WELLS FARGO BANK, N.A., Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent,
Vickie BOLTWOOD, et al., Real Parties in Interest. O'MELVENY & MYERS LLP, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent, Vickie BOLTWOOD, et al., Real Parties in Interest.
In this case we are asked to determine whether writings between employees of a bank acting as trustee of a trust and its counsel, both in-house and at an outside firm, can be privileged from disclosure under the attorney-client privilege and the work product doctrine in litigation brought against the bank by beneficiaries of the trust. We conclude that they can be, that they are in this case, and that the trial court abused its discretion in ordering production of the writings We issue a peremptory writ of mandate directing the trial court to vacate its order requiring disclosure, to enter an order denying the motion to compel production brought by the beneficiaries, and to conduct an in camera review of the work product documents communicated to the trustee by outside counsel to determine whether they were communicated in confidence.
FACTUAL AND PROCEDURAL SUMMARY
William A. Couch established the Couch Living Trust (the Trust) by a revocable declaration executed in October 1991. He served as the sole trustee until his death in March 1992. When he died, his wife, Rosa Couch, and Wells Fargo Bank N.A. were nominated as co-trustees by the Trust instrument. In April 1992, Wells Fargo agreed to act as co-trustee, and shared that responsibility with Mrs. Couch until May 1995. Ms. Boltwood and her children, real parties in interest in these proceedings, are among the several beneficiaries of the Trust.
In November 1994, Ms. Boltwood accused Wells Fargo in writing of attempted theft of trust assets, improper representation of trust beneficiaries, setting up the estate to charge excessive legal fees, and of violating the intent of the trustor. In December 1994, Wells Fargo commenced this action by petitioning the court, in probate, to settle its accounts and to approve its resignation as co-trustee.
On February 1, 1995, Ms. Boltwood wrote Wells Fargo, stating that she and her brother were seeking legal representation for the purpose of investigating Wells Fargo's allegedly improper administration of the Trust. In April 1995, Ms. Boltwood, acting individually and as guardian for her minor children, filed objections to the accounts submitted by Wells Fargo, petitioned for removal of Mrs. Couch as co-trustee, and petitioned for surcharge and for damages. In March 1996, real parties in interest filed amended claims against Wells Fargo.
Real parties in interest (real parties) sought production of documents related to the Trust. Wells Fargo produced some documents, and asserted the attorney-client privilege, the work product doctrine, or both, as to others. It produced a privilege log and an amended log which identified the following for each document: a sequential number, the nature of the document and the date, the author, the recipient, those who received copies, and the privilege asserted. The documents at issue fall into six broad categories: (1) communications between Wells Fargo employees and in-house counsel before Ms. Boltwood filed her claims against the trustee; (2) communications between Wells Fargo employees and in-house counsel after real parties in interest filed their claims in this action; (3) communications between Wells Fargo employees and outside counsel O'Melveny & Myers before the claims were raised; (4) communications between Wells Fargo employees and O'Melveny after the claims were raised; (5) O'Melveny work product which was not given to Wells Fargo; and (6) O'Melveny work product which was given Wells Fargo.
Real parties moved to compel production of the documents withheld by Wells Fargo. Later, the motion to compel was narrowed to certain documents described in the privilege log. Ms. Boltwood and attorneys for real parties filed declarations and exhibits in support of the motion. Wells Fargo filed an opposition to the motion to compel, supported by the declarations of Roberta Hydar, the trust officer at Wells Fargo primarily responsible for administration of the Trust, Michael J. Harrington, an attorney in the Legal Department of Wells Fargo, and Leah M. Bishop, a partner at O'Melveny. The O'Melveny firm had been retained to provide legal advice and services to Wells Fargo in the bank's capacity as trustee of the Trust.
The hearing on the motion to compel was not reported. The trial court granted the motion, ordering production of the documents sought within 30 days. The order did not include findings of fact or conclusions of law.
Wells Fargo petitioned this court for writ of mandate/prohibition and sought a stay of the trial court order (B0102332). O'Melveny also sought mandate and a stay (B0102399). Real parties filed a joint opposition to the petitions. We considered the petitions together, and ordered the trial court to show cause why a peremptory writ of mandate should not issue directing that it vacate its order granting the motion to compel. We also issued a temporary stay of the trial court's order until further order of this court. Real parties filed a return, and each petitioner filed a reply.
