Opinion
CASE NO: 10-70606 ADVERSARY NO. 11-07012
06-05-2013
In re: GABRIEL G. RODRIGUEZ Debtor(s). MICHAEL SCHMIDT Plaintiff(s), v. APOLINAR RODRIGUEZ, et al Defendant(s).
CHAPTER 7
JUDGE ISGUR
MEMORANDUM OPINION
Dewey Bellows's Motion to Compel, (ECF No. 110), is granted in part and denied in part.
The motion is granted as to the following:
• The Petitioning Creditors must turn over all documents corresponding to Bellows's Requests for Production No. 15 and No. 16;
• Harlin C. Womble, Jr. must appear for a deposition and answer Questions 1-19, 22-38, 44-49, 52-54, 56-65, 67-72, and 74-92 listed in ECF No. 110-4;
• Filiberto A. Garza must appear for a deposition and answer Questions 3, 5, and 6 listed in ECF No. 110-5; and,
• Craig Smith must respond to Questions 1-5 and 7-8 listed in ECF No. 110-3.
The motion is denied as to the following:
• Questions 20-21, 39-43, 50-51, 55, 66, 73, and 93-102 from Harlin C. Womble, Jr.'s deposition, listed on ECF No. 110-4;
• Questions 1-2, 4, and 7 from Filiberto A. Garza's deposition, listed at ECF No. 110-5;
• Questions 6 and 9-13 from Craig Smith's deposition, listed at ECF No. 110-3.
Background
A complete description of this adversary proceeding's factual background may be found in prior memorandum opinions. (ECF Nos. 79, 102, 129).
Discovery disputes have repeatedly marred this adversary proceeding. Dewey Bellows filed this Motion to Compel on September 24, 2012. (ECF No. 110). The Petitioning Creditors responded on October 11, 2012. (ECF No. 123).
The Petitioning Creditors are Apolinar Rodriguez, Petra Rodriguez, Maria Lilia G. Henkel, Israel Guerra, Jr., Filiberto A. Garza, Imelda Saenz, Mario Corona, Homera Corona, Blanca Corono Garza. These nine individuals filed the involuntary bankruptcy petition against Gabriel G. Rodriguez. The Petitioning Creditors and Gabriel Rodriguez engaged in a long, protracted dispute over several parcels of land. The land dispute is described in greater detail in the November 16, 2012 Memorandum Opinion, (ECF No. 129).
The Court issued an opinion and order on November 16, 2012 addressing competing motions for summary judgment. (ECF Nos. 128, 129). The opinion mooted certain issues in this discovery dispute. At a hearing on December 6, 2012, the parties agreed that only the following issues remained alive: (i) Dewey Bellows's Requests for Production Nos. 15 and 16; (ii) privilege claims from Harlin Womble's deposition; (iii) privilege claims from Filiberto A. Garza's deposition; and, (iv) privilege claims from Craig Smith's deposition.
The live issues were identified by the related paragraph numbers from Dewey Bellows's Motion to Compel. The live issues correspond to paragraphs 11 (subparts 15-16 only), 18-22, 23-24, and 25-28, respectively. (ECF No. 110).
After a hearing, the Court announced a ruling as to a majority of the disputed issues. (ECF No. 152). The parties were to submit further briefing on how the privilege issues were affected by the fact that Womble (one of the Petitioning Creditors' attorneys) signed the proofs of claim.
This Memorandum Opinion describes the Court's reasoning for the initial rulings of February 25, 2013, as well as the Court's more recent rulings in response to the parties' supplemental briefing.
Analysis
I. Governing Law
The Federal Rules of Evidence provide that state privilege law governs in civil actions and proceedings where state law provides the rule of decision, except as otherwise required by the Constitution, an Act of Congress, or rules prescribed by the Supreme Court pursuant to its statutory authority. FED R. EVID. 501.
The Petitioning Creditors' proofs of claim allege state law tort causes of action against the Debtor. The Trustee's causes of action against Dewey Bellows are for state law breach of contract and indemnity brought in the same adversary proceeding. Because Texas law provides the rules of decision, Texas privilege law governs except in one of the situations listed in the previous paragraph.
