Case Name: NATIONAL SURETY CORPORATION, Relator, v. The Honorable John F. DOMINGUEZ, Judge of the 93rd Judicial District Court, Respondent
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1986-06-19
Citations: 715 S.W.2d 67
Docket Number: No. 13-86-029-CV
Parties: NATIONAL SURETY CORPORATION, Relator, v. The Honorable John F. DOMINGUEZ, Judge of the 93rd Judicial District Court, Respondent.
Judges: Before NYE, C.J., and SEERDEN and KENNEDY, JJ.
Reporter: South Western Reporter Second Series
Volume: 715
Pages: 67–73

Head Matter:
NATIONAL SURETY CORPORATION, Relator, v. The Honorable John F. DOMINGUEZ, Judge of the 93rd Judicial District Court, Respondent.
No. 13-86-029-CV.
Court of Appeals of Texas, Corpus Christi.
June 19, 1986.
Rehearing Denied Aug. 29, 1986.
Richard McCarroll, Demaris Gullekson, Brown, Maroney, Rose, Barber & Dye, Austin, for relator.
Joe K. Longley, Longley & Maxwell, Austin, Ralph L. Alexander, Kelley, Looney, Alexander & Monroe, Edinburg, for respondent.
Before NYE, C.J., and SEERDEN and KENNEDY, JJ.

Opinion:
OPINION
SEERDEN, Justice.
National Surety Corporation, relator, filed this mandamus proceeding against the Honorable John F. Dominguez, judge of the 93rd Judicial District Court of Hidalgo County, Texas. Relator requests us to order the trial court to vacate its order of January 13, 1986, requiring relator to produce 200 documents for discovery in cause C-572-85-B, First National Bank of Mercedes v. National Surety Corporation. Relator contends that all of the documents are exempt from discovery within the meaning of Tex.R.Civ.P. 166b(3)(d) or the lawyer-client privilege provided in Tex.R.Evid. 503.
The underlying lawsuit giving rise to this mandamus was filed by First National Bank of Mercedes against relator on a banker's blanket bond issued by relator to the bank. Relator received notice of the initial claim on July 11, 1980. It involved transactions between the bank, a corporate customer, La Sara Grain Company (La Sara), and a corporate officer who misapplied corporate funds between 1975 and 1979. Litigation between La Sara, its officer and the bank was concluded in May, 1984, with the bank held liable to La Sara. Relator denied the bank's claim under its bond on December 21, 1984.
At the outset, we must determine whether relator has met the procedural burden which will entitle it to consideration of its request for mandamus.
In Peeples v. Fourth Supreme Judicial District, 701 S.W.2d 635 (1985), the Supreme Court set the guidelines to be followed by a party seeking to exclude documents from the discovery process. The party must: 1) specifically plead the particular privilege or immunity claimed; 2) request a hearing on its motion; and 3) tender the documents for an incamera inspection. These requirements were met. A hearing was then conducted concerning the claimed privileges. The parties submitted briefs to the trial court concerning the discoverability of the documents, and the trial court considered the evidence presented at the hearing, the arguments, the briefs and the authorities, and it inspected the documents and ruled them all to be discoverable. Relator contests this ruling now before this Court.
Having determined that the procedural requirements of Peoples were met, we now must determine the validity of the trial court's ruling. It is axiomatic that mandamus will issue only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law. Johnson v. Fourth Court of Appeals, 700 S.W.2d 916 (1985); State v. Walker, 679 S.W.2d 484, 485 (Tex.1984). The burden of proof to establish the existence of a privilege rests on the one asserting it. Jordan v. Court of Appeals for the Fourth Supreme Judicial District, 701 S.W.2d 644 (1985); Peeples v. Fourth Court of Appeals, 701 S.W.2d 635 (1985); Giffin v. Smith, 688 S.W.2d 112, 114 (Tex.1985).
Relator points to Maryland American General Insurance Co. v. Blackmon, 639 S.W.2d 455 (Tex.1982), as an analogous case holding that the documents are privileged. The Blackmon case does have a similar fact situation which involved a bank suing an insurance company on its blanket bond. It also involved the same privileges involved in our case, and the court held the privileges applied. However, Blackmon is silent about the date from which the privilege begins to be effective. This is a central problem in our case.
Tex.R.Civ.P. 166b(3) provides that the following matters are not discoverable:
*
d . any communication passing between agents or representatives or the employees of any party to the action . where made subsequent to the occurrence or transaction upon which the suit is based and made in connection with the prosecution, investigation or defense of the claim or the investigation of the occurrence or transaction out of which the claim has arisen.
To come under this exemption from discovery the rule plainly states that the communication must:
1. pass between agents, representatives or employees of a party or
2. pass between a party and his agents, representatives or their employees.
