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granting writ of certiorari where trial court ordered production of attorney-client privileged documents without conducting in-camera inspection
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Case No. 2D19-40
01-22-2020
Elma HETT, Petitioner, v. Michele BARRON-LUNDE, as Personal Representative of the Estate of John Barron, deceased, Respondent.
Kerry E. Mack and Jacqulyn Mack-Majka of Mack Law Firm Chartered, Englewood, for Petitioner. Christopher D. Smith of Christopher D. Smith, P.A., Sarasota, for Respondent.
Kerry E. Mack and Jacqulyn Mack-Majka of Mack Law Firm Chartered, Englewood, for Petitioner.
Christopher D. Smith of Christopher D. Smith, P.A., Sarasota, for Respondent.
SMITH, Judge.
Petitioner, Elma Hett, seeks certiorari review of a discovery order compelling her to produce her personal tax returns and financial information, and ordering the disclosure of nonparty trust records and attorney-client privileged information pursuant to subpoenas served under Florida Rule of Civil Procedure 1.351, on the following nonparties: The Mowry Law Firm, BB&T Company, and Liberty Savings Bank, F.S.B. Because we find the trial court departed from the essential requirements of law in compelling the disclosure of the nonparty trust's financial records without conducting an evidentiary hearing and in compelling disclosure of alleged attorney-client privileged information without conducting an in camera inspection, we grant the petition, in part, and quash, in part, the order below. As to the trial court's discovery order compelling the production of Petitioner's personal financial information, we deny certiorari relief. I
Following the death of her father John Barron, Respondent, Michelle Barron-Lunde, as personal representative of her father's estate, sued Petitioner, alleging Petitioner wrongfully obtained approximately $200,000 from John Barron's bank accounts after John Barron's mental state began to deteriorate. The complaint raises claims of civil theft, conversion, breach of fiduciary duty, unjust enrichment, and seeks the imposition of a constructive trust. Petitioner, the only named party in the complaint, denied liability and filed a counterclaim seeking, among other relief, compensation for services rendered to John Barron during his lifetime.
During the course of discovery, Petitioner's deposition was taken. Petitioner testified she and John Barron were elderly and had a close relationship spanning twenty years. At the time of John Barron's death, the couple held three joint bank accounts. John Barron designated Petitioner as his health care surrogate; she drove him to his medical and attorney appointments and to the bank, and sometimes cooked meals for him. At some point during their relationship, Petitioner retained an attorney with the Mowry Law Firm to set up a trust (Trust) for John Barron's benefit so he would be financially sound in the event she predeceased him. In her deposition, Petitioner explained that John Barron would write checks to her, which she would deposit into the Trust. Between 2014 and 2016, John Barron required more care and resided in a long-term care facility. In late 2016, Respondent moved John Barron to Maryland where she resided.
Petitioner testified that upon John Barron's death, the Trust ceased to exist.
After Petitioner's deposition, Respondent served discovery on Petitioner, including a request for the production of her "complete tax returns, including all schedules and attachments, from the year 2012 to present." Petitioner objected to the request for her financial information based on her right to privacy under Article I, section 23 of the Florida Constitution.
In addition, Respondent served nonparty subpoenas on Petitioner's financial institutions along with the law firm who set up the Trust.
Neither the Trust, nor Petitioner, as trustee of the Trust, were made parties to the complaint.
The subpoenas to the two financial institutions sought:
ANY AND ALL DOCUMENTATION INCLUDING FORMS, CHECKS, COPIES OF CHECKS, CANCELLED CHECKS, STATEMENTS, AND/OR CORRESPONDENCE RELATED TO ANY ACCOUNT HELD BY ELMA M. HETT, WHOSE SSN ENDS IN ****, AS AN INDIVIDUAL OR TRUSTEE, DOB *******, FROM JANUARY 2012 THROUGH DECEMBER 2017.
As to the subpoenas directed to the Mowry Law Firm, the discovery sought:
A COPY OF ANY DECLARATION OF TRUST, TRUST AGREEMENT, OR OTHER TRUST DOCUMENT IN WHICH ELMA HETT A/K/A ELMA M. HETT (DOB *****) IS A BENEFICIARY, SETTLOR OR A TRUSTEE. ALL TRUST ACCOUNTINGS ASSOCIATED WITH ANY TRUST IN WHICH ELMA HETT A/K/A ELMA M. HETT (DOB *****) IS A BENEFICIARY, SETTLOR OR A TRUSTEE. ANY DOCUMENT INDICATING OR DESCRIBING A DEPOSIT INTO OR A DISBURSEMENT FROM ANY TRUST IN WHICH ELMA HETT A/K/A ELMA M. HETT (DOB *****)
IS A BENEFICIARY, SETTLOR OR A TRUSTEE.
