Fouts v. Breezy Point Condominium Ass'n
851 N.W.2d 845
Wis. Ct. App.2014Background
- Fouts, a Breezy Point Condominium Association member and director, sued the Association seeking full access to records including attorney-client files and alleging misallocation of legal expenses for others.
- In 2010 the Association passed a resolution allowing any director to review records paid for by the Association, limited to closed cases, with no copying and no blanket waiver of privilege.
- The Association’s attorney later redacted privileged materials before providing Fouts with records; Fouts requested but did not receive non-redacted privileged communications.
- The circuit court denied Fouts’ summary judgment motion and held that the Association, via the board, has exclusive authority to determine access to privileged materials and that the board had not waived the privilege.
- After stipulated facts established the Association had asserted and not waived the attorney-client privilege, the court granted summary judgment to the Association and awarded costs and statutory attorney fees to the Association.
- Fouts appeals, arguing he as a director may review privileged communications and that the court should have ordered production or a different procedural course; the court affirms, applying the entity rule and Lane/Milroy guidance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether current directors may access privileged attorney-client communications | Fouts asserts directors should review all records, including privileged material. | Association argues privilege belongs to the client and a current director cannot pierce it. | Privilege belongs to the Association; current directors may not access privileged communications. |
| Whether a director can waive the attorney-client privilege on behalf of the Association | Fouts contends he can waive privilege as a director exercising oversight. | Waiver rests with the Association’s management, not individual directors. | A director cannot waive the privilege; the client (Association) controls waiver. |
| Application of Lane and Milroy to a current director seeking privileged materials | Fouts relies on Lane’s former-director context to justify access. | Lane/Milroy support the result that the client controls privilege and a director cannot override it. | Lane and Milroy apply; a current director has no authority to pierce the privilege. |
| Whether public policy or chapter 703 changes the privilege analysis | Fouts argues fiduciary duties and small-condominium rules override privilege. | Ch. 703 does not apply; the privilege remains with the Association. | Ch. 703 does not compel production; privilege remains with the Association. |
| Whether the statutory attorney-fee award was proper | Fouts contests attorney-fee recoveries under the declaratory judgment act. | Court properly awarded statutory attorney fees applicable to the prevailing party. | Statutory attorney fees were properly awarded; declaratory-judgment costs/fees procedure followed. |
Key Cases Cited
- Lane v. Sharp Packaging Sys., Inc., 251 Wis.2d 68 (2002 WI 28) (former director cannot waive corporation's privilege; entity rule assigns client control)
- Milroy v. Hanson, 875 F. Supp. 646 (D. Neb. 1995) (dissident director cannot override privilege when it conflicts with board decision)
- Reinecke v. Danforth, 485 N.W.2d 63 (Wis. Ct. App. 1992) (entity rule; client is organization, privilege belongs to client)
- Borgwardt v. Redlin, 538 N.W.2d 581 (Wis. Ct. App. 1995) (privilege with entity rule; application to discovery/privilege issues)
- State ex rel. Harvey v. Plankinton Arcade Co., 195 N.W. 904 (Wis. 1923) (stockholder access vs. privileged information; early access principle)
- Pettit v. State, 492 N.W.2d 633 (Wis. Ct. App. 1992) (caution against undeveloped, inadequately briefed arguments)