JANE BLAND, Justice.
In this mandamus proceeding, we examine whether a discussion between two lawyers — one representing a trade association and the other representing one of its members — is subject to an attorney-client or attorney-work-product privilege. Relators Baytown Nissan, Inc., the Burklein Family Limited Partnership and Frederick W. Burklein (collectively, "Baytown Nissan") are defendants in an action alleging breach of contract and various torts arising from a failed sale of their Nissan dealership to, BSAG, Inc. Baytown Nissan and their legal counsel, J. Cary Gray, seek mandamus relief from the trial court's order overruling their privilege assertions to the substance of a June 2013 phone conversation between Gray and Brenda Karen Phillips, the General Counsel of the Texas Automobile Dealer Association, regarding the dealership sale. The order requires that both Gray and Phillips answer additional questions about the substance of the conversation, for which Baytown Nissan has claimed privilege. We conditionally grant relief as to Gray's deposition and deny it as to Phillips's.
Baytown Nissan entered into an agreement to sell the assets and the associated real estate of their Nissan dealership to BSAG, Inc. Pursuant to the agreement's terms, the dealership's sale was subject to the written approval of Nissan North America, Inc., which also holds a right of first refusal for the sale of the dealership. Nissan North America never gave its written approval, and it exercised its right of first refusal; thus, the dealership sale to BSAG failed to close. Baytown Nissan then agreed to sell the dealership to a third party, who Nissan North American had approved. BSAG and its assignee under the agreement, Bob Stallings Nissan of Baytown, Inc. (collectively "BSAG") have sued the Baytown Nissan defendants and Nissan North America, seeking damages associated with the failed transaction.
In 1989, Nissan North America entered into a sales and service agreement with Baytown Nissan. Pursuant to the agreement, Baytown Nissan became an authorized Nissan dealer in Baytown, Texas. Nissan North America contends that the parties amended the agreement in 2005 to add, among other things, a right of first refusal ("ROFR") allowing Nissan North America to match any dealership purchase offer and to step into the shoes of a potential buyer.
In March 2013, BSAG offered to purchase the Baytown Nissan dealership from Baytown Nissan through an asset purchase agreement. In April, Baytown Nissan
Before it exercised its ROFR, Nissan North America notified Baytown Nissan that it was considering invoking it. At the time, Baytown Nissan was a member of the Texas Automobile Dealer Association ("TADA"). In response to the notice, Baytown Nissan's lawyer, Gray, telephoned TADA's General Counsel, Phillips, to discuss the transaction. During the discovery process in this suit, BSAG advised Baytown Nissan that it intended to (1) depose Gray regarding the substance of the Gray-Phillips Conversation and (2) call Philips as a witness at trial to testify against Baytown Nissan regarding their conversation.
Baytown Nissan moved to quash Gray's deposition, arguing that Gray's conversation with Phillips is privileged. The trial court ordered that Gray be deposed in the courtroom so that the court could rule on the privilege assertions in real time. At Gray's deposition, Gray's counsel asserted privilege and instructed Gray not to answer questions about the substance of the Gray-Phillips Conversation. The trial court was present for nine of these questions; it overruled the assertions of privilege and instructed Gray to answer within ten days. BSAG then posed the following two additional questions, which also evoked privilege objections and instructions not to answer:
The trial court thereafter entered a written order (1) overruling Gray's objections and assertions of privilege as to the nine original questions and the First Additional Question and (2) sustaining the objection to the Second Additional Question. The order compelled Gray to answer the deposition questions to which objections and instructions not to answer were overruled. Gray then provided sworn answers to the original questions and the First Additional Question. BSAG subsequently moved the court to reconsider its ruling sustaining the privilege objection to the Second Additional Question.
During Phillips's deposition, Baytown Nissan's counsel similarly objected to questions regarding the substance of the Gray-Phillips Conversation on the basis of attorney-client privilege and instructed Phillips not to answer. The parties contacted the trial court for a ruling. The trial court overruled Baytown Nissan's objections, but directed that Phillips not provide answers until ten days after the court entered a written signed order to allow for further review.
