PUBLISHED OPINION
Case No.: 94-2701
Complete Title
of Case:
G. CURT BORGWARDT
and C & S GRAPHICS,
Plaintiffs-Appellants,
v.
RALPH REDLIN, C.P.A.,
MICHAEL BROWNE, C.P.A.,
GREGORY KSICINSKI, C.P.A.,
REDLIN, BROWNE & COMPANY CERTIFIED
PUBLIC ACCOUNTANTS, S.C.,
and CRUM & FOSTER MANAGERS,
Defendants-Respondents,
M & W, LTD., C/O CHARLES MULCAHY, ESQ.,
CHARLES C. MULCAHY, ESQ.,
MICHAEL R. WHERRY, ESQ.,
NELSON S. WEINE, ESQ.,
and ABC INSURANCE COMPANY,
Defendants.
Submitted on Briefs: July 11, 1995
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: August 8, 1995
Opinion Filed: August 8, 1995
Source of APPEAL Appeal
from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Milwaukee
(If “Special”, JUDGE: JOHN J. DIMOTTO
so indicate)
JUDGES: Sullivan,
Fine and Schudson, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn
behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Paul
R. Erickson and Bradley I. Dallet of Gutglass, Erickson &
Bonville, S.C., of Milwaukee.
Respondent
ATTORNEYSOn
behalf of the defendants-respondents, the cause was submitted on the briefs of Barbara
J. Janaszek and Ann M. Maher of Whyte Hirschboeck Dudek S.C.,
of Milwaukee.
|
COURT OF APPEALS DECISION DATED AND RELEASED August 8, 1995 |
NOTICE |
|
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-2701
STATE
OF WISCONSIN IN COURT OF
APPEALS
G. CURT BORGWARDT
and C & S
GRAPHICS,
Plaintiffs-Appellants,
v.
RALPH REDLIN, C.P.A.,
MICHAEL BROWNE,
C.P.A.,
GREGORY KSICINSKI,
C.P.A.,
REDLIN, BROWNE &
COMPANY CERTIFIED
PUBLIC ACCOUNTANTS,
S.C.,
and CRUM & FOSTER
MANAGERS,
Defendants-Respondents,
M & W, LTD., C/O
CHARLES MULCAHY, ESQ.,
CHARLES C. MULCAHY,
ESQ.,
MICHAEL R. WHERRY,
ESQ.,
NELSON S. WEINE, ESQ.,
and ABC INSURANCE
COMPANY,
Defendants.
APPEAL from an order of
the circuit court for Milwaukee County:
JOHN J. DIMOTTO, Judge. Reversed.
Before Sullivan, Fine
and Schudson, JJ.
FINE, J. This is an appeal from the trial court's
non-final order directing Nelson S. Weine, Esq., a non-party deposition
witness, to produce documents that the plaintiffs claim are protected by the
attorney-client privilege and the work-product doctrine.[1] We reverse.
I.
This is an accounting
and legal malpractice action. The
complaint filed by G. Curt Borgwardt and C & S Graphics alleged, inter
alia, that the law firm of M & W, Ltd., and three named attorneys
employed by the firm, including Weine, were negligent in connection with the
plaintiffs' purchase of another business, which subsequently failed. At the time of the alleged professional
malpractice, the M & W attorneys represented Borgwardt and C & S
Graphics.
All claims against the M
& W attorneys were dismissed without prejudice on June 11, 1992, by
stipulation. Before that dismissal,
however, Borgwardt and C & S Graphics sought from M & W and the three
lawyers “[a]ny and all documents or things in writing relating to Curt
Borgwardt or C&S Graphics in the [lawyers'] possession or control.” No other party either joined in that request
or made an independent request for the documents. Counsel for M & W responded that the documents were available
for either inspection or copying, as provided for by Rule 804.09, Stats. Although the record is not clear, presumably
counsel for Borgwardt and C & S Graphics examined or copied the documents.
After the M & W
attorneys were dismissed from this action, the accounting defendants deposed
Weine pursuant to a subpoena duces tecum. See Rules
804.05(1) & 805.07, Stats. At his deposition, Weine produced the M
& W file relating to Borgwardt and C & S Graphics, but withheld two
sets of documents, identified at the deposition as exhibits 161 and 162, which
he claimed were protected from disclosure by the attorney-client privilege
belonging to Borgwardt and C & S Graphics and by the work-product
doctrine. The accounting defendants
moved the trial court to compel discovery of the two exhibits.
