Titmas v. Superior Court

104 Cal. Rptr. 2d 803, 87 Cal. App. 4th 738
California Court of Appeal·Decided March 26, 2001·No. G027750·Published·Cited by 27 cases

Opinion

104 Cal.Rptr.2d 803 (2001)
87 Cal.App.4th 738

Ted TITMAS, Petitioner,
v.
The SUPERIOR COURT of Orange County, Respondent;
John Iavarone et al., Real Parties In Interest.

No. G027750.

Court of Appeal, Fourth District, Division Three.

March 6, 2001.
As Modified March 26, 2001.

*805 Charles E. Ruben, Los Angeles, for Petitioner.

No appearance for Respondent.

Duckor, Spradling & Metzger, John C. Wynne and Robert J. Solis, San Diego, for Real Parties in Interest.

*804 OPINION

CROSBY, J.

The attorney-client privilege (Evid.Code, § 954), one of the oldest privileges in our jurisprudence, seeks to encourage candid and open discussion. Courts understandably are chary of efforts to turn attorneys against their clients. (But see People v. Gionis (1995) 9 Cal.4th 1196, 1208-1213, 40 Cal.Rptr.2d 456, 892 P.2d 1199.) Whether dealing with attorney-client communications or attorney work product, even the liberal principles of discovery are "hardly intended to enable a learned profession to perform its functions ... on wits borrowed from the adversary." (Hickman v. Taylor (1947) 329 U.S. 495, 516, 67 S.Ct. 385, 91 L.Ed. 451 (cone. opn. of Jackson, J.).)

Accordingly, we hold that when there is a prima facie claim of attorney-client privilege, the trial judge must accord a full hearing, with oral argument, before ordering the revelation of client confidences to the other side and, in effect, compelling attorney testimony against a client. The judge in this case (filling in for a vacationing colleague) erred in denying basic due process in this highly sensitive area.

I

Petitioner Ted Titmas invented and patented the Alkohol Stik, a saliva-based test designed to instantly test blood alcohol levels. He became the majority shareholder and chief executive officer in a Nevada corporation formed to produce and market the product.

Titmas hired plaintiffs John Iavarone as executive vice-president and John English as marketing vice-president. According to Titmas, they were partly compensated with stock in exchange for their oral promises to quickly raise more than $2 million in venture capital.

In October 1999, Titmas retained a law firm, Gage Frasier & Teeple ("GF & T"), to prepare a confidential private placement offering. He was disappointed with the results, which raised only $1.2 million. His relationships with plaintiffs soured, and he stopped paying them. They demanded that he step down, and he fired them.

Plaintiffs brought a shareholders' derivative action against Titmas, alleging he converted corporate assets to pay private debts, breached fiduciary duties by failing to manufacture the product, and diverted corporate opportunities to another company. They sought to remove him and to obtain a receiver. Titmas denied the allegations and cross-complained for damages and for rescission of the stock transfers to plaintiffs.

Plaintiffs noticed the depositions of Roland Frazier and Grant Teeple, two partners at GF & T, and served a subpoena for documents from GF & T's custodian of records. Titmas moved to quash the *806 subpoenas, declaring that he retained GF & T in his individual capacity and "am asserting the attorney client and work product privilege."[1]

Plaintiffs opposed the motion to quash on a variety of grounds, including waiver and the crime-fraud exception. They claimed that Titmas voluntarily disclosed his conversations with the attorneys in his declaration in opposition to plaintiffs' motion for a preliminary injunction. (The preliminary injunction was denied.) But plaintiffs also asked the trial court for "guidance with respect to the discoverability of all aspects of GF & T's relationship with defendants."

Although the case was on the docket of Judge David McEachen, the motion to quash came before Judge Brenner, who was filling in. Several hours before the hearing, the court clerk telephonically informed counsel the motion was denied: "The Court clerk notified the moving party's counsel ... that Judge Michael Brenner ruled on the Motion, and no appearance was required.... [¶] The Court ruled that the Motion to Quash the Subpoenas was denied, and that the attorney client privilege was waived."

Titmas sought a writ of mandate. We issued an order to show cause and stayed all proceedings pending our resolution of the issue. Despite our invitation to do so, plaintiffs did not file a return, thereby leaving us to accept all factual allegations in the petition as true. (Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 996, fn. 2, 39 Cal.Rptr.2d 506.)

II

We do not subscribe to the obscurantist notion that justice, like wild mushrooms, thrives on manure in the dark. As Presiding Justice Gilbert observed, "Just as a theater critic must see the play before writing a review, judges must carefully consider the evidence before deciding a case. The lifeblood of our judicial institutions depends upon judges rendering decisions that are the product of a reasoned and objective view of the law and the facts." (Rose v. Superior Court (2000) 81 Cal.App.4th 564, 572, 96 Cal.Rptr.2d 843.)

Rulings should be "reasoned decisions, rather than decisions with reasons...." (In re Rose (2000) 22 Cal.4th 430, 468, 93 Cal.Rptr.2d 298, 993 P.2d 956 (dis. opn. of Brown, J.), italics omitted) Because of basic due process concerns, law and motion judges are always on shaky ground where they "entirely bar parties from having a say." (Mediterranean Construction Co. v. State Farm Fire & Casualty Co. (1998) 66 Cal.App.4th 257, 265, 77 Cal.Rptr.2d 781 (Mediterranean); see also Monarch Healthcare v. Superior Court (2000) 78 Cal.App.4th 1282, 1286, 93 Cal. Rptr.2d 619 [criticizing pretrial orders which "issue like a `bolt from the blue out of the trial judge's chambers'"]; Gwartz v. Superior Court (1999) 71 Cal.App.4th 480, 83 Cal.Rptr.2d 865.) To this effect, courts have required an opportunity for oral argument in critical pretrial matters as to which there are genuine disputes of law or fact. (TJX Companies, Inc. v. Superior Court (2001) 87 Cal.App.4th 747, 104 Cal. Rptr.2d 810 (TJX) [demurrer to class action allegations]); (Rose v. Superior Court, supra, 81 Cal.App.4th 564, 96 Cal. Rptr.2d 843 [certain habeas corpus petitions]); (Hobbs v. Weiss (1999) 73 Cal. *807 App.4th 76, 77, 86 Cal.Rptr.2d 146 (Hobbs) [pretrial writs of attachment]; Mediterranean, supra, 66 Cal.App.4th 257, 77 Cal. Rptr.2d 781 [summary judgments]; but see Lewis v. Superior Court (1999) 19 Cal.4th 1232, 82 Cal.Rptr.2d 85, 970 P.2d 872 [oral argument not required for peremptory writs].)[2]

In the absence of a clear legislative directive for or against oral hearings, we examine the applicable statutory language and consider the context. In particular, we look to the following factors: (1) Does the statutory scheme, read as a whole, encompass an oral hearing? (2) Do the proceedings involve critical pretrial matters of considerable significance to the parties? and (3) Does the motion or other pretrial proceeding involve a real and genuine dispute? (See discussion in TJX, supra, 87 Cal.App.4th at pp.

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