Mark R. Kiesel Living Tr. v. Hyde

1

MARK R. KIESEL LIVING TRUST and MONTANA WOODS LLC, Plaintiffs, v. THOMAS HYDE, Defendant.

No. CV 22-109-M-KLD

United States District Court, D. Montana, Missoula Division

May 16, 2023

ORDER

Kathleen L. DeSoto, United States Magistrate Judge

Following a discovery status conference on February 14, 2023, the Court issued an order directing the parties to brief the issue of agency between the Plaintiffs, Mark R. Kiesel Living Trust and Montana Woods LLC (collectively “Kiesel”) and Justin Alexander, an architect retained by Kiesel. (Doc 29). In particular, the Court directed the parties to address whether an agency relationship exists, and if so, the scope of that agency relationship and the effect of that agency relationship on claims of attorney-client privilege and work product doctrine. The Court also ordered Kiesel to submit, in camera, the documents noted in his privilege log for in camera review so the Court can determine whether the withheld documents are protected by attorney-client privilege and/or the work product doctrine.

The parties completed the Court-ordered briefing on March 14 2023 (Docs. 34 and 36), and Kiesel has submitted the documents identified in his privilege log for in camera review (Doc. 33). Having considered the parties' arguments, and having conducted in camera review of the documents provided by Kiesel, the Court issues the following order.

I. Background^[1]

In June 2021, Kiesel closed on the purchase of an undeveloped residential lot (“the Property”) from Defendant Thomas Hyde. (Doc. 27 at ¶¶ 6-11). The Property is located within the Stock Farm Club Development (“Stock Farm”) in Hamilton, Montana. (Doc. 27 at ¶¶ 6, 18). Kiesel retained Alexander, a principal at A&E Architects, to design a home on the Property. (Doc. 27 at ¶¶ 15-21). Kiesel asserts that while Alexander was carrying out his professional design work in midAugust 2021, he discovered a vertical PVC pipe on the Property. (Doc. 27 at ¶ 16). Alexander contacted a civil engineer to investigate the purpose of the pipe and ascertain whether any utilities or utility easements existed on the Property. (Doc. 27 at ¶ 17). In late August 2021, the civil engineer advised Alexander that the pipe was an element of the Stock Farm community sewer that was located on the Property. (Doc. 27 at ¶ 18). Several days later, Alexander contacted the Stock Farm Homeowners Association Manager, Bill Thomas, and requested additional information about the pipe. (Doc. 27 at ¶ 19). Thomas advised Alexander that PCI Engineering would investigate the issue, and in mid-October 2021, Thomas advised Alexander that PCI Engineering had discovered the existence of sewage, gas, and electrical utility lines running directly through the center of the Property. (Doc. 27 at ¶¶ 20-21).

Kiesel alleges that Hyde failed to disclose the presence of any utilities or utility easements prior to the sale of the Property, and commenced this action against him in June 2022. (Doc. 27). Kiesel asserts claims for negligence, rescission, negligent misrepresentation, fraud, constructive fraud, punitive damages, and breach of contract. (Doc. 27 at ¶¶ 30- 89).

On November 18, 2022, Hyde served Kiesel with a set of discovery requests that included requests for all communications between Kiesel and his architect, Alexander. (Doc. 24 at 2). Kiesel has objected to the discovery requests, and has withheld certain communications with Alexander on the basis that the communications are protected by the attorney-client privilege and/or work-product doctrine. (Doc. 24 at 2).

Kiesel has filed all withheld or redacted documents under seal for in camera review by the Court, and has included a First Amended Privilege Log (“Privilege Log”) identifying the documents at issue. (Doc. 34-1). Hyde takes the position that Kiesel's communications with Alexander are not protected, and asks the Court to order Kiesel to produce all documents identified in the Privilege Log. (Doc. 34-1).

II. Discussion

Kiesel maintains the withheld communications are protected by the attorneyclient privilege and/or work product doctrine because Alexander was at all times acting as his agent in relation to the investigation, design, and eventual construction of a residential home on the Property. Because of this agency relationship, Kiesel argues, Alexander's participation in otherwise confidential conversations does not render them unprivileged, and he is capable of generating documents protected by the work-product doctrine. (Doc. 34 at 8).

Hyde disagrees, and contends that even if Alexander was acting as Kiesel's agent, Kiesel has not met his burden of demonstrating that the requirements for protection under the attorney-client privilege or work product doctrine are satisfied. Hyde further argues that Kiesel has waived the protections provided under the attorney-client privilege and work product doctrine by retaining a critical fact witness as a consultant for purposes of this litigation. (Doc. 36 at 8).