The trial court held a
hearing on the accounting defendants' motion to compel discovery of the Weine
deposition exhibits 161 and 162, but did not examine the documents in camera
to determine whether either the attorney-client privilege or the work-product
doctrine applied. Rather, the trial court
held that whatever privileges that might have protected the documents from
disclosure were waived by virtue of Rule
905.11, Stats.[2] The trial court concluded in an oral
decision that once Borgwardt and C & S Graphics requested production of
their file from M & W, “all parties [were] made privy to that
discovery.” Further the trial court
ruled, apparently without examining the documents, that the work-product
doctrine did not apply because the documents were not prepared “in anticipation
of this litigation.” (Emphasis
added.)[3]
II.
A trial court's decision
whether to order discovery is vested in its sound discretion. Vincent & Vincent, Inc. v. Spacek,
102 Wis.2d 266, 270, 306 N.W.2d 85, 87 (Ct. App. 1981). A trial court's discretionary determination
will be upheld on appeal if it is “consistent with the facts of record and
established legal principles.” Lievrouw v. Roth, 157 Wis.2d 332,
358-359, 459 N.W.2d 850, 859-860 (Ct. App. 1990). We reverse because the trial court misconstrued the law of waiver
as applied to the attorney-client privilege and the work-product doctrine.
Rule
804.01(2)(a), Stats., provides
that parties to civil litigation “may obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter involved in the pending
action” even though the information sought would not be admissible at trial as
long as “the information sought appears reasonably calculated to lead to the
discovery of admissible evidence.”
(Emphasis added.) Privileges in
Wisconsin are governed by Chapter
905, Stats. Rule
905.01, Stats., reaffirms that
parties in litigation are entitled to every person's evidence, except when a
person from whom evidence is sought has a privilege not to give evidence that
is “inherent or implicit in statute or in rules adopted by the supreme court or
required by the constitution of the United States or Wisconsin.”[4] There are two privileges operative
here: the attorney-client privilege
codified in Rule 905.03, Stats., and the work-product doctrine,
as adopted in Wisconsin by State ex rel. Dudek v. Circuit Court,
34 Wis.2d 559, 150 N.W.2d 387 (1967), and partially codified by Rule 804.01(2)(c), Stats.[5]
The attorney-client
privilege applies to confidential communications from the client to the lawyer,
and from the lawyer to the client if disclosure of the lawyer-to-client
communications would directly or indirectly reveal the substance of the
client's confidential communications to the lawyer. Journal/Sentinel, Inc. v. School Bd., 186 Wis.2d
443, 460, 521 N.W.2d 165, 173 (Ct. App. 1994).
The privilege is ”absolute” unless it either does not apply because of
one or more of the exceptions set out in Rule
905.03(4), Stats., or is waived
by operation of Rule 905.11, Stats. See Dudek, 34 Wis.2d at
581, 150 N.W.2d at 399–400.
The work-product
doctrine is a “qualified privilege,” United States v. Nobles, 422
U.S. 225, 237–238 (1975), and applies to matters “prepared in anticipation of
litigation or for trial.” Rule 804.01(2)(c), Stats.
The “litigation” need not have been commenced at the time the documents
were prepared:
Prudent
parties anticipate litigation, and begin preparation prior to the time suit is
formally commenced. Thus the test should be whether, in light of the nature of
the document and the factual situation in the particular case, the document can
fairly be said to have been prepared or obtained because of the prospect of
litigation.
See 8 C.A. Wright, A.R. Miller, & R.L. Marcus,
Federal Practice and Procedure: Civil 2d § 2024 at 343 (1994) (interpreting
the federal analogue to Rule
804.01(2)(c), Fed. R. Civ. P.
26(b)(3)). Moreover, the “litigation”
need not be the proceeding in which the doctrine is asserted. See Federal Trade Comm'n v.
