In re Patricia A. Mansell--Appeal from 45th Judicial District Court of Bexar County

99-00556 In re Mansell.wpd No. 04-99-00556-CV
In Re Patricia A. Mansell
Original Proceeding

Related Trial Court No. 97-CI-14150

From the 45th Judicial District, Bexar County, Texas

Honorable Carol Haberman, Judge Presiding(1)

Opinion by: Paul W. Green, Justice

Sitting: Tom Rickhoff, Justice

Catherine Stone, Justice

Paul W. Green, Justice

Delivered and filed: October 6, 1999

WRIT OF MANDAMUS CONDITIONALLY GRANTED

Relator, Patricia Mansell (Mansell), brings this mandamus action to vacate the order of the trial court denying Mansell's motion to quash the notices of deposition duces tecum propounded to her and her former attorney. The trial court ordered the depositions and production of documents to go forward based on a determination that Mansell had waived both her attorney-client and work product privileges. We conditionally grant the writ of mandamus.

Background

Relator and plaintiff below, Patricia Mansell, sued her former law partner, Thomas Quirk, and the real party in interest, defendant Broadway National Bank (Broadway), for diverting funds of the partnership, Quirk & Mansell, P.C. Mansell alleges that Quirk changed the law firm's dual-signature bank accounts into accounts held solely in his name. Mansell's original petition was filed by attorneys Henry and Craig Christopher. Mansell's claims against Broadway included breach of contract, conversion, breach of the duty of good faith and fair dealing, negligence, negligent misrepresentation, and violations of the Deceptive Trade Practices Act (DTPA). Broadway counterclaimed, alleging that Mansell's tort and DTPA claims were groundless.

On October 2, 1998, Craig Christopher wrote a seventeen-page letter to Broadway's attorney, Don Krause, discussing the bank's objections to Mansell's discovery requests and outlining the facts and theories of liability against the bank. The letter outlined the application of several cases to Mansell's claims for conversion, breach of the duty of good faith and fair dealing, negligent misrepresentation, and breach of the DTPA.

On May 6, 1999, the trial court(2) granted Broadway a partial summary judgment on Mansell's tort and DTPA claims. At about the same time, the Christophers withdrew as counsel for Mansell, who proceeded pro se until she hired attorney Bruce Beck.

Shortly after the Christophers withdrew as counsel, Broadway subpoenaed the deposition of Craig Christopher and requested the production of "all statements or other documents evidencing research or investigation into legal or factual issues or circumstances of this case." The bank also noticed the second deposition of Mansell, requesting production of all research documents. In response, Mansell moved to quash the depositions and further moved for a protective order and for sanctions. Mansell specifically argued that the requested information was privileged work product and attorney-client communication.

On June 25, 1999, the trial court heard Mansell's motions. Broadway's attorney stipulated that the documents were work product, and he conceded that he was not entitled to documents relating to Mansell's contract claim or claims against other parties.(3) Craig Christopher testified that the file contents were work product and attorney-client communications. Mansell also testified that her research was work product.

Broadway's counsel argued that Mansell waived her attorney-client and work product privileges by disclosure of the facts and legal theories contained in Christopher's letter of October 2, 1998. Broadway also contended that Mansell was using the privileges offensively, as a sword rather than a shield, because Broadway needed the privileged information to prove a "set off" to Mansell's plea for attorneys fees and to prosecute its counterclaim for frivolous pleading.

On July 9, 1999, the trial court denied Mansell's motion to quash and motion for protective order and sanctions. The court further ordered that if Christopher or Mansell claimed work product or attorney-client privileges during their depositions, then Mansell would automatically be prohibited from "offering at trial any of the argument contained in the letter of October 2, 1998." The trial court also ordered Mansell to produce the documents requested but limited the production to those documents related to the causes of action on which Broadway had already obtained summary judgment. As a basis for its ruling, the trial court specifically found that Mansell waived her attorney-client and work product privileges as a result of Craig Christopher's October 2, 1998 letter. The court also specifically found that Mansell's research was "outcome determinative" of the bank's set-off to her claim for attorney fees and that her claims of privilege were thus used offensively.

