HILL, KERTSCHER & WHARTON LLP v. MOODY

839 S.E.2d 535, 308 Ga. 74

• Court: Supreme Court of Georgia
• Decided: February 28, 2020
• Docket: S18G1436
• Status: Published

Opinion

308 Ga. 74 FINAL COPY

S18G1436. HILL, KERTSCHER & WHARTON, LLP et al. v. MOODY et al.

BOGGS, Justice.

Under longstanding Georgia law, when a client sues his former

attorney for legal malpractice, the client impliedly waives the

attorney-client privilege with respect to the underlying matter or

matters to the extent necessary for the attorney to defend against

the legal malpractice claim. The issue presented in this appeal is

whether the implied waiver extends to the client’s communications

with other attorneys who represented the client with respect to the

same underlying matter, but whom the client chose not to sue. The

trial court held that the waiver does extend to such other counsel

and therefore denied a motion for a protective order in this legal

malpractice case. The Court of Appeals reversed, see Moody v. Hill,

Kertscher & Wharton, LLP, 346 Ga. App. 129 (813 SE2d 790) (2018),

and we granted certiorari to decide this issue of first impression. We hold that when a client sues his former attorney for legal

malpractice, the implied waiver of the attorney-client privilege

extends to the client’s communications with other attorneys who

represented the client with respect to the same underlying

transaction or litigation. For the reasons described below, we

reverse in part and vacate in part the Court of Appeals’ judgment,

and we remand the case with direction.

1. (a) This case started with a complaint for legal malpractice

and breach of fiduciary duty. The complaint alleged as follows. Daryl

Moody and two associated business entities, Mast Nine, Inc., and

UAS Investments, LLC (“UAS”), had invested in Leucadia Group,

LLC, a California-based aerospace company that was owned by

Robert Miller and Sean Frisbee. Moody, Mast Nine, and UAS sought

legal advice from Hill, Kertscher & Wharton, LLP, and attorneys

Douglas Kertscher and Robert Joseph (collectively, “HKW”) about

terminating Miller as Leucadia Group’s president. On or about

January 15, 2015, HKW advised Moody, Mast Nine, and UAS to do

the following, all without notice to Miller: appoint Moody to

2 Leucadia Group’s board of directors; form a new company named

Leucadia Investment Holdings, Inc. (“LIH”); have Leucadia Group

issue shares to LIH; and terminate Miller as president of Leucadia

Group. Moody, Mast Nine, and UAS followed HKW’s advice, and

HKW prepared the necessary corporate documents. HKW also

recommended filing a lawsuit against Miller and Leucadia Group in

Fulton County Superior Court, which HKW then filed on behalf of

UAS and Frisbee on January 16, 2015. On February 11, 2015, Miller

responded by filing a lawsuit in California against Moody, LIH,

Leucadia Group, and Frisbee, whom HKW then represented in the

California litigation. Despite Moody’s specific requests, HKW failed

to assert certain defenses properly, including that the California

court lacked personal jurisdiction over Moody. HKW did not disclose

or obtain written waivers of any potential or actual conflicts of

interest resulting from prior or ongoing representation of Leucadia

Group and Miller. Miller filed a motion in the Fulton County lawsuit

to disqualify HKW, which was granted, and HKW then withdrew

from the California lawsuit. The California court ultimately ruled

3 that Moody’s appointment to Leucadia Group’s board of directors,

Leucadia Group’s issuance of shares to LIH, and Miller’s

termination as president of Leucadia Group were all void.

