Court Opinion

ID: 3078512
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:35:54.223185+00
Date Added: 2024-06-11T07:38:20.520781
License: Public Domain

In The
              Court of Appeals
Sixth Appellate District of Texas at Texarkana

                  No. 06-13-00108-CV

  IN RE: LUMBERMEN’S UNDERWRITING ALLIANCE

             Original Mandamus Proceeding

       Before Morriss, C.J., Carter and Moseley, JJ.
               Opinion by Justice Carter
                                             OPINION
        Lumbermen’s Underwriting Alliance has petitioned this Court for mandamus relief from

a discovery ruling. After the factory of Master Woodcraft Cabinetry, L.L.C. (MWC) was

destroyed by fire, a claim was filed with Lumbermen’s, the insurer, for losses incurred. MWC

retained an adjusting firm, Adjusters Group, L.L.C., to assist in filing the claim. Lumbermen’s

sought to obtain a great many documents from Adjusters, 1 but MWC objected to these discovery

requests, claiming the documents were protected by attorney-client and/or work-product

privilege. After the trial court sustained MWC’s claims of privilege, Lumbermen’s filed this

petition.    Lumbermen’s asks this Court to either compel Adjusters/MWC to produce the

documents or to require the trial court to compel the production of a privilege log and then to

conduct an in-camera inspection of the withheld documents. 2 We conditionally grant the petition

for writ of mandamus.

I.      Mandamus Requirements

        Mandamus issues only when the mandamus record establishes (1) a clear abuse of

discretion or the violation of a duty imposed by law and (2) the absence of a clear and adequate

remedy at law. Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992) (orig. proceeding); see

In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). A trial

1
 From the mandamus record filed with this Court, it appears that two individuals, Gerald Marshall and Robert
Snyder, acted on behalf of Adjusters in the engagement that is the subject of this petition. Our references to
Adjusters include both the firm and its agents unless stated otherwise.
2
 According to the parties’ briefs and their representations at oral argument, the underlying claim for damages has
been settled. This case apparently involves MWC’s extracontractural claims and Lumbermen’s defenses to those
claims.
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court clearly abuses its discretion when it reaches a decision “so arbitrary and unreasonable it

amounts to a clear and prejudicial error of law or it clearly fails to correctly analyze or apply the

law.” In re Olshan Found. Repair Co., 328 S.W.3d 883, 888 (Tex. 2010) (orig. proceeding). A

trial court has no discretion in determining what the law is or in applying the law to the facts.

Walker, 827 S.W.2d at 840.

II.    Abuse of Discretion—Assertion of Privilege

       The first issue we must address is whether the trial court abused its discretion in

sustaining MWC’s claims of privilege and denying Lumbermen’s motion to compel the

production of the disputed documents. The law recognizes that certain information is privileged.

If a party believes information is privileged, the party has a right to assert that privilege in

accordance with Rule 193.3 of the Texas Rules of Procedure. TEX. R. CIV. P. 193.3. Here,

MWC objected to Lumbermen’s discovery requests by asserting that the information sought was

protected by the attorney-client and/or the work-product privilege. Rule 193.3 sets out the

procedure to be followed in such an instance; in response to a discovery request, a party claiming

privilege may withhold the privileged material or information from its response. TEX. R. CIV. P.

193.3(a). If a party chooses to withhold, then that party must disclose that responsive material

has been withheld, identify the requests to which the material is responsive, and identify the

privilege or privileges asserted. Id. The party seeking discovery may then serve a written

request asking the withholding party to identify the withheld information and material. Within

fifteen days, “the withholding party must serve a response” describing the withheld material or

information, without divulging the privileged information itself or waiving the privilege, but in a
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manner that allows the requesting party to assess the applicability of the claimed privilege. The

claiming party must also assert a specific privilege for each item or group of items withheld.

TEX. R. CIV. P. 193.3(b).           This response identifying withheld items is commonly called a

privilege log. In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 221 n.1 (Tex. 2004) (orig.

proceeding) (per curiam). With one significant exception, preparation and service of a privilege

log is mandatory when such has been timely requested. TEX. R. CIV. P. 193.3(b). A party is not

required to file a privilege log for communications or documents to or from its attorney or for

privileged documents of a lawyer or lawyer’s representative. TEX. R. CIV. P. 193.3(c). This

discovery procedure was invoked in this matter.

