No right to interlocutory appeal of attorney-client privilege ruling

Listen to this article

A trial judge’s discovery order mandating disclosure of communications allegedly protected by the attorney-client privilege was not subject to immediate interlocutory appeal, the Supreme Judicial Court has determined.

The defendants, real estate trustees embroiled in litigation with a developer to whom they had transferred the rights to newly purchased property they allegedly lacked the authority to assign, sought to block deposition testimony by the attorney for the party that sold them the property.

According to the defendants, the seller’s counsel, who had represented them on prior real estate matters, also had an attorney-client relationship with them regarding the transaction and thus his testimony would reveal privileged communications.

A Superior Court judge decided there was no attorney-client relationship regarding the purchase and sale and ordered the lawyer to testify.

The defendants, in seeking to block the lawyer’s testimony, argued that they were entitled to interlocutory review by the Appeals Court under the “present execution doctrine,” which permits immediate appeal of orders that interfere with a party’s rights in a way that cannot be remedied on appeal from a final judgment and that are collateral to the underlying dispute in the case.

But the SJC disagreed.

“We agree with the developer plaintiffs that, although a successful postjudgment appeal cannot entirely eliminate the harm that arises from an order allowing third parties to learn the content of privileged communications, the trust defendants do have a viable postjudgment remedy,” Chief Justice Ralph D. Gants wrote for the court. “Unlike an order disqualifying a party’s counsel, the consequences of an adverse discovery order can be ascertained, the prejudice identified, and the error remedied by barring the use of any evidence derived from the protected communications at a new trial or other subsequent proceeding.”

The court also pointed out that aggrieved litigants can seek immediate review either by a single justice of the Appeals Court under G.L.c. 231, section118, or by asking the trial judge to report a discovery order to the Appeals Court under Rule 64 of the Massachusetts Rules of Civil Procedure.

The court went on to address the merits, remanding the trial judge’s determination that there was no attorney-client relationship back to the Superior Court for further findings.

The 29-page decision is Patel, et al. v. Martin, et al., Lawyers Weekly No. 10-197-18. The full text of the ruling can be found here.

Achieving consistency

Plaintiffs’ counsel David V. Lawler of Hyannis noted that the SJC adopted the U.S. Supreme Court’s rationale in its 2009 Mohawk Industries, Inc. v. Carpenter decision.

In that case, the Supreme Court held that federal court disclosure orders adverse to the attorney-client privilege are not immediately appealable under the collateral order doctrine, the federal courts’ counterpart to the present execution doctrine.

“These are different doctrines, but they’re very similar,” Lawler said. “With respect to interlocutory appeals on attorney-client privilege, this decision creates consistency. It provides clarity where previously there was none.”

Peter S. Brooks of Boston represented the defendants. He said the court appeared concerned that allowing an appeal in the case might open the door to similar interlocutory appeals in other cases in which a different privilege or trade secrets are at issue during discovery.

“The court accepted our argument of irreparable harm once the privileged disclosure is made but concluded that the harm, on balance, was outweighed by the availability of other avenues of review and a general desire to discourage interlocutory appeals,” he said. “It is pretty clear from this decision that the court is not inclined to allow for any expansion of the present execution doctrine.”

Newton civil litigator Thomas W. Evans, who was not involved in the case, said the decision struck a proper balance between protecting privileged information and avoiding endless appeals over discovery issues.

“Hopefully, Appeals Court justices in the single justice session will err on the side of permitting full panel appeals in cases in which disclosure may involve substantial risks of harm,” he said.

Meanwhile, Evans said the underlying facts provide a “cautionary tale” to lawyers who may be tempted to handle a transaction in which another lawyer is not actively involved, as the sellers’ attorney appeared to have done here.

“[The sellers’ attorney] fell into a trap that many lawyers do,” Evans said. “He considered his role as one of facilitating a real estate deal between two sides rather than advocating the adversarial position of one side of the deal.”

