Stockwell, Harris, Widom, Woolverton & Muehl, a California professional corporation (the Stockwell firm), and three of its members, George Woolverton, Steven Harris and Edward Muehl (collectively, Defendants), are defendants in an action brought by another member of the firm, Richard M. Widom. Widom's complaint arises from the firm's termination of his employment after Lisa Kerner, an attorney employed by the firm who was married to Widom at the time, accused him of domestic violence.
Kerner challenges orders compelling Defendants to produce documents purportedly protected by her attorney-client privilege and compelling her to answer deposition questions purportedly invading her attorney-client privilege. Defendants challenge orders permitting discovery of their financial condition in connection with Widom's claims for punitive damages (Civ. Code, § 3295, subd. (c)) and, based on collateral estoppel, granting a motion in limine to exclude any evidence of purported domestic violence.
After careful consideration of the record in these four consolidated writ proceedings, we conclude that (1) the trial court must conduct further proceedings to determine whether Kerner waived her claims of attorney-client privilege with respect to the production of documents; (2) the trial court erred in finding that Kerner and Woolverton did not have an attorney-client relationship and improperly granted Widom's motion to compel Kerner to answer certain deposition questions; (3) the trial court erred by considering conduct protected by the litigation privilege (Civ. Code, § 47, subd. (b)) in support of its finding that Widom had established a substantial probability of prevailing on a claim for punitive damages; (4) the existence of an attorney-client relationship between Woolverton and Kerner does not establish a basis for privity between them for purposes of collateral estoppel; and (5) the trial court's consideration of evidence that Widom had been found "factually innocent" of criminal charges in ruling on the motion in limine was error.
The Stockwell firm is a law firm engaged primarily in workers' compensation defense work. Widom was a member of the Stockwell firm for many years. Kerner also worked as an attorney for the firm. Widom and Kerner married in 2005 and separated in March 2009 after a physical altercation between them. Kerner filed a petition for marital dissolution in March 2009 (In re Marriage of Kerner and Widom (Super. Ct. L.A. County, No. BD501681)) and obtained a temporary restraining order against Widom based on allegations of domestic violence.
The Stockwell firm notified Widom on April 22, 2009, that his employment was terminated effective that day based on Kerner's claims against him and other claims of misconduct.
Widom filed a complaint against the Stockwell firm, Woolverton, Harris and Muehl in June 2009. He filed a verified second amended complaint against the same Defendants in August 2010 alleging that the Stockwell firm had terminated his employment without cause "to avoid paying him the salary, benefits and bonuses he would have earned through his retirement, and the four million dollars in deferred compensation to which he is entitled." He alleges that Defendants initially expressed their support for Widom in his opposition to Kerner's application for a temporary restraining order. He alleges, however, that Defendants later terminated his employment without notice and defamed him.
In his complaint, Widom pleads counts for (1) involuntary dissolution of the Stockwell firm corporation, (2) breach of fiduciary duty, (3) breach of oral contract, (4) breach of implied-in-fact contract, (5) breach of written contract, (6) declaratory relief, (7) reformation of contract, (8) breach of oral contract, (9) promissory estoppel, (10) fraud, (11) negligent misrepresentation, (12) defamation, (13) intentional interference with prospective economic advantage, (14) negligent interference with prospective economic advantage and (15) unfair competition. He seeks compensatory and punitive damages,
The Stockwell firm filed a cross-complaint against Widom and the Law Offices of Richard M. Widom, LLP, in January 2010. It filed a second amended cross-complaint against those same cross-defendants in October 2010 alleging that Widom had diverted the firm's money for his own purposes, induced the firm's attorneys to work for his competing law firm and solicited clients away while he was still a shareholder and director of the Stockwell firm, and had exposed the Stockwell firm to liability "by assaulting and battering Lisa Kerner" and by mistreating another employee. The Stockwell firm alleges counts for (1) breach of fiduciary duty, (2) interference with contract, (3) interference with prospective economic advantage, (4) violation of Labor Code sections 2854 and 2865, (5) accounting and (6) unfair competition.
Widom filed a petition for writ of mandate against the Stockwell firm, Woolverton, Harris and Muehl on August 20, 2009 (Widom v. Stockwell, Harris, Widom, Woolverton & Muehl (Super. Ct. L.A. County, No. BS122265)), seeking to compel the firm to allow him to inspect its books and records. The trial court entered a judgment on October 8, 2009, granting the petition. The court found that Widom was not properly removed as a director and shareholder and that he remained a director and shareholder of the firm.
Kerner filed a complaint against Widom on September 14, 2009 (Kerner v. Widom (Super. Ct. L.A. County, No. BC421690)), and filed a first amended complaint on September 30, 2009, alleging counts for assault and battery and intentional infliction of emotional distress and seeking money damages. Kerner alleged that Widom had threatened and attacked her during their marriage, culminating in a physical attack on March 1, 2009.
The Los Angeles City Attorney filed a criminal complaint against Widom in November 2009. On February 3, 2010, a jury found him not guilty of spousal abuse, spousal battery, simple assault and simple battery. On Widom's motion, the trial court determined that he was factually innocent of the charges and entered an order declaring him factually innocent on March 18, 2010.
The trial court in the family law proceeding concluded:
"My own finding is that Ms. Kerner is not a credible witness and that her testimony as to these events is not believed by the court. I choose to believe Mr. Widom's version of the facts, which is not to say that there is foolproof evidence that the events occurred in the fashion that he says, but on balance, I find his testimony to be more credible.
