2017-00205996-CU-BC

Mastagni Holstedt vs. Ellis Law Group, LLP

Nature of Proceeding: Motion to Compel Production of Documents

Filed By: Winter, Grant A.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) which oral argument is sought. **

Plaintiff Mastagni Holstedt, PC’s (“Mastagni” or “Plaintiff”) motion for a supplemental privilege log and a determination that Defendant Ellis Law Group, LLP (“Ellis” or “Defendant”) waived the parties’ shared client’s attorney-client privilege in relation to the client’s instructions on how attorney’s fees should be divided is GRANTED in part and DENIED in part as follows:

Mastagni is suing Ellis for breach of contract. Mastagni’s key allegations are:

Plaintiff and Defendant associated as co-counsel in connection with a workers compensation claim entitled Latham v. Vito Trucking and a third party claim entitled Latham v. Republic Services, et al. On or about October 1, 2015, Plaintiff and Defendant entered into a written Fee Agreement and Cost Sharing Agreement…The fee sharing agreement provided that Plaintiff and Defendant would equally split (“50%/50%”) the attorney’s fees.

Defendant settled Latham v. Republic Services, et al, the third party claim, for an amount which is unknown to Plaintiff, but believed to be $950,000, plus a Workers’ Compensation lien waiver of $230,000.

Plaintiff is unaware of the total fees received by Defendant, based upon the contingent fee agreement that Defendant entered into with the client. After the settlement, Defendant delivered to Plaintiff a check for $75,000. Plaintiff alleges that this amount is far less than 50% of the attorney’s fees that Defendant obtained from the settlement.

(Compl., pp. 4, 5.) Ellis’ answer to the complaint contains the following averments as an affirmative defense:

Defendant alleges that it was legally obligated and duty-bound to comply with the specific instructions of the parties’ mutual client regarding the division of fees, and that Defendant tendered to Plaintiff the maximum amount of fees which the parties’ mutual client, Frank Latham, authorized to be distributed by ELG to Plaintiff. Where the parties’ common client, as here, has disapproved of the percentage requested by the attorney, the “agreement” is void, and the attorney is entitled to the quantum meruit value of his services.

In August 2017, Mastagni propounded its first set of document requests. (See Winter Decl., Exh. B.) Mastagni sought Ellis’ complete litigation files in both the worker’s compensation case and the third-party case. It also sought all agreements and communications between Ellis and Frank Latham, the client. Ellis objected to virtually all the requests based on privilege. (See id., Exh. C.) After counsel met and conferred, Ellis produced a large quantity of documents as well as a privilege log. The

log corresponds to the approximately 225 documents Ellis redacted or withheld based primarily on attorney-client privilege and attorney work product. (Id. ¶ 11 and Exh. K.)

In its moving papers, Mastagni asks the court for two things: (1) a determination that Ellis waived the attorney client-privilege in relation to documents concerning Latham’s instructions on how to split attorney’s fees between the two firms, and (2) an order compelling Ellis to supplement its descriptions of the documents set forth in the privilege log. Ellis opposes.

Discussion

Preliminarily, the court rejects Ellis argument that this motion, which Mastagni has brought pursuant to CCP § 2031.310, is procedurally improper. Section 2031.310 authorizes motions to compel further responses to document requests. In Ellis’ view, this motion aimed at objections based on privilege and the sufficiency of a privilege log is not one for “further responses.” Because Ellis asserted its objections and produced its privilege log further to its written responses to Mastagni’s document requests, the court disagrees.

Waiver

When Ellis tendered the $75,000 check to Mastagni as the latter’s share of fees, it did so under a cover letter, in which with the following statement appears: “Enclosed please find the check to you in the amount of $75,000 for your work on the Latham v. Elder Creek third-party matter, as authorized by the client.” (Winter Decl., Exh. A, emphasis added and omitted.) Mastagni describes this statement as Ellis’ “disclos [ure] that Latham instructed Ellis to pay only a certain amount to Mastagni.” (Moving Memo. at 2:17-20.) Mastagni also highlights Ellis’ affirmative defense, quoted above, in which Ellis asserts Latham instructed it “regarding the division of fees.” Mastagni argues the privilege otherwise applicable to Latham’s instructions was waived and, therefore, that it is entitled to “any documents concerning communications between Latham and Ellis about how much to pay Mastagni[.]” (Id. at 2:21-23.)

With the opposition, Ellis has produced a specific email in which Latham disapproved of a 50% payment of fees to Mastagni. (See Opp., Exh. 2.) The email, which Ellis has produced with Latham’s consent, reads:

I’ve been thinking about the work that Mastagni’s Firm has done. And I don’t authorize you to pay them 50% of the fees. $50,000 sounds more than fair. If you want to go 20 to 25% that’s up to you.