Each of the communications ordered produced met one or the other of these conditions. In addition, the communication must be:
A. made subsequent to the occurrence or transaction upon which the suit is based, and
B. 1) made in connection with the prosecution, investigation or defense of the claim, or
2) the investigation of the occurrence or transaction out of which the claim has arisen.
The phrases referred to above as B 1 and 2 clearly do not refer to the same subject matter. The phrase in B 1, "made in connection with the prosecution, investigation or defense of the claim," refers to the same subject as A, "made subsequent to the occurrence or transaction upon which the suit is based," and the phrase in B 2 refers to an earlier event, the occurrence out of which the claim, listed as A, has arisen.
Using this analysis, it is clear that the occurrence upon which the suit is based was the denial of the bank's claim under its bond. This occurred on December 21, 1984. The occurrence or transaction out of which that claim arose was the claim by La Sara against the bank. This claim was made in July, 1980.
In order to be exempt from discovery under Tex.R.Civ.P. 166b(3)(d), the communication must meet three general conditions. It must be between persons whose status brings them within the rule; it must be made after the occurrence on which the suit is based; and it must have been made in connection with either the investigation, prosecution or defense of that occurrence or the investigation of the transaction out of which that claim arose. See State v. Clark, 695 S.W.2d 673 (Tex.App.—Austin 1985) (writ of mandamus denied).
The documents under consideration dated before December 21, 1984, the date of the occurrence or transaction out of which the suit arises, are, therefore, not exempt from discovery under this rule and the trial court did not abuse its discretion in ordering discovery of these documents. However, the documents dated after December 21, 1984, are exempt from discovery unless the exemption has been waived. The evidence shows that relator has not waived his right to protect the exempt documents from discovery.
Next, we must determine whether the trial court abused its discretion by refusing to hold that some of the documents were exempt from discovery by virtue of the lawyer-client privilege. Tex.R.Evid. 503 and Tex.R.Civ.P. 166b(3)(e).
Under Rule 503, not all communications between lawyers and clients are privileged. The communication must be one intended to be confidential and made for the purpose of facilitating the rendition of legal services to the client.
The purpose of the attorney-client privilege is to promote unrestrained communication and contact between an attorney and client in all matters in which the attorney's professional advice or services are sought, without fear that these confidential communications will be disclosed by the attorney, voluntarily or involuntarily, in any legal proceeding. West v. Solito, 563 S.W.2d 240 (Tex.1978). In determining whether the communication is confidential, it is appropriate to look at the circumstances surrounding the communication. Hayes v. Pennock, 192 S.W.2d 169, 174 (Tex.Civ.App. — Beaumont 1945, writ ref'd n.r.e.).
Relator has designated sixty-nine documents to which the lawyer-client privilege is claimed. Our examination of these documents reveals that they generally deal with the review of the matters which are the subject of the present suit between relator and the First National Bank of Mercedes or the prior suit by La Sara against its former employee and the First National Bank of Mercedes. From the testimony presented at the hearing on the discovery motion, the circumstances in which the communications were made, and a review of the communications themselves, we find there can be no other conclusion but that these communications were intended to be confidential. Respondent's contention that relator is required to offer direct evidence, such as the testimony of the lawyer, of the intent of confidentiality is without merit. See Hayes at 173-74. The facts of this case are distinguishable from Giffin. In Giffin, there had been no incamera inspection of documents, nor were the documents to which the privilege of confidentiality was asserted before the court for review. The court held that the relator had not met its burden and had offered no evidence of confidentiality. Here, the documents are before us, and the circumstances under which the communications were made were in evidence at the hearing. Accordingly, we hold, as a matter of law, that documents numbered 22, 24, 25, 26, 34, 37, 40 through 44, 49 through 53, 57, 66 through 68, 70, 71, 73 through 77, 80, 81, 85 through 87, 91, 94, 97, 98, 100 through 102, 104, 107, 111 through 115, 119, 124, 125, 128, 129, 131, 145, 150, 152, 153, 155, 158, 161, 166, 167, 169, 171, 174 through 176, 179, 189, 192, 195, and 197 are protected from discovery by virtue of Tex.R.Civ.P. 166b(3)(e) as being privileged by the lawyer-client privilege, Tex.R.Evid. 503.
In addition, the documents numbered 190 through 200, those dated after December 21, 1984, are exempt from discovery under the provisions of Tex.R.Civ.P. 166b(3)(d).
We conditionally grant relator's petition for writ of mandamus; however, the writ will not issue if the trial court amends its discovery order to conform with this opinion.
NYE, C.J., files a concurring opinion.
KENNEDY, J., files a dissenting opinion.