Each of the parties has submitted documents and declarations for our consideration that were not before the trial court. We decline to consider any material which was not before the trial court at the time it ruled on the motion to compel.1
We consider, first, whether the attorney-client privilege applies in an action between a trustee and trust beneficiaries. The Supreme Court recently examined the privilege, which is codified in Evidence Code sections 950 through 962. In Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 20 Cal.Rptr.2d 330, 853 P.2d 496, the court held that the “privilege applies to communications in the course of professional employment that are intended to be confidential. [Citations.] Under the Evidence Code, a client holds a privilege to prevent the disclosure of confidential communications between client and lawyer. (Evid.Code, § 954.) ‘Confidential communication’ is defined as including ‘a legal opinion formed and the advice given by the lawyer in the course of that [attorney-client] relationship.’ (Evid.Code, § 952.)” (Id. at p. 371, 20 Cal.Rptr.2d 330, 853 P.2d 496.)
The attorney-client privilege plays a fundamental role in our system. It has been described by the Supreme Court as “fundamental to the free and open exchange of information and advice between lawyers and their clients, and more broadly to the proper functioning of our judicial system.” (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 611, 208 Cal.Rptr. 886, 691 P.2d 642.) We review orders of the trial court on the applicability of the attorney-client privilege for abuse of discretion. (Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 640, 41 Cal.Rptr.2d 329.)
Real parties argue the privilege does not apply to the documents at issue here. Their primary claim is that the trustee of a trust has a duty to provide the beneficiaries with all documents related to the trust, and that this obligation overrides the attorney-client privilege.
We shall shortly discuss the factual context in which the privilege is claimed in this case. Before embarking on that necessary discussion of the detail, we summarize the overriding principle involved in the dispute.
It is, simply, that every party, including every fiduciary, is entitled to consult legal counsel and receive legal advice about the risks and rights presented by a transaction or a relationship. The party, as client, must be free to reveal information needed to enable counsel to provide advice, and to receive the advice, without hazard of disclosure without its consent. That is the essence of the attorney-client privilege. It is a cornerstone of our jurisprudence.
The law imposes requisites and recognizes exceptions to exercise of the privilege—we will discuss those argued by real parties—but there is no categorical exception for fiduciaries in general or trustees in particular.
It is a legislative prerogative to carve out particular kinds of communication from the protection of the privilege, and it has done so. The wisdom of such enactment is, of course, a matter of legislative judgment. When the Legislature enacts a statutory change in this area, trustees as well as others will know it and may plan their affairs accordingly. But it is not for us to usurp that legislative prerogative. We take the law as the Legislature has enacted it and as our courts have authoritatively construed it, and apply it to the facts and circumstances of this case.
We do that in the discussion that follows.
A. Duty to Disclose
Wells Fargo relies upon cases from other jurisdictions, particularly Huie v. DeShazo (1996) 39 Tex.Sup.Ct. J. 288 [922 S.W.2d 920] and a trial court decision, Estate of Calloway (Del.1996) 1996 WL 361504. While these cases do appear to support Wells Fargo, we do not rely on them. We decide the issue based on the California attorney-client privilege statutes and judicial interpretation of that statutory scheme. (See Lasky, Haas, Cohler & Munter v. Superior Court (1985) 172 Cal.App.3d 264, 281–282, 218 Cal.Rptr. 205.)
A trustee's duty to disclose information to trust beneficiaries is well established in this state. In 1950, the Supreme Court held: “A trustee has the duty to the beneficiaries to give them upon their request at reasonable times complete and accurate information relative to the administration of the trust.” (Strauss v. Superior Court (1950) 36 Cal.2d 396, 401, 224 P.2d 726.) Real parties rely on Probate Code provisions codifying the duty of a trustee to disclose information to trust beneficiaries. Probate Code section 16060 provides: “The trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.” Probate Code section 16061 provides further: “Except as provided in Section 16064, on reasonable request by a beneficiary, the trustee shall provide the beneficiary with a report of information about the assets, liabilities, receipts, and disbursements of the trust, the acts of the trustee, and the particulars relating to the administration of the trust relevant to the beneficiary's interest, including the terms of the trust that describe or affect the beneficiary's interest.”
The question presented is whether the trustee's duty to disclose includes confidential communications between the trustee and its counsel regarding claims of trustee misconduct, made by the beneficiaries. Real parties argue that we should not distinguish between documents related to the administration of the Trust and those relating to legal advice about claims made by the beneficiaries. In making that argument, they claim that the question of the applicability of the attorney-client privilege in these circumstances was decided in Moeller v. Superior Court (1996), 56 Cal.Rptr.2d 376, 921 P.2d 602. After oral argument in this case, the Supreme Court granted review in Moeller. We therefore may not and do not rely on that decision. (See Agricultural Labor Relations Bd. v. Tex–Cal Land Management, Inc. (1987) 43 Cal.3d 696, 709, fn. 12, 238 Cal.Rptr. 780, 739 P.2d 140; Barber v. Superior Court (1991) 234 Cal.App.3d 1076, 1082, 285 Cal.Rptr. 668.)
