In re CARBO CERAMICS INC., Relator.
No. 14-02-00048-CV.
Court of Appeals of Texas, Houston (14th Dist.).
May 20, 2002.
369 S.W.2d 369
Barry Abrams of Houston, TX, for respondent.
MAJORITY OPINION
EVA M. GUZMAN, Justice.
Relator, Carbo Ceramics Inc., (“Carbo“) seeks a writ of mandamus ordering respondent, the Honorable Sharolyn Woods, to vacate her order requiring that Carbo produce privileged documents. We conditionally grant the writ in part and deny the writ in part.
Factual and Procedural Background
The underlying suit involves claims that Carbo tortiously interfered with existing and prospective contractual relations between real party in interest, Proppant Technology, Ltd. (“Prop Tech“), and Mineracao Curimbaba Ltd. (“Curimbaba“), a Brazilian company. Trial was set for October 2, 2001. On September 17, 2001, Carbo filed an amended discovery response designating Stephen Shalen, one of Carbo‘s attorneys, as a potential witness with knowledge about the drafting and revision of proposed agreements between Carbo and Curimbaba. On September 30, 2001, and on October 1, 2001, Carbo produced a copy of a letter from Carbo to Shalen with an attachment. The attachment was a term sheet, a version of which had been previously produced by Carbo to Prop Tech. The Shalen letter and the attachment were jointly labeled as Defendant‘s Exhibit 54 and included on Carbo‘s exhibit list.1
On October 1, 2001, after receiving the Shalen letter, Prop Tech‘s counsel sent Carbo a letter asserting that Carbo was
On October 4, 2001, the trial court held a hearing on pretrial motions. Carbo announced it was not prepared to respond to Prop Tech‘s motion to compel and asked to submit briefing. The court approved a submission date of October 10, 2001. At the October 4th hearing, Prop Tech urged in its motion in limine that Carbo be precluded from presenting testimony about reliance on the advice of counsel as justification for its actions. During this hearing, Carbo advised the judge that it intended to rely on the advice of counsel as a defense, but it did not intend to offer the substance of that advice because that would waive its privilege. The trial judge, however, stated: “Based on the fact that the defendant [Carbo] does intend to rely on the advice of counsel and that‘s their defense ... I think that the defendant has to know that by its assertion here that that privilege is waived.”
On October 10, 2001, Carbo filed its response to Prop Tech‘s motion to compel. In its response, Carbo stated its understanding that no one disputed the privileged nature of the Shalen letter. Accordingly, Carbo only addressed the waiver grounds asserted in the motion to compel. On October 25, 2001, Prop Tech filed a reply to Carbo‘s response and asserted, as an additional ground for compelling production of the privileged document, Carbo‘s statement at the October 4th, hearing that it intended to rely on the advice of counsel defense. Carbo responded on November 14, 2001, that it never intended to waive the attorney-client privilege and unequivocally stated it would not assert the advice of counsel defense at trial and would comply with Prop Tech‘s motion in limine.
The record contains no transcript or reference to an oral hearing on the motion to compel. On January 3, 2002, the trial judge signed an order granting Prop Tech‘s motion to compel and ordered Carbo to produce the Shalen letter and “all other documents previously withheld on the ground of attorney-client privilege.”2 On January 4, 2002, the trial court signed a supplemental order, stating it had signed an order on January 3rd “with regard to the October 4, 2001, hearing” and had
Standard of Review
Mandamus relief is available if the trial court abuses its discretion, either in resolving factual issues or in determining legal principles when there is no other adequate remedy by appeal. See Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). A trial court abuses its discretion if “it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985). When alleging that a trial court abused its discretion in its resolution of factual issues, the complaining party must show the trial court could reasonably have reached only one decision. Id. at 918. As to determination of legal principles, an abuse of discretion occurs if the trial court clearly fails to analyze or apply the law correctly. See Walker, 827 S.W.2d at 840.
