In Anten v. Superior Court (No. B258437 – Filed 1/30/2015), the Second Appellate District held that when joint clients do not sue each other, but one of them sues their former attorney, the nonsuing client cannot prevent the parties to the malpractice suit from discovering or introducing otherwise privileged attorney-client communications made in the course of the joint representation.
Under California Evidence Code §958, in lawsuits between an attorney and a client based on an alleged breach of a duty arising from their attorney-client relationship, communications relevant to the alleged breach are not protected by the attorney-client privilege. Similarly, Evidence Code §962 provides that if multiple clients retain or consult with an attorney on a matter of common interest and the joint clients later sue each other, then the communications between either client and the attorney made in the course of that relationship are not privileged in the suit between the clients.
The issue presented in Anten was, according to the court, at the intersection of the above rules and presented a case of first impression in California. Anten and others (the Rubins) jointly retained the Weintraub law firm to advise them about tax advice previously given by their former tax lawyers and to represent them in a tax audit arising from that advice. Weintraub advised the joint clients that the prior lawyers’ incurable error barred the favorable tax treatment they had sought for the sale of their business. On that basis, the clients settled with the I.R.S., paying more than $1,000,000. Weintraub further advised the clients to file a malpractice suit against the prior tax lawyers. Eventually, Weintraub “fired” Anten and filed such a malpractice suit for the Rubins. Anten later filed his own suit against the tax lawyers and also named Weintraub as a defendant.
In that action, Weintraub opposed Anten’s discovery requests on the grounds that the information sought was subject to the Rubins’ attorney-client privilege, which they had expressly declined to waive. The trial court denied Anten’s motion to compel; he then filed a petition for writ of mandate seeking to overturn the trial court’s order. The appellate court granted the petition and directed the trial court to grant Anten’s motion to compel.
As the court explained, the principal rationale of Evidence Code §958 was that it would be unjust to permit a client to accuse his attorney of a breach of duty and then invoke the attorney-client privilege to prevent the attorney from introducing evidence to defend himself. Because the court could find no authority addressing the application of that exception where one joint client charges the attorney with a breach of duty, but the other joint client does not, the court had to determine whether Section 958 fit that scenario, concluding that, indeed, it could.
The attorney-client privilege applies only to confidential communications. The court explained that because the subject communications were not confidential as to Anten, they could not be privileged as to Anten. As for policy considerations, it recognized the unfairness of permitting the nonsuing joint clients (the Rubins) to thwart Anten’s malpractice suit against Weintraub by invoking the privilege given the risk of collusion (particularly if, for example, the alleged breach involved a claim that the attorney had impermissibly favored the interests of the nonsuing joint client over those of the suing client). The court concluded that the attorney-client privilege did not apply to communications relevant to an issue of breach of duty by Weintraub arising out of its joint attorney-client relationship with Anten and the Rubins.
However, the court’s holding that Anten was entitled to discover the subject communications sidestepped the related question of whether the communications would still be privileged as to third parties, i.e., persons other than Anten, the Rubins and Weintraub. Relegating it to an ambiguous footnote, the court ducked a decision on that issue but did, however, seem to recognize the potential quandary that could result: If the communications are still privileged as to third parties, those communications could then be inadmissible at trial, even against the successor law firm defendant. Therefore, under that scenario, in order to be able to use the communications against Weintraub at trial, Anten might be forced to dismiss, settle or sever the case against the prior tax lawyers. Perhaps the trial court will fashion an appropriate remedy if that does not happen, but the appellate court left Anten with some interesting decisions to make before trial. The moral of the story: Be careful what you wish for!
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