         After receiving MWC’s objections to its discovery requests, 3 Lumbermen’s sent MWC a

request for a privilege log pursuant to Rule 193.3(b). MWC invoked the exception to the

privilege log filing requirement and declined to produce a log, claiming that 193.3(c) relieved it

of this burden.

         Here, we are concerned with the mechanism for establishing whether responsive material

is privileged. In arguing that a privilege log is not required under the facts of this case, MWC

relies on a comment to Texas Rule of Civil Procedure 193.3, which states, “A party need not

state that material created by or for lawyers for the litigation has been withheld as it can be

assumed that such material will be withheld from virtually any request on the grounds of

attorney-client privilege or work product.” TEX. R. CIV. P. 193.3 cmt. 3. The comment further

3
 Lumbermen’s requested 111 categories of documents, information, and material; to 84 of these MWC objected that
the requests sought material that is, inter alia, “privileged under the attorney-client and/or work product privileges
and/or as confidential.”
                                                          4
states that “the rule does not prohibit a party from specifically requesting the material or

information if the party has a good faith basis for asserting that it is discoverable.” Id.

       The purpose of a privilege log is to identify the material that has been withheld and the

specific privilege or privileges under which it was withheld so that the claim of privilege may be

evaluated. Some privileged information is entitled to more procedural protection than other such

information.    For instance, even though other privileged information may exist, only

communications to or from a lawyer or lawyer’s representative or privileged documents of a

lawyer or lawyer’s representative are exempt from the privilege log disclosure. TEX. R. CIV. P.

193.3(c); see also TEX. R. EVID. 503(b)(1)(A), (D). The law also recognizes a distinction

between the work-product privilege protection for core-work product—the work product of an

attorney that contains mental impressions, opinions, conclusions, or legal theories—and that for

the work product of a party. TEX. R. CIV. P. 192.5. The work product of an attorney is not

discoverable, but the work product of others may be if the party seeking it can show a substantial

need for it. TEX. R. CIV. P. 192.5(b)(2). MWC is correct in arguing that it has no obligation to

produce a privilege log for attorney (or the attorney’s representatives) communications or

documents, but is incorrect in asserting that all of the work product of MWC’s nonattorney

representatives is exempt from the privilege log requirement.

   At the last of three hearings contained in the mandamus record, MWC argued it was not

required to produce a privilege log. In support of this argument, MWC tendered a few (nine or

ten) documents for in-camera inspection by the trial court and told the court those documents

were representative of the 6,000 withheld documents. MWC argued that the tendered documents
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would show that all of the withheld documents were generated in anticipation of litigation. Proof

that these documents were prepared in anticipation of litigation by a party or party’s

representative may indicate that those specific documents were protected as work product, but

that is not enough to qualify for the privilege log exemption of Rule 193.3(c). See TEX. R. CIV.

P. 193.3(c).

       MWC argues it was not required to file the privilege log because the affidavit filed by Gene

Ponder, Chief Executive Officer for MWC, establishes a prima facie showing of attorney-client

and work-product privileges. Ponder’s affidavit states that Adjusters and its employees were

representatives of MWC and were authorized to discuss the case with MWC’s attorneys and

even act on legal advice from MWC’s attorneys. Ponder’s affidavit further asserts that Adjusters

was employed within a month of the fire and that all of the correspondence or communication

between Ponder and third parties, such as Adjusters, was intended to remain confidential and

privileged. 4 Assuming that all of the factual assertions in Ponder’s affidavit are true, MWC has

4
    A summary of Ponder’s affidavit follows:

• Ponder began consulting with Adjusters in October 2011, and Ponder anticipated a dispute, including possible
  litigation, with Lumbermen’s.

• Ponder had the authority to obtain and to have his representatives, agents, and/or consultants obtain legal services
  on behalf of MWC.

• Ponder had authority to designate representatives of his choosing to act on MWC’s behalf in communicating with
  MWC’s attorneys and on behalf of MWC. Ponder considered Adjusters to be MWC’s representative, agent,
  and/or consultant.