In determining whether the writ should issue, we must further determine whether the party has an adequate remedy by appeal. Id. Mandamus is intended to be an extraordinary remedy, only available in limited circumstances “involving manifest and urgent necessity and not for grievances that may be addressed by other remedies.” Holloway v. Fifth Court of Appeals, 767 S.W.2d 680, 684 (Tex. 1989). An appellate remedy is not inadequate merely because the party may incur more expense and delay than in obtaining the writ. Walker, 827 S.W.2d at 842. The appellate remedy may be inadequate in three situations: (1) when the appellate court cannot cure the trial court‘s discovery order, such as where the trial court orders disclosure of privileged documents; (2) where the party‘s ability to present a viable claim or defense is vitiated or severely compromised; and (3) when the trial court disallows discovery and the missing discovery cannot be made part of the appellate record, thereby precluding appellate review. Id. at 843. Because the trial court has ordered production of privileged documents, we find any appellate remedy is inadequate.
I. Proof of Privilege
Prop Tech‘s motion was entitled, in part, “Motion to Conduct Hearing on Claimed Privilege and to Compel Production.” On page 5 of this motion, Prop Tech asserted that it requested the court to hear Carbo‘s claim that the first page of Exhibit No. 54, the Shalen letter, was privileged. Prop Tech further asserted that “Carbo bears the burden to establish that the document at issue [the Shalen letter] is privileged....”
The discovery rules provide that any party may request a hearing on a claim of privilege and the party asserting the privilege must present any evidence necessary to support the privilege.
A. Shalen Letter
Although Carbo asserted in its response that Prop Tech conceded the
The Shalen letter was prepared by Carbo and delivered to its attorney, Stephen Shalen. The letter‘s contents reveal it was intended to be confidential and was written for the purpose of rendition of legal services. Thus, the Shalen letter falls within the scope of
B. “All Other Documents”
The trial court‘s ruling requiring production of “all other documents previously withheld on the ground of attorney-client privilege” cannot be upheld for failure to prove the privilege. The motion to compel did not specifically challenge the privilege as to any documents other than the Shalen letter. Indeed, Prop Tech states in the motion to compel: “Under
Furthermore, Prop Tech essentially concedes the privileged nature of “all other documents.” Within the factual portion of the motion, Prop Tech states:
For the three reasons set out at the beginning of this motion, Prop Tech is now entitled to production of the first page of that document [the Shalen letter] as well as all other documents listed on Carbo‘s privilege log....
The “three reasons” set out at the beginning of Carbo‘s motion are waiver grounds, including waiver by voluntary production, waiver by voluntary production of a significant part of the privileged material, and the crime/fraud exception. By seeking these other documents on grounds that the privilege was waived, Prop Tech conceded the privileged nature of “all other documents.” Cf.
In the final prayer paragraph of the motion, Prop Tech asks the court to “order
Even if Prop Tech‘s request for “all other exhibits” could be interpreted to request exhibits other than the Shalen letter, we could not find that this request challenges Carbo‘s claim of privilege. Prop Tech did not specifically identify in its motion which exhibits, other than the Shalen letter, were previously withheld on the ground of attorney-client privilege. Absent a specific challenge to the privileged nature of any document other than the Shalen letter, we hold that Carbo was not required to prove its privilege with respect to any document other than the Shalen letter. Thus, because Prop Tech did not challenge the privileged nature of all privileged documents, we conclude that Carbo was not required to provide proof of privilege for all other documents previously withheld on the ground of privilege.
II. Waiver by Voluntary Production
In its motion to compel, Prop Tech argued that the attorney-client privilege had been waived because (1) Carbo‘s production of the document was not inadvertent; and (2) Carbo voluntarily produced a significant portion of the privileged material by previously producing a version of the attachment to the Shalen letter.
A person waives the privilege if she voluntarily discloses any significant part of the privileged matter unless such disclosure is itself privileged.
A party who permits access to unscreened documents may, due to inattention, unwittingly—but nonetheless voluntarily—disclose a privileged document. Disclosure is involuntary only if efforts reasonably calculated to prevent the disclosure were unavailing. Thus, although disclosure does not necessarily waive privileges, a party claiming involuntary disclosure has the burden of showing, with specificity, that the circumstances confirm the involuntariness of the disclosure. In addition to precautionary measures, other factors to be examined in determining involuntariness include the delay in rectifying the error, the extent of any inadvertent disclosure, and the scope of discovery.