(b) On April 28, 2017, Daryl Moody, Mast Nine, UAS, and LIH

(collectively, “Plaintiffs”) filed a complaint against HKW in Cobb

County State Court (the “trial court”). The complaint contained

counts for legal malpractice and breach of fiduciary duty based on

HKW’s legal advice and services in connection with the corporate

matter involving Leucadia Group and the Fulton County and

California lawsuits. On May 30, 2017, HKW filed an answer and

counterclaim for unpaid legal fees. HKW admitted representing

Mast Nine in connection with certain corporate actions over the

course of 2014; representing LIH after it was formed to receive

preferred stock from Leucadia Group; representing UAS in the

Fulton County lawsuit and with respect to certain corporate acts;

and representing Moody, who was the corporate representative of

Mast Nine, UAS, and LIH, in the California lawsuit. HKW denied

having previously represented Leucadia Group or Miller but

4 admitted that in September 2015, the Fulton County Superior Court

granted Miller’s motion to disqualify HKW and that HKW then

withdrew from the California lawsuit. HKW asserted numerous

defenses, including that non-parties caused some or all of the

damages alleged and that Plaintiffs had separate counsel who

provided “confirmatory advice.” HKW also alleged that Moody

directed HKW to “follow the instructions of Holland & Knight LLP

over the course of its interaction with Mr. Moody.”

(c) On June 6, 2017, HKW served a request for production of

documents on non-party Holland & Knight under the Civil Practice

Act. See OCGA § 9-11-34 (c) (1) (authorizing requests for production

of documents directed to “persons, firms, or corporations who are not

parties”). See also OCGA § 9-11-26 (b) (1) (authorizing parties in civil

litigation to “obtain discovery regarding any matter, not privileged,

which is relevant to the subject matter involved in the pending

action, whether it relates to the claim or defense of the party seeking

discovery or to the claim or defense of any other party”). HKW

requested, among other things: (1) Holland & Knight’s file for any

5 corporate work performed for Plaintiffs regarding Leucadia Group,

Miller, another named individual, and another named company;

(2) Holland & Knight’s litigation file for the Fulton County lawsuit;

(3) Holland & Knight’s litigation file for the California lawsuit; and

(4) all correspondence related to that corporate work and the Fulton

County and California lawsuits, including communications between

Plaintiffs and Holland & Knight. On July 31, 2017, Holland &

Knight responded to HKW’s discovery request, producing numerous

redacted documents and withholding others based on specified

objections, including attorney-client privilege and work product

protection; Holland & Knight did not object that any of the materials

sought were not “relevant to the subject matter involved in the

pending action.” OCGA § 9-11-26 (b) (1).

Also on July 31, 2017, Plaintiffs filed a motion for a protective

order on the same grounds raised by Holland & Knight. On

September 12, 2017, HKW filed a response to Plaintiffs’ motion with

multiple exhibits, including an affidavit by Kertscher concerning

Holland & Knight’s involvement in HKW’s corporate work for

6 Plaintiffs related to Leucadia Group and Holland & Knight’s

involvement in the Fulton County and California lawsuits. In its

response, HKW argued that Plaintiffs’ filing of a complaint for legal

malpractice against HKW based on HKW’s legal advice and services

in those three matters constituted an implied waiver of the attorney-

client privilege and work product protection with respect to all

counsel, including Holland & Knight, that assisted Plaintiffs in

those same matters.

No hearing was requested, and on September 19, 2017, the

trial court denied Plaintiffs’ motion for a protective order. The trial

court found that it was undisputed that Holland & Knight together

with HKW represented Moody in connection with the matters that

are the subject of the legal malpractice complaint and held that

Plaintiffs therefore had “waived the attorney-client privilege and

work product protection concerning Holland & Knight . . . by

asserting the present legal malpractice claims.” In support of its

ruling, the trial court cited Christenbury v. Locke Lord Bissell &

Liddell, LLP, 285 FRD 675 (N.D. Ga. 2012). The trial court then

7 granted Plaintiffs’ request for a certificate of immediate review; the

Court of Appeals granted Plaintiffs’ application for interlocutory

appeal; and Plaintiffs filed a timely notice of appeal.

(d) The Court of Appeals reversed the trial court’s order

denying Plaintiffs’ motion for a protective order. See Moody, 346 Ga.