Grolier Inc., 462 U.S. 19, 25–26 (1983) (interpreting the federal
analogue to Rule 804.01(2)(c), Fed. R. Civ. P. 26(b)(3)); see also
id., 462 U.S. at 29–30 (Brennan, J., concurring). Unlike the attorney-client privilege, the
qualified privilege afforded by the work-product doctrine gives way “upon a
showing that the party seeking discovery has substantial need of the materials
in the preparation of the case and that the party seeking discovery is unable
without undue hardship to obtain the substantial equivalent of the materials by
other means.” Rule 804.01(2)(c)1, Stats.
An otherwise valid
privilege is waived “if the person ... while holder of the privilege,
voluntarily discloses or consents to disclosure of any significant part of the
matter or communication.” Rule 905.11, Stats. There must be
actual disclosure; mere “consent to disclosure” that is withdrawn prior to
actual disclosure is not a waiver. Cf.
2 J.B. Weinstein & M.A. Berger,
Weinstein's Evidence, ¶ 511[02] at 511—8 (1995) (“waiver occurs
only if `any significant part of the matter or communication' is disclosed”)
(interpreting Supreme Court Standard 511, adopted verbatim in Wisconsin as Rule 905.11, Stats.). Further,
there is no waiver “if the disclosure is itself a privileged
communication.” Rule 905.11. We
examine the impact of this rule on both the attorney-client privilege and the
work-product doctrine.
The attorney-client
privilege belongs to the client. Rule 905.03(2), Stats. The client is
therefore the privilege's “holder,” as that term is used in Rule 905.11, Stats. Only the
client or someone authorized by the client to do so may waive the
privilege. Dudek, 34
Wis.2d at 605, 150 N.W.2d at 412 (An attorney “may not waive any objections to
discovery which are based upon the attorney-client privilege. Only the client can waive these
objections.”); Swan Sales Corp. v. Jos. Schlitz Brewing Co., 126
Wis.2d 16, 31–32, 374 N.W.2d 640, 648 (Ct. App. 1985) (Both the attorney-client
privilege and the work-product doctrine “are owned by the attorney's client and
can only be waived voluntarily at the client's direction.”).[6]
There is nothing in the record here that demonstrates that Borgwardt and C
& S Graphics either personally waived their attorney-client privilege in
connection with the documents or that they directed their attorneys to waive
the privilege. Certainly, a client's
request to see his or her file that is in the possession of current or former
counsel does not waive the attorney-client privilege as to that file, even if
the request is made under Rule
804.09, Stats. The rule provides: “Any party may serve on any other party a request (a) to produce and
permit the party making the request, or someone acting on the party's behalf,
to inspect and copy, any designated documents.” Rule 804.09(1), Stats. (Emphasis added.) Thus, contrary to the trial court's
conclusion, a request for production of documents by a party under this rule is
not a “carte blanche” invitation to all.
The record does not indicate that anyone other than Borgwardt and C
& S Graphics examined the documents that were produced pursuant to the
request, and disclosure to them of attorney-client privileged documents was
itself “a privileged communication.” See
Journal/Sentinel, Inc., 186 Wis.2d at 460, 521 N.W.2d at 173
(attorney-client privilege applies to confidential communications from the
lawyer to the client if “disclosure of the lawyer-to-client communications
would directly or indirectly reveal the substance of the client's confidential
communications to the lawyer”). As
such, it was not a waiver under Rule
905.11. There was no waiver.[7]
The
work-product-doctrine qualified privilege protects from disclosure those
investigations and analyses made by a party or by the party's agent, who may
but need not be a lawyer, see Rule
804.01(2)(c)1, Stats. See Hickman v. Taylor,
329 U.S. 495, 511 (1947) (lawyer preparing for litigation must assemble, sift,
and analyze information); Dudek, 34 Wis.2d at 590, 595, 150
N.W.2d at 404, 407. The doctrine is
designed to reward industry and discourage indolence. See Dudek, 34 Wis.2d at 590, 150 N.W.2d at
404; see also Hickman, 329 U.S. at 516 (“Discovery was
hardly intended to enable a learned profession to perform its functions either
without wits or on wits borrowed from the adversary.”) (Jackson, J.,
concurring). As with the attorney-client
privilege, the work-product doctrine cannot be waived by exposure to the client
for whom the investigations and analyses are made; the qualified privilege is
“owned by the attorney's client and can only be waived voluntarily at the
client's direction.” Swan Sales,
126 Wis.2d at 31–32, 374 N.W.2d at 648.
This was not done here. There
was no waiver.
