Opinion
No. A04-970.
Filed March 15, 2005.
Appeal from the District Court, Hennepin County, File No. Ct 03-4965.
William G. Peterson, Peterson Law Office, P.A., Bloomington, Mn, (for appellant).
Kenneth Rolf, Minneapolis, Mn, (pro se respondent).
Daniel R. Kelly, Donald G. Heeman, Felhaber, Larson, Fenlon Vogt, P.A., Minneapolis, Mn, (for respondent Bush Terrace Owners Association)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant, owner of a condominium in which she both lives and works, brought an action against respondents, alleging interference with the quiet enjoyment of her property. After appellant failed to comply with the district court's order compelling discovery, her complaint was dismissed with prejudice and she was ordered to pay $10,000 in attorney fees plus costs. On appeal from dismissal, appellant argues that the district court erred in ordering her to disclose her medical records and her clients' names and contact information. Because we find the district court did not abuse its discretion or misapply the law, we affirm.
FACTS
Appellant Carol Ingersoll owned and occupied a condominium in building H of Bush Terrace Condominiums. She also conducted her business as a tax preparer from her home. Respondent Kenneth Rolf also owned a condominium in building H. Respondent Bush Terrace Owner's Association, Inc. (Bush Terrace) managed the condominium building.
Rolf rented his condominium to tenants in December 2000. Approximately six months later, in May 2001, Ingersoll served a complaint against Rolf and Bush Terrace, describing numerous incidents of domestic altercations involving Rolf's tenants. She alleged that these incidents included "fighting, screaming, objects crashing into walls and other disturbances." Ingersoll noted occasions where police were called to Rolf's condominium and alleged that on March 30, 2001, "the noise and disturbances from [Rolf's condominium] were so extreme that [she] had to vacate her condominium." Ingersoll alleged that the association's declarations provide that "[a]ll owners, occupants and their guests shall have a right of quiet enjoyment in their property" and that prior to her complaint she brought the disturbances to the attention of both Rolf and Bush Terrace. Finally, Ingersoll alleged that she "suffered damage to her quiet enjoyment of her property, to her health and peace of mind and to her income, in an amount in excess of fifty thousand dollars."
Two years prior to the commencement of Ingersoll's quiet-enjoyment action, a property manager of Bush Terrace demanded that Ingersoll remove a dog from her condominium pursuant to the association's no-pet policy. At Ingersoll's request, a psychologist wrote to Bush Terrace explaining that Ingersoll "suffers from a diagnosable mental illness which is currently being stabilized by her relationship with her dog" and recommended that she be allowed to keep the dog.
Approximately two months after the commencement of Ingersoll's quiet-enjoyment action, Bush Terrace sent another letter to Ingersoll, requesting additional documentation regarding her medical condition to determine whether it constituted a disability as defined under the Federal Fair Housing Amendments Act and thereby qualified for a waiver of the condominium's no-pet policy. Ingersoll responded with two additional letters from her psychologist dated January 14, 2002, and February 13, 2002. The February letter stated, in part, that Ingersoll's disability "impacts her ability to get along with other people in collaborative working situations, as well as in daily social activities. It has impacted her ability to be involved in her professional association, as well as meet the needs of her clients." After receiving this letter, Bush Terrace granted Ingersoll a waiver from the no-pet policy.
With regard to Ingersoll's quiet-enjoyment suit, she further developed her theory of damages in her answer to interrogatories. In part she stated, "Because of this situation, my business has also lost revenue. I estimate the loss to be in excess of $45,000. See schedule of lost income attached." The attached schedule titled "Value of Lost Clients 2001-2002" listed clients by a client identification number and provided the number of years Ingersoll had worked with each client and each client's value.
As part of discovery, Bush Terrace requested that Ingersoll disclose her medical records and her clients' names and contact information. In response to this request, Ingersoll indicated that she would waive her claim for health injury so that her medical records would not be subject to discovery. Ingersoll further argued that her clients' names and contact information were not discoverable due to privileges under the Internal Revenue Code and Gramm-Leach-Biley Act. Bush Terrace filed a motion requesting an order from the district court compelling discovery of the requested information.