Id. Thus, the Granada court found that a party seeking to preserve a privilege after
Granada was overruled in part, however, by
Granada also addressed the issue of whether the determination of inadvertent disclosure was a factual or legal inquiry. Although waiver is ordinarily a question of fact, Tenneco, Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996), and the resolution of fact issues by the trial court are conclusive and not reviewable by mandamus, Osborne v. Johnson, 954 S.W.2d 180, 183 (Tex. App.—Waco 1997, orig. proceeding), the supreme court in Granada held that a determination under
A. Shalen Letter
The issue is whether Carbo produced the Shalen letter without intending to waive its claim of attorney-client privilege. See
The following day, when Prop Tech received a hand-delivered copy of the Shalen letter, Prop Tech sent a letter by fax to Carbo asserting its belief that production of the Shalen letter was an attempted selective waiver of the attorney-client privilege and that the letter contradicted prior affidavits of two Carbo representatives filed with the trial court. Prop Tech also contended that the late production of the Shalen letter deprived Prop Tech of the opportunity to conduct discovery relevant to that document.
After receiving this letter from Prop Tech‘s counsel, Carbo apparently changed its strategy. Carbo‘s counsel immediately responded with its letter claiming the Shalen letter was inadvertently produced and informing Prop Tech that it did not intend to call Shalen as a witness. Despite the statement in its October 1st letter that Carbo did not intend to call Shalen as a witness, Carbo‘s counsel asserted in the hearing on October 4, 2001, that it intended to rely on the advice of counsel defense. Although Carbo‘s counsel argued that the assertion of this defense would not waive
B. “All Other Documents”
Although the trial court was within its discretion to determine that Carbo waived its claim of attorney-client privilege when it voluntarily disclosed the Shalen letter, this implied waiver as to the Shalen letter is not an automatic blanket waiver of the privilege for all other documents withheld on the basis of attorney-client privilege. See Marathon Oil Co. v. Moye, 893 S.W.2d 585, 592 (Tex. App.—Dallas 1994, orig. proceeding); National Union Fire Ins. Co. v. Hoffman, 746 S.W.2d 305, 311 (Tex. App.—Dallas 1988, orig. proceeding). Carbo did not disclose any documents other than the Shalen letter.
Prop Tech‘s request in the “history” portion of its motion for “all other documents listed on Carbo‘s privilege log,” when viewed in the context of the paragraph in which it is located, seeks the two other copies of the Shalen letter listed on Carbo‘s privilege log. The request found in the prayer portion of the motion, for “all other exhibits” previously withheld was not a request for all other documents previously withheld on the ground of attorney-client privilege. Indeed, as previously discussed, this request also seeks the other versions of Exhibit 54, the Shalen letter. In requiring production of all other documents previously withheld as privileged, rather than “exhibits previously withheld as privileged,” or “all other documents listed on Carbo‘s privilege log,” the trial court‘s January 3rd order goes well beyond the relief requested in the motion to compel. See National Union Fire Ins. Co. v. Hoffman, 746 S.W.2d 305, 311 (Tex. App.—Dallas 1988, orig. proceeding) (trial court‘s blanket determination of waiver as to “all communications, knowledge and opinions which underlie the matters addressed in the letter” went well beyond requesting party‘s claim of waiver with respect to one letter). See also Marathon Oil Co. v. Moye, 893 S.W.2d 585, 590 (Tex. App.—Dallas 1994, orig. proceeding) (waiver by voluntary disclosure does not automatically allow disclosure of all privileged material). Moreover, the trial court‘s order does not limit the production of privileged documents to specific issues; rather, the order imposes a blanket requirement of production of all privileged documents. To the extent the trial court‘s order requiring production of these “other documents” was based on waiver by voluntary disclosure, it was an abuse of discretion.