"In fact, some of Ms. Kerner's testimony is among the most incredible testimony I have heard in a very brief period on the bench, but in 40-plus years as a trial lawyer, including most specifically her testimony about why she returned to the home because of concern over her cats and stayed there for four days in the face of what she thought was her imminent demise at the hands of Mr. Widom. So I'm going to deny the request for restraining order on that basis."
The trial court in Kerner's civil action for damages against Widom later concluded that the finding by the court in the family law proceeding that Widom did not commit domestic violence on March 1, 2009, was collateral estoppel in the civil action. Therefore, on February 17, 2011, the court in the civil action for damages granted Widom's motion in limine to exclude any evidence in support of Kerner's tort claims. She dismissed her civil action for damages with prejudice on March 1, 2011.
Widom filed a motion in December 2010 for an order permitting discovery of Defendants' financial condition pursuant to Civil Code section 3295, subdivision (c). He argued that there was a substantial probability that he would prevail on his counts for intentional interference with prospective business advantage and defamation and be awarded punitive damages. Defendants opposed the motion. A discovery referee heard the motion on February 7, 2011.
Widom moved on March 3, 2011, to compel the production of documents withheld by Defendants based on the assertion of Kerner's attorney-client privilege, attorney work product protection or physician/psychotherapist-patient privilege. The motion was in the form of a letter to the discovery referee to which a privilege log and a series of redacted e-mails were attached.
Widom argued that Defendants' counsel maintained that Kerner and her counsel in the civil action for damages, Jacob George, had previously asserted the claims of privilege and made the redactions in response to requests for production of the same documents in that action and that Defendants' counsel were merely asserting those same claims on Kerner's behalf in this action. He argued that this conflicted with declarations by Kerner and her counsel in the civil action for damages indicating that Defendants' counsel had originally asserted the claims of privilege and made the redactions.
Widom provided a copy of George's declaration filed in the civil action for damages on February 10, 2011, declaring that the documents produced to Widom in that action included "various e-mails received from counsel in the matter of
Widom also provided copies of Woolverton's declaration dated February 22, 2011, and Kerner's declaration of the same date, both filed in the civil action for damages. Woolverton declared that the documents produced to Widom in the civil action for damages included "various e-mails that Plaintiff [Kerner] received from our attorneys in the matter of
Kerner similarly declared that the documents produced to Widom in the civil action for damages included "various e-mails Plaintiff received from the Defendant's attorneys in the matter of
Kerner's deposition took place on March 9 and 10, 2011. She testified that she sought legal advice from Woolverton "in all matters that involve any legal issues in my life" and that she considered him to be her attorney. Her counsel in the deposition objected to and instructed her not to answer numerous questions based on the attorney-client privilege.
Defendants opposed the motion to compel the production of documents and provided revised privilege logs listing documents withheld based on the asserted privileges. The documents were e-mail messages saved on the Stockwell firm's computer network. Defendants' counsel McCloskey declared that Kerner and George, as Kerner's counsel in her civil action for damages, informed McCloskey that Woolverton had acted as Kerner's counsel and instructed her to withhold all of Kerner's communications with Woolverton based on the attorney-client privilege. McCloskey declared that she had told Kerner and George that Defendants were obligated to produce the documents unless Kerner moved for a protective order to relieve Defendants of their obligation to produce the documents.
McCloskey further declared that she agreed to separate all e-mails between Kerner and Woolverton "and provide them to Jacob George to decide which documents Kerner asserts are privileged." McCloskey declared: "As instructed, I continued to provide Mr. George copies of documents which potentially implicated Ms. Kerner's privileges and requested that he identify which of those documents could be produced and which of those documents Mr. George would move to prevent their disclosure. I also provided Jacob George with logs of the documents withheld so that he could identify to me
McCloskey declared that she had made no decisions as to which documents were privileged, but instead had followed instructions given by Kerner and George with respect to the redactions and awaited instructions from George as to which documents to withhold. Defendants argued in their opposition, "Defendants made no decisions concerning what was to be withheld or redacted and were bound to honor the claims of privilege made by Ms. Kerner because she is an employee of the Stockwell firm." They argued that Kerner's communications with Woolverton were privileged to the extent that they related to her seeking or his providing legal advice. Defendants acknowledged that they did not claim any privilege of their own as to any of the documents.
Defendants also argued: "The declarations submitted by Widom in support of the motion do not say what Widom argues they say. None of the declarations say that defendants directed or made the decisions concerning the redactions or withholding of documents based on Kerner's privileges. Indeed, counsel for defendants has repeatedly and accurately informed Widom's counsel that defendants do not claim any privilege of their own in such documents. . . . As discussed above, it is true that defendants' counsel physically made the redactions, since defendants' counsel had access to the database containing the documents and Kerner's counsel did not. . . . However, none of the decisions as to what documents should be redacted or what portions should be redacted were made by defendants' counsel."
Widom provided further evidence with his reply brief, including excerpts from the deposition of Harris on February 25, 2011, in which Harris testified that as an attorney he had never represented Kerner and that, to his knowledge, neither had Woolverton.
The discovery referee heard the motion to compel production of documents together with two other motions on March 22, 2011.
Kerner reportedly was physically attacked and beaten in her home on or about March 21, 2011. She apparently lost consciousness and was discovered in her home two or three days later and hospitalized. She suffered a subarachnoid hemorrhage and many bruises and abrasions.
The discovery referee prepared a report and recommendations dated March 25, 2011, on the motion to compel production of documents. He stated in the report: "Defendants have provided two privilege logs which they allege were prepared at the direction of Kerner and/or Kerner's counsel. . . . [¶] . . . Defendants are not asserting any privilege on their part or their own and make it clear that they do not have any basis for objecting to the release of the documents which are part of the privilege logs. Defendants' position is that many of the documents sought by Plaintiff are documents which represent communications by Kerner and others which were transmitted as part of Defendants' e-mail system. As employers of Kerner, they are concerned that they are not in a position to release/disclose those documents when Kerner and/or her attorneys are asserting the privilege."
