782 N.E.2d 624 | Ohio Ct. App. | 2002
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *560
{¶ 2} In late 1997, PPC experienced financial difficulties. Pursuant to statutory oversight authority set forth in R.C.
{¶ 3} On August 18, 2000, the superintendent of ODI, acting in his capacity of liquidator of PPC, filed a complaint against defendant, pursuant to R.C.
{¶ 4} In answer to plaintiff's complaint for return of the alleged preference payments, defendant raised various affirmative defenses, including set-off and estoppel. In asserting estoppel, defendant argued that ODI should be estopped from seeking return of payments PPC made to defendant pursuant to the settlement agreement if ODI, in its supervisory capacity, had knowledge of and approved the settlement agreement and payments made under it.
{¶ 5} After the trial court denied a summary judgment motion plaintiff brought on its preferential payments claim, defendant issued a broad subpoena duces tecum for ODI and one of its former employees to produce all documents and correspondence relating to the supervision, rehabilitation and liquidation of PPC. In response, plaintiff filed a motion to quash and for a protective order prohibiting the discovery of confidential or privileged matters defendant sought. Attached to plaintiff's motion was an extensive privilege log detailing documents purportedly falling within defendant's discovery request, and identifying privileges plaintiff claimed applied to prevent disclosure of the various documents.
{¶ 6} After its review of the privilege log, defendant excluded from its discovery request any documents plaintiff claimed were privileged under the attorney-client or attorney work-product privileges. Defendant limited its discovery request to testimony and documents concerning the settlement agreement between PPC and defendant, and payments PPC made under it. Defendant asserted the limited discovery was relevant and necessary to support its defense that ODI had approved the settlement agreement and therefore should be estopped from challenging the payments PPC made to defendant pursuant to the agreement. Defendant contended the testimony and documents were not "confidential" under R.C.
{¶ 7} In a decision issued January 10, 2002, the trial court found defendant's discovery request was limited in scope and relevant to its defense in the preference suit plaintiff brought. The trial court concluded the confidentiality and/or privilege provisions of R.C.
{¶ 8} Plaintiff brings this interlocutory appeal of the court's judgment entry permitting defendant's discovery, and assigns the following errors: *562
{¶ 9} "FIRST ASSIGNMENT OF ERROR: THE TRIAL COURT ERRED BY HOLDING THAT THE DOCUMENTS AND TESTIMONY SOUGHT FROM THE DEPARTMENT OF INSURANCE WERE RELEVANT TO THE UNDERLYING PREFERENCE ACTION.
{¶ 10} "SECOND ASSIGNMENT OF ERROR: THE TRIAL COURT ERRED BY NARROWLY CONSTRUING R.C.
{¶ 11} "THIRD ASSIGNMENT OF ERROR: THE TRIAL COURT ERRED BY IGNORING THE PLAIN LANGUAGE OF R.C.
{¶ 12} As a preliminary matter, because this court's jurisdiction is limited to "review and affirm, modify, or reverse judgments or final orders," we must first determine whether the trial court's order is final and appealable. See Section
{¶ 13} In its January 10, 2002 decision, the trial court declined to quash defendant's subpoenas or to issue a protective order as to the discovery of matters that plaintiff claimed were confidential and privileged pursuant to R.C.
{¶ 14} R.C.
{¶ 15} "(B) An order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following:
{¶ 16} "* * *
{¶ 17} "(4) An order that grants or denies a provisional remedy and to which both of the following apply: *563
{¶ 18} "(a) The order in effect determines the action with respect to the provisional remedy and prevents a judgment in the action in favor of the appealing party with respect to the provisional remedy.
{¶ 19} "(b) The appealing party would not be afforded a meaningful or effective remedy by an appeal following final judgment as to all proceedings, issues, claims, and parties in the action." R.C.
{¶ 20} The portion of the trial court's decision that holds plaintiff is not entitled to a protective order pursuant to R.C.
{¶ 21} To the extent the trial court's decision directs plaintiff to submit requested materials to an in camera review so the court can determine whether the documents are protected from disclosure on some alternative basis, including other bases of privilege or confidentiality, the order is not a final appealable order pursuant to R.C.
{¶ 22} Accordingly, this court's review is limited to whether the trial court erred in determining that neither R.C.