The objection to Petitioning Creditors' proofs of claim #11-19 has now been consolidated with this adversary proceeding.
One example relevant to this discovery dispute is Rule 26 of the Federal Rules of Civil Procedure. This is a rule prescribed by the Supreme Court pursuant to its statutory authority. Rule 26 codifies the work-product privilege and it, not the Texas work-product privilege, governs even though Texas law provides the rules of decision. See Frontier Refining, Inc. v. Gorman-Rupp Co., Inc., 136 F.3d 695 (10th Cir. 1998); United Coal Cos. v. Powell Const. Co., 839 F.2d 958 (3d Cir. 1988) ("Unlike the attorney client privilege, the work product privilege is governed, even in diversity case[s], by a uniform standard embodied in [Rule] 26(b)(3) . . . .").
Rule 26 is made applicable in bankruptcy adversary proceedings by Rule 7026 of the Federal Rules of Bankruptcy Procedure.
The parties dispute the applicability of the attorney-client and work-product privileges. The Texas attorney-client privilege and the federal work-product privilege govern these issues.
II. Requests for Production
Dewey Bellows's Request for Production No. 15 requests: "All assignments, deed or transfers of all or a portion of the Ranch by any of the Petitioning creditors to any one including their attorneys." (ECF No. 110-1 at 11).
The Petitioning Creditors' written response to the Requests for Production stated: "Objection. Relevance. Not calculated to lead to admissible evidence. Subject to that objection, all responsive documents will be made available for viewing and copying in the manner that they are kept, in the offices of Jordan, Hyden, Womble, Culbreth & Holzer, P.C., at an agreeable time and date." (ECF No. 110-1 at 11).
The Petitioning Creditors' relevance objection to Bellows's Request for Production No. 15 is overruled. The threshold for relevance is low. See United States v. Jones, 664 F.3d 966, 975 (5th Cir. 2011) (citing United States v. Frick, 588 F.2d 531, 537 (5th Cir. 1979)); FED. R. EVED. 401 ("any tendency to make a fact more or less probable than it would be without the evidence"). This evidence is relevant for numerous reasons. The most obvious is that the identity of the owners of the allegedly polluted land is relevant in an adversary proceeding related to proofs of claim asserting debts owed to the land's owners. Dewey Bellows's Motion to Compel is granted as to Bellows's Request for Production No. 15.
Dewey Bellows's Request for Production No. 16 requests: "All contingency fee agreements between the Petitioning Creditors and their attorneys related to the Bellows State Court suit or the Bellows Adversary."
The Petitioning Creditors' written response to the Requests for Production stated: "Objection. Not calculated to lead to admissible evidence. Subject to that objection, all responsive documents will be made available for viewing and copying in the manner that they are kept, in the offices of Jordan, Hyden, Womble, Culbreth & Holzer, P.C., at an agreeable time and date." (ECF No. 110-1 at 10).
The Court interprets this statement as constituting a relevance objection as well.
The Petitioning Creditors' relevance objection to Dewey Bellows's Request for Production No. 16 is overruled. Dewey Bellow's Motion to Compel is granted as to Dewey Bellows's Request for Production No. 16. (ECF No. 110 at 6).
III. Harlin C. Womble, Jr.'s Deposition
Harlin C. Womble, Jr. is one of the Petitioning Creditors' attorneys for this adversary proceeding. (ECF No. 123 at 6). Dewey Bellows deposed Womble on July 12, 2012. Womble objected to and refused to answer 102 questions during the deposition, on the grounds that this was necessary to protect a privilege. Dewey Bellows requests that Womble be compelled to appear for another deposition and to respond to those questions.
Valid objections do not necessarily constitute valid reasons for refusing to answer deposition questions. A party may only refuse to answer questions at an oral deposition when it is necessary to: (i) protect a privilege; (ii) enforce a limitation ordered by the Court; or, (iii) present a motion under Rule 30(d)(3). FED. R. CIV. P. 30(c)(2).