The report stated further: "It should be noted that Jacob George, the attorney who represented Lisa Kerner in her lawsuit against Widom in Judge Robert Hess' courtroom, did not file objections before the dismissal of the case by Kerner and never took the position that he was objecting to their disclosure and took the position that he never identified any document to be included in any privilege log for Kerner and that it was Defendants' counsel in this case that did the privilege log and who included these documents."
The discovery referee concluded that some of the documents identified in the privilege log as protected by the attorney-client privilege or attorney work product protection should be disclosed unless Kerner or the persons identified as her attorneys filed written objections in the trial court "no later than 5 `Court' days following service by Plaintiff's counsel of this Report and Recommendations."
The report stated further, "As for all of the other documents in the privilege log that explicitly identify communications between Kerner and Defendants and Defendants' attorneys, none of them should be ordered disclosed. As for all the other documents in the privilege log that explicitly identify communications between Kerner and attorneys Peter Hermes and/or Jacob George, none of them should be ordered disclosed. As for all others,
Widom's counsel served the referee's report on Kerner and the three attorneys identified in the report as counsel for Kerner (George, Woolverton and Hermes), and on Defendants' counsel, by overnight courier on March 25, 2011. According to a later declaration by McCloskey, her firm began representing Kerner and George ceased his representation of Kerner on that same date.
Defendants and Kerner jointly filed an objection to the referee's report on the motion for production of documents on March 30, 2011, stating that they objected to the five-day limitation. They stated that Kerner remained hospitalized and was unable to meaningfully participate in her representation and that the time to file objections should be extended until Kerner was able to do so. They stated further that Defendants' cocounsel Sedgwick LLP also represented Kerner and that the objection was asserted on behalf of both Defendants and Kerner.
The trial court at the final status conference on April 11, 2011, ordered Defendants' counsel to provide Kerner's medical reports.
The discovery referee prepared a report and recommendations dated April 4, 2011, on the motion for net worth discovery. He stated that net worth
The discovery referee concluded that it was "very likely" that Widom would prevail on his claim for punitive damages against the Stockwell firm, Woolverton and Harris, but not against Muehl. The discovery referee explained:
"[A]fter weighing the evidence submitted in favor and in opposition to the instant motion, it is very likely that Plaintiff Widom will prevail on his claim for punitive damages. Defendants in this case did not simply believe in good faith that Mr. Widom had a physical altercation with Ms. Kerner on March 1, 2009, which resulted in physical injuries to Ms. Kerner, and terminated his employment as a result of that incident and allegations of sexual harassment by other employees of the firm, they acted with malice to destroy Mr. Widom's reputation by making sure that criminal charges be brought against Mr. Widom and by making disparaging remarks about Mr. Widom to his potential clients. In addition, the evidence presented gives the trier of fact the ability to conclude that Defendants also had a financial interest in terminating Plaintiff's employment with Defendant law firm given the $4 million retirement he was allegedly going to receive when he turned 59 ½. Although the City Attorney did not originally contemplate filing criminal charges against Mr. Widom, Defendants hired private investigators to dig up damaging material with respect to Mr. Widom, persuaded Ms. Kerner to file charges with LAPD and lobbied LAPD and the City Attorney[']s office to make sure that the City Attorney file[d] criminal charges against Mr. Widom.
"Moreover, during the Request for Proposal initiated by Kroger [(apparently, a potential client of both Defendants and Widom)], Defendants, without being prompted to do so, told Kroger representatives about the March 1, 2009 incident with Ms. Kerner and that Mr. Widom will soon be criminally charged. Part of the reason why Kroger decided not to select Mr. Widom's law firm was the concern that he will be occupied with personal litigation matters."
The discovery referee rejected Defendants' argument that their efforts to ensure that Widom was criminally prosecuted were protected by the privilege under Civil Code section 47, subdivision (b). He concluded, however, that even if Defendants' communications with the city attorney and police were privileged, their actions of hiring private investigators were noncommunicative acts that were not protected. The referee's report also stated, "[a]lthough Mr. Widom cannot introduce evidence or transcript of testimony from the
Defendants filed objections to the referee's report on the motion for net worth discovery on April 11, 2011. They argued that the evidence strongly supported the conclusion that Widom beat Kerner on March 1, 2009, and compelled the conclusion that they acted without malice. They also argued that Widom was the primary suspect in the recent attack on Kerner and that this made it unlikely that Widom could prove that he did not beat Kerner two years earlier.
Defendants argued further that their hiring of private investigators did not show malice and was protected by the litigation privilege in any event, and that Penal Code section 851.8, subdivision (i)(1) prohibited Widom from presenting any evidence in this action that the court in his criminal case found him factually innocent.
The trial court in a minute order filed on May 19, 2011, adopted in its entirety the referee's recommendation on the motion to compel production of documents and ordered the documents to be produced within two court days. In the same order, the court also adopted in its entirety the referee's recommendation on the motion for net worth discovery. There was no prior oral argument on Defendants' and Kerner's objections to the referee's report.
Defendants moved for reconsideration of both rulings. They argued with respect to the motion to compel production that Kerner was still incapacitated as a result of the attack of March 21, 2011, and that she therefore had no opportunity to file written objections to justify the assertions of privilege. They argued that Defendants' and Kerner's joint counsel "were not her counsel when determinations were made as to what documents should be withheld on the basis of privilege" and had no opportunity to consult with Kerner concerning the basis for the assertions of privilege and that this was a new fact justifying reconsideration. The trial court denied the motion for reconsideration on June 21, 2011.