{¶ 23} Civ.R. 26(B)(1) provides that parties "may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter *564
involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party." The relevancy test under Civ.R. 26(B)(1) is much broader than the test for relevancy utilized at trial. Matters are only irrelevant at the discovery stage when the information sought will not reasonably lead to the discovery of admissible evidence. Tschantz v. Ferguson (1994),
{¶ 24} In Ohio, the burden of showing that testimony or documents are confidential or privileged rests upon the party seeking to exclude it. Lemley v. Kaiser (1983),
{¶ 25} Here, plaintiff asserts the testimony and documents defendant sought are not discoverable because they are privileged or confidential, pursuant to R.C.
{¶ 26} "In all proceedings and judicial reviews thereof under sections
{¶ 27} "The work papers of the superintendent or of the person appointed by the superintendent, resulting from the conduct of an examination made pursuant to section
{¶ 28} In denying plaintiff's motion for a protective order, the trial court stated that "[p]laintiff may not initiate a lawsuit to compel defendant to return payments made under the settlement agreement and then deny defendant the evidence necessary to defend itself in the lawsuit." (Jan. 10, 2002 Decision, 4.) The court's statement is in accord with the subject matter waiver doctrine first enunciated in Hearn v. Rhay (E.D.Wash. 1975),
{¶ 29} Under the subject matter waiver doctrine, Hearn and its progeny employ a tripartite test to determine if a privilege has been waived. Pursuant to the test, if (1) assertion of a privilege is the result of some affirmative act, such as the filing of a lawsuit, by the asserting party, (2) through the affirmative action the asserting party has placed the allegedly protected information at issue by making it relevant to the case, and (3) application of the privilege would deny the opposing party access to information vital to its defense, a court should find that the asserting party has waived the privilege through its affirmative conduct. Id. at 581. In accord, Schottenstein, Zox Dunn, supra.
{¶ 30} Here, plaintiff's assertion of the statutory privileges arises out of an affirmative act on the part of plaintiff, that being the filing of this lawsuit against defendant. Hearn; Schottenstein, Zox Dunn, supra. Accordingly, the first factor is established.
{¶ 31} By filing the lawsuit for the return of the alleged preference payments defendant received, pursuant to the settlement agreement, plaintiff placed in issue defendant's estoppel defense: whether ODI had knowledge of and approved the settlement agreement and payments made to defendant under the agreement. Where such a defense is successfully asserted, it "prevents one from asserting a claim or right that contradicts what one has said or done before or what has been legally established as true." Blacks Law Dictionary (7th Ed. 1999) 570. Accordingly, the second factor of the Hearn test is satisfied because plaintiff put the allegedly protected information at issue and it is directly relevant to the estoppel defense defendant raised. *566
{¶ 32} In response, plaintiff contends an estoppel defense cannot lie against the state, and therefore the requested discovery is not at issue in plaintiff's action to recover payments PPC made to defendant. In some instances, however, estoppel may lie against the state. Moreover, the very documents defendant seeks may be particularly significant to demonstrating whether estoppel applies under the facts of this case.
{¶ 33} The third and final factor of the Hearn test is met here because application of the statutory privileges would deny defendant information vital to its estoppel defense. "Vital information" necessarily implies that the information is unavailable from any other source. See Ward at 332; H D Steel, supra; Frontier Refining, Inc. v. Gorman-Rupp Co., Inc. (C.A. 10, 1998),
{¶ 34} Because the tripartite test in Hearn has been satisfied, the subject matter waiver doctrine operates to allow defendant discovery of information relevant to and within the parameters of its estoppel defense: matters concerning ODI's knowledge or approval of the settlement agreement and payments made to defendant pursuant to the agreement. As a result, plaintiff cannot claim statutory privileges under R.C.
{¶ 35} Plaintiff's second and third assignments of error raise questions rendered moot by our disposition of plaintiff's first assignment of error: (1) whether the trial court should have conducted an in camera inspection of ODI's documents to determine if the statutory privileges protect the documents, and (2) whether the trial court misconstrued R.C.
{¶ 36} Having overruled plaintiff's first assignment of error, rendering plaintiff's second and third assignments of error moot, we affirm the trial court's judgment denying plaintiff's motion for a protective order and allowing defendant discovery of matters concerning the settlement agreement between PPC and defendant and payments made under the agreement.
Judgment affirmed.
TYACK, P.J., and PETREE, J., concur. *567