Petitioner filed an objection to the three subpoenas raising the following grounds: (1) the requests interfere with a nonparty's right to privacy under Article I, section 23 of the Florida Constitution ; (2) the requests sought documents relating to Petitioner as trustee; however, Petitioner, as trustee, is not a party to the underlying litigation, nor is any other grantor or settlor of the trust; and (3) the subpoena to the law office seeks information protected by the attorney-client privilege. The Mowry Law Firm also filed an objection stating it has served as Petitioner's estate planning attorneys for over five years and she had not provided consent for the turnover of records under rule 4-1.6 of the Rules Regulating the Florida Bar.
Rule 4-1.6 governs the disclosure of attorney-client confidential communications by an attorney.
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In compelling Petitioner's personal financial records, the trial court found them relevant to the claims of theft and breach of fiduciary duty. The trial court also found the Trust records relevant, reasoning:
[I]t cannot fairly be said that [Petitioner] should be considered an unrelated third party by virtue of her potential status as a trustee of the subject account funds. As such, she is not entitled to a full evidentiary hearing when the relevance of the documents is readily apparent and she has been afforded notice and an opportunity to be heard on this threshold issue.
Finally, as to the Mowry Law Firm records, the order compelled the disclosure but was silent as to the issue of privilege.
II
To invoke the extraordinary relief of certiorari a party must "demonstrate that the contested order constitutes ‘(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case[,] (3) that cannot be corrected on postjudgment appeal.’ " Bd. of Trs. of Internal Improvement Trust Fund v. Am. Educ. Enters., LLC, 99 So. 3d 450, 454 (Fla. 2012) (quoting Reeves v. Fleetwood Homes of Fla., Inc., 889 So. 2d 812, 822 (Fla. 2004) ). "An order compelling the production of documents by a nonparty is reviewable by certiorari because he or she has no adequate remedy by appeal." Rowe v. Rodriguez-Schmidt, 89 So. 3d 1101, 1103 (Fla. 2d DCA 2012) (quoting Rappaport v. Mercantile Bank, 17 So. 3d 902, 905 (Fla. 2d DCA 2009) ). Certiorari is also the proper method for seeking review of an order compelling disclosure of information that is claimed to be protected by attorney-client privilege. See Allstate Ins. Co. v. Langston, 655 So. 2d 91, 94 (Fla. 1995) ("Discovery of certain kinds of information ‘may reasonably cause material injury of an irreparable nature’....This includes ‘cat out of the bag’ material that could be used to injure another person or party outside the context of the litigation, and material protected by privilege, trade secrets, work product, or involving a confidential informant may cause such injury if disclosed." (quoting Martin–Johnson, Inc. v. Savage, 509 So. 2d 1097, 1100 (Fla. 1987) )); Kobi Karp Architecture & Interior Design, Inc. v. Charms 63 Nobe, LLC, 166 So. 3d 916, 920 (Fla. 3d DCA 2015) (finding under specific facts of the case, a discovery order requiring an architect's clients to produce "voluminous, patently irrelevant information" would result in material injury of an irreparable nature). Furthermore, a party is not entitled to a "trolling exercise through the confidential and potentially privileged records of a non-party." Rousso v. Hannon, 146 So. 3d 66, 69 (Fla. 3d DCA 2014) (granting certiorari where party sought nonparty and privileged records in possession of attorney).