Wells Fargo does not dispute its duty to produce documents related to trust administration, including those which may come within the attorney-client privilege. It has produced them. But it invokes the privilege as to its communications with counsel, both in-house and outside, relating to its own potential liability with respect to real parties' claims of misconduct.2 We conclude that the communications are privileged.
This conclusion is consistent with our earlier opinion in Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d 264, 218 Cal.Rptr. 205. In that case, trust beneficiaries sought to remove a trustee for mismanagement. The beneficiaries sought discovery of all communications generated by the trustee's counsel regarding the alleged misconduct. The Lasky law firm produced all written and oral communications to the trustee concerning “material trust business” but invoked the work product doctrine in refusing to produce its internal and private work product relating to the trust which was not communicated to its client, the trustee.
The beneficiaries argued that the trustee's fiduciary duty of full disclosure under Strauss v. Superior Court, supra, 36 Cal.2d at pages 401–402, 224 P.2d 726, extended to attorney work product documents. We disagreed. We concluded that the beneficiaries' right of access to trust administration documents is irrelevant to the question of whether the work product doctrine applies. Our conclusion was based on the express statutory scheme protecting attorney work product from discovery. (Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d at pp. 280–282, 218 Cal.Rptr. 205.) Similarly, the statutory attorney-client privilege overrides the trustee's duty to disclose here.
In effect, real parties in interest argue that Lasky is no longer good law in light of Moeller. As we have discussed, we do not rely on Moeller. Wells Fargo established that the communications for which it asserts the attorney-client privilege did not concern administration of the Trust, but instead related to Ms. Boltwood's claims of misconduct. In opposition to the motion to compel, Wells Fargo submitted declarations by its trust administrator, in-house counsel, and the partner at O'Melveny who handled this matter.
Roberta Hydar, the trust officer primarily responsible for administration of the Trust, declared that some of the communications at issue were between herself and in-house counsel Alexandra Laboutine and Michael Harrington. She stated that both Ms. Laboutine and Mr. Harrington provided advice about Wells Fargo's potential exposure related to the Trust. Neither attorney provided advice about administration of the Trust or was involved in administration of the Trust.
Ms. Hydar explained that she became concerned about Wells Fargo's ability to administer the Trust as drafted without incurring liability to the beneficiaries. This was because she thought certain terms of the trust instrument were ambiguous. For that reason, she sought advice from Ms. Laboutine between August 4, 1992 and September 17, 1992 regarding Wells Fargo's potential liability. On September 23, 1992, Wells Fargo filed a petition prepared by O'Melveny for clarification of the Trust terms.
Prior to October 1994, Ms. Hydar had received several conflicting demands from trust beneficiaries, including Ms. Boltwood, regarding real property in Anaheim, a trust asset. Ms. Hydar sought advice from Mr. Harrington at that time regarding potential claims against Wells Fargo by the beneficiaries and the possibility of Wells Fargo resigning from its position as co-trustee. At the same time, Wells Fargo sought advice from Leah Bishop at O'Melveny regarding Wells Fargo's possible resignation as co-trustee. These communications did not relate to the administration of the Trust.
After specific threats and accusations made by Ms. Boltwood in early November 1994, Ms. Hydar and other Wells Fargo employees had several communications with Mr. Harrington, the in-house counsel, regarding these claims. Similar communications were generated in response to later claims made by Ms. Boltwood in February 1995 and April 1995. Ms. Hydar had other Wells Fargo employees provide information to in-house counsel in relation to these discussions. All these communications were intended to be confidential.
Michael Harrington's declaration in opposition to the motion to compel stated that he is an attorney in the Legal Department at Wells Fargo. He declared that at various times he was asked by Wells Fargo personnel to render legal advice regarding potential claims that might be asserted by beneficiaries of the Trust, or the actual allegations, claims, and threats made by Ms. Boltwood. He declared: “3. The communications that I had with Wells Fargo personnel related solely to the legal advice they sought on behalf of Wells Fargo's interests with respect to those claims and potential claims against Wells Fargo. [¶] 4. At no time did I render legal advice to Wells Fargo personnel relating to the administration of the Couch Trust. [¶] 5. At no time did I provide any business advice to Wells Fargo personnel relating to their administration of the Couch Trust. I have never been involved in the administration of the Couch Trust.” He also said that he had never acted as counsel for either the Trust or any beneficiary.
Ms. Bishop's declaration in opposition to the motion to compel, identified various documents included in the privilege log which were prepared by O'Melveny personnel for the purpose of providing legal advice to Wells Fargo in relation to the Trust. The documents reflect Ms. Bishop's “impressions, conclusions, opinions or legal research or theories.” None of these documents was prepared to provide business advice to the trustee or any beneficiary. They were not provided to Wells Fargo. Ms. Bishop asserted the work product privilege with respect to this group of documents.
