DP Pham LLC v. Cheadle
246 Cal. App. 4th 653
| Cal. Ct. App. | 2016Background
- DP Pham loaned nearly $3 million to Robert Obarr, secured by a mobilehome park; Obarr allegedly contracted to sell the Property to two buyers (Westminster via SCD, and Pham).
- Obarr’s assistant/bookkeeper, Christi Galla, received and forwarded emails/letters from Obarr’s attorney, Shapleigh Kimes; two communications (Sept 2012 email, Jan 2013 letter) were later used by Pham in opposing a summary adjudication motion.
- Obarr died; C. Tucker Cheadle became administrator of the estate and asserted claims and defenses relating to the Property and Pham’s loans.
- Cheadle moved to exclude the two attorney-client communications as privileged and to disqualify Pham’s counsel for obtaining and using them after Galla provided copies.
- The trial court conducted an in camera review, concluded the communications were not privileged (and invoked statutory exceptions §§957, 960, 961), and denied disqualification.
- The Court of Appeal reversed: it held the trial court erred by reviewing communications to decide privilege and directed remand for the trial court to decide disqualification without considering privileged content.
Issues
| Issue | Plaintiff's Argument (Cheadle) | Defendant's Argument (Pham) | Held |
|---|---|---|---|
| Whether court may review contents of disputed documents to determine if attorney-client privilege applies | Privilege attaches once prima facie showing made; court may not inspect content — privilege is absolute and content-irrelevant | Court and Pham relied on in camera review to show communications were not privileged | Court: Trial court erred — courts may not review communications to decide privilege after prima facie showing; section 915 prohibits such inspection until waiver/exception established (reversed) |
| Whether statutory exceptions (§957, §960, §961) eliminate privilege for these communications | Exceptions do not apply: here parties assert claims against estate and exception purpose (disclosure among claimants over estate disposition) doesn’t encompass adverse estate liability | Exceptions apply because both Pham and Westminster claim title through deceased client; communications are relevant to who Obarr intended to sell to | Court: Exceptions do not apply given parties also seek damages/claims against estate; applying exceptions broadly would defeat their narrow purpose (error to apply them) |
| Whether privilege was waived or lost (by disclosure to Galla or failure to preserve) | No waiver: holder (client or personal representative) did not authorize disclosure; mere possession by agent or inadvertent third-party disclosure does not waive privilege | Waiver or forfeiture: Galla publicly disclosed communications; estate failed to act diligently to retrieve documents | Court: Pham did not prove waiver; no evidence required showing client or representative waived or authorized disclosure; claims of failure to preserve forfeited/not supported (no waiver) |
| Whether opposing counsel should be disqualified for receiving/using privileged materials | Counsel should be disqualified if they obtained and used privileged communications without notice and failed to follow professional obligations | Pham contends disclosure was voluntary and communications were not privileged | Court: Remanded — disqualification is within trial court’s discretion; trial court must decide on remand based on State Fund/Rico factors and without relying on privileged content the court previously inspected |
Key Cases Cited
- Costco Wholesale Corp. v. Superior Court, 47 Cal.4th 725 (2009) (attorney-client privilege protects communications irrespective of content; section 915 bars in camera inspection to test privilege)
- Kerner v. Superior Court, 206 Cal.App.4th 84 (2012) (privilege is absolute and protects confidential attorney-client communications)
- Cornish v. Superior Court, 209 Cal.App.3d 467 (1989) (courts should not inspect privileged communications to decide privilege)
- OXY Resources California LLC v. Superior Court, 115 Cal.App.4th 874 (2004) (court-ordered in camera review limited to waiver/exception inquiries — court here distinguished OXY post-Costco)
- Rico v. Mitsubishi Motors Corp., 42 Cal.4th 807 (2007) (ethical obligations and standards for counsel who receive potentially privileged materials; disqualification not automatic)
- State Comp. Ins. Fund v. WPS, Inc., 70 Cal.App.4th 644 (1999) (State Fund rule: attorney should limit review and notify sender upon receiving apparently privileged materials)
- Cooke v. Superior Court, 83 Cal.App.3d 582 (1978) (privilege determinations must be made without inspection of documents)
- People v. Gionis, 9 Cal.4th 1196 (1995) (burden and appellate review principles for privilege determinations)