1 Filed 7/31/13 Truck Ins. Exchange v. Super. Ct. CA1/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

TRUCK INSURANCE EX CHANGE, et al., Petitioners,

v. THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; GOLDEN STATE DEVELOPERS, INC., et al., Real Parties in Interest. A137420
(Alameda County Super. Ct. No. RG-06-291935, consolidated with RG-07-334847 & RG-10-509252)

Petitioners Truck Insurance Exchange, Mi d-Century Insurance Company, Farmers Insurance Exchange, and Farmer s Group, Inc., seek a writ di recting respondent court to vacate certain orders compelling responses to discovery propounded by real parties in interest Golden State Developers, Inc., Cast ro Valley Associates, LP, and Castro Valley, Inc. (hereafter collectively referred to as Go lden State). In th e pending litigation in respondent court, petitioners objected to the requested discove ry (production of documents and responses to de position questions) on the grou nd that it sought disclosure
of communications that contravened their atto rney-client privilege (Evid. Code, § 954). 1

1 The California Evidence Code refers to this privilege as the “lawyer-client” privilege (Evid. Code, § 954), instead of “the more accurate denomination [of] ‘attorney-client privilege.’ ” ( Freedom Trust v. Chubb Group of Ins. Companies (C.D. Cal. 1999) 38 F.2 Respondent court found Golden State met it s burden of demonstra ting that petitioners’ attorney-client privilege had been lost based on the crim e-fraud exception codified in
Evidence Code section 956. 2 For the reasons stated below, we conclude respondent court erred in concluding that Golden State ha d met its burden for applying the crime-fraud exception to the attorney-client privilege. Th erefore, we will issue the requested writ and direct respondent court to vacate its orders and issue new and differe nt orders sustaining petitioners’ objections to discovery requests that contravene their attorney-client privilege.
FACTS 3 A. Background The underlying dispute arose after the development of single-family homes by Golden State, who acted as the general cont ractor for the project. Several homeowners sued Golden State, seekin g damages for water penetra tion allegedly caused by
construction defects. In Ma rch 2003, after Golden State had incurred approximately $370,000 in repair costs, it sued several of its subcontract ors, which generated various cross-complaints between Golden State and other subcontrac tors and the parties’ insurers. Ultimately, one of the homeo wners, James Morrison, settled with a subcontractor for approximately $80,000; Morris on allegedly assigned his right s against Golden State to petitioner Mid-Century Insu rance Company, the s ubcontractor’s insurer. 4

Supp.2d 1170, 1171, fn. 1.) Because the privilege is “co mmonly known as the attorneyclient privilege” ( ibid .), we use that nomenclat ure in this opinion.

2 Evidence Code section 956 reads: “There is no privilege . . . if the se rvices of the lawyer were sought or obtained to enable or aid anyo ne to commit or plan to commit a crime or a fraud.”
3 We set forth only those facts necessary to resolve the issues raised in this proceeding. In the absence of any objection, we grant Golden State’s request for judicial notice of the documents submitted in three vo lumes of exhibits, and have considered the documents to the extent they are relevant to our resolution of this petition.