App. at 129. The Court of Appeals recognized that when a client sues

his former attorney for legal malpractice, the client impliedly waives

the attorney-client privilege to the extent necessary for the attorney

to defend against the legal malpractice claim. See id. at 130.

However, the Court of Appeals expressed doubt that the implied

waiver extends to other attorneys who represented the client in the

same underlying matter, stating that this Court has “indicated” that

implied waivers of the attorney-client privilege should be narrowly

drawn, citing Waldrip v. Head, 272 Ga. 572, 578-579 (532 SE2d 380)

(2000) (holding that habeas petitioner who asserts claim of

ineffective assistance of counsel waives attorney-client privilege and

work product protection only to extent necessary for attorney to

defend against specific charges of misconduct), overruled on other

8 grounds by Duke v. State, 306 Ga. 171 (829 SE2d 348) (2019). See

Moody, 346 Ga. App. at 130. The Court of Appeals then tried to

distinguish Christenbury on its facts, stating that the plaintiffs in

Christenbury also had sued one of the non-party attorneys from

whom discovery was sought (albeit in a different court) for the same

transaction for which the plaintiffs blamed the defendant-attorneys.

See Moody, 346 Ga. App. at 130-131.

The Court of Appeals acknowledged the trial court’s finding

that it was undisputed that Holland & Knight and HKW together

represented Plaintiffs in connection with the matters underlying

Plaintiffs’ legal malpractice complaint. The Court of Appeals also

recognized that Moody engaged Holland & Knight “to assist with”

the Fulton County and California lawsuits. Moody, 346 Ga. App. at

129. However, the Court of Appeals pointed to Holland & Knight’s

engagement letter with Moody and said that Plaintiffs “actually

engaged Holland & Knight after the legal advice and services

provided by [HKW] that constitute the subject of [Plaintiffs’]

9 complaint against [HKW].” Id. at 131 (emphasis in original).1 The

Court of Appeals then surmised that Holland & Knight was

“involved in dealing with the consequences of the alleged

malfeasance of [HKW],” and concluded that “even if the rule in

Christenbury were applied, there would be no basis for finding an

implied waiver of the attorney/client privilege between [Plaintiffs]

and the non-party Holland & Knight.” Moody, 346 Ga. App. at 131.

2. As stated above, OCGA § 9-11-26 (b) (1) authorizes parties

to civil lawsuits to “obtain discovery regarding any matter, not

privileged, which is relevant to the subject matter involved in the

pending action, whether it relates to the claim or defense of the party

seeking discovery or to the claim or defense of any other party.”2

1 Notably, Holland & Knight’s engagement letter referred to the firm’s

“longstanding client relationship” with Moody. 2 The term “not privileged” here refers to the concept of “privileges” as

that term is used in the law of evidence. See United States v. Reynolds, 345 U.S. 1, 6 (73 SCt 528, 97 LE 727) (1953). As we explained in Bowden v. Med. Center, Inc., 297 Ga. 285 (773 SE2d 692) (2015), when the General Assembly comprehensively and exhaustively revised the discovery provisions of the Civil Practice Act in 1972, OCGA § 9-11-26 was virtually identical to the corresponding federal rule then in effect, so “[c]ases and commentary interpreting the language used in the 1970 version of the federal discovery rules are therefore persuasive authority in interpreting Georgia’s discovery

10 Holland & Knight did not dispute that the discovery that HKW

sought from it is relevant to the subject matter of Plaintiffs’

malpractice action against HKW. Holland & Knight also did not

assert that it had no responsive documents in any of the four

categories specified above, and where Holland & Knight had no

responsive documents, it said so directly (for example, “Holland &

Knight has no documents which would be responsive to Request No.

