Chapter 8: Posthumous Application of the Attorney-Client Privilege

Transcription

1 Evidence Chapter 8: Posthumous Application of the Attorney-Client Privilege Justin Delacruz Code Sections Affected Evidence Code 953, 957 (amended); Probate Code (amended). AB 1163 (Tran); 2009 STAT. Ch. 8. I. INTRODUCTION Bing Crosby was one of the most successful entertainers of his time. 1 Upon his death, he left a vast portfolio of interests in records, radio and television productions, motion pictures, and musical and literary works. 2 Crosby s assets, including his recording contracts, were probated. 3 During the probate proceedings, the executor 4 of Crosby s estate along with Crosby s widow created HLC Properties, Ltd. (HLC), a partnership designated to manage Crosby s assets upon his estate s distribution. 5 All of Crosby s assets were transferred to HLC and the executor was discharged. 6 HLC later sued MCA Records (MCA) for unpaid royalties. 7 MCA sought documents containing Crosby s past communications with his attorney. 8 Both HLC and Crosby s former law firm withheld documents, claiming that they were protected by the attorney-client privilege. 9 However, the California Supreme Court ultimately ordered HLC to produce the documents it previously withheld, reasoning that the attorney-client privilege belongs only to the client. 10 Since HLC was not the client in the attorney-client relationship in question, it could not 1. HLC Properties, Ltd. v. Superior Court, 35 Cal. 4th 54, 57, 105 P.3d 560, 562 (2005). 2. Id. 3. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 403, at 5 (June 26, 2007). Probate is the procedure by which the decedent s property is distributed to his intended beneficiaries. JESSE DUKEMINIER ET AL., WILLS, TRUSTS, AND ESTATES 39 (8th ed. 2009). 4. The first step in probate is to appoint a personal representative. DUKEMINIER ET AL., supra note 3, at 40. A personal representative is a fiduciary who inventories and collects the property of the decedent; manages and protects the property during the administration of the decedent s estate; processes the claims of creditors and tax collectors; and distributes the property to those entitled. Id. A court may appoint a personal representative or a decedent s will may expressly designate the personal representative; in the latter instance, this person is called an executor. Id. 5. HLC Properties, Ltd., 35 Cal. 4th at 58, 105 P.3d at Id. 7. Id. 8. Id. 9. Id. 10. Id. at 68, 105 P.3d at

2 2010 / Evidence invoke the privilege. 11 The Court found that the privilege transferred to the executor of his estate and ceased to exist upon the executor s discharge. 12 In response, the Legislature clarified that when subsequent administration of an estate is necessary after the personal representative has been discharged because other property is discovered... or because it becomes necessary or proper for any other cause, the court must appoint a personal representative who shall be the holder of the decedent s attorney-client privilege. 13 Applied to the HLC case, this amendment would have allowed a court-appointed personal representative to invoke the attorney-client privilege and withhold the documents HLC listed as protected by the privilege. Prior to Chapter 8, the Evidence Code was unclear as to whether a subsequent personal representative may claim the attorney-client privilege after the original personal representative has been discharged. 14 In other words, if Bing Crosby s estate was subject to further litigation or if more property was found under Crosby s name, the Evidence Code was unclear as to whether the attorneyclient privilege could be invoked again. Chapter 8 clarifies this confusion. 15 A. The Attorney-Client Privilege II. LEGAL BACKGROUND The attorney-client privilege protects the confidentiality of communications between a client and his or her attorney. 16 The purpose of the privilege is to assure the client of the lawyer s confidentiality and encourage truthful, full disclosure to the lawyer. 17 It is based on the policy determination that the aggregate benefit to the legal system justifies the risk that the privilege may sometimes result in unjust decisions through suppression of relevant evidence. 18 A client, 19 whether or not a party to an action, may invoke a privilege that allows him to refuse to disclose, and to prevent another from disclosing, a confidential communication between the client and lawyer. 20 The privilege only applies if claimed by a holder of the privilege, a person authorized by the holder 11. HLC Properties, Ltd., 35 Cal. 4th at 68, 105 P.3d at Id Cal. Stat. ch. 388, 1 (amending CAL. PROB. CODE 12252). 14. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 3-4 (June 9, 2009). 15. Id. at CAL. EVID. CODE 954 (West 2009). 17. Fisher v. United States, 425 U.S. 391, 403 (1976). 18. Mitchell v. Superior Court, 37 Cal. 3d 591, 599, 691 P.2d 642, 646 (1984). 19. A client, for the purposes of the attorney-client privilege, is any person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity. CAL. EVID. CODE 951. A client may also be an entity. See id. 175 (West 1995) (defining a person for purposes of the Evidence Code to include a corporation, a public entity, and an association). 20. Id. 954 (West 2009). 570

