule, courts must consider whether reasonably competent counsel, knowing
the circumstances of the litigation, would have concluded the materials were privileged,
how much review was reasonably necessary to draw that conclusion, and when counsel’s
examination should have ended.” (Ibid.)
The failure to comply with these obligations may justify counsel’s
disqualification, but does not automatically require it. (Rico, supra, 42 Cal.4th at p. 819;
State Fund, supra, 70 Cal.App.4th at p. 657.) “‘“[M]ere exposure”’ to an adversary’s
confidences is insufficient, standing alone, to warrant an attorney’s disqualification.”
(Rico, at p. 819; see State Fund, at p. 657)Instead, the court must consider the totality of
the circumstances surrounding the receipt, review, use, and impact of the disclosed
privileged information, with “‘the means and sources of breaches of the attorney-client
confidentiality . . . be[ing] important considerations.’” (State Fund, at p. 657; see Rico, at
p. 819.)
“A disqualification motion involves a conflict between a client’s right to
counsel of his or her choice, on the one hand, and the need to maintain ethical standards
of professional responsibility, on the other. [Citation.] Although disqualification
necessarily impinges on a litigant’s right to counsel of his or her choice, the decision on a
disqualification motion ‘involves more than just the interests of the parties.’ [Citation.]
When ruling on a disqualification motion, ‘[t]he paramount concern must be to preserve
public trust in the scrupulous administration of justice and the integrity of the bar. The
important right to counsel of one’s choice must yield to ethical considerations that affect
24
the fundamental principles of our judicial process.’” (Clark, supra, 196 Cal.App.4th at
pp. 47-48.)
A motion to disqualify counsel is vested in the sound discretion of the trial
court and we review the court’s ruling under the deferential abuse of discretion standard.
“‘In exercising its discretion, the trial court must make a reasoned judgment that complies
with applicable legal principles and policies.’ [Citations.] ‘The order is subject to reversal
only when there is no reasonable basis for the trial court’s decision.’” (Clark, supra,
196 Cal.App.4th at p. 46.)
Here, the trial court never undertook the careful balancing of competing
interests required to determine Cheadle’s request to disqualify Pham’s counsel because
the trial court concluded the e-mail and letter were not privileged, and therefore no basis
for disqualifying Pham’s counsel existed. As explained above, the trial court erred in
concluding the e-mail and letter were not privileged attorney-client communications. The
foregoing standards regarding the inadvertent disclosure of these privileged
communications apply because there was no showing either Obarr or Cheadle intended to
disclose these communications to Pham or anyone else.
We decline to decide the disqualification issue, and instead remand for the
experienced trial judge to determine the issue based upon her superior knowledge of the
underlying facts and the impact of this disclosure on the case. In doing so, the trial court
should not consider any information it acquired from its review of the e-mail and letter.
Rather, the court should limit itself to nonprivileged information it received from the
parties about the communications and their impact on the action. Nothing about the
attorney-client privilege, however, prevents the court from considering, or requiring
disclosure of, any information not derived from an examination of the privileged
communications, such as facts relating to who holds the privilege, whether an attorney-
client relationship existed at the time of the communications, and whether the client
intended the communication to be confidential. (See Costco, supra, 47 Cal.4th at p. 737.)
25
For example, Galla may testify about the circumstances surrounding the communications
and the attorney-client relationship between Obarr and Kimes provided she has personal
knowledge of these facts and does not disclose any privileged information or any
information she gained from reviewing a privileged communication. Of course, as the
holder of the attorney-client privilege, Cheadle may ask the court to conduct an in camera
review of the communications (or consider the communications in deciding the
disqualification issue) if he believes it is necessary for a proper determination of that
issue. (See id. at pp. 738-740.) By providing this guidance and remanding the matter to
the trial court, we express no opinion concerning whether the facts and circumstances
surrounding the disclosure and use of the e-mail and letter warrant disqualification in this
case.
III
DISPOSITION
The order is reversed and remanded for further proceedings consistent with
this opinion. Cheadle shall recover his costs on appeal.
ARONSON, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
BEDSWORTH, J.
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