A. Existence and Scope of Agency Relationship

Under Montana law, “[a]n agent is one who represents another, called the principal, in dealings with third persons.”^[2] Mont. Code Ann. § 28-10-101. “Agency is ‘the fiduciary relation which results from the manifestation of consent by one person to another' that the agent shall act on behalf of the principal subject to the principal's control and consent.” Associated Mgmt. Servs., Inc. v. Ruff, 424 P.3d 571, 586 (Mont. 2018) (quoting Butler Mfg. Co. v. J&L Implement Co., 540 P.2d 962, 965 (Mont. 1975)).

An agency relationship “is either actual or ostensible.” Mont. Code Ann. § 28-10-103(1). An agency is actual “when the agent is ‘really employed' by the principal, and is ostensible when the principal ‘intentionally or by want of ordinary care causes a third person to believe another to be the principal's agent when that person is not really employed by the principal.'” Dick Anderson Construction, Inc. v. Monroe Property Co., LLC, 255 P.3d 1257, 1261 (Mont. 2011) (quoting Mont. Code Ann. § 28-10-103(1)).

A principal may create an agency relationship and confer agency authority by a prior authorization or a subsequent ratification. Mont. Code Ann. § 28-10201. “An actual or ostensible agent has implied authority to ‘do everything necessary, proper, and usual in the ordinary course' of the principal's business ‘for effecting the purpose of the agency.'” Ruff, 424 P.3d at 587 (quoting Mont. Code Ann. § 28-10-405(1)). “A principal may confer actual or ostensible authority upon an agent by express authorization or circumstantial implication.” Ruff, 424 P.3d at 587.

Kiesel argues the facts and circumstances establish that he had both an actual and ostensible agency relationship with Alexander. To satisfy his evidentiary burden of establishing an agency relationship, Kiesel has submitted his own declaration and an affidavit from Alexander. (Docs. 34-3 and 34-4). As described in these supporting materials, Kiesel retained Alexander to assist in the investigation, design, and eventual construction of a residential home on the Property. (Doc. 34-3 at ¶¶ 6-7; Doc. 34-4 at ¶¶ 4-6). Kiesel explains that “[t]his eventually included the development of solutions related to the existence of undisclosed utility lines (including sewer, gas, and electric) on the Property.” (Doc. 34-3 at ¶ 7). Kiesel states that he entrusted Alexander to act on his behalf in furtherance of these efforts, including by establishing dealings with engineers, members of the Stock Farm Homeowners Association (“the Association”), and officials at Ravalli Electric and Northwestern Energy. (Doc. 34-3 at ¶ 10). And when it became apparent that he needed legal advice regarding the Property, Kiesel explains, Alexander was instrumental in helping him find an attorney. (Doc. 34-3 at ¶¶ 21-22). Kiesel further states that because Alexander had been acting on his “behalf in relation to issues related to the Property, [Alexander] was the best historian when it came time to communicate the situation to an attorney,” and that he relied on Alexander “to facilitate the obtainment of legal advice from” his attorneys. (Doc. 34-3 at ¶¶ 23-24).

Alexander's affidavit corroborates much of the information provided in Kiesel's declaration. (Doc. 34-4). Alexander states that he took numerous actions on Kiesel's “behalf, and established dealings with third parties, in relation to assessing the feasibility of designing and constructing a residential home on the Property.” (Doc. 34-4 at ¶ 6). Alexander explains that “[o]nce the existence of utility lines on the Property became known,” he took actions on Kiesel's “behalf to develop solutions to facilitate construction of a residential home on the Property,” including by establishing dealings with members of the Association and individuals at Ravalli Electric and Northwestern Energy. (Doc. 34-4 at ¶¶ 8-11). Alexander confirms that he assisted Kiesel “in procuring and retaining an attorney,” and participated in several conversations with Kiesel and/or his attorneys. (Doc. 34-4 at ¶¶ 16-17).

Kiesel argues the facts described above are sufficient to establish that Alexander was his actual or ostensible agent, and describes the scope of their agency relationship as follows “Mr. Alexander was retained to assist in the investigation, design, and eventual construction of a residential home on the Property. That was the purpose of the agency relationship.” (Doc. 34 at 19). Kiesel asserts that as the situation evolved, however, Alexander's “focus eventually shifted from designing a home, to exploring available options to address the newly discovered sewer and utility lines on the Property.” (Doc. 34 at 20). Kiesel further argues that as part of the agency relationship, Alexander was...