Ms. Bishop also identified certain documents which she generated in response to Wells Fargo's request for legal advice on the issue of whether it should resign as co-trustee of the Trust. She declared that these documents do not relate to trust administration. Ms. Bishop also explained that one document sought is a copy of a letter she sent to Wells Fargo in April 1995 after Ms. Boltwood commenced her claims against Wells Fargo. It relates to those claims rather than to trust administration.
We are satisfied that these declarations met the dual threshold showing required. First, they establish that the contested documents relate to confidential advice given regarding Wells Fargo's potential liability from claims made by the beneficiaries. Second, they demonstrate the existence of an attorney-client relationship as to these communications. (See Shannon v. Superior Court (1990) 217 Cal.App.3d 986, 996, 266 Cal.Rptr. 242.) Once the party invoking the privilege has made that showing, the burden shifts to the party seeking disclosure to “establish a cognizable basis for compelling disclosure.” (Ibid; Evid.Code, § 917.) 3
If we were to adopt the position urged by real parties, we would elevate the trustee's duty to disclose to an exception to the attorney-client privilege. Real parties argue “it would work a profound injustice were a trustee such as Wells Fargo, on a record bereft of any real threat of litigation, able to cloak documents relating to its administration of a trust by the simple expedient of involving counsel (whether in-house or outside). This would, in effect, give the trustee carte blanche to exempt documents relevant to the merits of its trust administration from disclosure to its beneficiaries by mere artifice.”
The problem with this position is that the authorities on which real parties rely do not support their claim for an exception to the attorney-client privilege. California does not recognize judicially created exceptions to the statutory attorney-client privilege. (Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 373, 20 Cal.Rptr.2d 330, 853 P.2d 496.) In Roberts, the Supreme Court declined to imply an exception to the privilege. “It is not our function, however, to add language or imply exceptions to statutes passed by the Legislature. [Citations.] [¶] Our deference to the Legislature is particularly necessary when we are called upon to interpret the attorney-client privilege, because the Legislature has determined that evidentiary privileges shall be available only as defined by statute․ [N]or may courts imply unwritten exceptions to existing statutory privileges. (Dickerson v. Superior Court (1982) 135 Cal.App.3d 93, 99, 185 Cal.Rptr. 97 ․ [refusing to imply a stockholder's exception to the attorney-client privilege between a corporate client and corporate counsel]; see also Cal. Law Revision Com. com., West's Ann. Evid.Code, § 911, p. 488 [privilege ‘is one of the few instances where the Evidence Code precludes the courts from elaborating upon the statutory scheme.’].)” (Id. at pp. 372–373.)
The Probate Code provisions mandating disclosure of trust information do not expressly require disclosure of materials which come within the attorney-client privilege. There is no mention of the privilege in these provisions. We may not imply an exception where none was provided by the Legislature.
Real parties also argue that since the Trust was charged with the fees incurred by O'Melveny in giving advice on Wells Fargo's potential liability, the documents were trust administration documents rather than attorney-client privileged documents. We addressed a similar argument, and rejected it, in Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d at pp. 284–285, 218 Cal.Rptr. 205: “[T]he beneficiaries place substantial reliance upon the analysis (derived from the Restatement of Trusts and foreign-state opinions) that because an attorney for a trustee is paid with funds from the trust corpus, and the beneficiaries have the beneficial interest in that corpus, it follows that all information generated by the attorney relative to administration of the trust is, in a meaningful sense, ‘trust property’ and there is a duty owed by the attorney to disclose the contents of his files to the beneficiaries. This general analysis, however, is not wholly applicable or sufficiently refined to control the circumstances of our case. While it is true that every dollar paid from the trust corpus for legal counsel in the administration of the trust immediately diminishes the corpus balance, it does not follow that it is the beneficiaries who have made such payments.”
We went on to discuss the necessity of legal expenses in the administration of trusts and concluded that the payment of attorneys' fees in itself does not determine the existence of an attorney-client relationship between the beneficiaries and the attorney for the trustee. Instead, we ruled that the contractual intent and conduct of the parties are critical to the formulation of such relationship. (172 Cal.App.3d at p. 285, 218 Cal.Rptr. 205.)
The fact that the Trust was charged with O'Melveny's fees is not sufficient, by itself, to overcome the showing that the documents at issue were generated in giving advice to Wells Fargo about its potential liability rather than in administration of the Trust. The better practice would have been to not charge the Trust for these fees, but the fact that it was charged and paid the fees is not determinative.
We turn to the other arguments made by real parties to support their position that the attorney-client privilege does not apply. We find little merit in these contentions.