Where a trial court orders the disclosure of a nonparty's financial information without considering any evidence regarding its relevance, the trial court departs from the essential requirements of law. Rowe, 89 So. 3d at 1103. The consideration of evidence suggests, as some courts including this court have held, the necessity for an evidentiary hearing to determine the relevancy of the documents. See Id.; Spry v. Prof'l Emp'r Plans d/b/a IHOP, 985 So. 2d 1187, 1188 (Fla. 1st DCA 2008) ; Vega v. Swait, 961 So. 2d 1102, 1104 (Fla. 4th DCA 2007) ; but see 2245 Venetian Court Bldg. 4, Inc. v. Harrison, 149 So. 3d 1176, 1181 (Fla. 2d DCA 2014) (where relevancy is "readily apparent ... an evidentiary hearing is not necessary" (citing Elsner v. E–Commerce Coffee Club, 126 So. 3d 1261, 1264 (Fla. 4th DCA 2013) ("rejecting the argument that ‘a trial court must always conduct an evidentiary hearing before it may order financial discovery from a party’ and holding that where the requested financial information was relevant to the issues as framed by the pleadings, trial court did not depart from the essential requirements of the law in ordering disclosure"))).
Similarly, a trial court departs from the essential requirements of law when ordering the disclosure of purportedly privileged documents before addressing whether a privilege applies, without conducting an in camera inspection. Snyder v. Value Rent–A–Car, 736 So. 2d 780, 782 (Fla. 4th DCA 1999) ; see also Patrowicz v. Wolff, 110 So. 3d 973, 974-75 (Fla. 2d DCA 2013) (quashing an order compelling production of documents without first reviewing them to determine whether attorney-client privilege applied); AG Beaumont 1, LLC v. Wells Fargo Bank, N.A., 160 So. 3d 510, 512 (Fla. 2d DCA 2015) (quashing order compelling production of documents containing allegedly privileged material absent in camera review); Marshalls of M.A., Inc. v. Witter, 186 So. 3d 570 (Fla. 3d DCA 2016).
III
We first address the discoverability of the requested personal financial information of Petitioner, individually, from the nonparty banks. Petitioner argues Respondent failed to meet her burden of proof overcoming Petitioner's constitutional right to privacy. We disagree.
"A trial court possesses broad discretion in overseeing discovery, and protecting the parties that come before it." Rojas v. Ryder Truck Rental, Inc., 641 So. 2d 855, 857 (Fla. 1994) (quoting Rojas v. Ryder Truck Rental, Inc., 625 So. 2d 106, 107-08 (Fla. 3d DCA 1993) ). The rules governing discovery liberally allow for the production of records which are reasonably calculated to lead to the discovery of admissible evidence. Amente v. Newman, 653 So. 2d 1030, 1032 (Fla. 1995) ("The concept of relevancy is broader in the discovery context than in trial context" (citing Fla. R. Civ. P. 1.280(b)(1) )). However, a trial court's discretion is not without limitations and, thus, the relevant inquiry turns on the allegations as framed by the pleadings. Diaz–Verson v. Walbridge Aldinger Co., 54 So. 3d 1007, 1011 (Fla. 2d DCA 2010).
Petitioner raises her constitutional right to privacy as a bar to the discovery of her personal financial information. She correctly argues that personal financial information is afforded protection under the fundamental right to privacy found in Article I, section 23, of the Florida Constitution. Woodward v. Berkery, 714 So. 2d 1027, 1035 (Fla. 4th DCA 1998) ("[P]ersonal finances are among those private matters kept secret by most people." (citing Winfield v. Div. of Pari–Mutuel Wagering, 477 So. 2d 544 (Fla. 1985) )). Article I, section 23 clearly affords a right of privacy to natural persons. See Rowe, 89 So. 3d at 1103 ("Because of the strong public policy underlying this constitutional protection, ‘[t]he relevance of financial information should be determined only after an evidentiary hearing.’ " (quoting Spry, 985 So. 2d at 1188-89 )). Based upon these guiding principles, the general rule in Florida is that personal financial information is only discoverable after judgment in aid of execution. Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So. 2d 189, 194 (Fla. 2003) (citing Gruman v. Bankers Trust Co., 379 So. 2d 658, 659 (Fla. 3d DCA 1980) ); Inglis v. Casselberry, 200 So.3d 206, 209 (Fla. 2d DCA 2016) ("We note that this case involves postjudgment discovery, which is generally broader in scope than prejudgment discovery." (citing Harrison, 149 So. 3d at 1179 )). This rule, however, is not without exception. A party may be required to produce personal financial information in the prejudgment context when the information is relevant to the allegations in the complaint. Regions Bank v. MDG Frank Helmerich, LLC, 118 So. 3d 968, 969 (Fla. 2d DCA 2013).