• Adjusters was MWC’s representative, agent, and/or consultant when communicating with MWC’s attorneys
  regarding this case.

• Adjusters had authority to obtain legal services and/or act on legal advice rendered on MWC’s behalf regarding
  this case.
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still failed to demonstrate that all of the 6,000 withheld documents are exempt from the privilege

log requirement of Rule 193.3. Further, this affidavit does not purport to assert a particular

privilege “for each item or group of items withheld.” TEX. R. CIV. P. 193.3(b)(2). In fact, no

particular item or group of items is even identified.

         The affidavit of Ponder suggests that MWC may have some work-product documents;

that may be the trial court’s conclusion after reviewing the log or, if necessary, an in-camera

review. Even if the documents are the privileged work product of MWC or its representatives,

they may still be subject to discovery in accordance with Rule 192.5(b)(2). 5

• Adjusters had authority to make/receive confidential communications with MWC and/or MWC’s attorneys while
  acting in the scope of its agency/employment with MWC.

• The communications, documents, and information exchanged between MWC’s attorneys and MWC are
  privileged, confidential, and private because they were exchanged for the purpose of facilitating rendition of legal
  services for MWC. These materials were not intended to be disclosed to third persons other than to those to
  whom disclosure was made in furtherance of the rendition of legal services.

• The communications, information, and documents exchanged between Adjusters and MWC’s attorneys are
  privileged, confidential, and private because they were exchanged to facilitate the rendition of legal services to
  MWC.

• These communications, information, and/or documents were made and/or received while Adjusters was acting in
  the scope of its capacity as representative, agent, and/or consultant for MWC.

• Communications, documents, and/or information exchanged among Adjusters and MWC are privileged and
  confidential and were made for the purpose of facilitating legal representation and in anticipation of litigation or
  trial or were materials prepared or mental impressions developed in anticipation of a dispute including possible
  litigation or trial; there was an expectation of privacy, confidentiality, and privilege in these communications,
  information, and/or documents.

• By forwarding and/or copying communications, information, and/or documents to “third persons, including, but
  not limited to, Richard Anderson, Randy Akin, or Randall Taylor,” Ponder did not waive or intend to waive
  privileges and confidentialities attached to all documents/communications exchanged between MWC and or its
  agent, representatives, consultants, and MWC’s attorneys.
5
 “Any other work product is discoverable only upon a showing that the party seeking discovery has substantial need
of the materials in the preparation of the party’s case and that the party is unable without undue hardship to obtain
the substantial equivalent of the material by other means.” TEX. R. CIV. P. 192.5(b)(2).
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        The Rule authorizing a party to withhold privileged documents from discovery without

furnishing a privilege log, 6 provides that “a party may withhold a privileged communication to

or from a lawyer or a lawyer’s representative,” or a “privileged document of a lawyer or lawyer’s

representative” created or made from the point in time when a party consults the lawyer with an

eye toward obtaining the lawyer’s services for the specific claim or suit in which the discovery is

requested. TEX. R. CIV. P. 193.3(c). Ponder’s affidavit explains that MWC hired Adjusters—

they were MWC’s representatives, not representatives of a lawyer. There is no evidence that all

of the 6,000 withheld documents are privileged communications or documents from, to, or by a

lawyer or lawyer’s representative. Many of the requested items involved communications and

documents not involving lawyers or their representatives.

        The trial court sustained MWC’s assertions of privilege and objections to Lumbermen’s

deposition on written questions. This ruling and the failure to require MWC to produce a

privilege log precluded Lumbermen’s from meaningfully assessing and contesting MWC’s broad

privilege claim as to 6,000 documents. It was MWC’s burden to make a prima facie showing

that the attorney-client or work-product privileges applied and to produce some evidence to

support its assertion of privilege. See In re USA Waste Mgmt. Res., L.L.C, 387 S.W.3d 92, 96

(Tex. App.—Houston [14th Dist.] 2012, orig. proceeding); see also In re Yorkshire Ins. Co., 337
S.W.3d 361, 364 (Tex. App.—Amarillo 2011, orig. proceeding) (in mandamus proceeding,