B. Anticipation of Litigation
Real parties argue that most of the contested documents do not come within the attorney-client privilege because they were not prepared in anticipation of litigation. They contend that Wells Fargo had no reason to anticipate litigation until February 1, 1995, when Ms. Boltwood notified the bank that she objected to its handling of the Trust. Actual litigation did not commence until April 3, 1995.
The argument is specious. It is the rule in California that “under the Evidence Code, the attorney-client privilege applies to confidential communications within the scope of the attorney-client relationship even if the communication does not relate to pending litigation; the privilege applies not only to communications made in anticipation of litigation, but also to legal advice when no litigation is threatened. [Citations.]” (Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 371, 20 Cal.Rptr.2d 330, 853 P.2d 496, emphasis added.)
Real parties support their argument with two cases from other jurisdictions. These decisions, In re Grand Jury Investigation (Sturgis) (E.D.Pa.1976) 412 F.Supp. 943 and Linde Thomson Langworthy Kohn & Van Dyke, P.C. v. RTC (D.C.Cir.1993) 5 F.3d 1508, each applies the Federal Rules of Evidence and therefore is of little use in our analysis. Moreover, Sturgis involved the work product doctrine, rather than the attorney-client privilege. (412 F.Supp. at p. 948.)
In their return, real parties cite Linde Thomson for the proposition that “a litigant must demonstrate that the documents were created with a specific claim supported by concrete facts which would likely lead to litigation in mind.” Actually, in that case, the District of Columbia Circuit did not reach the issue for which real parties cite the case. The court observed that the federal attorney-client privilege protects communications made for “ ‘the purpose of obtaining legal advice from the lawyer,’ ․” (Linde Thomson Langworthy Kohn & Van Dyke, P.C. v. RTC, supra, 5 F.3d at p. 1515), and it went on to say that an insured's communications with an insurer “for the express purpose of seeking legal advice with respect to a concrete claim, or for the purpose of aiding an insurer-provided attorney in preparing a specific legal case,” are within the attorney-client privilege. (Ibid.) But the court did not say a “specific legal case” must exist in order for the privilege to apply.
C. Joint Client
Real parties also argue that the attorney-client privilege does not apply because trust beneficiaries are joint clients of counsel to the trustees. They cite Moeller, supra, to support this contention. As we have indicated, since the Supreme Court granted review in Moeller, it may not be cited. Moreover, we note that there was no discussion of the joint client exception to the attorney-client privilege in that case.
The same argument has been rejected by California courts. We rejected it in Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d at pp. 278, 282–285, 218 Cal.Rptr. 205 [“while the beneficiaries are owed a duty of care by the trustee and the trustee's counsel, this duty, and the consequent potential civil liability, does not render the beneficiaries joint clients of the trustee's attorneys.”] Recently, in Fletcher v. Superior Court (1996) 44 Cal.App.4th 773, 52 Cal.Rptr.2d 65, the court took the same position: “The attorney for the trustee of a trust is not, by virtue of this relationship, also the attorney for the beneficiaries of the trust. The attorney represents only the trustee.” (Id. at p. 777, 52 Cal.Rptr.2d 65.)
Real parties rely on a declaration by Ms. Boltwood to the effect that Ms. Bishop stated that O'Melveny represented her as a beneficiary of the Trust, and told her that she need not retain an attorney to protect her interests in the Trust. They note that Wells Fargo does not refute Ms. Boltwood's representation in its petition.4 We conclude that Ms. Boltwood's declaration is insufficient to establish any relationship other than the usual one between an attorney for a trustee and a beneficiary of the Trust. The general and vague nature of the assurance purportedly given by Ms. Bishop is not sufficient to establish an attorney-client relationship between her and Ms. Boltwood.
We also reject real parties' related argument that the attorney-client privilege does not apply because Ms. Bishop was acting as a trust administrator, rather than as an attorney, on this matter. The declaration presented to the trial court by Ms. Bishop established her role as an attorney acting on behalf of the trustee, Wells Fargo. Ms. Boltwood's declaration regarding her conversation with Ms. Bishop is not sufficient to overcome that showing.
Real parties make several arguments to the effect that Wells Fargo has waived the attorney-client privilege. We find no waiver.
“Waiver is the intentional relinquishment of a known right. (BP Alaska Exploration, Inc. v. Superior Court (1988) 199 Cal.App.3d 1240, 1252 [245 Cal.Rptr. 682] [erroneous legal concession not waiver because not intentional and knowing].) ‘The burden is on the party claiming the waiver to prove it by clear and convincing evidence that’ “ ‘does not leave the matter doubtful or uncertain․’ ” [Citations.] Waiver requires “ ‘sufficient awareness of the relevant circumstances and likely consequences.’ ” [Citations.] [¶] These principles emphasize actual knowledge and awareness of what is being waived, and require resolution of doubts against waiver.” (Cathay Bank v. Lee (1993) 14 Cal.App.4th 1533, 1539, 18 Cal.Rptr.2d 420.)