We have for review a prejudgment case; therefore, the relevancy of the records must be framed by the operative complaint allegations. There is no question the discovery request to Petitioner and the subpoenas to the banks for Petitioner's individual records implicate her right to privacy. Weighing these privacy rights against the backdrop of the allegations in the complaint and Petitioner's own sworn deposition testimony, however, we cannot say the discovery sought is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence. Therefore, we find Petitioner's personal financial information, which includes her tax returns and bank records are relevant to the issues of civil theft, conversion, breach of fiduciary duty, unjust enrichment, and the request for the imposition of a constructive trust where the complaint alleges Petitioner wrongfully obtained $200,000 from John Barron. Accordingly, the trial court did not depart from the essential requirements of the law in compelling the personal financial records of Petitioner, and we deny the petition as to the discovery of Petitioner's personal financial information.
IV
Petitioner next contends the financial information of the Trust relating to Petitioner in her capacity as trustee of the Trust is not discoverable because neither Petitioner, as trustee, nor the Trust are parties to the underlying litigation, and even so, Petitioner, as trustee, was entitled to an evidentiary hearing prior to the trial court entering an order compelling the records. For the reasons discussed below, we find merit in Petitioner's objection to the discovery in her capacity as trustee.
Ordinarily, we would be constrained by the scant record before us in addressing the Trust records because without a transcript it is unclear what may or may not have transpired at the hearing on the motion to compel. See Applegate v. Barnett Bank of Tallahassee, 377 So. 2d 1150, 1152 (Fla. 1979). "It is the responsibility of the appellant to ensure that a record adequate to permit resolution of the issues raised on appeal is prepared and transmitted to the appellate court." Morgan v. Pake, 611 So. 2d 1315, 1316 (Fla. 1st DCA 1993) (citing Fla. R. App. P. 9.200(e) ); see also Butler v. Metro. Dade Cnty., 298 So. 2d 552, 552-53 (Fla. 3d DCA 1974) (affirming final summary judgment because material portions of the record upon which trial court based its findings was omitted on appeal). However, the error here appears on the face of the discovery order, and so review is appropriate. See Peacock v. Ace, 24 So. 3d 750, 751 (Fla. 2d DCA 2009) ("[T]his court previously has determined that the absence of the required findings in the written order renders the order fundamentally erroneous on its face and that the lack of transcript ‘does not preclude appellate review.’ ") (quoting Harris v. McKinney, 20 So. 3d 400, 403 (Fla. 2d DCA 2009) ).
The relevancy of the Trust records, unlike the personal financial records of Petitioner, are not discernable from the allegations in the complaint, but were brought out through Petitioner's deposition testimony, which testimony was argued before the trial court. Notwithstanding that neither the Trust nor Petitioner, as trustee, was a party to the complaint, the trial court determined the Trust records were nonetheless discoverable, finding Petitioner was not an "unrelated third-party by virtue of her potential status as a trustee of the subject account funds," and as such, was not entitled to an evidentiary hearing. This was error.
As we discussed above, where the discovery sought is in the prejudgment context, as is the case here, a party is entitled only to those financial records which are relevant to the pending action from an opposing party and an evidentiary hearing is usually necessary to determine the relevancy issue. See Regions Bank, 118 So. 3d at 969 ; accord Rappaport v. Mercantile Bank, 17 So. 3d 902, 907-08 (Fla. 2d DCA 2009) (concluding, in suit against guarantor on loan guarantee, assets held jointly by guarantor and spouse were irrelevant and not discoverable); Harrison, 149 So. 3d at 1181. The general rule under Florida law is that a trustee is an indispensable party to proceedings affecting trust property. See In re Estate of Stisser, 932 So. 2d 400, 402 (Fla. 2d DCA 2006) (holding probate court did not have authority to rule on a matter involving a trust where it lacked personal jurisdiction over co-trustees of the trust). Further, contrary to the trial court's finding, a trustee is a separate party distinct from the individual person serving as a trustee. See Grasso v. Grasso, 143 So. 3d 1050 (Fla. 2d DCA 2014) (determining individuals were not parties to the action and therefore not liable as individuals where they were sued as purported trustees).