Standard of Review

To be entitled to mandamus relief, Mansell must show that the trial court abused its discretion and that she has no adequate remedy at law. See Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). Remedy by appeal is inadequate when an order requires the disclosure of information exempted from discovery. See id. at 843. To determine whether such an order is an abuse of discretion, we defer to the trial court's factual determinations while reviewing its legal determinations de novo. Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex. App.--San Antonio 1996, no writ). The trial court abuses its discretion when it fails to properly apply the law to the undisputed facts, when it acts arbitrarily or unreasonably, or when its ruling is based on factual assertions unsupported by the record. Microsoft Corp. v. Manning, 914 S.W.2d 602, 607 (Tex. App.--Texarkana 1995, writ dism'd).

Texas law is well settled that attorney-client communications are privileged and not generally subject to disclosure. Tex. R. Evid. 503; see Ford Motor Co. v. Leggat, 904 S.W.2d 643, 647 (Tex. 1995) (attorney-client privilege is one of the oldest privileges for confidential communications in the common law). Texas Rule of Civil Procedure 192.5(b) prohibits the discovery of core work product and severely limits the disclosure of other work product:

Core work product--the work product of an attorney or an attorney's representative that contains the attorney's or the attorney's representative's mental impressions, opinions, conclusions, or legal theories--is not discoverable. . . . Any other work product is discoverable only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the material by other means.

 

Tex. R. Civ. P. 192.5(b)(1-2); see also Tex. R. Civ. P. 192.5(b)(4) (requiring mental impressions to be protected when "other" work product is disclosed). The attorney-client and work product privileges may be waived, however, by voluntary disclosure or offensive use. See Tex. R. Evid. 511; Occidental Chemical Corp. v. Banales, 907 S.W.2d 488, 490 (Tex. 1995).

Discussion

The Depositions

A deposition may not be quashed in its entirety on grounds that some of the matters to be explored may be privileged. Instead, the deposition should go forward and the witness must object and assert the applicable privilege when the inquiry is made. Borden v. Valdez, 773 S.W.2d 718, 719-20 (Tex. App.-Corpus Christi 1989, orig. proceeding). The trial court order is correct to the extent that it denies Mansell's motion to quash the depositions in their entirety.

Waiver of Privileges

1. Voluntary Disclosure

In this case, the trial court found that Mansell waived her attorney-client and work product privileges as a result of the discussion in Christopher's October 2, 1998 letter. The letter, however, is a persuasive document that, like any pleading, uses work product. The factual information and legal theories discussed in the letter are also found in Mansell's pleadings and her response to Broadway's motion for summary judgment. Texas Rule of Civil Procedure 194.2(c) now compels the disclosure of the factual and legal basis for claims. The prosecution or defense of a lawsuit requires that opposing counsel be able to confer on the facts and legal theories of a case. Mansell did not waive her attorney-client or work product privileges through the Christopher letter.

Offensive-Use Waiver Mansell's affirmative claims

The trial court also found that Mansell waived her attorney-client and work product privileges by offensive use. To offensively use a privilege, (1) the party asserting the privilege must seek affirmative relief; (2) the privileged information, if believed by the fact finder, in all probability would be outcome determinative of the cause of action asserted; and (3) the evidence is otherwise not available to the opposing party. Republic Ins. Co. v. Davis, 856 S.W.2d 158, 163 (Tex. 1993).

Mansell, as a plaintiff, is seeking affirmative relief in general, but the information requested is not relevant to the prosecution of her claims. There is no indication that the attorney-client communications or work product sought by Broadway would be outcome determinative of Mansell's affirmative claims. Instead, Broadway seeks privileged information that it believes is relevant to its counterclaim that at least part of Mansell's suit was groundless and frivolous.

The bank's counterclaim is a separate action for sanctions based on Tex. R. Civ. P. 13 and on Tex. Bus. & Com. Code Ann. 17.50(c) (DTPA). Under both Rule 13 and the DTPA, the court makes the determination as a matter of law as to whether a claim is groundless and brought in bad faith or for harassment. See Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634, 637 (Tex. 1989).