9.”). Regarding the four categories above, Holland & Knight objected

based on the attorney-client privilege, see OCGA § 24-5-501 (a) (2),

thereby indicating that Holland & Knight had responsive

documents that it would not produce. See Ford Motor Co. v. Conley,

294 Ga. 530, 532, 543-545 (757 SE2d 20) (2014) (noting importance

of precision in discovery requests and responses).3

statutes.” Bowden, 297 Ga. at 291 n.5. The limitation of discovery to matter that is “not privileged” has been part of the Federal Rules of Civil Procedure from the beginning, in 1938, and was carried forward into the 1970 version of the federal discovery rules. See 8 Richard L. Marcus, Federal Practice & Procedure § 2016 (3d ed. updated 2019). Thus, we conclude that the United States Supreme Court’s interpretation in Reynolds of the term “not privileged” applies to the same term as used in the discovery provisions of the Civil Practice Act. 3 Holland & Knight agreed to produce what it considered to be non-

11 The attorney-client privilege is the oldest of the common law

privileges for confidential communications. See St. Simons

Waterfront, LLC v. Hunter, Maclean, Exley & Dunn, P.C., 293 Ga.

419, 421 (746 SE2d 98) (2013). The privilege is currently codified at

OCGA § 24-5-501 (a) (2), which says: “There are certain admissions

and communications excluded from evidence on grounds of public

policy, including, but not limited to, . . . [c]ommunications between

attorney and client . . . .” The privilege exists

to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice. The privilege recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer’s being fully informed by the client.

St. Simons Waterfront, 293 Ga. at 422 (citation and punctuation

omitted). In Georgia, the privilege is narrowly construed, because its

application operates to exclude evidence and thus to impede the

search for the truth. See id. There are also certain exceptions to the

privileged documents from its litigation files for the Fulton County and California lawsuits and also said that it would produce “non-privileged documents relating to the only ‘corporate work’ performed for” UAS and LIH. 12 privilege in Georgia; for example, there is an exception for

“communications in furtherance of a crime, fraud, or other unlawful

end.” Id. at 427. Moreover,

the rule as to privilege has no application where the client, in an action against the attorney, charges negligence or malpractice, or fraud, or other professional misconduct. In such cases it would be a manifest injustice to allow the client to take advantage of the rule of privilege to the prejudice of his attorney.

Daughtry v. Cobb, 189 Ga. 113, 118 (5 SE2d 352) (1939) (citation and

punctuation omitted). See generally Marjorie A. Shields,

Construction and Application of Self-Protection or Self-Defense

Exception to Attorney-Client Privilege, 71 ALR6th 249 (2012).

A similar rationale requires recognition that the implied

waiver of the attorney-client privilege extends to other attorneys

who represented the plaintiff-client in the same underlying matter.

To succeed on a claim of legal malpractice, the plaintiff-client must

prove three elements: “(1) employment of the defendant attorney,

(2) failure of the attorney to exercise ordinary care, skill and

diligence, and (3) that such negligence was the proximate cause of

13 damage to the plaintiff.” Allen v. Lefkoff, Duncan, Grimes & Dermer,

P.C., 265 Ga. 374, 375 (453 SE2d 719) (1995) (citation and

punctuation omitted). Thus, by suing HKW for legal malpractice,

Plaintiffs have put at issue questions of proximate causation,

reliance, and damages, all of which may have been affected by other

attorneys who represented Plaintiffs in the same matters

underlying Plaintiffs’ malpractice complaint. As the Washington

Supreme Court stated in one of the leading cases in this area,

plaintiff-clients should not be allowed to file a claim for malpractice

against a former attorney “and at the same time conceal from him

communications which have a direct bearing on this issue simply

because the attorney-client privilege protects them. To do so would

in effect enable them to use as a sword the protection which the

Legislature awarded them as a shield.” Pappas v. Holloway, 787 P2d

30, 36 (Wash. 1990). See also Bailey v. Baker, 232 Ga. 84, 86 (205

SE2d 278) (1974) (stating in different context that in analyzing

implied waiver of attorney-client privilege, this Court asks, “Is it fair

and consistent with the assertion of the claim or defense being made

14 to allow the privilege to be invoked?”); Simmons Foods, Inc. v. Willis,

191 FRD 625, 636 (D. Kan. 2000) (noting that attorneys from whom

discovery was sought in Pappas “all had the opportunity to commit

or contribute to the legal malpractice alleged”). As recognized in

Christenbury, “federal law has largely found implied waiver in such

situations.” 285 FRD at 683.