3 McGeorge Law Review / Vol. 41 of the privilege to claim the privilege, or the lawyer at the time of the confidential communication. 21 The Evidence Code provides statutorily enumerated exceptions to the attorney-client privilege. 22 Prior to Chapter 8, section 957 of the Evidence Code provided that there is no attorney-client privilege... as to a communication relevant to an issue between parties all of whom claim through a deceased client, regardless of whether the claims are by testate or intestate succession or by inter vivos transaction. 23 However, since this exception did not apply to non-probate transfers, relevant communications regarding a non-probate transfer were privileged. 24 When the Evidence Code was enacted, the main estate planning instrument was a will. 25 Now, estate planners use trusts and other non-probate mechanisms to transfer property at death outside of the probate system. 26 Thus, section 957 was inconsistent with modern estate planning trends toward nonprobate transfers and the general policy that relevant evidence should not be withheld from finders of fact. 27 B. Holders of the Privilege The holder of the attorney-client privilege is the person entitled to claim the privilege. 28 Generally, the holder of the privilege is the client. 29 If a client has a guardian or conservator, the guardian or conservator of the client is the holder of the privilege. 30 If the client is dead, the personal representative of the client is the holder of the privilege. 31 When the client is an entity no longer in existence, a successor, assignee, or trustee in dissolution is the holder of the entity s 21. Id. For example, when the privilege applies, it prevents use of the confidential communication as evidence in court. CAL. L. REVISION COMM N, RECOMMENDATION, ATTORNEY-CLIENT PRIVILEGE AFTER CLIENT S DEATH, 169 (2008), available at (on file with the McGeorge Law Review). 22. CAL. EVID. CODE 956 (lawyer s services sought to commit crime or fraud); id (lawyer s disclosure necessary to prevent a criminal act that the law reasonably believes is likely to result in the death of, or substantial bodily harm to, an individual); id. 958 (communication relevant to an issue of breach of duty arising out of the lawyer-client relationship); id. 959 (lawyer attesting as a witness); id. 960 (communication relevant to an issue regarding the intention of a deceased client with respect to written instrument affecting an interest in property); id. 961 (communication relevant to an issue concerning the validity of writing affecting property interest); id. 962 (communication offered in a civil proceeding between joint clients as between joint clients). 23. Id SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 5 (June 9, 2009). Nonprobate transfers are transfers that occur at death that do not require estate administration. CAL. PROB. CODE 5000 (West 2009). 25. CAL. L. REVISION COMM N, supra note 21, at Id. 27. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 5 (June 9, 2009). 28. CAL. EVID. CODE 953(a) (West 2009). 29. Id. 30. Id. 953(b). 31. Id. 953(c). 571

4 2010 / Evidence privilege. 32 In the case of a corporation, the corporation is the holder of the privilege, not the shareholders. 33 Similarly, when the holder of the privilege is an association, the association, not its individual members, holds the privilege. 34 The client may also authorize another person to claim the privilege. 35 C. Survival of the Privilege After a Client s Death The attorney-client privilege does not indefinitely survive the client s death. 36 Rather, the attorney-client privilege lasts as long as a personal representative is in place. 37 It remains effective during the administration of the deceased client s estate and during the resolution of claims by or against the estate. 38 In 2007, the Legislature amended Probate Code section 12252, adding that a personal representative holds the decedent s attorney-client privilege when a personal representative is reappointed for the subsequent administration of the decedent s estate. 39 Confusion arose as to whether a subsequent representative holds the decedent s attorney-client privilege when the subsequent personal representative is different from the original personal representative. 40 The Legislature directed the California Law Revision Commission (Commission) to determine whether the attorney-client privilege should survive the death of the client. 41 Chapter 8 implements the Commission s recommendations. 42 III. CHAPTER 8 Chapter 8 clarifies provisions regarding the application of the attorney-client privilege after a client s death. 43 Specifically, Chapter 8 expands the definition of the holder of the privilege in Evidence Code section 953 to include a deceased client s subsequent personal representative appointed after the original personal representative has been discharged. 44 Also, Chapter 8 adds non-probate transfers to the exception provided in Evidence Code section The section now 32. Id. 953(d). 33. Nat l Football League Prop., Inc. v. Superior Court, 65 Cal. App. 4th 100, , 75 Cal. Rptr. 2d 893, 899 (6th Dist. 1998). 34. Benge v. Superior Court, 131 Cal. App. 3d 336, 345, 182 Cal. Rptr. 275, 280 (5th Dist. 1982). 35. CAL. EVID. CODE 954(b). 36. HLC Properties, Ltd. v. Superior Court, 35 Cal. 4th 54, 65, 105 P.3d 560, 567 (2005). 37. Id. at 65-68, 105 P.3d at CAL. L. REVISION COMM N, supra note 21, at Cal. Stat. ch. 388, 1 (amending CAL. PROB. CODE 12252). 40. CAL. L. REVISION COMM N, supra note 21, at Cal. Stat. ch. 388, SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 2 (June 9, 2009). 43. Id. at CAL. EVID. CODE 953(c) (amended by Chapter 8). 45. Id. 957 (amended by Chapter 8). 572

