Jones Waldo Holbrook & McDonough PC v. 3293 Harrison Blvd. LLC

524 P.3d 1022

JONES WALDO HOLBROOK & MCDONOUGH PC, Kenneth A. Okazaki, and Christopher L. Paulson, Appellants,

v.3293 HARRISON BLVD. LLC, Appellee.

No. 20220142-CA

Court of Appeals of Utah.

Filed January 20, 2023

Kenneth B. Black, Salt Lake City, Wesley Harward, and Samuel C. Straight, Attorneys for Appellants

Aaron R. Harris, Steven C. Smith, and Kipp S. Muir, Attorneys for Appellee

Judge Michele M. Christiansen Forster Authored This Opinion, in Which Judges Gregory K. Orme and Ryan D. Tenney Concurred.

Opinion

CHRISTIANSEN FORSTER, Judge:

¶1 Kenneth A. Okazaki and his law firm, Jones Waldo Holbrook & McDonough PC (Jones Waldo), assisted their client, Christopher L. Paulson, (collectively, Appellants) in recording a Notice of Lis Pendens against property located in Ogden, Utah (the Property), which was owned by 3293 Harrison Blvd. LLC (Harrison). At the time, Okazaki and Jones Waldo were representing Christopher in his divorce from Trishna Paulson, and Trishna, a member of Harrison, was attempting to sell the Property. Harrison subsequently filed a complaint alleging wrongful lien and intentional interference with economic relations. In the course of discovery, Harrison sought documents from Jones Waldo that Appellants alleged were protected by the attorney-client and work-product privileges. Harrison filed two statements of discovery issues (SODIs)¹ relating to Jones Waldo's compliance with the discovery requests. The district court granted relief with respect to both SODIs. Appellants sought, and this court granted, interlocutory review of the district court's orders. On appeal, we are asked to determine whether the district court erred in granting the requested relief. Because the justification provided by the district court in its order did not support its decision to require production, we reverse its grant of one of the two SODIs.

BACKGROUND

¶2 Okazaki, an attorney who worked for Jones Waldo, represented Christopher in his divorce from Trishna. The district court's temporary orders in the divorce case prohibited either party from "dissipat[ing] any marital asset outside of the regular course of the parties’ businesses and their historical practices." (Quotation simplified.)

¶3 During their marriage, Christopher and Trishna organized and were co-managers of Harrison. Harrison owns the Property. A trust created by the Paulsons held an 89.22% membership interest in Harrison, while the Paulsons’ four children each held a 2.695% membership interest. The Property was purchased using premarital funds belonging to Trishna, and the operating agreement for Harrison prohibited any equity owner from recording a lis pendens on property owned by the company.

¶4 While the temporary orders for the Paulsons’ divorce were in place, Harrison finalized a commercial real estate purchase contract (the REPC) to sell the Property for $2,050,000. Upon learning of the REPC, Okazaki, on behalf of Christopher, recorded a Notice of Lis Pendens² with the Weber County Recorder and sent a letter to the Property's listing agent demanding that the agent immediately withdraw any offers or acceptance of offers on the Property. Subsequently, the buyer for the Property canceled the REPC.

¶5 Eventually, Appellants released the lis pendens, and in the divorce proceedings, Trishna succeeded in an unopposed motion for summary judgment determining that the trust's membership interest was her separate property rather than marital property. Harrison then sued Appellants, alleging claims for wrongfully recording the lis pendens and intentional interference with economic relations.

¶6 Appellants filed a motion for summary judgment on Harrison's claims, but the district court denied the motion. The court explained that, based upon the undisputed facts submitted for purposes of the motion, it was "reasonable to infer that at the time the Notice [of Lis Pendens] was recorded ..., all the [Appellants] knew the ... Property was not an asset subject to division in the divorce and that no legal action against it had been filed," and that the Notice of Lis Pendens was therefore "groundless and consequently contained an intentional material misstatement or false claim."

¶7 In the course of subsequent discovery in the wrongful lien litigation, Harrison requested that Appellants identify "each communication between any attorney, paralegal, legal secretary, and/or other agent of Jones Waldo" and Christopher "that related, in any way, to the preparation and/or recording" of the Notice of Lis Pendens (Interrogatory No. 1). Harrison also made the same request regarding Jones Waldo's internal communications (Interrogatory No. 2) and requested that Jones Waldo produce all documents identified in Interrogatory No. 1 and Interrogatory No. 2. Jones Waldo objected to these discovery requests on the ground that they sought information protected by the attorney-client privilege and the attorney-work-product privilege.³ The parties participated in a "meet and confer" regarding Jones Waldo's objections, and Jones Waldo agreed to provide a limited response to the interrogatories and to produce a privilege log of withheld and redacted documents that it deemed privileged.