Plaintiffs bore the burden of showing their entitlement to a

protective order. See OCGA § 9-11-26 (c) (authorizing issuance of

protective orders “[u]pon motion by a party . . . and for good cause

shown”). The trial court found that Holland & Knight and HKW

together represented Plaintiffs in the matters that are the subject of

the malpractice complaint. The Court of Appeals acknowledged this

finding and agreed that Moody engaged Holland & Knight “to assist

with” the Fulton County and California lawsuits, Moody, 346 Ga.

App. at 129, but appears to have disagreed with the trial court’s

finding that Holland & Knight represented Plaintiffs in connection

with the corporate matter involving Leucadia Group. However, the

trial court’s finding that Holland & Knight represented Plaintiffs in

15 connection with all three matters underlying the malpractice

complaint was entitled to substantial deference by the Court of

Appeals. See Ford Motor Co., 294 Ga. at 547-549. See also

Ambassador College v. Goetzke, 244 Ga. 322, 323 (260 SE2d 27)

(1979) (“‘This court has repeatedly held that it will not reverse a trial

court’s decision on discovery matters absent a clear abuse of

discretion.’” (quoting Retail Credit Co. v. United Family Life Ins. Co.,

130 Ga. App. 524, 526 (203 SE2d 760) (1974))). Moreover, the trial

court’s finding was supported by Holland & Knight’s discovery

responses, and the Court of Appeals therefore erred in rejecting the

trial court’s finding. See Ford Motor Co., 294 Ga. at 547 (noting that

trial court’s factual finding on discovery matter will be upheld on

appeal if there is any evidence to support it). Instead, the Court of

Appeals should have affirmed the trial court’s ruling that Plaintiffs

were not entitled to a protective order based on attorney-client

privilege.

3. One other matter requires comment. In light of the Court

of Appeals’ conclusion regarding implied waiver of the attorney-

16 client privilege, the Court of Appeals had no occasion to consider

whether the trial court erred in its analysis of the work product

exception to document production, which requires the requesting

party to show a substantial need for the materials and an inability

without undue hardship to obtain the substantial equivalent of the

materials by other means. See OCGA § 9-11-26 (b) (3). We note that,

even where the necessary showing is made and discovery of such

materials is ordered, the trial court still must “protect against

disclosure of the mental impressions, conclusions, opinions, or legal

theories of an attorney or other representative of a party concerning

the litigation,” id., including, if necessary, through in camera review,

see St. Simons Waterfront, 293 Ga. at 429-430 (“Where otherwise

discoverable materials contain such ‘mental impressions,’ the trial

court may need to conduct an in camera review to ensure those

portions are redacted prior to production.”). See also Pappas, 787

P2d at 37-39 (separately analyzing whether documents requested

were protected by work product doctrine). Accordingly, we reverse

the Court of Appeals’ judgment with regard to the implied waiver of

17 the attorney-client privilege, vacate its judgment with regard to the

work product doctrine, and remand the case to the Court of Appeals

for further proceedings consistent with this opinion.

Judgment reversed in part and vacated in part, and case remanded with direction. All the Justices concur, except Peterson, J., not participating, and Ellington, J., disqualified.

DECIDED FEBRUARY 28, 2020. Certiorari to the Court of Appeals of Georgia — 346 Ga. App. 129. Carlock, Copeland & Stair, Johannes S. Kingma, John C. Rogers; Mark A. Rogers, for appellants. Chandler Law, Douglas V. Chandler, Shaun P. Rooney, for appellees. Holland & Knight, Matthew D. Friedlander, Caroline J.

18 Tanner, amici curiae.