(Id.) Latham clearly waived the attorney-client privilege as it relates to this particular communication. (See Evid. Code § 912(a) [“[T]he right of any person to claim a privilege…is waived with respect to a communication protected by the privilege if any holder of the privilege…has disclosed a significant part of the communication or has consented to disclosure made by anyone”].) Mastagni argues the privilege is waived as to all documents concerning Latham’s instruction not to provide a 50/50 split. Mastagni cites Mitchell v. Superior Court (1984) 37 Cal.3d 591, 605, to support its position. That case, however, addressed the scope of an implied waiver, i.e., where the client places the attorney’s state of mind at issue. The client in this case, Latham, is not a party and has not placed Ellis’ state of mind at issue in this breach of contract case. Rather, the question here is whether Latham’s express waiver of the privilege

protecting a single communication waived the privilege in relation to other documents.

The scope of any waiver “should be determined with reference to the purpose of the privilege.” (Manela v. Superior Court (2009) 177 Cal.App.4th 1139, 1148.) “[T]he fundamental purpose of the attorney-client privilege is the preservation of the confidential relationship between attorney and client[.]” (Costco Wholesale Corp. v. Superior Court (2009) 47 Cal.4th 725, 740-741.) Such a policy supports a liberal construction favoring the exercise of the privilege. (See Benge v. Superior Court (1982) 131 Cal.App.3d 336, 344.) “Although the privilege may result in the suppression of relevant evidence, it is necessary to protect the client in making a full disclosure of the facts.” (Id.)

On the other hand, at least one court has broadly construed the term “communication” as used in Evidence Code § 912(a), supra, albeit in the context of a physician-patient communication. (See Jones v. Superior Court of Alameda County (1981) 119 Cal.App.3d 534, 547 [“We are prepared to accept that the term “communication” deserves, in this context, a liberal construction. A patient, for example, who has disclosed her conversation with a physician on Monday ought not be permitted to claim the privilege with respect to a conversation with the same physician and relating to the same subject matter on Tuesday”], disapproved on another point in Williams v. Superior Court (2017) 3 Cal.5th 531, 557, fn. 8.)

Based on the authorities, the court agrees that Latham’s waiver extends to other communications in which Latham instructed Ellis on how to split fees with Mastagni. Given Latham’s voluntary disclosure of one such communication, disclosure of additional communications on the same subject will not undermine the policy of open discussions between attorneys and their clients. What follows is that, to the extent Ellis withheld or redacted documents solely because they contain Latham’s instructions on how to split fees with Mastagni, it must revise the privilege log, indicate in its response(s) to applicable document requests that it will produce documents containing Latham’s instructions, as well as produce responsive documents in which Latham’s instructions are unredacted.

The court makes some additional observations. In the moving papers, Mastagni assumes that Latham’s confidential instructions to Ellis on the topic of fee-sharing are privileged, but that Latham and Ellis waived the privilege. In the reply, Mastagni argues such communications are not privileged in the first place because they fall outside the legal representation. (See Reply, 2:23-28.) The court does not address this latter argument. Mastagni did not raise it in the moving papers, and Elis has not had a fair opportunity to respond. Mastagni has moved for an order stating that Ellis and/or Latham waived the privilege, and that is the order the court now makes.

Supplemental Privilege Log

Mastagni’s second request is for an order compelling Ellis to supplement the descriptions of the document listed in the privilege log. Ellis currently describes the documents as, for example, “Inter-Office Communication,” “Facsimile Transmission” or “Handwritten Note.” Mastagni argues it cannot evaluate Ellis’ assertions of privilege or work-product protection based on such generalized descriptions. Citing a form of privilege log in a treatise, Ellis argues its descriptions are sufficient. Ellis nonetheless indicates it is willing to supplement its descriptions in order to accommodate Mastagni’s concerns.

In light of its willingness to supplement the privilege log, the court orders Ellis to do so. All that Ellis is required to do, however, is provide “sufficient factual information for [Mastagni] to evaluate the merits of [any] claim” of privilege. (CCP § 2031.240(c).) Hence, for example, the court in Catalina Island Yacht Club v. Superior Court (2015)
242 Cal.App.4th 1116, 1130 wrote:

The precise information required for an adequate privilege log will vary from case to case based on the privileges asserted and the underlying circumstances. In general, however, a privilege log typically should provide the identity and capacity of all individuals who authored, sent, or received each allegedly privileged document, the document’s date, a brief description of the document and its contents or subject matter sufficient to determine whether the privilege applies, and the precise privilege or protection asserted. (Emphasis added.)

Nothing in this ruling compels Ellis to provide factual details that compromise any claim of privilege or work-product protection.

Monetary Sanctions

Because Ellis was substantially justified in opposing the motion, Mastagni’s request for a monetary sanction pursuant to CCP § 2031.310(h) is DENIED. Mastagni’s further request for sanctions based on Ellis’ purported misuse of the discovery process is DENIED as well. (See CCP §§ 2023.010, 2023.020.) Although Ellis did not supplement its privilege log when it initially stated it would, that was not a failure to meet and confer in good faith or otherwise a misuse of the discovery process.

Disposition

The motion is granted in part and denied in part on the terms above.

Ellis shall serve its supplemental privilege log no later than 6/13/18. To the extent Ellis possesses additional documents containing Latham’s instructions on how to split fees with Mastagni, Ellis shall serve further responses to applicable documents requests and produce the documents no later than 6/13/18 as well.