¶8 Harrison then filed two SODIs with the district court. The first SODI alleged that Jones Waldo had refused to respond to Interrogatory No. 1 and had not provided a privilege log regarding communications between Jones Waldo and Christopher. The second SODI asked the court to order Jones Waldo to produce the requested documents and communications on the grounds that (1) Jones Waldo waived attorney-client privilege by denying allegations in Harrison's complaint, (2) Jones Waldo had put any communications related to the lis pendens at issue by denying the allegations in Harrison's complaint, and (3) the privilege does not apply to communications made in furtherance of fraud. Both SODIs also asked for an award of attorney fees.

¶9 Jones Waldo responded that it had, in fact, included "multiple communications between Jones Waldo and [Christopher]" in its privilege and redaction logs and that it had fully responded to Interrogatory No. 1. It further explained that the parties did not actually discuss Interrogatory No. 1 during the meet and confer and that Harrison had never "indicated, prior to the filing of [the first SODI], that Jones Waldo's logs did not contain the communications between Jones Waldo and [Christopher]." Jones Waldo also continued to assert that the attorney-client and work-product privileges applied to the requested communications.

¶10 The district court did not hear oral argument on the SODIs. Instead, it issued orders granting the relief requested by Harrison. As to the first SODI, the court determined that Jones Waldo had not responded to Interrogatory No. 1, "as modified by the parties’ meet and confer," and ordered it to do so within seven days. As to the second SODI, the court made the following determination:

[F]acts and communications related to any of the following subjects are directly at issue in this case and, therefore, are not protected from discovery by the attorney-client communication and/or work product privilege(s): [1] any Defendant's consideration of the Notice of Lis Pendens at issue in this case, [2] research regarding facts and/or law related to the Notice of Lis Pendens at issue in this case, [3] drafting of the Notice of Lis Pendens at issue in this case, [4] recording, or causing to [be] recorded, the Notice of Lis Pendens at issue in this case, and/or [5] any response to any demand by Plaintiff to remove, release, and or withdraw the Notice of Lis Pendens at issue in this case.

As to both SODIs, the court ordered Jones Waldo to pay Harrison's attorney fees incurred in pursuing the court's resolution of the discovery issues.

¶11 Jones Waldo sought—and we granted—interlocutory review of the district court's determination that Jones Waldo had not fully responded to the discovery request, its determination that the requested documents and communications were not privileged, and its award of attorney fees. Jones Waldo also obtained a stay of enforcement of the court's orders pending the outcome of this appeal.

ISSUE AND STANDARD OF REVIEW

¶12 Appellants challenge the district court's determination that the attorney-client and work-product privileges do not apply in the context of this case. "The existence of a privilege is a question of law for the court, which we review for correctness, giving no deference to the district court's determination." Chard v. Chard , 2019 UT App 209, ¶ 31, 456 P.3d 776 (quotation simplified).

ANALYSIS

I. The First SODI

¶13 On appeal, Appellants contest the district court's ruling on both SODIs. However, their entire argument focuses on the applicability of the attorney-client and work-product privileges to the discovery requested by Harrison. While this argument is persuasive with respect to the district court's grant of relief with respect to the second SODI, see infra section II, it does not adequately address the district court's basis for granting relief with respect to the first SODI.

¶14 In the first SODI, Harrison alleged that Jones Waldo had not provided "any response to Interrogatory [No.] 1, and did not provide any log of withheld (based on privilege) communications between Jones Waldo and Christopher." Jones Waldo objected that it had, in fact, responded to Interrogatory No. 1 and had turned over a privilege log. Nevertheless, the court granted relief with respect to the first SODI on the basis that Jones Waldo had "not responded to [Harrison's] Interrogatory No. 1 (as modified by the parties’ meet and confer), and the deadline for responding has passed." Thus, the court's determination on the first SODI appears to have turned, not on the question of privilege, but on whether Jones Waldo had provided the response to Interrogatory No. 1 that it had agreed to provide in the parties’ meet and confer. But Appellants’ arguments on appeal do not address...