On August 12, 2014, the trial court entered a written order, ruling that the substance of the Gray-Phillips Conversation is not privileged and ordering both Gray and Phillips to be re-deposed. The trial court also granted BSAG's motion for reconsideration of its July 8, 2014 ruling and ordered Gray to answer Second Additional Question.
Baytown Nissan seeks mandamus relief, requesting that we vacate the August 12, 2014 order, contending that the Gray-Phillips Conversation is subject to one or more privileges or exemptions from discovery.
Mandamus relief is available to correct a clear abuse of discretion when there is no adequate remedy by appeal. See Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992) (orig. proceeding). Generally, the scope of discovery is within the trial court's discretion. See In re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding) (citing Dillard Dep't Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex.1995) (orig. proceeding)). The burden of establishing a clear abuse of discretion is on the party resisting discovery. See In re CSX Corp., 124 S.W.3d 149, 151 (Tex.2003) (orig. proceeding) (citing Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 305 (Tex.1994) (orig. proceeding)). But a trial court has no discretion in determining what the law is or in applying the law to the particular facts. See Walker, 827 S.W.2d at 840.
In particular, mandamus relief is appropriate to protect confidential and privileged information from discovery. See In re Living Ctrs. of Tex., Inc., 175 S.W.3d 253, 256 (Tex.2005) (orig. proceeding); Mem'l Hosp.-The Woodlands v. McCown, 927 S.W.2d 1, 12 (Tex.1996). An appeal is inadequate when a trial court erroneously orders the production of confidential information or privileged documents. See In re Ford Motor Co., 211 S.W.3d 295, 298 (Tex.2006); In re E.I. DuPont de Nemours and Co., 136 S.W.3d 218, 223 (Tex.2004); see also In re BP Prods. N. Am. Inc., 263 S.W.3d 106, 111 (Tex.App.-Houston [1st Dist.] 2006, orig. proceeding) ("There is not an adequate remedy by appeal when a trial court erroneously orders the disclosure of privileged information because the error cannot be corrected once the benefit of the privilege is lost.").
To properly assert a claim of privilege, a party must plead the particular privilege, produce evidence to support the privilege through affidavits or testimony, and produce the documents for an in camera inspection, if the trial court determines review is necessary. See In re ExxonMobil Corp., 97 S.W.3d 353, 357 (Tex.App.-Houston [14th Dist.] 2003, orig. proceeding). The burden to establish the privilege is on the party seeking to shield information from discovery, and the party has the obligation to prove, by competent evidence, that the privilege applies to the information sought. See Arlington Mem'l Hosp. Found., Inc. v. Barton, 952 S.W.2d 927, 929 (Tex.App.-Fort Worth 1997, orig. proceeding).
Texas Rule of Evidence 503 provides that 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. See TEX.R.EVID. 503(b)(1).
The attorney-client relationship is a contractual relationship whereby an attorney agrees to render professional services
Baytown Nissan argues that the Gray-Phillips Conversation is privileged under Rule 503 because (1) the rule does not require an attorney-client relationship between two attorneys for it to apply; and (2) in any event, an attorney-client relationship was implied under these facts.
Rule 503 recognizes a privilege for confidential communications when a lawyer either (1) renders professional legal services to a client or (2) consults with a client who seeks professional legal services from that lawyer. See TEX.R. EVID. 503(a)(1), (b)(1). Baytown Nissan's first argument, that Phillips's status as an attorney — and not necessarily their attorney — is sufficient to attach attorney — client privilege disregards the purpose of the privilege: to foster open communication between clients and their attorneys so that the attorneys can best represent their clients. See In re Union Carbide Corp., 2003 WL 22682301, *4 (Tex.App.-Houston [1st Dist.] 2003, orig. proceeding) ("The purpose of the attorney-client privilege is to protect the confidential relationship between attorney and client and to promote full and open disclosure of facts so that the attorney can best represent his client."). It is the relationship with the client that confers the privilege. Accordingly, we reject Baytown Nissan's request to expand the attorney-client privilege to situations outside of an attorney-client relationship. See TEX.R. EVID. 503(b).