Defendants argued with respect to the motion for net worth discovery that the fact that Kroger recently had placed Widom's firm on its panel of law firms to handle workers' compensation cases was a new fact justifying
Widom filed a motion on May 9, 2011, to compel Kerner to answer 43 questions presented at her deposition on March 9 and 10, 2011, that her counsel had instructed her not to answer based on the attorney-client privilege. Many of the questions concerned Kerner's communications with Woolverton. Widom argued that those questions pertained to preliminary facts and surrounding circumstances independent from the privileged content of any attorney-client communications. Other questions concerned the contents of documents produced by Defendants in this litigation. Widom argued that any attorney-client privilege as to those documents had been waived and that Kerner therefore should be compelled to answer questions concerning the contents of those documents.
Defendants opposed the motion arguing that to the extent that the motion was based on the absence of an attorney-client relationship with Woolverton, any ruling should be postponed until Kerner was able to meaningfully participate in preparing an opposition. They also argued that the questions called for privileged information rather than mere background facts and that there was no waiver of the privilege. The discovery referee heard the motion on June 20, 2011.
Widom also filed a separate motion on May 31, 2011, to compel Kerner to appear and testify at her deposition. Defendants opposed the motion. The trial court granted the motion on June 16, 2011, ordering Kerner to appear and testify at her deposition to take place on August 23, 2011.
Defendants petitioned this court for a writ of mandate or other extraordinary relief on June 23, 2011 (No. B233918), challenging the orders of May 19, 2011, and June 21, 2011, compelling the production of documents. They
The discovery referee prepared a report and recommendations dated June 28, 2011, on the motion to compel deposition answers. He rejected Defendants' request to defer ruling until Kerner was able to participate in preparing an opposition to the motion, stating that she had made her position clear in her deposition on March 9 and 10, 2011. He noted that Kerner never at any time before January 2011 asserted that Woolverton had acted as her attorney, and that Woolverton had never asserted that he had an attorney-client relationship with Kerner despite several opportunities to do so and to claim the privilege. The discovery referee stated that Woolverton never claimed the attorney-client privilege "because he clearly knew that he never gave Kerner legal advice," and that Woolverton testified on October 25, 2010, that all he did for Kerner was "to hire a private investigator and to accompany Kerner as a friend to the prosecutor's office." The referee concluded, "Kerner's assertion of the attorney-client relationship with Woolverton is not credible and not supported by the facts in this case." He recommended that the trial court grant the motion to compel deposition answers as to all 43 questions.
Defendants filed objections to the discovery referee's report on the motion to compel deposition answers. They argued that Kerner's failure to assert the existence of an attorney-client relationship before January 2011 was not evidence of the nonexistence of such a relationship and that she had no reason to claim the attorney-client privilege earlier. They also argued that Woolverton's failure to assert the existence of an attorney-client relationship did not indicate that no such relationship existed because he had no reason to assert the privilege and was never questioned as to the existence of an attorney-client relationship with Kerner. They argued that the discovery referee had misconstrued Woolverton's testimony. They argued that Kerner's deposition testimony supported the existence of an attorney-client relationship with Woolverton and that Kerner should be afforded an opportunity to testify as to any additional facts supporting the existence of such a relationship.
The trial court in a minute order filed on July 6, 2011, adopted in its entirety the referee's recommendation on the motion to compel deposition answers.
Defendants petitioned this court for a writ of mandate or other extraordinary relief on July 15, 2011 (No. B234423), challenging the order permitting net worth discovery. They argue that in adopting the discovery referee's recommendation, the trial court applied an improper legal standard and considered inadmissible evidence.
Defendants argue that the referee applied an improper legal standard in concluding that it was very likely that Widom could present evidence sufficient to establish his claim for punitive damages, rather than clear and convincing evidence as required. They argue that the evidence strongly supports the conclusion that Widom beat Kerner, that Defendants so believed in good faith, and that they acted without malice in making statements to third parties. They also argue that the evidence of Woolverton's statements made to potential clients does not pertain to Harris and that the evidence does not support the finding of a "substantial probability" of prevailing on a punitive damages claim against Harris.
Defendants argue that the referee considered inadmissible evidence by considering evidence protected by the privilege under Civil Code section 47, subdivision (b) and evidence of the declaration of factual innocence. They argue that their hiring of private investigators was not an act independent from their privileged communications with prosecutors and therefore is also privileged. They also argue that the relevant act is not their hiring of private investigators but the communications made by those private investigators to the police and the city attorney, and that those communications are protected by the privilege. They argue that the referee's conclusion that Widom can testify at trial that the criminal court found him innocent of the criminal charges is contrary to law and that the referee improperly relied on the declaration of factual innocence in concluding that Widom had established a "substantial probability" of prevailing on his claim for punitive damages.
We filed a notice of our intent to issue a peremptory writ of mandate in the first instance (Palma notice [Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171 [203 Cal.Rptr. 626, 681 P.2d 893]]) on July 19, 2011, relating to Defendants' first writ petition. We stated that there was no indication in the record that Kerner had affirmatively waived her attorney-client privilege and that we intended to issue a peremptory writ of mandate directing the trial court to vacate the order adopting the referee's recommendation on the motion to compel production of documents, grant Defendants' motion for reconsideration of that order, and extend the time for Kerner to file objections to the disclosure of information protected by the attorney-client privilege until the time that she was reasonably able to communicate with counsel and assert her attorney-client privilege. We stayed enforcement of the orders of May 19, 2011, and June 21, 2011, as to compelling the production of documents.