By order filed November 4, 2003, the district court directed Ingersoll to comply with discovery within ten days by providing Bush Terrace with executed medical authorizations, a list of all medical providers over the past five years, and the identity of her clients listed on the schedule titled "Value of Lost Clients 2001-2002."
Upon Ingersoll's motion, the district court granted reconsideration of the November order, noting that Ingersoll faced probable sanction of dismissal of her claims with prejudice for failure to comply with the discovery order. Ingersoll also amended her complaint stating, "Plaintiff has suffered damage to her quiet enjoyment of her property and to her income, in an amount in excess of fifty thousand dollars ($50,000.00). No claim is being made for depletion of clientele or loss of future profits due to such depletion."
After the parties' arguments on the motion for reconsideration, the district court reinstated its November order. The court reasoned that Ingersoll, by claiming that her loss of income was caused by domestic disturbances in Rolf's condominium, put into controversy the reason she lost income, "including her mental disability."
Ingersoll did not comply with the reinstated order. Pursuant to Bush Terrace's subsequent motion, her complaint was dismissed with prejudice and she was ordered to pay Bush Terrace $10,000 in attorney fees plus costs.
DECISION I.
Ingersoll contends that the district court erred in ordering her to disclose her medical records, arguing that she did not place her medical condition at issue and her disclosures regarding her disability for purposes of resolving the pet dispute did not constitute waiver. The district court has wide discretion to issue discovery orders and, absent clear abuse of that discretion, its discovery orders will not be disturbed. Shetka v. Kueppers, Kueppers, Von Feldt Salmen, 454 N.W.2d 916, 921 (Minn. 1990).
Confidential communications between a physician or psychologist and his or her patient are legally privileged; a physician or psychologist shall not, without the consent of the patient or professional's client, "be allowed to disclose any information or opinion based thereon which the professional has acquired in attending the client in a professional capacity, and which was necessary to enable the professional to act in that capacity." Minn. Stat. § 595.02, subd. 1(d), (g) (2004).
A. Psychologist's Letters
"Disclosure of otherwise confidential information to third persons with the acquiescence of the patient destroys the confidentiality of communication and constitutes a wavier of the [medical] privilege." Muller v. Rogers, 534 N.W.2d 724, 727 (Minn.App. 1995).
Bush Terrace received letters from Ingersoll's psychologist describing a diagnosed disability. Ingersoll directed her psychologist to make these disclosures for the purpose of obtaining a waiver from the association's no-pet policy. We conclude that by doing so, she waived her right to assert the statutory privilege under Minn. Stat. § 595.02, subd. 1(g), as to the information disclosed. See Muller, 534 N.W.2d at 727 (concluding party waived right to assert physician-patient privilege with respect to medical information he provided to Department of Public Safety for benefit of keeping his driver's license or obtaining handicapped license plates).
Because Ingersoll waived her physician-patient privilege with respect to the information contained within the psychologist's letters, the district court did not err in determining that this information was subject to discovery by respondents.
B. Medical Records
Minn. R. Civ. P. 35.03 limits the extent to which the medical privilege set forth under Minn. Stat. § 595.02, subd. 1, may be asserted:
If at any stage of an action a party voluntarily places in controversy the physical, mental or blood condition of that party . . . such party thereby waives any privilege he may have in that action regarding the testimony of every person who has examined . . . that party . . . with respect to the same mental, physical or blood condition.
This rule is designed "to afford disclosure of relevant medical evidence plus facts which may lead to other relevant evidence" when the statutory medical privilege has been waived. Wagner v. Thomas J. Obert Enters., 396 N.W.2d 223, 228 (Minn. 1986).