As noted, the trial
court did not examine the documents in exhibits 161 and 162 to determine
whether either the attorney-client privilege or the work-product doctrine
applies to them. It must do so. See Wurtz v. Fleischman,
97 Wis.2d 100, 107 n.3, 293 N.W.2d 155, 159 n.3 (1980) (court of appeals may
not decide issues of fact). Upon
remand, Borgwardt and C & S Graphics are to list the date, author, recipient,
and privilege or privileges claimed for each document in exhibits 161 and
162. This list together with the
documents are to be transmitted to the trial court for its in camera
inspection and determination of whether the claimed privilege or privileges
apply. See United States
v. Zolin, 491 U.S. 554, 568–569 (1989) (in camera review is
appropriate method to determine applicability of attorney-client privilege)
(crime-fraud exception to privilege). A
copy of the list shall be furnished to all counsel.
By the Court.—Order
reversed.
[2] Rule 905.11, Stats., provides:
Waiver of privilege by voluntary disclosure. A person upon whom this chapter confers a privilege against disclosure of the confidential matter or communication waives the privilege if the person or his or her predecessor, while holder of the privilege, voluntarily discloses or consents to disclosure of any significant part of the matter or communication. This section does not apply if the disclosure is itself a privileged communication.
[3] The following is the
trial court's analysis on these issues:
[P]ursuant to Wisconsin discovery
statutes, in particular 804.09, when a party is served such a request, all
parties are made privy to that discovery.
In the response there was no contingency placed by [M & W's
attorney]. He didn't say these
documents will be made available only to plaintiff or plaintiff's counsel. It's carte blanche they'll be made available
upon reasonable advance notice or say you'll pay for them and we'll just give
you copies.
....
So
what we have here is the defense claims that there is a waiver by failing to
object. And in that regard, I agree
with the defense that because the plaintiff, Mr. Borgwardt, did not interpose
an objection on any grounds whatsoever, notwithstanding the fact that the
lawyers were involved in the case at that time, the objection could have been
proffered. It was not, and therefore I
construe that that is a waiver under 905.11 ....
....
And
therefore with respect to Exhibit 162, upon which a claim of attorney-client
privilege is interposed by the plaintiff, that objection is overruled, and I'm
going to grant the motion to compel, and the plaintiff must produce for the
defense Exhibit No. 162.
With respect to Exhibit 161, that is the exhibit that contains the purported work product. The work product, however, in question was not prepared in anticipation of this litigation, and I don't construe the documents as they have been propounded to the Court to fall within the definition of confidential matters or communications to which the privilege would apply. And because the work product was not prepared in anticipation of this litigation, and because the Court does not find that it would fall coterminusly [sic] under the lawyer client privilege 905.03, the Court is going to grant the motion to compel that Exhibit 161 also be turned over to the defense.
[4] Rule 905.01, Stats., provides:
Privileges recognized only as
provided. Except as provided by or inherent or
implicit in statute or in rules adopted by the supreme court or required by the
constitution of the United States or Wisconsin, no person has a privilege to:
(1) Refuse to be a
witness; or
(2) Refuse to disclose
any matter; or
(3) Refuse to produce any
object or writing; or
(4) Prevent another from being a witness or disclosing any matter or producing any object or writing.
[5] Rule 905.03, Stats., provides:
Lawyer‑client
privilege. (1) Definitions. As used
in this section:
(a) A “client” is a person, public officer, or
corporation, association, or other organization or entity, either public or
private, who is rendered professional legal services by a lawyer, or who
consults a lawyer with a view to obtaining professional legal services from the
lawyer.
(b) A “lawyer” is a person authorized, or
reasonably believed by the client to be authorized, to practice law in any
state or nation.
(c) A “representative of the lawyer” is one
employed to assist the lawyer in the rendition of professional legal services.
(d) A communication is “confidential” if not
intended to be disclosed to 3rd persons other than those to whom disclosure is
in furtherance of the rendition of professional legal services to the client or
those reasonably necessary for the transmission of the communication.
(2) General rule of privilege.