It is undisputed by the parties that there was no express agreement forming an attorney-client relationship between Phillips and Baytown Nissan. Baytown Nissan instead argues that an attorney-client relationship existed because Phillips is an attorney who provides legal services to TADA's membership and thus, as a member of TADA, Baytown Nissan numbers among her clients.
In the absence of an express agreement, an attorney-client relationship can be implied from the actions of the parties. See Span Enters., Inc. v. Wood, 274 S.W.3d 854, 858 (Tex.App.-Houston [1st Dist.] 2008, no pet.). Whether an attorney-client relationship can be implied depends upon an objective standard, looking at what the parties said and did to support an agreement to enter into one. See Span Enters., 274 S.W.3d at 858; Vinson & Elkins, 946 S.W.2d at 405-06. A court cannot consider a client's or attorney's unspoken subjective beliefs about the parties' relationship. See Id.
A federal district court rejected Baytown Nissan's position in Robinson v. Tex. Auto. Dealers Ass'n, 214 F.R.D. 432 (E.D.Tex.2003), vacated in part on other grounds, In re Tex. Auto. Dealers Ass'n, No. 03-40860, 2003 WL 21911333 (5th Cir. July 25, 2003). In Robinson, the plaintiffs moved to compel production of documents on a privilege log served by defendants that included communications between Phillips, on behalf of TADA, and individual members. The district court concluded that the communications between Phillips and TADA members were not per se protected by attorney-client privilege. The court observed that "[t]o invoke the attorney-client
We similarly decline to adopt a blanket rule of privilege between a trade association's members and the association's counsel. Consistent with our precedent, we instead examine the objective evidence in the record supporting an attorney-client relationship between the association's counsel and this particular member. The record cannot support an implied relationship here. In particular:
Although Gray provided statements regarding his belief that the conversation was subject to attorney-client privilege and would be kept confidential, such unstated subjective beliefs do not give rise to an attorney-client relationship by implication. See Span Enters., 274 S.W.3d at 858 ("[Appellant's] unstated, subjective beliefs do not give rise to an attorney-client relationship by implication."); Vinson & Elkins, 946 S.W.2d at 405-06 ("Because the attorney-client relationship is contractual, the determination of the existence of a contract must be, as in any other contract case, based on an objective standard, and not on what the parties subjectively thought."). Accordingly, the trial court acted within its discretion in overruling Baytown Nissan's attorney-client privilege objections. We hold that Baytown Nissan has not shown that it is entitled to mandamus relief based on a claim of attorney-client privilege.
The work product doctrine preserves the rights of attorneys to thoroughly prepare cases for trial and to investigate both favorable and unfavorable aspects of their cases, while preventing attorneys from taking advantage of their opposing counsel's efforts. See In re Union Carbide Corp., 2003 WL 22682301, at *5 (Tex.App.-Houston [1st Dist.], Nov. 13, 2003). The Texas Rules of Civil Procedure define "work product" as:
TEX.R. CIV. P. 192.5(a). The rule distinguishes between "core work product" and "non-core work product." "Core work product" concerns an attorney's mental processes and is not discoverable. See TEX.R. CIV. P. 192.5(b)(1). "Other" or "non-core" 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." Id. at 192.5(b)(2).
Thus, our court has held that the work product privilege exempts an attorney's documents, reports, communications, memoranda, mental impressions, conclusions, opinions, or legal theories from discovery if generated in anticipation of litigation. See Marshall v. Hall, 943 S.W.2d 180, 183 (Tex.App.-Houston [1st Dist.] 1997, no writ). The privilege also protects the mental impressions and strategy of the attorney. Id. Core work product is the work product of an attorney or an attorney's representative that contains the attorney's or the attorney's representative's mental impression, opinions, conclusions, or legal theories; it is not discoverable. See TEX.R. CIV. P. 192.5(b)(1). "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)(2). The "anticipation of litigation" test is met when a reasonable person would have concluded from the totality of the circumstances that there was a substantial chance that litigation would ensue and the party asserting the work product privilege subjectively believed in good faith that there was a substantial chance that litigation would ensue. See Nat'l Tank Co. v. Brotherton, 851 S.W.2d 193, 204, 207 (Tex.1993). Whether the Gray-Phillips Conversation was in anticipation of litigation is not in dispute.