The disputed questions fall into seven general categories and will be addressed by category:
The individual questions may be found in the Appendix attached to this Memorandum Opinion.
• Category A—Questions Regarding Privileged Communications
• Category B—Questions Regarding Womble's Activities Prior to Filing the Proofs of Claim
• Category C—Questions Regarding the Factual Basis for the Proofs of Claim
• Category D—Questions Regarding Documents Used Offensively
• Category E—Questions Disregarded
• Category F—Questions Regarding Womble's Knowledge of Certain Facts or Events
• Category G—Questions Regarding the Fee Arrangement and Other Nonprivileged Aspects of the Attorney-Client Relationship
a. Questions Regarding Privileged Communications
Category A questions inquire as to communications normally covered by the attorney-client privilege under Texas law.
The Texas Rules of Evidence incorporate the attorney-client privilege: "A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client." TEX. R. EVID. 503(b). This privilege protects not just conversations between the client and the lawyer directly, but also conversations involving representatives of either the client or the lawyer, as well as conversations with lawyers representing another party (concerning a matter of common interest between them). TEX. R. EVID. 503(b).
Although Womble's refusal to answer these questions would normally be appropriate, here Womble signed the Petitioning Creditors' proofs of claim. Dewey Bellows argues that this makes Womble a fact witness as to the allegations contained in the Petitioning Creditors' proofs of claim. (ECF No. 40 at 2). The Court agrees and Finds that the attorney-client privilege is waived.
This issue originally arose when Womble and Smith moved to quash their depositions. (ECF Nos. 31, 33). The Court did not rule on the issue at the time, allowing the depositions to go forward without prejudice to any claims of privilege. (ECF No. 41).
Womble alleges, and no one disputes, that the Petitioning Creditors consented to having Womble sign the proofs of claim. (ECF No. 169 at 6). The Petitioning Creditors, and not Womble, are the privilege holders. This consent constitutes the waiver.
i. Womble as Fact Witness
Signing a proof of claim is an assertion of personal knowledge of the facts alleged in the proof of claim. (See, e.g., Claims' Register 2-2) ("I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information, and reasonable belief."). Although the phrase "to the best of my knowledge, information, and reasonable belief is the standard governing complaints, there is an important difference between filing a complaint and filing a proof of claim. A complaint is not prima facie evidence of the facts asserted therein. Am. Cancer Soc'y v. Cook, 675 F.3d 524 (5th Cir. 2012) ("[A] complaint is not evidence of the charges contained in it.") (quoting Scholes v. Lehmann, 56 F.3d 750, 762 (7th Cir. 1995)). A properly filed proof of claim is prima facie evidence as to the claim's validity (thus, as to the facts alleged therein). FED. R. BANKR. P. 3001(f).
In Comp. Network Corp. v. Spohler, the Court addressed an analogous situation, which helps to distinguish between an attorney who signs a proof of claim (or performs a similar act) and an attorney who files a complaint. 95 F.R.D. 500 (D.D.C. 1982). In Spohler, the plaintiffs moved to compel Schott (both a corporate officer and general counsel for two corporate defendants) to answer deposition questions related to the factual basis of an affidavit executed by Schott and attached to defendants' opposition to plaintiff's motion for expedited discovery. 95 F.R.D. at 501. The affidavit touched on the merits of the litigation. 95 F.R.D. at 501. The defendants sought a protective order, arguing that the motion to compel sought disclosure of privileged material. 95 F.R.D. at 501.
The district court affirmed the magistrate judge's decision that Schott must answer the questions regarding the factual basis for the assertions made in the affidavit. 95 F.R.D. at 500. The parties disputed whether Schott filed the affidavit in his corporate officer capacity or his general counsel capacity. 95 F.R.D. at 502. Defendants argued that Schott filed the affidavit in his general counsel capacity, and that therefore these matters were protected by the attorney-client privilege. 95 F.R.D. at 500-02.