First, real parties argue that Wells Fargo's production of trust administration records to which the attorney-client privilege would apply constitutes disclosure of a significant portion of the communications and, therefore, constitutes waiver. As we have seen, Wells Fargo was obligated to produce these documents, so long as they did not relate to legal advice given regarding potential liability based on claims of misconduct made by the beneficiaries. If we were to hold that this production constitutes waiver, we would eviscerate the protection accorded a trustee's communications with counsel about its own liability. We decline to adopt such a rule.
In addition, a review of the documents on which real parties base this argument reveals that they relate only to trust administration issues rather than to Wells Fargo's possible liability to the beneficiaries. In particular, at oral argument, real parties cited the production of a memorandum prepared by Peter G. Lawson on March 10, 1995 and sent to Ms. Bishop at O'Melveny. We have reviewed that document, which discusses the relative advantages of leasing or selling real property which comprises the major asset of the Couch Trust. There is nothing in it, or in any of the other documents cited by real parties, relating to legal advice given Wells Fargo regarding its potential liability to the beneficiaries. Disclosure of these trust administration documents does not constitute waiver of attorney-client documents by Wells Fargo.
Second, real parties argue that the privilege was waived because the contested documents were commingled with trust administration records. They cite no statutory or case law in support of this novel argument. They rely entirely on a “Practice Pointer” in The Rutter Group Practice Guide, Weil & Brown, Civil Procedure Before Trial (1996) § 8:217.3, p. 8C–47. This passage appears in a discussion of the work product doctrine, not the attorney-client privilege. The authors observe that when an attorney is hired both to investigate and to advise the client, the court may have to review the attorney's files in camera to determine which documents come in the work product privilege. In the “Practice Pointer,” the authors suggest that this can be a problem for in-house counsel and that outside counsel should be used for investigative activities. “That way, in-house counsel will be free to maintain separate files, and can evaluate the case and advise the client without fear that those files will be discoverable by the opposing party.” (Ibid.)
This may be a salutary practice, but it does not reflect a statutory exception to the attorney-client privilege. As we have seen, we may not imply exceptions to that doctrine. (See Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 373, 20 Cal.Rptr.2d 330, 853 P.2d 496.) Moreover, the cited passage in Weil and Brown is inapposite because in camera inspection of documents to determine the applicability of a privilege is barred by Evidence Code section 915, subdivision (a). (See Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31, 45 fn. 19, 265 Cal.Rptr. 801, 784 P.2d 1373.) We find no waiver based on commingling of documents.
Finally, in their discussion of waiver, real parties argue that Evidence Code section 958 applies. That statute provides: “There is no privilege under this article as to a communication relevant to an issue of breach, by the lawyer or by the client, of a duty arising out of the lawyer-client relationship.” We set out real parties' argument in its entirety: “In this case, the documents also fall within the exception set forth in Evid.Code § 958; Schlumberger Ltd. v. Superior Court (1981) 115 Cal.App.3d 386, 392, 171 Cal.Rptr. 413 (no privilege as to communication relevant to issue of breach of duty by lawyer or client arising out of the relationship) to the extent that, as is alleged, real party predicates her claims on the conduct of Wells Fargo's in-house legal department (e.g., the Anaheim property) and the O'Melveny law firm (e.g., its relations with real party and intimate involvement with the other trust administration issues).”
This argument is difficult to follow. In any event, as we have seen, it is established that counsel for the Trust is not counsel for the beneficiaries. We fail to see how Evidence Code section 958 applies.
E. Crime or Fraud Exception
Evidence Code section 956 provides: “There is no privilege under this article if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or a fraud.” Real parties argue this section applies because they made the requisite prima facie showing of fraud. They argue that Wells Fargo was aware of conversion of trust assets by Mrs. Couch and beneficiary William Anderson, and participated in the fraud by engaging in a cover-up, by making misstatements of fact in tax returns, and by failing to take remedial action. They cite pages 386–387 and 390–397 of the record in support of this proposition.
The first portion of the record cited is a part of the declaration of Mark L. Musto, counsel for real parties in interest, in reply to Wells Fargo's opposition to the motion to compel. He merely states that true and correct copies of excerpts from William Anderson's deposition are attached to his declaration, and paraphrases that testimony.