Kerner filed a declaration dated July 22, 2011, in the trial court in support of Defendants' motion to reopen discovery. She declared that Widom broke into her home on or about March 21, 2011, stated that he was there to "finish the job" and beat her unconscious. She declared that she believed that she was found two days later and taken to the hospital. She also declared that she had reported the attack to the police. The court denied the motion to reopen discovery on September 9, 2011. The court sustained Widom's evidentiary objections to the Kerner declaration at that time and struck the declaration in its entirety.
Kerner, through her new counsel, Amman Khan of Glaser Weil Fink Jacobs Howard Avchen & Shapiro LLP, filed an ex parte application on August 18, 2011, for an order continuing her deposition for 90 days. Her counsel argued that her recent medical evaluation indicated that for her to submit to a deposition would threaten her recovery and be dangerous to her health. Widom opposed the application. Kerner, through her new counsel, also filed an application to file her medical records under seal. The trial court continued the hearing on the ex parte application first to September 27, 2011, and then to October 3, 2011.
We filed an order to show cause on the second writ petition on August 30, 2011. We also stayed enforcement of the orders of May 19, 2011, and June 21, 2011, as to permitting net worth discovery.
Defendants petitioned this court for a writ of mandate or other extraordinary relief on September 6, 2011 (No. B235664), challenging the order compelling deposition answers. They argued that Kerner's deposition testimony supported her assertion that she had an attorney-client relationship with Woolverton, and the validity of her assertions of privilege should not have been determined without an opportunity for Kerner to testify in opposition to and participate in opposing the motion to compel deposition answers. Defendants also argued that Woolverton's declaration as to the existence of an attorney-client relationship was uncontroverted and supported the existence of such a relationship.
We issued an order on September 16, 2011, vacating our prior Palma notice with respect to Defendants' first writ petition, and then issued orders to show cause on September 20, 2011, as to the first and third writ petitions. We also consolidated the three proceedings at that time and stayed enforcement of the order compelling deposition answers. We then filed an order on September 30, 2011, staying all trial court proceedings.
Widom had also filed a motion in limine on March 17, 2011, to exclude any evidence or argument that he had committed domestic violence against Kerner on March 1, 2009. He argued that the finding by the family law court that he did not commit domestic violence against Kerner on March 1, 2009, was binding on Defendants in this case under the doctrine of collateral estoppel. He asserted that Woolverton had provided legal advice to Kerner in matters involving Widom and that Kerner also testified that she considered Harris and Muehl to be her attorneys as well. He contended that Kerner and the Stockwell firm thus had a common interest in the family law proceeding, that the interests of both were adequately represented in that proceeding and that the Stockwell firm should have had a reasonable expectation that it
The trial court heard the motion in limine at the final status conference on September 26, 2011. The court found that the Stockwell firm was in privity with Kerner for purposes of collateral estoppel. The court stated that its finding was based in part on Kerner's assertion of an attorney-client relationship with Woolverton and on the fact that the Stockwell firm hired a private investigator to support Widom's prosecution. It stated that Defendants and Kerner had common interests in the family law proceeding, the civil action and the criminal proceeding, and that if Widom were convicted the Stockwell firm would have obtained the benefit of collateral estoppel against Widom in this action.
The trial court stated that the question whether Widom committed domestic violence against Kerner on March 1, 2009, had been determined on the merits in Widom's favor twice, in the family law proceeding and the criminal proceeding. The court stated with respect to the finding of factual innocence, ". . . the doctrine of collateral estoppel should apply to bar re-litigation of the March 1, 2009, incident where Mr. Widom has been declared factually innocent after a trial by jury and by a judge who reconsiders that based on his own appraisal of the evidence." It stated further that it was appropriate to apply collateral estoppel to "preserve the integrity of the judicial system, promote judicial economy, and protect Mr. Widom from harassment by vexatious litigation of the exact same issue for which he has been declared factually innocent."
The trial court therefore granted the motion in limine, excluding any evidence or argument that Widom committed domestic violence against Kerner on March 1, 2009. The court stated that its ruling was based on both collateral estoppel and Evidence Code section 352.
Defendants petitioned this court for a writ of mandate or other extraordinary relief on October 28, 2011 (No. B236927), challenging the exclusion of evidence. They asserted that Widom's motion in limine was a disguised summary judgment motion because it effectively adjudicated their truth defense to Widom's defamation count and other counts. They also argued that the existence of an attorney-client relationship between Woolverton and Kerner and the Stockwell firm's hiring of a private investigator to support Widom's prosecution did not establish privity for purposes of collateral estoppel. They argued further that the trial court erroneously considered the
We issued an order to show cause on the fourth writ petition on December 2, 2011, and consolidated that proceeding with the three other consolidated writ proceedings.
Defendants and Kerner filed a motion for leave to amend the petition challenging the orders compelling the production of documents and the petition challenging the order compelling Kerner to answer deposition questions. They acknowledged that Defendants had no standing to challenge those orders based on Kerner's attorney-client privilege (Evid. Code, § 918) and sought to substitute Kerner in the place of Defendants as the petitioner in those petitions. Widom opposed the motion. We concluded that, the parties having fully briefed the issues raised by the two petitions, Widom would suffer no prejudice from the substitution. We therefore granted the motion and ordered the substitution of Kerner as the sole petitioner in those petitions in the place of Defendants.
Kerner and Defendants challenge the orders (1) compelling the production of documents purportedly protected by Kerner's attorney-client privilege; (2) permitting discovery of Defendants' financial condition; (3) compelling Kerner to answer deposition questions; and (4) excluding any evidence or argument that Widom committed domestic violence against Kerner on March 1, 2009.
