Opinion
No. COA09-797.
Filed April 6, 2010.
Buncombe County No. 08 CVS 4456.
Appeal by defendants from judgment entered 5 March 2009 by Judge Mark Powell in Buncombe County Superior Court. Heard in the Court of Appeals 13 January 2010.
Roberts Stevens, P.A., by Kenneth R. Hunt, for defendant-appellants. Contrivo Contrivo, Jr., by Frank J. Contrivo, Jr., for plaintiff-appellee.
Defendants appeal from a trial court order which overruled defendants' objection on the basis of attorney-client privilege and required defendants to answer and respond to plaintiff's interrogatories and request for production of documents. For the reasons stated herein, we affirm.
Facts
Timothy Foxx became a patrolman with the Town of Fletcher Police Department on 10 October 2005. In the span of a year, Foxx was promoted to shift leader by Chief of Police Langdon Raymond, plaintiff, then demoted back to patrol officer. Foxx filed a grievance with the Fletcher Police Department, which was denied on 23 October 2006. Foxx was suspended 24 October 2006 and remained so through 9 March 2007 on which date his employment with the Town of Fletcher Police Department was terminated.
On 4 February 2008, Foxx, represented by Attorney Shannon Lovins, filed a complaint against, among others, the Town of Fletcher and Langdon Raymond — in both his official and individual capacities — in the United States District court for the Western District of North Carolina. As a member in good standing of the Southern States Police Benevolent Association (SSPBA), Foxx had requested assistance with his civil action. Under the SSPBA's Constitution and Policies, Policy 03-24, members may receive "staff services, attorney's fees, and directly related Court costs." SSPBA requested John Midgette, executive director of the North Carolina Police Benevolent Association, Inc. (NCPBA) — a subsidiary of the SSPBA, to aid Foxx. The matter was assigned to The Lovins Law Firm, PA.
On 19 August 2008, plaintiff Raymond filed suit against defendants SSPBA, NCPBA, and John Midgette alleging that defendants engaged in champerty and maintenance by financing Foxx's civil action against Raymond and The Town of Fletcher with the agreement that Foxx reimburse and share any settlements or verdicts. Plaintiff served defendants with interrogatories and a request for production of documents as to the payment arrangement between defendants and Attorney Lovins or Foxx with regard to Lovins' representation of Foxx in Foxx's civil action against the Town of Fletcher and Raymond., Defendants objected on the grounds of attorney-client privilege. Plaintiff filed a motion to compel.
Plaintiff made the following pertinent interrogatories:
1. State with specificity and particularity any arrangement or agreement that either one or both of the Defendants have with Attorney Shannon Lovins or Timothy Foxx with regard to Mrs. Lovins' representation of Timonthy Kirk Foxx as Plaintiff in the case of Foxx vs. Fletcher and Raymond et. al. filed in the United States District Court for the Western District of North Carolina, Asheville Division File # 1:07cv00336 including but not limited to payment of attorney's fees, expert witness fees and court cost.
. . . .
3. State the amount of such fees and costs which have been paid to Mrs. Lovins to date for her representation of Mr. Foxx in the lawsuit against Langdon Raymond.
4. State the amount of expert witness fees that have been paid by either or both Defendants to expert witness Melvin Tucker in the above referenced lawsuit brought by Mr. Foxx against Mr. Raymond.
5. State the amount of court costs to include filing fees which have been paid by either or both Defendants to Mr. Foxx or Mrs. Lovins in the above referenced federal lawsuit brought by Mr. Foxx against Mr. Raymond and others.
Following is plaintiff's request for production of documents:
1. Any documents in the possession of either Defendant reflecting a fee arrangement with attorney Shannon Lovins or Timothy Foxx for her representation of Timothy Foxx in pending litigation against Landgon Raymond.
2. Any documents in the possession of either Defendant reflecting payment of expert witness fees to Melvin Tucker of his services as expert witness in the federal lawsuit brought by Timothy Foxx against Langdon Raymond and others.
3. Any documents in the possession of either Defendant reflecting payment of court costs by either Defendant on behalf of Timothy Foxx in the federal lawsuit against Langdon Raymond and others.
4. Copies of all correspondence between Defendants and Shannon Lovins concerning Langdon Raymond and/or Timothy Foxx in the federal lawsuit referenced above including but not limited to any discussion of fees and costs of Timothy Foxx in the federal lawsuit against Langdon Raymond and others.
After a hearing in Buncombe County Superior Court, the trial court ordered that defendants fully answer and respond to plaintiff's interrogatories and request for production of documents. Furthermore, the trial court certified the order for immediate appeal. Defendants appeal.
We first consider whether this appeal is appropriately before us.
An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.
As a general rule, there is no right of immediate appeal from interlocutory orders or judgments. . . .
Van Engen v. Que Scientific, Inc., 151 N.C. App. 683, 686, 567 S.E.2d 179, 182 (2002) (internal citations omitted). However, "[a]n appeal may be taken from every judicial order or determination of a judge of a superior or district court, upon or involving a matter of law or legal inference . . . which affects a substantial right claimed in any action or proceeding. . . ." N.C. Gen. Stat. § 1-277(a) (2007). As defendants have claimed that the trial court's order compels the disclosure of information protected by attorney-client privilege, they are entitled to a hearing on appeal. See Evans v. United Servs. Auto. Ass'n, 142 N.C. App. 18, 541 S.E.2d 782 (2001).
On appeal, defendants raise one issue: Did the trial court err in granting plaintiff's motion to compel defendants' compliance with certain interrogatory requests. Defendants contend the requested information is protected by attorney-client privilege. We disagree.