In her amended complaint, Ingersoll stated that she "suffered damage to her quiet enjoyment of her property and to her income." She has the burden of establishing the elements of her quiet-enjoyment claim, including the element of causation. See Pearson v. Henkemeyer, 503 N.W.2d 504, 507 (Minn.App. 1993) (finding injured police officer's claim based on landlord's duty to evict tenants who disrupt quiet-enjoyment failed when there was no evidence of causation), review denied (Minn. Sept. 30, 1993); Nguyen v. Control Data Corp., 401 N.W.2d 101, 105 (Minn. App. 1987) (providing claimant, to recover on a breach-of-contract claim, must prove that its damages resulted from or were caused by the breach). By alleging damages of lost income, Ingersoll voluntarily placed into controversy the reasons she lost that income, including whether the damage was caused by respondents' breach or by her disability. As such, the district court did not err in ordering Ingersoll to disclose her medical records so far as those records relate to her disability. See Derrick v. St. Paul City Ry. Co., 252 Minn. 102, 110, 89 N.W.2d 629, 634 (1958) (stating waiver of medical privilege for one medical problem is not a waiver for an unrelated medical problem).
At oral argument before this court, Ingersoll's attorney argued that the district court's order compelling discovery constituted error because it was overbroad, requiring Ingersoll to release all of her medical records regardless of whether those records related to her disability. Although we recognize that the district court's order may have been overbroad, we nonetheless conclude that the alleged error was harmless. See Minn. R. Civ. P. 61 (requiring harmless error to be ignored); Bloom v. Hydrotherm, Inc., 499 N.W.2d 842, 845 (Minn.App. 1993) (appellant bears burden of demonstrating that error is prejudicial), review denied (Minn. June 28, 1993).
Our careful review of the record shows that throughout the proceedings before the district court, Ingersoll remained adamant in refusing to recognize the propriety of any portion of the discovery order and in refusing to comply with any portion of that order. While she argued overbreadth in her opposition to Bush Terrace's motion to dismiss, even at that juncture her attorney explained that she had directed him not to comply with the discovery order. We further note that the district court's December 2003 order was narrowly focused on medical records pertaining to Ingersoll's "mental disability." Nonetheless, Ingersoll persisted in her blanket refusal. To the extent the district court may have erred with regard to the breadth of the order to disclose medical records, the error was harmless.
II.
Ingersoll raises numerous arguments to support her contention that the district court erred in ordering her to disclose her clients' names and contact information. First, she argues client lists are confidential trade secrets under Gordon Employment, Inc. v. Jewell, 356 N.W.2d 738 (Minn.App. 1984). We find no support in that case for Ingersoll's argument. In Gordon Employment, a temporary employment agency and its owner brought suit against former employees for theft of trade secrets. Id. at 739-40. This court affirmed the district court's conclusion that the employment agency failed to show its client list qualified as a trade secret under the three-part test established under Minnesota Statutes. Id. at 741. Gordon Employment does not hold, as argued by Ingersoll, that client lists are necessarily trade secrets.
Further, Ingersoll does not support her assertion that her client list qualifies as a trade secret with argument nor does she cite any legal authority for the proposition that trade secrets are undiscoverable. See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn.App. 1997) (stating assignment of error in brief based on mere assertion and not supported by argument or authority is waived unless prejudicial error is obvious on mere inspection); Thermorama, Inc. v. Shiller, 271 Minn. 79, 82-83, 135 N.W.2d 43, 46 (1965) (noting when a party is concerned about having trade secrets revealed in discovery, that party should request the district court provide necessary safeguards to protect him).
Second, Ingersoll argues that the ordered disclosure of her client list constituted error because the discovery request stems from an impermissible use of the psychological report she voluntarily disclosed to Bush Terrace during the dispute regarding her dog. This argument fails because, as analyzed above, Ingersoll waived her medical privilege by disclosing medical information to a third party and by placing her medical condition in controversy.