Kerner contends (1) the trial court erred by compelling the production of documents as to which she previously had claimed the attorney-client privilege without determining the merits of her privilege claims and without allowing her a meaningful opportunity to object; (2) the evidence in the record supports the existence of an attorney-client relationship between Kerner and Woolverton, and the court's finding to the contrary in granting the motion to compel answers to deposition questions was error; and (3) the court erred by compelling Kerner to answer deposition questions without allowing her a meaningful opportunity to object so as to substantiate her privilege claims.
Defendants contend (1) the court failed to apply the "clear and convincing evidence" standard required by Civil Code section 3294, subdivision (a) in determining that there was a "substantial probability" (id., § 3295, subd. (c))
We review a trial court's ruling on a motion to compel discovery for abuse of discretion. (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 733 [101 Cal.Rptr.3d 758, 219 P.3d 736] (Costco).) "An abuse of discretion occurs if, in light of the applicable law and considering all of the relevant circumstances, the court's decision exceeds the bounds of reason and results in a miscarriage of justice. [Citations.] This standard of review affords considerable deference to the trial court provided that the court acted in accordance with the governing rules of law. We presume that the court properly applied the law and acted within its discretion unless the appellant affirmatively shows otherwise. [Citations.]" (Mejia v. City of Los Angeles (2007) 156 Cal.App.4th 151, 158 [67 Cal.Rptr.3d 228].)
An abuse of discretion also occurs if the court applies an erroneous legal standard or its factual findings are not supported by substantial evidence. (Costco, supra, 47 Cal.4th at p. 733; HLC Properties, Ltd. v. Superior Court (2005) 35 Cal.4th 54, 60 [24 Cal.Rptr.3d 199, 105 P.3d 560] (HLC Properties).) Whether a waiver occurred is a question of fact, which we review under the substantial evidence standard, unless the facts are undisputed and can support only one reasonable conclusion. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196 [8 Cal.Rptr.3d 517, 82 P.3d 727].)
The fundamental purpose of the attorney-client privilege is to protect the confidential relationship between client and attorney so as to promote open discussion regarding legal matters. (Costco, supra, 47 Cal.4th at p. 732.) The California Supreme Court has stated: "`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. As this court has stated: "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." [Citations.]' [Citation.]" (Ibid.)
Calvert involved a State Bar disciplinary proceeding against an attorney arising from the attorney's representation of a client. (Calvert, supra, 54 Cal.3d at p. 771.) Another attorney who previously had represented the same client testified for the defense at the hearing and was questioned on cross-examination concerning her communication with her former client after her
The California Supreme Court concluded that the attorney-client privilege was waived and that it was error to strike the witness's testimony. (Calvert, supra, 54 Cal.3d at p. 780.) Calvert stated: "Evidence Code section 912, subdivision (a) provides that a privilege is waived when a holder of a privilege fails to claim the privilege in a proceeding in which he or she has the standing and opportunity to do so. In this case, those conditions were met and the privilege must be held waived. McKnight [(the client)] was a holder of the privilege; as a witness who was present at the hearing she had standing and opportunity to claim it; she consulted with her attorney when the issue was raised by petitioner; and she evidently failed to instruct Frampton [(the testifying attorney)] to claim the privilege. Frampton, as McKnight's attorney, stated that she was `not sure' whether her testimony created a conflict or would jeopardize McKnight's case. This equivocal statement by McKnight's attorney after consultation with McKnight amounts to a failure to claim the privilege when the opportunity arose." (Ibid.)
Glade v. Superior Court (1978) 76 Cal.App.3d 738 [143 Cal.Rptr. 119] (Glade) involved an action by clients against their former attorney. The plaintiffs moved to compel the production of the attorney's correspondence with other clients (the MacFarlands) and other documents relating to his representation of the MacFarlands. The defendant attorney opposed the motion, asserting the attorney-client privilege. (Id. at pp. 742-743.) The trial court initially denied the motion without prejudice "to afford the MacFarlands an opportunity to appear and present grounds other than those already asserted by defendant for protection of their files."
Defendants argued in opposition to the motion to compel production of documents that the e-mails were properly withheld to the extent that they contained confidential communications between Kerner as client and
The discovery referee noted that Woolverton himself had never stated that he had acted as Kerner's attorney. Although Defendants argued in their opposition that the e-mails, or some of them, contained confidential communications between Kerner as client and Woolverton as her attorney, Woolverton's declaration filed in Kerner's civil action for damages never specifically mentioned such an attorney-client relationship. Instead, Woolverton declared in that action more generally that some of the e-mails contained confidential communications between Defendants and Defendants' counsel in this action and that other e-mails involved "communications where Plaintiff Lisa Kerner seeks information from Stockwell, Harris necessary for her representation in her divorce case against Richard Widom."
The question now is whether Kerner waived the privilege by failing to timely claim the privilege in response to the referee's report. The discovery referee was unaware of the March 21, 2011, physical attack on Kerner and did not consider it in his report, which included the recommendation that an order be issued requiring the disclosure of certain documents unless Kerner or her attorney filed written objections within five days. Widom served the discovery referee's report on Kerner and the persons identified as her attorneys, Woolverton, George and Hermes, and on Defendants' counsel, by overnight courier on March 25, 2011. Defendants' counsel Sedgwick LLP commenced its representation of Kerner in connection with this discovery dispute on that same date, replacing George as Kerner's counsel. McCloskey declared that her firm "began representing Kerner in connection with the protection from disclosure of her attorney-client privileged communications" on March 25, 2011. Kerner, through her new counsel, filed an objection on March 30, 2011, stating that Kerner remained hospitalized and was unable to meaningfully participate in her representation and that the time to file objections should be extended until she was able to meaningfully participate. Neither Kerner's new counsel nor the persons previously identified as her attorneys asserted the privilege on her behalf at that time. Defendants' and Kerner's joint counsel lodged Kerner's medical records under seal on or about April 14, 2011.