III. Waiver by Disclosure of a Significant Part
Prop Tech also claimed Carbo waived its claim of privilege by voluntarily producing a significant part of the privileged material.
In addition to waiver, Prop Tech argued that the Shalen letter fell within the crime/fraud exception to the attorney-client privilege.
V. Waiver by Advice of Counsel Defense
In its reply to Carbo‘s response to the motion to compel, Prop Tech contended Carbo waived its claim of privilege by asserting in the October 4, 2001, hearing that it intended to rely on the advice of counsel defense.3 During the October 4th hearing, the trial judge made the following statement after Carbo‘s counsel admitted its intent to assert the advice of counsel defense:
THE COURT: Based on the fact that the defendant [Carbo] does intend to rely on the advice of counsel and that‘s their defense ... I think that the defendant has to know that by its assertion here that that privilege is waived ... I‘m not going to limit the defense if the defendant believes they are validly asserting, but I think it is very clear here as to the Court‘s interpretation that once you claim that defense, that becomes open for full and complete examination of the communications.
In the January 4th supplemental order, the trial court stated that the January 3rd order “was signed on the ruling made with regard to the October 4, 2001, hearing....” This indicates that the ruling in the January 3rd order, requiring production of the Shalen letter and “all other documents previously withheld as privileged,” was based, at least in part, on Carbo‘s admitted intent to assert the advice of counsel defense.
Texas courts apply the offensive use doctrine when the advice of counsel defense is raised. See, e.g., DeWitt and Rearick, Inc. v. Ferguson, 699 S.W.2d 692 (Tex. App.—El Paso 1985, orig. proceeding), disapproved on other grounds, Owens-Corning Fiberglas Corp. v. Caldwell, 818 S.W.2d 749, 750 (Tex. 1991). The offensive use doctrine applies when a party seeking affirmative relief attempts to claim a privilege to shield evidence that would materially weaken or defeat that party‘s claims. See Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985). “‘A plaintiff cannot use one hand to seek affirmative relief in court and with the other lower an iron curtain of silence against otherwise pertinent and proper questions which may have a bearing upon his right to maintain his action.‘” Id. at 108 (quoting Pavlinko v. Yale-New Haven Hosp., 192 Conn. 138, 470 A.2d 246, 251 (1984)).
DeWitt was the first Texas case to apply the offensive use doctrine to the attorney-client privilege and the application of this doctrine to the attorney-client privilege has been upheld by the supreme court. Republic Ins. Co. v. Davis, 856 S.W.2d 158, 161 (Tex. 1993). In DeWitt, the relators stated they had settled with one group of
In Republic Insurance Company, the supreme court set out three factors that must be present for the offensive use doctrine to apply: (1) the party asserting the privilege must be seeking affirmative relief; (2) the privileged information must be such that, if believed by the factfinder, would in all probability be outcome determinative of the cause of action; and (3) disclosure of the confidential communication is the only means by which the aggrieved party may obtain the evidence. 856 S.W.2d at 163. We turn first to the determination whether Carbo seeks affirmative relief. Prop Tech claims that Carbo‘s defense of justification constitutes a request for affirmative relief. We disagree.
Texas courts define affirmative relief narrowly for the purpose of determining whether offensive use commands the waiver of privilege. In Republic Insurance Company, the party asserting the privilege sought a declaratory judgment. 856 S.W.2d at 164. The court held that the Republic‘s purpose in seeking a declaratory judgment was defensive and that Republic was therefore not seeking the type of affirmative relief that would result in offensive use Id.
Prop Tech does not identify and we have been unable to locate any authority supporting the assertion that the defense of justification constitutes a claim for affirmative relief. Furthermore, by the time the trial court addressed the issue of offensive use, Carbo had unequivocally stated to Prop Tech and in filings with the trial court that it would not assert the advice of counsel defense. In National Union Fire Insurance Company v. Valdez, 863 S.W.2d 458, 461 (Tex. 1993), the supreme court held the offensive use doctrine did not apply because National Union was not seeking affirmative relief. As an additional reason for finding that the offensive use doctrine did not apply, the court stated National Union had subsequently amended its motion for summary judgment to delete all references to the attorney‘s testimony and had represented to the trial court that it no longer intended to rely on this testimony. Id. at 461-62. Based on Valdez, we find that Carbo‘s apparent change in strategy as reflected in its unequivocal statement to Prop Tech and in filings with the trial court that it did not intend to rely on the advice of counsel defense, is independently sufficient to support a finding that no waiver occurred. For this additional reason, to the extent the trial court‘s ruling requiring production of all other privileged documents was based on waiver by offensive use, it was an abuse of discretion.