Boston lawyer William T. Bogaert, who handles complex civil litigation, said the ruling was really about controlling the flow of cases into the Appeals Court, particularly in a landscape in which the attorney-client privilege is raised “almost by rote” in many cases.

“If every one of those disputes was to go on appeal under the present execution doctrine, requiring a full-blown appeal, it would clog the courts,” he said.

Given the reality that an issue has to be material to be appealed under Rule 64, and an unsuccessful single justice appeal under Chapter 231 carries the risk of sanctions, parties now will have to be very careful about what they assert as privileged, Bogaert continued.

At the same time, he said, the SJC’s distinctions between anti-SLAPP rulings and orders disqualifying counsel — which it recognized as being subject to the present execution doctrine — and attorney-client privilege rulings are not that meaningful.

“Once disclosed, the privilege is breached and a non-client has confidential communications it should not have,” he said. “You cannot un-ring this bell.”

Additionally, he said, the SJC’s proposed remedy of retrial without the use of the privileged information was inefficient in terms of the parties’ money and the court’s time.

“It is pretty clear from this decision that the court is not inclined to allow for any expansion of the present execution doctrine.”

— Peter S. Brooks, Boston

Privileged information?

In September 2012, defendant trustees of the Grossman Munroe Trust executed an agreement to buy a former Masonic temple from the Masonic Temple Association of Quincy. A rider in the contract said the agreement could not be assigned without prior consent of the Masons.

Six months later, the trustees assigned the rights to the property to plaintiff Jay Patel, a real estate developer who planned to put a hotel on the property, for $100,000.

On Sept. 30, 2013, before the sale had closed, a fire severely damaged the property. Afterwards, the Masons claimed they never consented to the assignment, refused to recognize it, and received $6 million in insurance proceeds.

Patel and his company then sued the trustees in Superior Court seeking economic damages due to their failure to obtain the consent needed for the assignment to go through.

During discovery, Patel sought to depose attorney David Levin, who represented the Masons in the sale and who had represented the trustees in other real estate matters for more than 20 years.

The trustees sought a protective order to bar him from disclosing confidential attorney-client communications and claimed he represented them as well as the Masons in the transaction, though Levin himself claimed he represented only the Masons.

After an evidentiary hearing, Judge Jeffrey A. Locke recognized an attorney-client relationship between Levin and the trustees over claims arising from the fire but not with respect to the purchase and sale of the property. Locke ordered Levin’s deposition.

The defendants sought interlocutory review of the order under the present execution doctrine, and the SJC took up the matter on its own motion.

Reparable harm

The SJC ruled that the present execution doctrine did not apply in the case, finding that sufficient post-judgment remedies were available if the discovery order were to cause the defendants undue harm.

“Ultimately, the doctrine of present execution represents a balancing act that weighs the harm to cost-effective litigation arising from piecemeal interlocutory appeals against the harm that a litigant may suffer from a trial court order that is irremediable on postjudgment appeal,” Gants wrote.  “The sheer volume of potential appeals that would be permitted by including privilege-related discovery orders within the doctrine of present execution, and the inevitable adverse impact on judicial efficiency, outweighs the intrinsic harm that potentially might be suffered by an aggrieved party who is denied an immediate right to appeal.”

Turning to the merits of the defendants’ appeal, the SJC presented a litany of facts suggesting the possibility of an attorney-client relationship and found Locke’s findings insufficient to conclude that there was no attorney-client relationship regarding the purchase and sale of the property.

Accordingly, the court remanded the case back for further findings and reconsideration of the issue.

Patel, et al. v. Martin, et al.

THE ISSUE: Was a trial judge’s discovery order mandating disclosure of communications allegedly protected by the attorney-client privilege subject to immediate interlocutory appeal?

DECISION: No (Supreme Judicial Court)

LAWYERS: David V. Lawler of Hyannis (plaintiffs)

Peter S. Brooks and Gregory M. Boucher, of Saul, Ewing, Arnstein & Lehr, Boston (defense)