The trial court adopted the discovery referee's recommendation on May 19, 2011, without oral argument, and ordered the documents to be produced
In light of the unusual circumstances of this case, we believe that it is imperative that the trial court consider and expressly rule on Defendants' and Kerner's objection to the referee's report and, specifically, the matters we have identified. Accordingly, we will grant in part and deny in part Kerner's petition challenging the orders compelling the production of documents. The trial court must conduct further proceedings, including an evidentiary hearing, to determine whether Kerner waived her attorney-client privilege with respect to the requested documents pursuant to Evidence Code section 912, subdivision (a). The court must make explicit findings as to whether, despite her physical condition after the attack, Kerner had an opportunity to consult with counsel concerning assertion of her attorney-client privilege and whether she had an opportunity to claim the privilege in this action through her counsel but failed to do so.
The attorney-client privilege protects confidential communications between a client and his or her attorney made in the course of an attorney-client relationship, as we have stated. (Evid. Code, §§ 952, 954.) A "client" for purposes of the attorney-client privilege is "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 . . . ." (Id., § 951.)
The question whether the attorney-client privilege applies to a particular communication is a question of fact if the evidence is in conflict. (HLC Properties, supra, 35 Cal.4th at p. 60; People v. Gionis, supra, 9 Cal.4th at p. 1208.) In particular, whether an attorney was consulted in his or her professional capacity as an attorney, creating an attorney-client relationship, is a question of fact. (People v. Gionis, supra, at pp. 1208, 1212.) We can disturb the trial court's factual finding in this regard only if there is no substantial evidence to support it. (Ibid.)
Kerner testified in her deposition that she sought legal advice from Woolverton "in all matters that involve any legal issues in my life." She testified that Woolverton provided her with legal advice relating to various litigation matters, including her civil action for damages against Widom, her family law proceeding and the criminal case against Widom. She also testified that she considered Woolverton to be one of her lawyers in connection with her civil action for damages against Widom and her family law proceeding. The attorney representing Kerner in the deposition instructed her not to answer numerous questions as to whether Woolverton had advised her concerning actions that she took in connection with the various litigation matters.
The discovery referee stated in his report dated June 28, 2011, that Kerner never at any time before January 2011 stated that Woolverton was her lawyer or that she turned to him for legal advice. The referee noted that Woolverton
The discovery referee concluded that Kerner's assertion of an attorney-client relationship with Woolverton was "not credible and not supported by the facts in this case" and that "[t]he only reasonable conclusion" was that Kerner was attempting to avoid providing testimony that could support Widom's claims. The referee recommended that the trial court grant Widom's motion in its entirety and that Kerner be compelled to answer the 43 questions. The trial court adopted the referee's recommendation in its entirety on July 6, 2011, despite Woolverton's declaration filed on July 5, 2011.
Woolverton stated in that declaration: "On August 3, 2009, Lisa Kerner began consulting with me for legal advice relating to the various legal matters in which she was involved with Richard Widom. . . . I advised her on legal issues, assisted her in making legal decisions and, in connection with some of these matters, interfaced with her other legal counsel. . . . I continue to serve as her legal counsel in all matters between Kerner and Widom, including the recent attack on her and the various legal needs that have arisen as a result thereof." He declared that when he testified in his deposition that all he did to help Kerner was to hire a private investigator, he understood the question to be limited to what efforts he had made to assist Kerner in causing Widom to be prosecuted. Woolverton declared that his testimony in response to that question did not reflect the advice that he had given to Kerner in connection with Widom's criminal prosecution or other legal matters.
Kerner's deposition testimony and Woolverton's declaration were consistent, plausible and not inherently unbelievable. Both stated that Kerner had sought and received legal advice from Woolverton in connection with various legal
We therefore will grant Kerner's petition challenging the order compelling her to answer deposition questions and will direct the trial court to vacate that order and reconsider the motion in light of the views expressed in this opinion.
The purpose of this requirement is to protect defendants' financial privacy and prevent defendants from being pressured into settling nonmeritorious cases in order to avoid disclosure of their financial information. (Jabro v. Superior Court (2002) 95 Cal.App.4th 754, 757 [115 Cal.Rptr.2d 843] (Jabro).)
The discovery referee, in a recommendation adopted by the trial court, concluded that Widom had established a substantial probability of prevailing on his claim for punitive damages. That conclusion was based in part on evidence of Defendants' efforts to encourage the city attorney to prosecute Widom for domestic violence. Those efforts included hiring private investigators to investigate Widom, convey information to the police and city attorney, and encourage the authorities to prosecute Widom. The private investigators' communications with the authorities conveying information for the purpose of encouraging the prosecution of Widom were protected by the "official proceeding" privilege. (Hagberg, supra, 32 Cal.4th at pp. 362-364.)
Defendants' conduct of hiring private investigators to encourage the city attorney to prosecute Widom was necessarily related to the communications
We therefore will grant Defendants' petition challenging the order permitting net worth discovery and will direct the trial court to reconsider the motion in light of the views expressed in this opinion.