A client has a privilege to refuse to disclose and to prevent any other
person from disclosing confidential communications made for the purpose of
facilitating the rendition of professional legal services to the client: between the client or the client's
representative and the client's lawyer or the lawyer's representative; or
between the client's lawyer and the lawyer's representative; or by the client
or the client's lawyer to a lawyer representing another in a matter of common
interest; or between representatives of the client or between the client and a
representative of the client; or between lawyers representing the client.
(3) Who may claim the privilege.
The privilege may be claimed by the client, the client's guardian or
conservator, the personal representative of a deceased client, or the
successor, trustee, or similar representative of a corporation, association, or
other organization, whether or not in existence. The person who was the lawyer at the time of the communication
may claim the privilege but only on behalf of the client. The lawyer's authority to do so is presumed
in the absence of evidence to the contrary.
(4) Exceptions. There is
no privilege under this rule:
(a)
Furtherance of crime or fraud.
If the services of the lawyer were sought or obtained to enable or aid
anyone to commit or plan to commit what the client knew or reasonably should
have known to be a crime or fraud; or
(b)
Claimants through same deceased client.
As to a communication relevant to an issue between parties who claim
through the same deceased client, regardless of whether the claims are by
testate or intestate succession or by inter vivos transaction; or
(c)
Breach of duty by lawyer or client.
As to a communication relevant to an issue of breach of duty by the
lawyer to the lawyer's client or by the client to the client's lawyer; or
(d)
Document attested by lawyer. As
to a communication relevant to an issue concerning an attested document to
which the lawyer is an attesting witness; or
(e)
Joint clients. As to a
communication relevant to a matter of common interest between 2 or more clients
if the communication was made by any of them to a lawyer retained or consulted
in common, when offered in an action between any of the clients.
Rule 804.01(2)(c), Stats.,
provides:
(2) Scope of discovery.
Unless otherwise limited by order of the court in accordance with the
provisions of this chapter, the scope of discovery is as follows:
....
(c)
Trial preparation: materials.
1. Subject to par. (d) a party
may obtain discovery of documents and tangible things otherwise discoverable
under par. (a) and prepared in anticipation of litigation or for trial by or
for another party or by or for that other party's representative (including an
attorney, consultant, surety, indemnitor, insurer, or agent) only upon a
showing that the party seeking discovery has substantial need of the materials
in the preparation of the case and that the party seeking discovery is unable
without undue hardship to obtain the substantial equivalent of the materials by
other means. In ordering discovery of
such materials when the required showing has been made, the court shall protect
against disclosure of the mental impressions, conclusions, opinions, or legal
theories of an attorney or other representative of a party concerning the
litigation.
2. A party may obtain without the required showing a statement concerning the action or its subject matter previously made by that party. Upon request, a person not a party may obtain without the required showing a statement concerning the action or its subject matter previously made by that person. If the request is refused, the person may move for a court order. Section 804.12 (1) (c) applies to the award of expenses incurred in relation to the motion. For purposes of this paragraph, a statement previously made is a written statement signed or otherwise adopted or approved by the person making it, or a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially verbatim recital of an oral statement by the person making it and contemporaneously recorded.
[6] See also Dudek, 34 Wis.2d at 578, 150 N.W.2d at 398: Attorney-client privileged communications are immune “from disclosure unless the privilege is waived by the client or unless disclosure is required for the protection of the attorney, the client, or the client's interests.” There is no evidence in the record that disclosure here is required to protect Borgwardt and C & S Graphics, their interests, or those of M & W. Indeed, disclosure might have just the opposite effect.
[7] Although not relied on by the trial court, the accounting defendants argue that the exception to the attorney-client privilege under Rule 905.03(4)(c), Stats., operates to give them access to the documents. Under Rule 905.03(4)(c) a client may not assert the attorney-client privilege “[a]s to a communication relevant to an issue of breach of duty by the lawyer to the lawyer's client or by the client to the client's lawyer.” This exception, however, applies only to claims between the client and the lawyer; it does not benefit third parties who may seek to assert in connection with their own claims an alleged breach of duty encompassed by the exception. See Housler v. First Nat'l Bank, 484 F. Supp. 1321, 1323 (E.D.N.Y. 1980) (applying ethical rule similar to Rule 905.03(4)(c), Stats.). We mention this issue because we may affirm the trial court for a reason on which it did not rely. See State v. Patricia A.M., 176 Wis.2d 542, 549, 500 N.W.2d 289, 292 (1993).