Third, Ingersoll argues that the requested information about her clients is privileged under the Internal Revenue Code and under the requirements of the Gramm-Leach-Biley Act. We disagree. Under 26 U.S.C. § 7216(a) (2002) of the Internal Revenue Code, a tax return preparer who knowingly or recklessly "discloses any information furnished to him for, or in connection with, the preparation of any such return" is guilty of a misdemeanor. But subsection (a) does not apply to a disclosure of information if such disclosure is made "pursuant to an order of a court." 26 U.S.C. § 7216(b)(1)(B) (2002). Under the Gramm-Leach-Biley Act, financial institutions are prohibited from "disclos[ing] to a nonaffiliated third party any nonpublic personal information" received by the institution from a consumer, unless the consumer has notice of the disclosure and has been given an opportunity to "opt out" of that disclosure. 15 U.S.C. § 6802(a)-(b) (2002). But this section does not prohibit disclosure of nonpublic personal information "to comply with Federal, State, or local laws, rules, and other applicable legal requirements" or "to respond to judicial process." 15 U.S.C. § 6802(e)(8) (2002); see Ex parte Nat'l W. Life Ins. Co., ___ So.2d ___, 2004 WL 2260308, at *7 (Ala. Oct. 8, 2004) (holding "judicial process" in 15 U.S.C. § 6802(e)(8) encompasses trial court discovery orders). The requested discovery in this case is sought pursuant to a court order; as such, it is not privileged under the Internal Revenue Code or the Gramm-Leach-Biley Act.
Fourth, Ingersoll argues the requested information is not relevant, and therefore not discoverable, because she waived any claim for loss of future profits. She further argues that the discovery order is overly burdensome because Bush Terrace intends to conduct interviews with her former clients, which would be detrimental to future business, and that there are alternative sources, such as Ingersoll's tax returns, from which Bush Terrace can obtain the information.
The scope of discovery allowed in Minnesota courts is set forth in rule Minn. R. Civ. P. 26.02(a), which specifies that
[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, . . . including . . . the identity and location of persons having knowledge of any discoverable matter. The information sought need not be admissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.
This rule allows the court to limit or disallow discovery if "the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive." Minn. R. Civ. P. 26.02(a).
In interpreting rule 26.02, the Minnesota Supreme Court stated that
[t]he tenor of the new rules is to permit a wide discovery and investigation of the facts under Rules 26.02 . . . but not to permit such discovery and investigation to be used in bad faith or in such a manner as unreasonably to annoy, embarrass, oppress, or injure the parties or witnesses.
Baskerville v. Baskerville, 246 Minn. 496, 506, 75 N.W.2d 762, 769 (1956). The district court has broad discretion to disallow discovery in order to prevent such abuses of the discovery process. Id.
Ingersoll pleaded that she "suffered damage to her quiet enjoyment of her property and to her income." In her answers to interrogatories, she attached a schedule titled "Value of Lost Clients 2001-2002." Regardless of whether she is seeking damages for loss of future profits, the identity of the claimed lost clients and investigation into why the business relationship between Ingersoll and those clients ended is central to her claim of lost income. This information cannot be discovered through other means such as her income tax returns; tax returns may show a loss of revenue but do not explain what caused the loss. The discovery request clearly comes within the scope of rule 26.02.
We note also that the district court limited the extent of permissible discovery, stating Bush Terrace
shall be allowed to contact the clients disclosed by [Ingersoll] for the limited purpose of determining whether their decrease or elimination of the use of [Ingersoll's] services was due to the alleged actions of [Bush Terrace], [Ingersoll's] mental illness or some other reason. [Bush Terrace] shall not inquire into client's income, tax returns or any other financial information.
The district court did not abuse its discretion or misapply the law in ordering Ingersoll reveal the names of her clients and their contact information.
III.
The district court may issue orders compelling discovery and imposing sanctions. Minn. R. Civ. P. 37.01, .02. Sanctions may include dismissal of all or part of a claim if a party willfully and persistently fails to comply with a discovery order without justification or excuse. Minn. R. Civ. P. 37.02(b)(3); Breza v. Schmitz, 311 Minn. 236, 237, 248 N.W.2d 921, 922 (1976).