The discovery referee stated in his report on the motion for net worth discovery that Widom could not introduce evidence from the criminal trial, but that Widom could "state that he was found innocent of the criminal charges by the court," apparently referring to such a statement at trial in this action. Neither the discovery referee nor the trial court in adopting the referee's report expressly considered the finding of factual innocence in concluding that Widom had established a substantial probability of prevailing on his claim for punitive damages. Still, the above quoted language in the referee's report is cause for concern, and the issue is likely to arise again in further proceedings, so we will address it.
"Notwithstanding expanded notions of privity, collateral estoppel may be applied only if due process requirements are satisfied. [Citations.] In the context of collateral estoppel, due process requires that the party to be estopped must have had an identity or community of interest with, and adequate representation by, the losing party in the first action as well as that the circumstances must have been such that the party to be estopped should reasonably have expected to be bound by the prior adjudication. [Citation.]
Moreover, we believe that to find an attorney in privity with his or her client for purposes of collateral estoppel based on the existence of an attorney-client relationship could cause attorneys to consider not only their client's best interests with respect to the subject of the representation, but also the potential impact of any finding in the proceeding on the attorney's interests in another proceeding. This could create a potential conflict of interest in some circumstances and compromise the attorney's ability to faithfully serve the client's best interests.
Wright and Miller describe this approach as "[b]ogus privity." (18A Wright et al., Federal Practice and Procedure (2d ed. 2002) Mutuality, § 4464.1, p. 716, fn. 4, boldface omitted, citing, inter alia, Plotner v. AT & T Corp., supra, 224 F.3d at p. 1169, and Henry v. Farmer City State Bank, supra, 808 F.2d at p. 1235, fn. 6.) "One means adopted to accomplish nonmutual claim preclusion is to state that the party invoking preclusion is in privity with a party to the earlier action although the circumstances would not support a finding of privity to invoke preclusion against the new party. Although the results may be laudable, there is a price to be paid for this approach. Bogus findings of privity may cloud reasoning as later courts confront real privity questions, and may prevent the present court from considering and articulating the factors that make it appropriate to allow
We conclude that the attorney-client relationship between Woolverton and Kerner cannot establish privity between Woolverton, or any other defendant, and Kerner for purposes of collateral estoppel.
Widom argued in his motion in limine that the finding in the family law proceeding that he did not commit domestic violence on March 1, 2009, was binding in this action under the doctrine of collateral estoppel. He referred to Defendants' purported involvement in the criminal proceeding, but he did not argue that the finding of factual innocence by the criminal court was collateral estoppel in this action or that it supported the conclusion that the finding in the family law proceeding that Widom did not commit domestic violence on March 1, 2009, was collateral estoppel in this action. The trial court in its ruling, however, apparently concluded that the finding of factual innocence was collateral estoppel in this action and supported the conclusion that the finding in the family law proceeding was also collateral estoppel in this action.
The trial court stated that the question whether Widom committed domestic violence against Kerner on March 1, 2009, "has actually been litigated on the merits twice," and that Defendants were in privity with Kerner with respect to the family law proceeding, the criminal proceeding and her civil action for damages. The court stated that Defendants' assertion of an attorney-client relationship between Woolverton and Kerner "supports Widom's argument that there is privity between Stockwell and Kerner such that the doctrine of collateral estoppel should apply to bar re-litigation of the March 1, 2009, incident where Mr. Widom has been declared factually innocent after a trial by jury and by a judge who reconsiders that based on his own appraisal of the evidence." The court stated that if the criminal prosecution had succeeded, Defendants would have sought to apply collateral estoppel in this action and that "now that the plan has essentially backfired on Stockwell, it seeks to prevent the use of collateral estoppel." The court stated further that the application of collateral estoppel was consistent with public policy because "there is no inherent contradiction or unfairness in applying collateral [estoppel], and its application, especially in this case, will preserve the integrity of the judicial system, promote judicial economy, and protect Mr. Widom from harassment by vexatious litigation of the exact same issue for which he has been declared factually innocent."
We conclude that the granting of the motion in limine was error. There is no basis for the finding that Defendants were in privity with Kerner, and the trial court improperly considered the finding of factual innocence.
Kerner's petition challenging the orders of May 19, 2011, and June 21, 2011, as to the granting of the motion to compel production of documents (No. B233918) is granted in part and denied in part. Let a peremptory writ of mandate issue directing the trial court (1) to vacate those orders as to the granting of the motion to compel production of documents and (2) conduct further proceedings and make explicit findings as discussed in this opinion. To the extent that she seeks an order allowing her to file objections asserting her attorney-client privilege, Kerner's petition is denied as premature.
Kerner's petition challenging the order of July 6, 2011, compelling her to answer deposition questions (No. B235664) and Defendants' petition challenging the order of May 19, 2011, as to the granting of the motion for net worth discovery (No. B234423) are granted. Let a peremptory writ of mandate issue directing the trial court (1) to vacate those orders as to those two matters and (2) to reconsider, in light of the views expressed in this opinion, the motion to compel deposition answers and the motion for net worth discovery.
Defendants' petition challenging the order of September 26, 2011, granting the motion in limine (No. B236927) is granted. Let a peremptory writ of mandate issue directing the trial court to vacate that order and enter a new order denying the motion in limine.
Kerner and Defendants are entitled to recover their costs in these appellate proceedings.
Klein, P. J., and Kitching, J., concurred.
California courts also recognize a nonstatutory implied waiver of the attorney-client privilege in some circumstances when the client puts the privileged communication directly at issue in litigation and disclosure is essential to a fair adjudication. (Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31, 40-43 [265 Cal.Rptr. 801, 784 P.2d 1373].) Kerner is not a party to the trial court proceedings and did not put any matter at issue here, so this basis for a waiver is inapplicable.