4 The related litigation between Golden St ate, the subcontractors, and the other homeowners also settled. Thus, all claims against Golden State and the subcontractors are now dismissed.3 Subsequently, Mid-Century Insurance Co mpany filed two actions to recover the
costs it had incurred to settle the Morrison claim: Farmers Insurance Group and James
Morrison v. Golden Stat e Developers, et al. (hereafter “Farmers/Morrison action”) and Mid-Century Insurance Company v. Golden State Developers, et al. (hereafter “MidCentury action”) (collectively hereafter also refe rred to as “the recovery actions”). In the Farmers/Morrison action, Golden State was di smissed as a defendant in January 2008. The complaint in the Mid-Cent ury action was filed, but not served on Golden State.
When Golden State discovered the filed Mi d-Century action complaint, it successfully
moved to dismiss that co mplaint against it. B. Current Litigation During the construction defect litigation, Golden State sued one of its alleged insurers, petitioner Truck Insurance Exchange , for declaratory relief and to recover damages for various claims includi ng breach of contra ct, bad faith, and misrepresentation. By the time of the filing of a fifth amended complaint, on March 26, 2010, Golden State added as defendants its alleged additional insu rers, petitioners MidCentury Insurance Company, Farmers Insuran ce Exchange, Farmers Group, Inc., and the insurers’ counsel Gregory R. de la Peña, Keith L. Cooper, and de la Peña & MacDonald LLP, and an additional claim fo r malicious prosecution of the dismissed recovery actions. Respondent court ordered the Golden State lawsuit to be tried in several phases, depending on what issues, if any, needed to be resolved after each phase of the trial. Phase I was to focus on certain questions of law and declaratory relief including whether particular Golden State claims were barred or released by prior settlement agreements
and whether certain insurers owed any duty to defend or i ndemnity Golden State in the construction defect litigation. Phase II was to focus on Golden Stat e’s claims of breach of contract, bad faith, fraud, damages, defens e fees and costs, and indemnity. Phase III
was to focus on Golden State’s claim of malicious prosecution, with the court specifically ordering that “[i]ssues regard ing malicious prosecution and the elements of that cause of
action will not be considered for Phase I.” On September 5, 2012, after a bench trial, respondent court filed a statem ent of decision resolving the Phase I issues and adhering to4 its pretrial ruling not to consider issues re garding malicious prosec ution nor the elements
of that cause of action. 5 In preparing for the Phase II trial, Golden State sought the production of documents in Mid-Century’s claim files. Mi d-Century objected to the production of any documents that contravened the attorney-client privilege. After Go lden State moved to compel discovery, respondent court appointed Ju dge Bonnie Sabraw (R etired judge of the Alameda County Superior Court) to serve as discovery refe ree to review Mid-Century’s privilege logs. In pertinent part, the refe ree addressed “whether or not there were documents in the files that supported [Golden St ate’s] allegations of the application of the crime-fraud exception” to th e attorney-client privilege. After an in camera review of the files, the referee tentativel y found that the production of privileged attorney-client information was not warranted. However, th e referee did not address whether or not respondent court had “found, as a result of is sues decided in Phase I, whether there is a basis for a finding of the necessary prima faci e showing for [Golden St ate’s] [application] of the crime[-]fraud exception to the attorney client pr ivilege,” and she requested “guidance on that issue as it [was] anticipated [Golden St ate] may attempt to propound questions related to the crime-fraud issue at upcoming depositions.” On September 14, 2012, in response to Golden State’s ob jections to the referee’s recommendations, and after cons ideration of the parties’ oral and written arguments, respondent court found Golden State had “set forth a prima facie showing of fraud, at least on the part of Mid-Ce ntury Company, with respec t to both the initiation and maintenance of the [recovery actions].” 6 The court noted that, although the referee had

5 Respondent court’s Phase I trial decision ad dressed only Golden State’s claims against petitioners Truck Insurance, Mi d-Century, and Farmers Insu rance Exchange. The court deferred determination of the responsibility , if any, of Farmers Group, Inc.