The court ruled that, whether Schott filed the affidavit in his corporate officer or general counsel, the attorney-client privilege was inapplicable. The Court distinguished the act of filing an affidavit from the mere filing of a complaint:
Submitting an affidavit was far different than a lawyer filing an answer to a complaint or a memorandum of points and authorities in which he weaves in factual representations with legal arguments. Here Mr. Schott was being a factual witness concerning fact issues which goes to the heart of this legal controversy. He cannot foreclose discovery of the factual basis for his factual representations in the affidavit anymore than he could take the witness stand and testify on direct examination to the factual matters set forth in his affidavit, and then preclude cross-examination by invoking the attorney-client privilege.95 F.R.D. at 502. The situation here is analogous. The proofs of claim signed by Womble, like Schott's affidavit, constitute evidence going towards the merits of this litigation. By signing the proofs of claim, Womble became a fact witness as to the allegations contained in the proof of claim.
This results in waiver of otherwise applicable privileges.
ii. Waiver by Offensive Use
Texas privilege law governs as to the attorney-client privilege, including questions of waiver. The Texas Supreme Court held that the doctrine of waiver by offensive use applies to the attorney-client privilege in Republic Ins. Co. v. Davis, 856 S.W.2d 158 (Tex. 1993). There are three elements for the theory to apply: (i) the party asserting the privilege must be seeking affirmative relief; (ii) the privileged information must be outcome determinative; and, (iii) disclosure of the confidential communication must be the only means by which the aggrieved party may obtain the evidence. These elements are satisfied here.
Where the issue of waiver is substantive (e.g., placing the privileged communications in controversy) as opposed to procedural (e.g., waiver resulting from failure to complete a privilege log), state waiver law should govern where state privilege law applies. See Cerro Gordo Charity v. Fireman's Fund Am. Life Ins. Co., 819 F.2d 1471, 1477 (8th Cir. 1997).
Although labeled as "factors," they are in fact elements. 856 S.W.2d at 163 ("If any one of these requirements is lacking, the trial court must uphold the privilege.").
The petitioning creditors do not dispute that they seek "affirmative relief." (ECF No. 169 at 8).
In arguing that the privileged information is not outcome determinative, the Petitioning Creditors state the following:
In the instant case, evidence shows a final judgment from a Texas Court holding Petitioning creditors have title. No communications between Petitioning Creditors and counsel leading up to and concerning the title judgment are "outcome determinative." The outcome of the title dispute has already been resolved, and with it almost every liability issue. Only damages are disputed.(ECF No. 169 at 8). The Court disagrees with this analysis of the outcome determinative element.
As noted above, a properly filed proof of claim is prima facie evidence as to the claim's validity. FED. R. BANKR. P. 3001(f). A proof of claim is deemed allowed unless an objection is filed. 11 U.S.C. § 502(a). The burden is on an objecting party-in-interest to rebut the factual assertions contained in a proof of claim filed in accordance with Rule 3001. FED. R. BANKR. P. 3001(f). Accordingly, the factual assertions contained in the proofs of claim are outcome determinative.
The third element is whether disclosure of the privileged information is the only means by which the aggrieved party may obtain the evidence. The Petitioning Creditors argue that certain evidence (for example, the method of calculating remediation damages) may be found elsewhere and by other methods of discovery. (ECF No. 169 at 8). This argument confuses the issue of what "evidence" is at issue. The proofs of claim contain the following factual assertions by Womble: (i) personal knowledge that the debtor is liable to the petitioning creditors for bad faith trespass (and other torts); and, (ii) personal knowledge that the damages to the petitioning creditors are in the amounts asserted (calculated in accordance with the attachment to the proofs of claim). At the time of the filing of the proof of claim, these limited factual assertions (combined with the damages calculation, which was neither self-explanatory nor self-authenticating) constituted the entirety of the evidence in support of the proofs of claim. (Claims' Register 2-1). When questioned as to the basis for his factual assertions, Womble objected on the grounds of privilege. It is clear that the only means by which the the objecting party-in-interest may obtain this evidence is by making inquiry of Womble (that is, the evidence initially used by the Petitioning Creditors in support of their proofs of claim).