Conclusion
Because we have found the trial court‘s order compelling production of all copies of the Shalen letter may be upheld on the ground of waiver by voluntary production, we deny relator‘s petition for writ of mandamus as it concerns the portion of the order compelling production of the Shalen letter bearing bates numbers CCPT 000923-924 and CCPT 000939-940. Because this portion of the order remains effective, another portion of the order that remains effective is the portion of the order stating that “Prop Tech shall be allowed to conduct discovery concerning the circumstances surrounding the creation of Exhibit 54 [the Shalen letter] and the creation of the affidavits earlier submitted to
YATES, J., concurs and dissents.
CONCURRING AND DISSENTING OPINION
YATES, J., concurring and dissenting.
I agree with the majority‘s decision to deny mandamus relief with respect to production of the Shalen letter. However, I would also conclude Carbo did not establish that the trial court abused its discretion in ordering production of other withheld documents because Carbo failed to present evidence to the trial court supporting its claim that those documents are protected by the attorney-client privilege. Accordingly, I would deny relator‘s requested relief in its entirety.
In addition to ordering production of the Shalen letter, the trial court‘s order requires production of all other documents withheld by Carbo under the attorney-client privilege. As the party seeking mandamus relief, Carbo had the burden of providing this court with a sufficient record to establish its right to relief. Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992).
The majority concludes that Carbo was not required to present evidence supporting its privilege claim as to documents other than the Shalen letter because Prop Tech did not “specifically challenge the privilege” as to those documents. I disagree. In the body of its motion, Prop Tech plainly requested that the trial court order production of the Shalen letter “as well as all other documents listed on Carbo‘s privilege log.” Prop Tech‘s prayer requests production of the Shalen letter and “all other exhibits previously withheld on the grounds of attorney client privilege.” Although the prayer uses the word “exhibits” rather than “documents,” Prop Tech‘s use of the modifier “previously withheld” immediately after “exhibits” makes sense only if Prop Tech‘s request is interpreted as referring to all documents withheld as privileged. Furthermore, Prop Tech‘s reply makes clear that it was seeking production of all documents on which Carbo was claiming the attorney-client privilege, based on Carbo‘s assertion of reliance on counsel as a defense. Nevertheless, the majority somehow concludes that the phrases “all other documents” and “all other exhibits previously withheld” refer only to additional copies of the Shalen letter. Even if this interpretation was reasonable, it is certainly not the only reasonable interpretation. Accordingly, Carbo
The majority further concludes that, even if Prop Tech requested production of documents other than the Shalen letter, Carbo was not required to support its privilege claim as to those documents because Prop Tech‘s request was based on waiver and not a “specific challenge to the privileged nature of any document.” However, nothing in the language of
The court‘s order in this case is easily distinguishable from that in National Union Fire Insurance Co. v. Hoffman, 746 S.W.2d 305 (Tex. App.—Dallas 1988, orig. proceeding). In Hoffman, the court determined that a finding of waiver as to “all communications, knowledge and opinions” was unworkable, and thus an abuse of discretion. Id. at 311. Here, however, the court‘s order is limited to “documents previously withheld on the grounds of attorney client privilege.” The scope of the trial court‘s order is clear, and it conforms to the relief requested by Prop Tech. Accordingly, I would deny relator‘s petition for mandamus relief. Because the majority grants relief in part, I respectfully dissent.
No. 09-99-145 CV.
Court of Appeals of Texas, Beaumont.
Submitted Dec. 28, 2001. Decided June 6, 2002.