6 In support of its ruling, respondent court cited to two earlier or ders denying motions seeking to dismiss the malicious prosecution cause of action against defendants Gregory R. de la Peña, Keith L. Cooper, and de la Pe ña & MacDonald LLP. The court, in those orders, found in essence that either Go lden State had demonstrated a reasonable likelihood of success on its malicious prosecutio n claim or there were material issues of5 found that no reviewed documents supported an application of the cr ime-fraud exception,
she did so without the benefit of the court’s finding that Golden State had made a prima facie showing of fraud. Conse quently, the court remanded the matter to the referee for a
reexamination of the document s “that refer to, discuss, mention, or otherwise relate specifically to the [recovery actions], whic h presumably would eliminate any documents
authored after those cases were ” terminated. As to the refe ree’s request for guidance on the matter of questioning during depositions, th e court directed that “lines of inquiry soliciting information regarding the [recovery a] ctions, including the decisions to initiate and maintain those actions, may be pursued, w ith [attorney-client privilege] objections to questions regarding [those actions] subject to being overruled pursuant to Evidence Code section 956.” The court concluded by stating th at “[t]he issuance of a final order . . . will await receipt and review of the [referee’s] further recommendations upon remand.” On remand, the referee made new recommendations after establishing the appropriate timeframe (October 1, 2006 thro ugh January 23, 2009) for which responsive documents would be required to be pro duced by Mid-Century. The referee found that “several hundred” otherwise privileged documents were discoverable based on the crime-fraud exception. Petitioners objected to the refe ree’s recommendations, again arguing against the application of the cr ime-fraud exception. On November 8, 2012, respondent c ourt issued another “non-final” order addressing petitioners’ objections. In so ru ling, the court stated: “For purposes of determining whether the [crime-fraud exception] to the [attorney-clie nt privilege] applies in the discovery context, it is not necessary to make an ultimat e finding of fraudulent conduct. Rather, eviden ce from which inferences can be drawn to establish the fraud is a sufficient ‘prima facie showing.’ ” The cour t again noted that its finding was based on the previous court orders addressing the mali cious prosecution cause of action, “and, by inference, the evidence submitted by [Golden Gate] in opposition to those motions. . . . [¶] The court further notes that [petitioners’] arguments as to the extent of its duties to
fact regarding each of the elements of the ma licious prosecution caus e of action (lack of probable cause, malice, and termin ation in Golden State’s favor).6 [Golden State] under the applicable insuranc e policies and endorsem ents, raised in an attempt to establish that the [recovery actions] were in no sense improper, are inconsistent with the findings of the court in the Phase I tr ial.” The matter was remanded to the referee to determine whether any of petitioners’ other objections to the production of the requested documents should be sustai ned. On remand, the referee made revised recommendations, identifying more than 260 documents to which the attorney-client privilege was claimed but fell w ithin the temporal and subject- matter scope of respondent court’s rulings on the crime-fraud exception. Petitioners objected, again arguing against the application of the cr ime-fraud exception. Thereafter, respondent court issued tw o orders, both filed December 18, 2012, granting, in part, Golden State’s motions to compel answers to certain deposition questions after overruling petitione rs’ objections based on the attorney-client privilege. On December 21, 2012, responde nt court issued a final orde r directing the production of documents pursuant to the referee’s late st recommendations after again rejecting petitioners’ objections based on the attorney-c lient privilege. In so ruling, the court stated that petitioners’ objections reflected “a misunderstanding of the scope and effect of the court’s orders regarding the crime-fraud ex ception (“CFE”) as it arises here in the discovery context. A finding that a prima fa cie showing of conduc t implicating the CFE has been made does not equate to a finding of liability for such co nduct. Rather, the limited effect of this finding is to cause the production of ev idence that would otherwise properly be withheld as privileged. These discovery production orde rs have no direct effect in establishing any form of liability on the part of any party, nor are they determinative of whether any evidence pr oduced thereunder w ill be admissible in connection with the adjudication of such issues of liability.” On December 27, 2012, petitioners filed this petition for writ of mandate and/or prohibition and requested an immediate stay of the discovery orders that were filed on December 18, 2012, and December 21, 2012. On January 3, 2013, we temporarily stayed the discovery orders, request ed informal briefing, and gave notice, pursuant to Palma v.7 U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 180, that , if appropriate, this court might issue a peremptory writ in the first instance.