At the time of trial, Broadway will no doubt present the court with the facts and legal authorities that it believes were or should have been available to Mansell and her counsel when she filed her cause of action. The trial court may then determine whether Mansell's claims were groundless and brought in bad faith. The filing of the counterclaim does not automatically unlock Mansell's litigation files for disclosure of her counsel's thought processes for review. Mansell is entitled to assert her privileges in defense of Broadway's counterclaim for sanctions. Cf. National Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 461 (Tex. 1992) ("When a defendant relies on privileged information to rebut a plaintiff's cause of action, the defendant is not seeking affirmative relief that is an offensive use of the privilege."). Additionally, Broadway has not established that the evidence necessary to prosecute its counterclaim is not otherwise available.

Broadway's "set off" defense

In the alternative, Broadway attempts to characterize its counterclaim as a "set off" to Mansell's claim for attorneys' fees in the event she prevails on her cause of action for breach of contract. The bank alleges that Mansell engaged in a course of frivolous pleading and discovery abuse that would inflate the amount of fees she might receive and accordingly, privileged information is necessary in order for Broadway to defend against the fee claim. We do not agree.

In order to recover attorney fees, Mansell must prove the hours worked, the amount per hour, that the work was necessary to prove her case, and that the fees were reasonable. Goudeau v. Marquez, 830 S.W.2d 681, 683 (Tex. App.- Houston [1st Dist.] 1992, no pet.). It is Mansell's burden to segregate attorney fees on her prevailing cause of action from nonrecoverable fees. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10-11 (Tex. 1991). Broadway may rebut Mansell's claim, as is customary, through expert testimony and evidence of Mansell's improper conduct, if any, during the discovery process. At the time of trial, if Mansell prevails on her remaining claim against the bank, the trial court can determine whether the amount of fees she seeks is reasonable. Broadway has not shown that the privileged information it seeks is (1) necessary to defend against Mansell's claim for attorneys fees or (2) otherwise unavailable without undue hardship.

Automatic Sanctions

We find that the trial court abused its discretion when it imposed automatic sanctions excluding the use of certain evidence and arguments at trial if Mansell or Christopher assert privileges during the depositions. Because there has been no waiver of the attorney-client or work product privileges, Mansell is entitled to protect confidential material. The broad imposition of sanctions prior to the assertion of a privilege is premature and prejudicial.(4)

Scope of Discovery

Finally, Mansell complains that the order is overbroad and fails to properly limit the scope of questioning in the depositions and document production. We read the trial court's order to limit the scope of Broadway's discovery to matters related to its counterclaim and only to those causes of action which have previously been dismissed on summary judgment. Broadway is entitled to non-privileged information and documents within that narrow range of inquiry.

Conclusion

We affirm that portion of the trial court's order that allows the depositions to proceed and that limits the scope of the inquiry to matters related to claims against Broadway which have already been dismissed by summary judgment. However, we do not find that Mansell waived her attorney-client or work product privileges either as a result of the October 2, 1998 letter or through offensive use of the privilege. Consequently, the trial court abused its discretion by ordering automatic sanctions excluding evidence at trial in the event that Mansell or her counsel assert attorney-client or work product privileges during the depositions. The trial court also abused its discretion by ordering full discovery on all issues presented in the October 2, 1998 letter and the production of all documents concerning Broadway's counterclaim related to the causes of action against Broadway which have previously been dismissed by summary judgment. The scope of discovery should have been limited to non-privileged information and documents. There is no adequate remedy by appeal because the trial court ordered the production of information exempted from discovery.

We conditionally grant Mansell's petition for writ of mandamus. The writ will issue if the trial court fails to modify its discovery order within twenty days of the date of this opinion.

 

PAUL W. GREEN,

JUSTICE

 

DO NOT PUBLISH

1. The Honorable Juan Gallardo, visiting judge, presided at the hearing from which the trial court's order issued.

2. The summary judgment was signed by the Honorable Andy Mireles.

3. At this point in time, the lawsuit included a claim against an insurance company for failing to issue a settlement check to Quirk & Mansell, P.C.

4. At the time of trial, the trial court judge has the authority to exclude evidence that Mansell previously withheld under a claim of privilege. Tex. R. Civ. P. 193.4(c).