This is not a criticism; it is all that was required.
The following questions fit into this category, but relate to the proofs of claim and are therefore not privileged: 1-3, 8-10, 26-27, 34-35, 47-48, 56-57, and 61-62. Dewey Bellows's Motion to Compel is granted as to these questions.
The numbering found on Exhibit D to Bellows's Motion to Compel, (ECF No. 110-4), will be used. The number appears where Womble refused to answer. The corresponding question appears in the immediately preceding lines. As an example, Womble invoked the privilege for the 29th time on page 22 of the transcript, beginning with line 12. (ECF No. 110-4 at 30). Question 29 immediately precedes it, beginning at line 8 on page 22 of the transcript. (ECF No. 110-4 at 30).
A few questions fall into multiple categories. Once a question falls into a nonprivileged category it will not be addressed in a subsequent category.
The following questions fit into this category but do not relate to the proofs of claim, and are therefore privileged: 40-42 and 73. Dewey Bellows's Motion to Compel is denied as to these questions.
b. Questions Regarding Womble's Activities Prior to Filing the Proofs of Claim
Category B questions inquire as to Womble's activities prior to filing the proofs of claim. Examples include questions asking about documents he reviewed, the people with whom he spoke, or Womble's understanding as to the law.
Question 12: "Did you review any documents before you filed the 75 million dollar proof of claim." (ECF No. 110-4 at 24).
Question 29: "With respect to the source of the spill on San Gregorio Ranch, did you talk to anyone other than the petitioning creditors, Craig Smith, and Mr. Daniel Airey.?"
Question 96: "With respect to the joint defense that's been asserted in this - privileged in this case, is there any limitation on that joint defense privilege asserted in this lawsuit that you're aware of." (ECF No. 110-4 at 53).
Federal Rule of Procedure 26(b)(3) (the work-product privilege) protects materials meeting the following requirements: (i) documents and tangible things; (ii) prepared in anticipation of litigation or for trial; (iii) that were prepared by or for another party or by or for that party's representative. Although Rule 26(b)(3) only references tangible materials, the Supreme Court case of Hickman v. Taylor continues to protect intangible materials as well. Nguyen v. Excel Corp., 197 F.3d 200, 210, 210 n.34 (5th Cir. 1999) (noting that attorney's mental impressions and opinions are inviolate) (citing 6 MOORE'S FED'L PRACTICE § 26.70 [2][c], at 26-209 ("[C]ourts have protected an attorney's thoughts, mental processes, strategy, and opinions from disclosure, regardless of the discovery method employed. . . . Courts have continued to apply Hickman to prevent circumventing the work product doctrine by attempting to elicit an attorney's thought processes through depositions or interrogatories.")).
Refusal to answer these questions on the grounds of the work product privilege is normally appropriate. An attorney's "mental impressions, conclusions, opinions, or legal theories" are protected as intangible work-product. See Mattenson v. Baxter Healthcare Corp., 438 F.3d 763 (7th Cir. 2006). The identities of the individuals with whom Womble spoke are similarly protected under normal circumstances.
The attorney-client privilege may also be applicable as to certain questions.
However, the circumstances are not normal. Womble is no longer merely the Petitioning Creditors' attorney. Womble signed the proofs of claim, thereby making certain factual assertions and becoming a fact witness. As a result, questions which would normally be an improper intrusion into areas protected by the work-product privilege may now be proper questions seeking the basis for factual assertions made by a fact witness. See Spohler, 95 F.R.D. at 502 ("[Schott] cannot foreclose discovery of the factual basis for his factual representations in his affidavit . . .."). Womble may not shield from discovery via the work-product privilege the basis for factual assertions made as a fact witness.
The Court concludes that Womble must respond to inquiries about the factual basis of the proof of claim. The work product and attorney client privileges are waived as to the facts alleged in the proof of claim. The Court further holds that Womble need not respond to inquiries about the legal basis of the proof of claim. Womble's legal opinions, legal research and thought are protected by the work product privilege.