DISCUSSION
I. Writ Review and Relief Is Appropriate in This Case It is well settled that interlocutory writ re lief is “the only adequate remedy” where a superior court orders the pr oduction of information that “m ay be subject to a privilege, ‘since once privileged matter has been disclosed there is no wa y to undo the harm which consists in the very disclosure.’ [Citation. ] The attorney-client privilege ‘deserves a particularly high degree of protection in this regard since it is a legislatively created privilege protecting important public policy interests, particularly the confidential relationship of attorney and client and their freedom to discuss matters in confidence.’ [Citations.]” ( Korea Data Systems Co. v. Superior Court (1997) 51 Cal.App.4th 1513, 1516.) Because the petition here alleges that, absent writ relief, privileged attorney-client communications will be disclosed and the priv ilege irretrievably lost, we will entertain the petition.
Golden State contends we should not reach the merits of this petition because (1) petitioners failed to provide an adequate r ecord; (2) the petition is untimely; and (3) petitioners failed to pursue an adequate legal remedy in respo ndent court. We conclude these procedural objections are unavailing.
Petitioners submitted seven vol umes of exhibits, includi ng all of the documents submitted to respondent court concerning its orders regarding the crime-fraud exception,
as well as the court’s statement of decision af ter the Phase I trial, and the only document incorporated by reference ther ein. Golden State complain s that petitioners failed to include the “second complaint” filed in the Mi d-Century action, as we ll as Golden State’s evidence submitted in opposition to defense motions seeking dismissal of the malicious prosecution cause of action, and “critical evidence ad mitted in the Phase [I] trial.” To the
extent Golden State believed the additiona l documents were relevant, they submitted them to this court and we gran ted its request to take judici al notice and have considered8 those documents to the extent they are re levant to our resolution of this petition. 7 We
therefore deem the record sufficient for informed appellate review. ( Bank of America, N.A. v. Superior Court (2013) 212 Cal.Ap p.4th 1076, 1085.) We also reject Golden State’s argumen t that the petition was untimely because it was submitted approximately thre e months after the first cour t order ruling on the crimefraud exception to the attorney-client privilege. In that first order, the respondent court specifically stated that “[t]he issuance of a final order [giving] effect [to its rulings] will await receipt and review of the Discovery Referee’s further recommendations upon
remand.” The court’s final orders on the ma tter did not issue un til December 18, 2012 and December 21, 2012, and th is petition was thereafter tim ely filed on December 27,
2012. Lastly, we conclude petitioners adequa tely exhausted their legal remedy in respondent court before fili ng this petition for writ relief. Golden State contends petitioners failed to adequately challenge the requested discovery because when the crime-fraud exception issue was first raised , petitioners “filed no written opposition,” but relied only on the referee’s te ntative finding that there was no evidence to support the application of the exception. However, the record indica tes that petitioners relied not only on the referee’s tentative finding in their favor, but also relied on—and respondent court expressly considered—p etitioners’ written argument ag ainst applying the crimefraud exception as set forth in their “brief re garding privilege [log] documents filed with the Court on June 1st, 2012.” II. Respondent Court Erred in Ruling that the Crime-Fraud Exception to the Attorney-Client Privilege Applied in This Case
“ We review discovery orders for an abuse of discretion. [Citation.] Under this standard, a trial court’s ruling on a disc overy motion ‘will be overturned upon a prerogative writ if there is no substantial basis for the manner in which trial court
discretion was exercised or if the trial cour t applied a patently improper standard of