The deposition of Mr. Anderson does not show a prima facie case of fraud. He was asked whether he had a conversation with Ms. Hydar of Wells Fargo regarding trust assets. Mr. Anderson replied in relevant part: “I said, you know, ‘Rosa kept assets.’ And I didn't really get into it. She [Ms. Hydar] just said ‘That's not something you want to get into, is it?’ And I just backed off.” When asked if he told Ms. Hydar that Mrs. Couch kept assets from the Trust, Mr. Anderson replied “I think she understood that's what I was referring to.” Mr. Anderson admitted that he never said that to Ms. Hydar. He also said that he never brought it up again.
Mr. Anderson was also asked if he ever told his sister, Ms. Boltwood, that Wells Fargo was covering up removal of coins from a box. He replied: “I think I told her when we were talking about this that, you know. I felt it was conspiratorial in nature.” [¶] Q. Between whom? [¶] A. Between Rosa [Mrs. Couch] and Roberta [Ms. Hydar]. [¶] Q. Did you tell your sister that you believe that Wells Fargo was involved in a cover-up? [¶] “A. I don't remember if I said that or not. I remembered telling her that Roberta was protective of Rosa or something because I couldn't understand why, you know, I was told this isn't anything you want to get into, you just back off. I couldn't understand why she would do that.” Mr. Anderson testified that he felt intimidated by Ms. Hydar and chose not to raise the issue further.
This testimony amounts only to speculation by Mr. Anderson. A party invoking the crime or fraud exception to the attorney-client privilege must present “prima facie proof that [the client] sought or obtained the services of its attorneys with the intent to enable it to commit or to plan to commit a fraud.” (BP Alaska Exploration, Inc. v. Superior Court, supra, 199 Cal.App.3d 1240, 1246, 245 Cal.Rptr. 682.) Real parties fail to make the requisite showing. The exception does not apply.
O'Melveny argues the trial court abused its discretion in compelling production of documents which come within the absolute work product doctrine (Code Civ. Proc., § 2018). Code of Civil Procedure section 2018, subdivision (c) absolutely bars the discovery of “Any writing that reflects an attorney's impressions, conclusions, opinions, or legal research or theories․” Real parties raise several arguments in support of the trial court's order.
A. Applicability of Privilege
In Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d 264, 218 Cal.Rptr. 205, we held that a trust beneficiary may not discover absolute work product generated by an attorney for a trustee. (Id. at p. 280, 218 Cal.Rptr. 205.)
Real parties argue that O'Melveny waived the work product by disclosing certain documents to Wells Fargo. In BP Alaska Exploration, Inc. v. Superior Court, supra, 199 Cal.App.3d 1240, 245 Cal.Rptr. 682, the court ruled that delivery of an attorney's absolute work product to a client in confidence does not waive the protection of the work product doctrine. (Id. at p. 1260, 245 Cal.Rptr. 682.) The court reasoned: “The recognition of an attorney's right to assert a work product protection in the contents of a writing after it is delivered to the client strengthens the attorney-client relationship by enabling the attorney to evaluate his client's case and to communicate his opinions to the client without fear that his opinions and theories will thereafter be exposed to the opposing party or to the public in general for criticism or ridicule.” (Ibid.)
C. Joint Client
Real parties renew their argument that they are entitled to the documents withheld as joint clients of O'Melveny with Wells Fargo. They rely on the declaration of Ms. Boltwood that she was referred by Wells Fargo to Ms. Bishop to discuss trust issues. Ms. Boltwood concludes: “Ms. Bishop did not deal with me as a lawyer in these instances, but rather as a substitute for and liaison for Ms. Hydar (or Ms. Palumbo) whom, it was clear, did not want to discuss such matters with me as they represented that Ms. Bishop was the final decision-maker.” 5
But as we have discussed, it is established that trust beneficiaries are not joint clients of counsel retained by the trustee. Real parties' reliance on our opinion in Metro–Goldwyn–Mayer, Inc. v. Superior Court (1994) 25 Cal.App.4th 242, 30 Cal.Rptr.2d 371 is misplaced. That case presented highly unusual circumstances which led to its narrow holding. We concluded that a law firm may not use its work product, developed in an underlying transaction, to benefit some of its clients against another client. (Id. at p. 249, 30 Cal.Rptr.2d 371.) On that basis, we found that the firm had waived the protection of the absolute work product doctrine. (Ibid.) But here, real parties were not clients of O'Melveny. Our earlier opinion does not apply.