Using that framework, the following questions are not privileged: 11-12, 18-19, 23-25, 28-29, 36-37, 44-46, 49, 52-53, 58-60, and 63-64. Dewey Bellows's Motion to Compel is granted as to these questions.
The following questions are privileged: 43, 55, and 93-102. Dewey Bellows's Motion to Compel is denied as to these questions.
c. Questions Regarding the Factual Basis for the Proofs of Claims
Category C questions, which directly inquire into the factual basis for the proofs of claim, would normally not be appropriate for a deposition of an opposing party's attorney. However, by signing the proofs of claim Womble became a fact witness to the facts alleged within. As with the two previous categories, this resulted in waiver of the applicable privileges for the same reasons discussed above.
Question 30: "What is the element of damage in the proofs of claim for the spill?" (ECF No. 110-4 at 26). These questions are in many ways similar to certain questions in Category B.
The following questions fall in this category: 4-7, 30-33, and 54. Dewey Bellows's Motion to Compel is granted as to these questions.
d. Questions Regarding Documents Used Offensively
Category D questions inquire as to documents used in support of the Petitioning Creditors' claims. Womble's refusal to answer these questions on the grounds of work-product privilege was inappropriate.
Question 82: "[C]an you identify the basis for the $1,665,432.16 [listed on a document attached as an exhibit to the Petitioning Creditors' proofs of claim]?" (ECF No. 110-4 at 48).
The Court is assuming that the Petitioning Creditors' refusal was based on the work-product privilege. If the Petitioning Creditors' refusal was based on the attorney-client privilege, the Court similarly overrules the objection under Texas's "waiver by offensive use" doctrine discussed above.
Parties cannot use documents as testimonial evidence in support and simultaneously object that the document is protected by the work-product privilege. An example in this case is the document the Petitioning Creditors attached to Proofs of Claim Nos. 2-10 ("Exhibit 1") asserting $76,665,432.16 in total damages (calculated by adding the costs of removing the polluted soil to Dewey Bellows's gross receipts over a period of years). (Claim's Register No. 2-1). This total amount is then broken down as to each Petitioning Creditor in relation to the percentage of land owned. (Claim's Register No. 2-1). By attaching the damages calculation to the proofs of claim, the document is being used as testimonial evidence.
Although it is listed as "Exhibit 1" when attached to the proofs of claim, during the deposition it was referred to as "Exhibit 2."
The Court recognizes the difficulty in this ruling. Certain portions of the damages calculation may require a determination of law. The highly competent counsel on both sides of this dispute should be able to sort through this issue. Womble must answer questions concerning factual allegations in the proof of claim; he is not required to respond to questions concerning legal theories. If the parties have difficulty implementing this ruling, further motions may be filed.
The Petitioning Creditors, via their attorney Womble, may not seek protection from the work-product privilege for a document used in a testimonial manner. See In re Martin Marietta Corp., 856 F.2d 619 (4th Cir. 1988) ("The signal feature of the implied waiver in [United States v. Nobles, 422U.S. 225 (1975)], and in the one at bar, is the attempt to make testimonial use of work-product materials."); see also Deep Nines, Inc. v. McAfee, Inc., 2008 U.S. Dist. LEXIS 1215181 at *15 (E.D. Tex. Mar. 28, 2008) ("[C]ourts have found waiver in the case where a party 'deliberately disclosed work-product in order to gain a tactical advantage and in instances where a party made testimonial use of work-product materials and then attempt to invoke the work-product doctrine to avoid cross-examination.") (quoting Varel v. Banc One Capital Partners, Inc., 1997 U.S. Dist. LEXIS 4711 at *3 (N.D. Tex. Feb. 25, 1997)).
The following questions fit into this category: 13-17 and 82-85. Dewey Bellows's Motion to Compel is granted as to these questions.
e. Questions Disregarded
Category E contains certain questions that cannot be properly analyzed and therefore will be disregarded. Category E questions: (i) relate to issues that are moot ; or (ii) discuss persons or documents not sufficiently identified.