The instant case is the reverse, factually, from Grasso, but the same reasoning holds true: because Petitioner, individually, was sued in this case, she could never be liable in her trustee capacity based upon the allegations Respondent raised against Petitioner, individually. First, the trial court never acquired personal jurisdiction over Petitioner in her trustee capacity. Beekhuis v. Morris, 89 So. 3d 1114, 1116 (Fla. 4th DCA 2012) (concluding probate court never acquired personal jurisdiction over trustee where pleadings never alleged claim against the trust or trustee); In re Estate of Stisser, 932 So. 2d at 402. Further, there are no allegations in the complaint against the Trust, or Petitioner as trustee. Absent any allegations in the complaint that Petitioner, individually, fraudulently transferred or otherwise converted the subject monies to Petitioner, as trustee or even simply to the Trust, the records are irrelevant and not reasonably calculated to lead to the discovery of admissible evidence. Therefore, the trial court erred in denying Petitioner an evidentiary hearing to determine the relevancy of the Trust records. See Rowe, 89 So. 3d at 1103. Accordingly, because the relevancy of the Trust's financial records is not apparent from the face of the complaint, the trial court departed from the essential requirements of the law by compelling the disclosure of these records without holding an evidentiary hearing to determine relevancy. Therefore, we grant the petition for certiorari in part and quash in part the trial court's order compelling the disclosure of the Trust's financial records.
V
Lastly, Petitioner challenges the trial court's order compelling the disclosure of records in the possession of her attorneys retained to set up the Trust, claiming attorney-client privilege, and we agree there was error. Instead of seeking the Trust documents from Petitioner, Respondent served a subpoena directly on Petitioner's attorneys seeking the records of the Trust, which we have established is a nonparty. While this practice is not prohibited, it should not be employed without certain safeguards.
The attorney-client privilege is the oldest privilege of confidential communications known to the common law, and perhaps the most sacred of all legally recognized privileges. United States v. Bauer, 132 F.3d 504, 510 (9th Cir. 1997) (citing Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981) ). A party who seeks third-party financial records and records of a nonparty maintained by an attorney bears the burden of proof and must show the need for the discovery outweighs the privacy rights of the third-party. Rousso, 146 So. 3d at 70. The reason for this heightened standard is due to the irreparable harm that may be caused by the disclosure of irrelevant, yet confidential, information. Rappaport, 17 So. 3d at 906. In conducting this balancing test, typically an evidentiary hearing or in camera review should be employed to assist the trial court. Bianchi & Cecchi Servs., Inc. v. Navalimpianti USA, Inc., 159 So. 3d 980, 983 (Fla. 3d DCA 2015) (noting, however, there is no per se rule requiring a trial court to conduct an evidentiary hearing).
The trial court's order compelled the disclosure of the documents from the Mowry Law Firm without addressing the privilege issue raised by Petitioner, nor did it address the objection Petitioner's attorneys filed raising, not only the same issues of privilege, but the nonexistence of a waiver of consent by Petitioner allowing the disclosure of the records as provided under rule 4-1.6. Also not addressed in the order was the need, or absence thereof, for an in camera inspection prior to the disclosure of the records in order to safeguard any attorney-client privilege that did, indeed, apply.
Petitioner, as the client under section 90.502, Florida Statutes (2017), "has a privilege to refuse to disclose, and to prevent any other person from disclosing, the contents of confidential communications when such other person learned of communications because they were made in the rendition of legal services to the client." Petitioner exercised her right to this privilege by raising her objection, and the Mowry Law Firm brought this to the trial court's attention by referencing in its own objection rule 4-1.6, which prohibits an attorney from disclosing privileged attorney-client information without the consent of the client. These objections to the disclosure of attorney-client information went unanswered by the trial court in the order. Typically, the absence of the hearing transcript would terminate this analysis and prevent any further action by this court. See Applegate, 377 So. 2d at 1152. However, Respondent has essentially conceded that no in camera inspection took place below by arguing in her brief that if certiorari relief is granted, it should be limited to an in camera inspection of the records allegedly containing privileged information. Because it was error for the trial court to compel the disclosure of records maintained by the law firm without conducting an in camera inspection to determine whether the attorney-client privilege applied, we find the trial court departed from the essential requirements of the law. See Patrowicz, 110 So. 3d at 973.
Accordingly, we grant certiorari relief and quash the order as to the Mowry Law Firm records.
Petition for writ of certiorari granted in part; the trial court's order is quashed in part.
NORTHCUTT and KELLY, JJ., Concur.