5 McGeorge Law Review / Vol. 41 provides that the attorney-client privilege does not apply to a communication relevant to an issue between parties all of whom claim through a deceased client, regardless whether the claims are by testate or intestate succession, nonprobate transfer, or inter vivos transaction. 46 Lastly, Chapter 8 amends Probate Code section by removing the second sentence, which stated that [t]he appointed personal representative shall be a holder of the decedent s lawyerclient privilege for purposes of Article 3 (commencing with Section 950) of Chapter 4 of Division 8 of the Evidence Code. 47 This amendment has no substantive effect, but is meant to diffuse confusion regarding the 2007 amendments to section IV. ANALYSIS A. Greater Clarity for Judicial Efficiency and Client Candor Chapter 8 conserves judicial resources and encourages honest and full disclosure between clients and their attorneys. 49 Proponents suggest that the clarifications this bill makes will help avoid disputes over the meaning of Probate Code section In 2007, amendments to section caused interpretative confusion. 51 Some interpreted section to require a court to reappoint a personal representative to hold the privilege, even when there is no estate to administer. 52 Under this expansive interpretation, the privilege would indefinitely survive the client s death. 53 However, an expansive interpretation would be a significant change from existing law... [and] was expressly rejected by a legislative committee. 54 Others interpreted section to clarify that a personal representative who is appointed to perform subsequent estate administration is the holder of deceased client s privilege. 55 There is legislative support for this narrow interpretation Id. (emphasis added). 47. See CAL. PROB. CODE 12252(a) (amended by Chapter 8). 48. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 5 (June 9, 2009). 49. Id. at Id. at CAL. L. REVISION COMM N, supra note 21, at Id. 53. Id. at 181 n Id. 55. Id. 56. See ASSEMBLY FLOOR ANALYSIS OF AB 403, at 1 (Aug. 29, 2007) (stating that AB 403 [r]equires the court-appointed personal representative, in a subsequent administration of an estate, to be a holder of the decedent s lawyer-client privilege ); see also SENATE COMMITTEE ON JUDICIARY, COMMITTEE ANALYSIS OF AB 403, at 5-6 (June 26, 2007) ( This bill would... authorize a court to appoint a personal representative where subsequent administration of an estate is necessary because disclosure of a privileged communication is sought. ). 573

6 2010 / Evidence Chapter 8 also amends Evidence Code section 957 to ensure that the deceased client s donative intent is correctly implemented. 57 Previously, the provision stated that the attorney-client privilege does not apply after a client s death as to a communication relevant to an issue between parties all of whom claim through a deceased client, regardless of whether the claims are by testate or intestate succession or by inter vivos transaction. 58 The exception assumes that a deceased client would have wanted the communication disclosed. 59 Previous language could be construed to exclude a party who claims the privilege through a non-probate transfer. 60 However, the rationale for the exception that a deceased client would have wanted the communication disclosed applies regardless of whether a person claims as a beneficiary under a will or by operation of a non-probate transfer. 61 B. Alternatives Considered Chapter 8 originated from the Commission s review of California s attorneyclient privilege, the history behind that privilege, jurisdictional treatment of the privilege, and possible alternatives to California s approach. 62 California, along with twenty-five other states, allows the attorney-client privilege to survive the client s death so long as there is a personal representative. 63 The Commission determined that California s current approach to the attorney-client privilege after the client s death strikes a good balance between competing policy considerations CAL. L. REVISION COMM N, supra note 21, at CAL. EVID. CODE 957 (West 2009). 59. CAL. L. REVISION COMM N, supra note 21, at Id. The provision could be interpreted narrowly if the clause regardless of whether the claims are by testate or intestate succession or by inter vivos transaction is read as an exclusive, rather than an illustrative, list. Id. at 196 n.71 (internal quotation marks omitted). 61. See id. at 196 n.72. If all parties claim through a nonprobate transfer, there is potentially no probate estate at all. In that case, there would be no personal representative, and no privilege would exist. However, if there is both a probate estate and nonprobate transfer on death, the privilege would continue, and would apply absent an exception or a waiver. If an issue arises in a dispute among the decedent s beneficiaries, including a non-probate beneficiary, a narrow reading of the exception could defeat its purpose of ascertaining the decedent s intentions. Id. 62. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 4 (June 9, 2009). 63. CAL. L. REVISION COMM N, supra note 21, at Id. at 166. The Commission identified two key policy determinations upon which the duration of the privilege relied. Id. at 176. [I]t reflects a conclusion that attorney-client communication would be chilled significantly if the privilege ended before a personal representative has completed his or her duties as a personal representative, such as administration of the estate of the deceased person (the decedent). Second, it reflects a conclusion that attorney-client communication would not be chilled significantly if the privilege ended after the personal representative has completed his or her duties. Id. 574