Question 66: "All right. The current discovery responses have not been verified. Are the petitioning creditors going to provide a verification with respect to their interrogatory responses?" (ECF No. 110-4 at 11). Dewey Bellows's Motion to Compel complained of the Petitioning Creditors' failure to verify their interrogatory responses. (ECF No. 110 at 4). At the December 6 hearing, the parties agreed that this issue was no longer live.
This assumes that the person's identity is necessary to analyzing the claimed privilege.
The following questions fall into this category: 20-21, and 66. Dewey Bellows's Motion to Compel is denied as to these questions.
f. Questions Regarding Womble's Knowledge of Certain Facts or Events
Category F consists of questions about whether Womble was aware of certain facts or events at relevant time periods. Under normal circumstances the Court would sustain a refusal to answer on the grounds of the work-product privilege or the attorney-client privilege.
An example is Question 38: "At the time that you filed the proofs of claim, were you aware that Craig Smith owned any portion of the San Gregorio Ranch as set forth on Exhibit 2." (ECF No. 110-4 at 33).
Once again, as explained above, these are not normal circumstances. The privilege is waived where a question in this category relates to a proof of claim. Questions 22 and 38 fit this description. Dewey Bellows's Motion to Compel is granted as to these questions.
Where the question does not relate to a proof of claim, the applicable privilege is not waived. Questions 39 and 50-51 match this description. Dewey Bellows's Motion to Compel is denied as to these questions.
g. Questions Regarding the Fee Arrangement and Other Nonprivileged Aspects of the Attorney-Client Relationship
Womble repeatedly objected to and refused to answer questions asking about his fee arrangement with the Petitioning Creditors, the legal services he provided for them, whether other individuals represented the Petitioning Creditors, and fee arrangements with other counsel or parties aligned with the Petitioning Creditors.
The specific grounds for these objections are not clearly stated on the transcript The Petitioning Creditors' response to Dewey Bellows's Motion to Compel objects to the questions posed to Womble on the grounds of relevance, attorney-client privilege, and work product privilege. As noted above, irrelevance is a proper ground for objection but not for refusing to answer questions during an oral deposition. The work-product privilege is inapplicable. Womble's refusal to answer these questions appears to be based on attorney-client privilege.
Question 68: "Are you—Your contract with the petitioning creditors in this case, is it a contingent fee agreement?" (ECF No. 110-4 at 44).
Question 72: "Did you assist, in any way, in the preparation of the responses to discovery in this lawsuit?" (ECF No. 110-4 at 45).
Question 71: "Does Mr. Smith have a fee agreement with the petitioning creditors with respect to this lawsuit." (ECF No. 110-4 at 45).
Question 69: "Is there a fee sharing arrangement between your offices and Mr. Smith with respect to the—any contingent fee arrangement in this lawsuit." (ECF No. 110-4 at 45).
Womble's refusal to answer Category G questions on the grounds of attorney-client privilege was improper. The Texas attorney-client privilege does not protect this type of information. See Duval County Ranch Co. v. Alamo Lumber Co., 663 S.W.2d 627, 634 (Tex. Ct. App.—Houston 1988) ("Under the great weight of authority, information concerning the factual circumstances surrounding the attorney-client relationship has no privilege, at least as long as disclosure does not threaten to reveal the substance of any confidential communications. Therefore, the attorney-client privilege does not encompass such nonconfidential matters as the terms and conditions of an attorney's employment, the purposes for which an attorney has been engaged, or any of the external trappings of the relationship between the parties."); see also Goode, Wellborn and Sharlot, 2A COURTROOM HANDBOOK ON TEXAS EVIDENCE 456 (2012) ("Texas courts have followed the widely accepted common-law rule that the identity of the client and fee arrangements ordinarily are not shielded from disclosure.").
The following questions fit into this category: 65, 67-72, 74-81, and 86-92. Dewey Bellows's Motion to Compel is granted as to these questions.