The absence of an attorney-client relationship between real parties and O'Melveny undercuts real parties' argument that Lasky does not apply. They assert that “even Lasky notes that real party's need for discovery of the conduct and state of mind of Ms. Bishop and her subordinates, presents ‘strong public policy considerations for creation of an exception.’ ”
This quotation is taken out of context. What we said is: “The question of whether the public policy consideration of achieving justice in the context of an actual legal malpractice action might be held to mandate an exception to the ‘absolute’ privilege need not be reached by this court. In the underlying action, the work product is sought by litigation adversaries of the client. There is no suggestion that the trustee, acting in his own interests in defending the underlying removal and surcharge proceedings, desires the disclosure of the materials sought by the beneficiaries. This case does not present the same strong public policy considerations for creation of an exception as would discovery efforts by the client for the purpose of facilitating preparation of his own malpractice action against his former attorney. Also, the privilege's guarantee of protecting the attorney from compelled disclosure to future adversaries of his client is served in the present circumstances, while it would not be so served in an action exclusively between client and attorney. [¶] This determination appears pragmatically appropriate in situations where, as here, the subject work product has not been communicated or produced to the client because the attorney alone knows what impressions, opinions, or legal research or theories are entitled to be protected under the principles underlying the privilege.” (Lasky, Haas, Cohler & Munter v. Superior Court, supra, 172 Cal.App.3d at p. 274, fn. 4, 218 Cal.Rptr. 205, emphasis added.)
Real parties cannot invoke the same policy considerations applicable in an action by a client against a former attorney. They attempt to distinguish Lasky on the ground that the attorney's conduct is at issue here because of the role O'Melveny played. This is apparently based on real parties' assertion that O'Melveny was a part of a conspiracy against the beneficiaries. They point to O'Melveny's refusal to sign an engagement letter tendered by Wells Fargo which would have made O'Melveny responsible for interest and penalties imposed by the Internal Revenue Service in connection with tax returns prepared for the Trust. This argument is speculative and does not support a conclusion that O'Melveny was acting in concert with Wells Fargo to defraud the beneficiaries.
At oral argument, counsel for real parties argued for the first time that O'Melveny waived the work product argument because it failed to appear at the hearing in the trial court. Aside from the impropriety of raising this argument, which did not appear either in real parties' joint opposition to the writ petitions or in their return to O'Melveny's writ petition, it is without merit. The declaration of Ms. Bishop asserting work product was before the trial court at the hearing. There was no waiver.
The declaration of Ms. Bishop of O'Melveny states that the documents as to which the work product doctrine was asserted reflect her impressions, conclusions and legal theories within the meaning of Code of Civil Procedure section 2018, subdivision (c). The trial court did not conduct an in camera inspection of the work product documents.6 O'Melveny argues that this omission constitutes reversible error.
Although such inspection is not allowed where the attorney-client privilege is asserted, it is the proper procedure to determine whether the work product doctrine applies. (See BP Alaska, Exploration, Inc., v. Superior Court, supra, 199 Cal.App.3d at p. 1261, 245 Cal.Rptr. 682.) We conclude that the trial court should conduct an in camera inspection of the documents prepared by O'Melveny and communicated to Wells Fargo as to which only the work product doctrine is asserted. The trial court is to determine whether the documents were given to Wells Fargo in confidence.
Let a peremptory writ of mandate issue directing respondent to vacate its order of May 20, 1996 which compels the discovery of documents, and to make a new and different order denying discovery as to those matters as to which the attorney-client privilege was asserted, and all work product documents which were not communicated by O'Melveny to Wells Fargo. The court is to hold an in camera review of documents for which the work product doctrine was invoked by O'Melveny, which were communicated to Wells Fargo, to determine whether they are protected from disclosure because they were communicated in confidence. Petitioners to have costs on appellate review.
1. Ms. Boltwood also asked us to take judicial notice of Wells Fargo's response to first amended objections and request for surcharge of V. Boltwood pursuant to Evidence Code section 452, subdivision (d). While the matter is subject to judicial notice, she has not demonstrated how the document bears on the issues before us. We deny her request on that basis.
2. We granted an application by the California Bankers Association to file a letter brief as amicus curiae in support of Wells Fargo. In its letter, amicus argues that the need for trustees to obtain confidential legal advice is critical.
3. Real parties also challenge the sufficiency of the privilege log provided by Wells Fargo, although this argument was not made in the trial court. We have examined the privilege log and find it to be sufficient.
4. In the O'Melveny reply, Ms. Bishop submitted a declaration challenging Ms. Boltwood's account of their relationship. As we have said, we decline to consider any matters not before the trial court at the time it ruled on the motion at issue.
5. The parties have submitted additional documents, not presented to the trial court, in support of their arguments. We confine our review to the record before the trial court.
6. The parties dispute the circumstances regarding the trial court's failure to conduct an in camera inspection of the work product documents. Because O'Melveny, which holds the work product privilege, did not appear at the trial court hearing, we conclude that the right to such review is not waived.
EPSTEIN, Associate Justice.
CHARLES S. VOGEL, P.J., and BARON, J., concur.