6
 When construing rules of procedure, we apply the same rules of construction that govern the interpretation of
statutes. In re Christus Spohn Hosp. Kleberg, 222 S.W.3d 434, 437 (Tex. 2007) (orig. proceeding). We first look to
the plain language of the rule and construe it according to its plain or literal meaning. See, e.g., In re E.A., 287
S.W.3d 1, 5 (Tex. 2009). In doing so, we keep in mind that the Rules of Civil Procedure are given a liberal
construction so as “to obtain a just, fair, equitable and impartial adjudication of the rights of litigants under
established principles of substantive law.” TEX. R. CIV. P. 1.
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reviewing court looks to whether party asserting privilege discharged burden). A log was critical

to evaluating MWC’s privilege claims. Although we do not find that an in-camera review is

required at this point, we note that “a trial court abuses its discretion when it fails to conduct an

adequate in camera inspection of documents when such review is critical to evaluation of a

privilege claim.” In re Living Ctrs. of Tex., Inc., 175 S.W.3d 253, 261 (Tex. 2005) (orig.

proceeding).

III.   Inadequate Remedy by Appeal

       To determine whether a party has an adequate remedy by appeal, we apply a balancing

test. See Prudential, 148 S.W.3d at 136; In re AIU Ins. Co., 148 S.W.3d 109, 115 (Tex. 2004)

(orig. proceeding). Under this test, a remedy available on direct appeal is adequate when the

detriments of mandamus review outweigh the benefits. Prudential, 148 S.W.3d at 136. When

mandamus is sought to overcome a trial court’s conclusion that evidence is privileged, the

appellate court must determine whether the party asserting the privilege has discharged its

burden of proof. Yorkshire Ins. Co., 337 S.W.3d at 364–65 (citing Barnes v. Whittington, 751
S.W.2d 493, 494 (Tex. 1988)). An appellate remedy is not inadequate because it may involve

more expense or delay than obtaining an extraordinary writ, rather it is inadequate only when

parties stand to lose their substantial rights. Walker, 827 S.W.2d at 842. Whether ordinary

appeal can provide an adequate remedy to a trial court’s abuse of discretion depends on a careful

analysis of the costs and benefits of interlocutory review. In re McAllen Med. Ctr., Inc., 275
S.W.3d 458, 464 (Tex. 2008) (orig. proceeding). This balancing analysis recognizes that the

adequacy of an appeal depends on the facts involved in each case. Id. at 469.
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       An appeal is an inadequate remedy when the court erroneously orders disclosure of

privileged information.    In re Ford Motor Co., 211 S.W.3d 295, 298 (Tex. 2006) (orig.

proceeding) (per curiam). The Texas Supreme Court has held that the denial of discovery in the

absence of evidence substantiating the claim of privilege was an abuse of discretion requiring

mandamus relief. Weisel Enters., Inc. v. Curry, 718 S.W.2d 56, 58 (Tex. 1986). In Weisel, the

party resisting discovery filed a list of documents that it claimed to be privileged attorney-client

and work-product documents. The trial court was requested to review the documents in camera,

but refused. While our present Rules do not necessarily require an in-camera review, they do

require that a privilege log be presented so that some manner of review by the trial court may be

accomplished. Based on the similarity of the facts involved in this case and the Weisel case, we

believe the relator has shown that the remedy by appeal is inadequate. Here, none of the

disputed documents are contained in the mandamus record, no privilege log was prepared, and

the trial court was never presented with an opportunity to examine the documents.

       When material is properly requested for discovery, a party asserting a privilege must

serve a response describing the material withheld and asserting a specific privilege for each item

or group of items withheld. The only exception to this filing applies to privileged information

from lawyers and their representatives. We find the trial court abused its discretion in not

requiring the production of a privilege log so that the claim of privilege could be properly

assessed.

       We conditionally grant the petition for mandamus relief. The trial court is directed to

vacate its previous order of September 17, 2013, insofar as it relates to assertions of privilege and
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to conduct further proceedings in accordance with this opinion. We are confident the trial court

will promptly comply, and our writ will issue only if it does not.

                                              Jack Carter
                                              Justice

Date Submitted:        December 4, 2013
Date Decided:          January 16, 2014

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