7 See footnote 3, ante

.9 decision.’ [Citation.]” ( People ex. rel. Lockyer v. Superior Court (2004) 122 Cal.App.4th 1060, 1071.)
“Evidence Code section 956 codifies the common law rule that the privilege protecting confidential attorney-client communica tions is lost if the client seeks legal assistance to plan or perpetra te a crime or fraud. [Citati on.] The crime-fraud exception expressly applies to communicati ons ordinarily shielded by th e attorney-client privilege. (Evid. Code, § 954.)” ( BP Alaska Exploration, In c. v. Superior Court (1988) 199 Cal.App.3d 1240, 1249 ( BP Alaska Exploration ).) As explained by our Supreme Court, the crime-fraud exception is invoked “ ‘only when a client seeks or obtains legal
assistance “to enable or aid” one to comm it a crime or fraud. The quoted language clearly requires an intention on the part of the client to abuse the attorney-client relationship . . . .’ [Citations.]” ( People v. Clark (1990) 50 Cal.3d 583, 623 ( Clark ), quoting Glade v. Superior Court (1978) 76 Cal.App.3d 738, 746 ( Glade ), citing to BP Alaska Exploration, supra, 199 Cal.App.3d at p. 1249.) Concededly, “Evidence Code section 956 does not require a completed cr ime or fraud. It applies to attorney communications sought to enable the client to plan to commit a fraud, whether the fraud is successful or not. Moreover, we are not reviewing the merits of a fraud cause of action . . . but rather we are reviewing the merits of a discovery [ motion ] to determine if [Golden State] will have access to communications betw een [petitioners] and [their] attorneys to aid [Golden State] in provin g its causes of action.” ( BP Alaska Exploration, supra , 199 Cal.App.3d at pp. 1262-1263.) Thus, “because section 956 applies where an attorney’s services are sought to enable a party to pl an to commit a fraud, the proponent of the exception need only . . . prove a false represen tation of a material fact, knowledge of its falsity, intent to deceive a nd the right to rely.” ( BP Alaska Exploration, supra , 199 Cal.App.3d at p. 1263.) Golden State contends petitioners’ prosecu tion of the recovery actions constituted “criminal deceit.” We disagree. Standing al one, the prosecution of a lawsuit, malicious or not, is neither a crime nor deceit. ( Tur v. City of Los Angeles (1996) 51 Cal.App.4th 897, 903; see also Civ. Code, § 1709 [defin ing deceit as “the willful [deception of]10 another with intent to induce him to alter hi s position to his injury or risk].) Rather, a lawsuit is an adversarial proceeding in which a plaintiff’s intent is to convince the trier of fact to adopt his position. Golden State, as an adversary , had no right to rely on any facts alleged in the recovery actions “without [making] an independent inquiry.” ( Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324 , 1332.) As the record shows, once that independent inquiry was ma de, the recovery actions were dismissed against Golden State. Thus , in the absence of any showing that Golden State was deceived by the filing of the recovery actions, it failed to meet its burden of demonstrating a prima facie showing of fraud sufficient to invoke the crime-fraud exception to the attorney -client privilege. (Cf. BP Alaska Exploration, supra, 199 Cal.App.3d at pp. 1264, 1268 [proponent of crime-fraud exception to attorney-client privilege demonstrated prima facie showing of fraud; proponent ha d right to rely on adversary’s letter from which reas onable inferences could be dr awn that the letter was an attempt to defraud and dissuade prop onent from pursuing its claims].) We are not persuaded that we should u phold the discovery orders based on Golden State’s remaining arguments. We see nothing in the court’s earlier orders addressing the elements of the malicious prosecution cause of action or the court’s findings after the Phase I trial that demonstrates petitioners sought or obtained legal assi stance to enable or
aid in the commission of a crime or fraud. Gold en State’s citation to the ethical standards governing an attorney’s conduct and its critici sm of the recovery actions are not relevant
as “it is the intent of the c lient upon which attention must be focused and not that of the lawyers.” ( State Farm Fire & Casualty Co. v. Superior Court (1997) 54 Cal.App.4th 625, 645; see also Clark, supra , 50 Cal.3d at pp. 622-623.) Even if counsel misclassified
the nature of the claim in th e recovery actions, such a circumstance is not relevant
without some evidence this alle ged error was attributable to an intent to defraud by petitioners. (See Glade, supra , 76 Cal.App.3d at p. 74 6 [attorney’s misuse of
confidential information to de fraud others does not implic ate crime-fraud exception if client did not seek legal assi stance to further this goal an d was unaware of attorney’s contemplated wrongdoing].)11 In sum, we conclude resp ondent court erred in overru ling petitioners’ objections to the production of documents and responses to deposition questions th at contravened their attorney-client privilege as Golden State failed to demonstrate that the crime-fraud exception applied in this case. 8
DISPOSITION
The accelerated Palma procedure ( Palma v. U.S. Industrial Fasteners, Inc., supra, 36 Cal.3d 171) is appropr iate here because petitioners’ “en titlement to relief is so obvious that no purpose could reas onably be served by plenary consideration of the issue. . . .” ( Ng v. Superior Court (1992) 4 Cal.4th 29, 35.) Let a peremptory writ of mandate issue di recting respondent court to vacate only those portions of its two December 18, 2012 orders “Re: Motion to Compel (Motion) Partial Grant,” and its Decembe r 21, 2012 order “Re: Objec tions to Discovery Referee’s Recommendations Dated November 19, 2012, ” which overruled petitioners’ attorneyclient privilege objections to deposition qu estions and the produc tion of documents, and
issue new and different orders sustaining petitioners’ objec tions to the production of documents and responses to deposition ques tions that contravene their attorney-

8 In light of our determination, we need not address petitioners ’ other arguments.12 client privilege. The January 3, 2013 stay i ssued by this court is dissolved. Petitioners
are entitled to their allowable costs.

_ ____________ ____________ McGuiness, P. J.

We concur:

_____________ ____________ Siggins, J.

_____________ ____________ Jenkins, J.