BSAG responds that the work product privilege does not protect facts of the case from discovery save under exceptional circumstances. See Marshall v. Hall, 943 S.W.2d at 183 (citing Leede Oil & Gas, Inc. v. McCorkle, 789 S.W.2d 686, 687 (Tex.App.-Houston [1st Dist.] 1990, orig. proceeding) (interpreting TEX.R. CIV. P. 166b(3)(a))). "Where relevant and non-privileged facts remain hidden in an attorney's file and where production of those facts is essential to the preparation of one's case, discovery may properly be had." Hickman v. Taylor, 329 U.S. 495, 511, 67 S.Ct. 385, 394, 91 L.Ed. 451 (1947). We thus examine whether compelling either Phillips or Gray to testify about the Gray-Phillips Conversation would require disclosure of attorney work product and, if so, whether an exception to the work product privilege applies.
Baytown Nissan notes that Gray sought to investigate the claims of this case in his discussions with Phillips because (1) "TADA itself openly states that it represents the Texas automobile dealer body and works on behalf of its members" and (2) "Phillips testified that TADA's purpose is to represent the Texas automobile
We reach a different conclusion in the application of the work-product doctrine to the testimony sought from Gray. The record demonstrates that Gray is Baytown Nissan's lawyer. His conversation with Phillips was conducted as part his examination of the ROFR and the dealership sale that is the subject of the underlying lawsuit. The deposition questions posed to Gray requested the disclosure of his thoughts and mental impressions with respect to the claims at hand. His firm is Baytown Nissan's counsel of record in this lawsuit. As one of our sister courts noted in granting mandamus relief in similar circumstances:
In re Baptist Hosps. of S.E. Tex., 172 S.W.3d 136, 143 (Tex.App.-Beaumont 2005, orig. proceeding). "Compelling an attorney of record involved in the litigation of the case to testify concerning the suit's subject matter generally implicates work product concerns" and "is inappropriate under most circumstances." Id. at 140, 145.
Deposition questions requesting Gray's mental impressions regarding his conversation with Phillips (such as whether Phillips's statements "were consistent with [his] experience") are core work product and not discoverable. Other questions requesting factual details of Gray's conversation with Phillips are non-core work product. With respect to those questions, BSAG had the burden of demonstrating the substantial need and undue hardship requirements for discovery of non-core work product. See TEX.R. CIV. P. 192.5(b)(2). This is a particularly heavy burden when a discovery request seeks to compel the deposition of a party's attorney:
In re Baptist Hosps. of S.E. Tex., 172 S.W.3d at 145.
Our decision in Marshall v. Hall is instructive in this case. See 943 S.W.2d 180. In Marshall, an employee of the relator's attorney interviewed a witness to a car accident over the telephone and took notes of the interview. Id. at 182. In holding that the interview notes were protected by the attorney work product privilege, our court reasoned:
Id. at 183. Our court rejected an effort to overcome the privilege based on hardship, applying the two-part test provided in Hickman for exemption from privilege requiring that (1) the information be "hidden in the attorney's file" and (2) the facts sought to be discovered must be "essential to the preparation of one's case." See id. (quoting Hickman, 329 U.S. at 511, 67 S.Ct. 385). As in Marshall, BSAG has not satisfied its burden of demonstrating exemption from privilege. The information it seeks, far from being hidden, is readily available through Phillips, who already has disclosed it to third-parties, who in turn at some point disclosed it to BSAG. See id. Given Phillips's availability, there is no indication in the record of a substantial need for Gray's testimony. See id.
We hold that the trial court erred in compelling Gray to testify about the Gray-Phillips conversation; mandamus relief is therefore appropriate. See In re CSX Corp., 124 S.W.3d at 151.
We conditionally grant the petition for writ of mandamus, and direct the trial court to vacate its order compelling Gray's deposition. We deny further requested relief. We are confident that the trial court will comply, and the writ will issue only if it does not.