IV. Filiberto A. Garza's Deposition
Filiberto A. Garza is one of the Petitioning Creditors in the involuntary bankruptcy of Gabriel G. Rodriguez. During his deposition Garza objected to and refused to answer 7 questions, alleging that this was necessary in order to protect a privilege. (ECF No. 110-5). Dewey Bellows requests that the Court enter an order compelling Garza to respond to these questions. (ECF No. 110 at 7). In their response, the Petitioning Creditors asserted that Garza's refusal to answer was proper as it was necessary to protect privileged confidential attorney-client communications. (ECF No. 123 at 8).
The Court will use the enumeration provided by Dewey Bellows in its Motion to Compel, (ECF No. 110-5).
Questions 1 and 2 inquire as to the substance of privileged confidential attorney-client communications. Dewey Bellows's Motion to Compel is denied as to these questions.
Question 3 asks about the substance of Garza's claim, facts that have been placed into issue in this adversary proceeding by the filing of the proof of claim. Dewey Bellows's Motion to Compel is granted as to Question 3.
Questions 4 and 7 do not directly inquire as to the substance of privileged attorney-client communications. The answer to those questions, however, will necessarily reveal the content of confidential attorney-client communications. Therefore, the Court finds that Garza's refusal to answer these questions was proper as it was necessary to preserve attorney-client privilege. See Goode, Wellborn and Sharlot, 2A COURTROOM HANDBOOK ON TEXAS EVIDENCE p.456, (2012) (citing Montgomery County v. Microvote Corp., 175 F.3d 296, 304 (3d Cir. 1999) (billing records not discoverable where disclosure would essentially reveal the substance of confidential communications by revealing the nature of services performed) (applying Pennsylvania privilege law)). Dewey Bellows's Motion to Compel is denied as to these questions.
Question 5 is similar in substance to Questions 4 and 7. However, the Court finds that the answer will not necessarily reveal the content of attorney-client communications. Therefore, Garza's refusal to answer was improper. Dewey Bellows's Motion to Compel is granted as to this Question 5.
Womble objected to Question 6 on grounds of relevance. Yet, Womble instructed his client not to answer the question. This objection is not proper grounds for refusing to answer the question as it does not fit into one of the three categories enumerated in Rule 30. Dewey Bellows's Motion to Compel is granted as to Question 6.
V. Craig Smith's Deposition
Craig Smith is one of the attorneys of record for the Petitioning Creditors in this adversary proceeding and has represented them in several related state court cases. (ECF No. 123 at 7). Craig Smith objected to and refused to answer 13 questions in his deposition, on the grounds that refusal was necessary to protect a privilege. (ECF No. 110-3). Dewey Bellows requests an order compelling Smith to answer the questions. (ECF No. 110 at 7). In their response to Dewey Bellows's Motion to Compel, the Petitioning Creditors again assert that refusal was necessary to protect confidential attorney-client communications or to product materials covered by the work-product privilege. (ECF No. 123 at 7).
Again, the numeration is that found with Dewey Bellows's Motion to Compel, (ECF No. 110-3).
The Court does not believe that the waiver issue affects any of the questions in dispute from Craig Smith's deposition.
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Questions 1-5 and 7-8 relate to fee arrangements or other nonprivileged information surrounding the attorney-client relationship. As explained above, this information is not privileged. Dewey Bellows's Motion to Compel is granted as to these questions.
Questions 6 and 9 inquire as to the substance of a confidential attorney-client communication. Dewey Bellows's Motion to Compel is denied as to Questions 6 and 9.
Questions 10-11 and 13 inquire as to Smith's legal theories, opinions, or strategies. As explained above, this information is protected as intangible work product. Dewey Bellows's Motion to Compel is denied as to Questions 10-11 and 13.
Question 12 inquires as to parties who are not sufficiently identified. The parties' identities are material. Dewey Bellows's Motion to Compel is denied as to Question 12.
Conclusion
The Court will enter a separate order in accordance with this Memorandum Opinion.
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Marvin Isgur
UNITED STATES BANKRUPTCY JUDGE
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