7 McGeorge Law Review / Vol. 41 First, the Commission considered expanding the privilege to survive until non-probate assets definitively pass to beneficiaries. 65 The Commission noted several obstacles to implementing such an expansion. 66 Namely, it would be difficult to specify the types of cases in which the privilege should apply, the holder of the privilege would be unidentifiable, and the duty governing the holder s exercise of the privilege would be unclear. 67 Without an identifiable holder of the privilege and a well-defined duty, the privilege might be exercised in a manner that does not further the purpose of continuing the privilege. 68 The Commission determined that allowing the attorney-client privilege to survive until non-probate assets definitively pass to beneficiaries would be premature until these issues could be resolved. 69 The Commission also considered extending the privilege to survive indefinitely. 70 Indefinite survival would allow the privilege to apply regardless of whether a decedent s property passes inside or outside of the probate system. 71 This would assure clients that attorney-client communications would be protected forever. 72 However, if existing law adequately serves the goal of encouraging client candor, indefinite survival of the privilege would unnecessarily exclude relevant evidence. 73 Finally, if the privilege lasted indefinitely, the same problems posed by expanding the privilege to the nonprobate context would arise. 74 The Commission also considered a case-by-case balancing approach that would require the courts to balance the evidentiary need for disclosure of the attorney-client communication against the decedent s continued interest in confidentiality. 75 Few jurisdictions apply this test. 76 While this approach would have allowed courts to tailor the scope of the privilege on a case-by-case basis, it would have undermined the purpose of the privilege to provide certainty to clients regarding are protected. 77 Clients need predictability. 78 Finally, the Commission reviewed a rule that would end the attorney-client privilege upon the client s death. 79 While no other state takes this approach, 65. Id. at Id. at Id. 68. Id. at CAL. L. REVISION COMM N, supra note 21, at Id. 71. Id. at Id. 73. Id. 74. Id. at CAL. L. REVISION COMM N, supra note 21, at Id. Jurisdictions that apply the balancing approach include New Jersey, New York, and Washington. Id. at n Id. at Id. 79. Id. at

8 2010 / Evidence proponents believe that ending the privilege outright would not significantly undermine full and truthful client disclosure. 80 However, ending the privilege at death would be a significant departure from California s longstanding approach of allowing the privilege to survive after the client s death. 81 After a thorough examination of the existing law, the Commission concluded that none of the alternatives would further the policy of promoting candid communications in the attorney-client relationship. 82 The alternatives would either require drastic changes to California s attorney-client privilege or would present implementation problems. 83 The Commission suggested that California s current approach to the survival of the attorney-client privilege has been effective in promoting the policy of the attorney-client privilege. 84 By implementing the Commission s minor revisions, Chapter 8 preserves California s current approach to the attorney-client privilege. 85 V. CONCLUSION Chapter 8 continues the attorney-client privilege s long-standing purpose of promoting justice by encouraging clients to fully disclose information to their attorneys. 86 The Commission determined that California s existing attorney-client privilege has served the state well for over forty years, but the two minor adjustments Chapter 8 makes will increase predictability for clients making disclosures to their attorneys. 87 Clients are now assured that confidential communications with attorneys during their lifetimes will be protected when their estates are subject to further litigation or when more property is found. 88 Should another dispute arise over Crosby s assets, his estate can be confident that the attorney-client privilege survives. 80. Id. 81. CAL. L. REVISION COMM N, supra note 21, at Id. at Id. at Id. 85. See supra Part III. 86. SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 4 (June 9, 2009). 87. CAL. L. REVISION COMM N, supra note 21, See SENATE JUDICIARY COMMITTEE, COMMITTEE ANALYSIS OF AB 1163, at 3-4 (June 9, 2009) (noting that predictability and clarification of the attorney-client privilege were stated needs for Chapter 8). 576