"It is well established that orders regarding discovery matters are within the discretion of the trial court and will not be upset on appeal absent a showing of abuse of that discretion." Nationwide Mut. Fire Ins. Co. v. Bourlon, 172 N.C. App. 595, 601, 617 S.E.2d 40, 45 (2005) (citation omitted). "To demonstrate an abuse of discretion, the appellant must show that the trial court's ruling was manifestly unsupported by reason, or could not be the product of a reasoned decision." Wachovia Bank, N.A. v. Clean River Corp., 178 N.C. App. 528, 531, 631 S.E.2d 879, 882 (2006) (citation and emphasis omitted).
"The public's interest in protecting the attorney-client privilege is no trivial consideration, as this protection for confidential communications is one of the oldest and most revered in law." In re Investigation of the Death of Miller, 357 N.C. 316, 328, 584 S.E.2d 772, 782 (2003). "It is an established rule of the common law that confidential communications made to an attorney in his professional capacity by his client are privileged, and the attorney cannot be compelled to testify to them unless his client consents." Dobias v. White, 240 N.C. 680, 684, 83 S.E.2d 785, 788 (1954) (citation omitted). "It is further well established that the attorney-client privilege is not absolute." Miller, 357 N.C. at 335, 584 S.E.2d at 786. "[The] privilege depends on the assumption that full and frank communication will be fostered by the assurance of confidentiality, and the justification for granting the privilege ceases when the client does not appear to have been desirous of secrecy." State v. McIntosh, 336 N.C. 517, 523, 444 S.E.2d 438, 442 (1994).
If it appears by extraneous evidence or from the nature of a transaction or communication that they were not regarded as confidential, or that they were made for the purpose of being conveyed by the attorney to others, they are stripped of the idea of a confidential disclosure and are not privileged.
Dobias, 240 N.C. at 684-85, 83 S.E.2d at 787 (citations omitted). "[T]he responsibility of determining whether the attorney-client privilege applies belongs to the trial court. . . ." Miller, 357 N.C. at 336, 584 S.E.2d at 787 (citation omitted). Our Supreme Court has recognized the following five-part test to determine whether a communication is encompassed by the attorney-client privilege:
(1) the relation of attorney and client existed at the time the communication was made, (2) the communication was made in confidence, (3) the communication relates to a matter about which the attorney is being professionally consulted, (4) the communication was made in the course of giving or seeking legal advice for a proper purpose although litigation need not be contemplated and (5) the client has not waived the privilege.
Id. at 335, 584 S.E.2d at 786 (citation omitted). "The attorney-client privilege extends only to confidential communications. A communication intended to be disclosed to a third party is not confidential." Marina Food Assoc., Inc. v. Marina Restaurant, Inc., 100 N.C. App. 82, 89, 394 S.E.2d 824, 828 (1990). We have found no cases in which our appellate courts have considered whether fee agreements between attorneys and their clients are confidential communications protected by the attorney-client privilege. For this reason, we note the persuasive authority established in courts beyond this jurisdiction.
The Supreme Court of the United States held that "since the [attorney-client] privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose. Accordingly it protects only those disclosures — necessary to obtain informed legal advice — which might not have been made absent the privilege." Fisher v. United States, 425 U.S. 391, 403, 48 L. Ed. 2d 39, 51 (1976) (citations omitted). More specifically, several circuit court have held that the attorney-client privilege does not normally extend to the payment of attorney's fees and expenses. In re Grand Jury Subpoena (Under Seal), 774 F.2d 624, 628 (4th Cir. 1985) ("the attorney-client privilege normally does not extend to the payment of attorney's fees and expenses. . . .") (citing In re Grand Jury Proceedings (United States v. Jones), 517 F.2d 666, 670-71 (5th Cir. 1975) ("`[T]he identity of a client is a matter not normally within the privilege . . . nor are matters involving the receipt of fees from a client usually privileged.'") (citations omitted)); In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1027 (5th Cir. 1982) ("We have long recognized the general rule that matters involving the payment of fees and the identity of clients are not generally privileged."); United States v. Haddad, 527 F.2d 537, 538 (6th Cir. 1975), cert. denied, 425 U.S. 974, 96 S. Ct. 2173, 48 L. Ed. 2d 797 (1976) ("In the absence of special circumstances, the amount of money paid or owed to an attorney by his client is generally not within the attorney-client privilege.") (citations omitted).
Here, Foxx was a member in good standing with the SSPBA, an association of various law enforcement agencies employed by the United States government, by state governments, or by political subdivisions of those states or by municipal governments. Under a portion of the SSPBA policy, entitled "Grievance, Disciplinary and Other Services," a member may be entitled to "payment by [S.S.]P.B.A. of staff services, attorney's fees, and directly related Court costs. Use of experts shall be pre-approved by the Director of Legal Services." Furthermore, "[t]he Legal Department shall endeavor to obtain periodic updates on cases in an effort to ensure that proper representation is being provided to the member and that the fees, costs and expenditures are being incurred within the coverage and limitations set forth by this policy." In their answer to plaintiff's complaint, defendants "admitted that Defendant SSPBA agreed to pay Officer Foxx's chosen counsel an hourly fee and costs associated with the litigation. . . ." Clearly, almost all of plaintiff's discovery requests related specifically to the payment of attorney's fees and expenses, which is not protected information subject to the attorney-client privilege. Further, plaintiff's request for information beyond attorney's fees and expenses, i.e. "[c]opies of all correspondence between Defendants and Shannon Lovins concerning Langdon Raymond and/or Timothy Foxx in the federal lawsuit" was not a request for potentially privileged communication between Foxx (client) and Lovins (attorney). Therefore, the trial court did not err in allowing plaintiff's motion to compel defendants to fully answer and respond to plaintiff's first set of interrogatories and first request for production of documents. Accordingly, defendants' assignment of error is overruled.
Affirmed.
Judges ELMORE and STROUD concur.
Report per Rule 30(e).