We review a district court's discovery sanctions for an abuse of discretion. Chicago Greatwestern Office Condo. Ass'n v. Brooks, 427 N.W.2d 728, 730 (Minn.App. 1988). In determining whether a district court has abused its discretion in imposing discovery sanctions, appellate courts have relied on the following factors: (1) whether the court set a specific date for discovery, (2) whether the court warned the party about the possible sanction, (3) whether the failure to cooperate with discovery was an isolated event or part of a pattern, and (4) whether the failure to comply was willful or without justification. See Breza, 311 Minn. at 237, 248 N.W.2d at 922 (willful or without justification); Beal v. Reinertson, 298 Minn. 542, 544, 215 N.W.2d 57, 58 (1974) (specific date for discovery); Sudheimer v. Sudheimer, 372 N.W.2d 792, 795 (Minn. App. 1985) (warning about possible sanctions); Williams v. Grand Lodge of Freemasonry AF AM, 355 N.W.2d 477, 480 (Minn.App. 1984) (isolated event or part of a pattern), review denied (Minn. Dec. 20, 1984).
Ingersoll does not dispute that she was specifically told the dates by which she was required to comply with the order compelling discovery and that failure to comply would result in dismissal with prejudice. She raises instead issues of justification and lack of prejudice to Bush Terrace. As already noted, however, Ingersoll was not justified in withholding medical records or client contact information. Going forward without the requested discovery would have unduly prejudiced Bush Terrace, and Ingersoll had numerous opportunities between Bush Terrace's October 2003 letter requesting discovery and the district court's January 2004 order denying the reconsideration motion to comply with discovery. The district court did not abuse its discretion in dismissing Ingersoll's complaint with prejudice.
In affirming the decision of the district court to dismiss Ingersoll's action with prejudice, we are not unaware of or insensitive to the harshness of that decision. It is the most extreme sanction available, and should be invoked "only under exceptional circumstances." Kmart Corp. v. County of Becker, 639 N.W.2d 856, 859 n. 2 (Minn. 2002). Aware, however, of our deferential standard of review on issues such as this, we cannot conclude that the circumstances here were unexceptional. The district court appears to have demonstrated considerable patience and extended considerable latitude to Ingersoll. Even at the last opportunity during the district court's hearing on Bush Terrace's motion to dismiss, the court asked Ingersoll's attorney to verify it was Ingersoll's position that she would not comply with the court's discovery order. Ingersoll's attorney explained that it was his client's position that she would not provide the ordered discovery.
IV.
Ingersoll argues the district court's order awarding Bush Terrace $10,000 in attorney fees plus costs constitutes error because the request for fees did not strictly comply with Minn. R. Gen. Pract. 119.01. Under rules 119.01 and 119.02, in any action in which an attorney seeks fees in the amount of $1,000 or more, application must be made by motion and accompanied by an attorney affidavit describing each item of work performed, the time spent on each item of work, and the hourly rate for the work performed.
Bush Terrace submitted its request for attorney fees as part of its motion to dismiss for failure to comply with discovery, and concedes that it failed to submit the necessary attorney affidavit with its motion. The record indicates, however, that the district court allowed Bush Terrace to submit the necessary affidavit at a later time. The affidavit included the requisite description of each item of work, time spent, and hourly rate.
The advisory committee comment to rule 119.01 states that the rule "is intended to establish a standard procedure for supporting requests for attorneys' fees" due to the committee's concern "that motions for attorneys' fees are either not supported by any factual information or are supported with conclusionary, non-specific information." We see no abuse of discretion in the decision of the district court to permit Bush Terrace to submit the necessary affidavit after the motion requesting fees had been submitted. See Gully v. Gully, 599 N.W.2d 814, 826 (Minn. 1999) (finding district court did not abuse its discretion by awarding attorney fees without the required affidavit where the court was familiar with the case and has access to the parties' financial records).