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Wellin v. Wellin

United States District Court, D. South Carolina, Charleston Division

October 24, 2018

WENDY WELLIN, as the Special Administrator of the Estate of Keith S. Wellin and as Trustee of the Keith S. Wellin Florida Revocable Living Trust u/a/d December 11, 2011, PLAINTIFF,
v.
PETER J. WELLIN, et al., DEFENDANTS, LARRY S. MCDEVITT, as Trustee of the Wellin Family 2009 Irrevocable Trust, PLAINTIFF,
v.
PETER J. WELLIN, et. al, DEFENDANTS, PETER J. WELLIN, et. al., PLAINTIFF,
v.
WENDY WELLIN, individually and as Trustee of the Keith S. Wellin Florida Revocable Living Trust u/a/d December 11, 2011, DEFENDANT.

          SPECIAL MASTER'S REPORT AND RECOMMENDATION RE: WELLIN CHILDREN'S MOTION TO COMPEL, OR IN THE ALTERNATIVE, FOR IN CAMERA REVIEW (ECF NO. 718 IN 2:13-CV-1831)

         Currently before the undersigned is the motion filed by Peter J. Wellin, Cynthia W. Plum. Marjorie W. King, and Friendship Management, LLC (collectively, the "Wellin Children") to compel production of two documents previously clawed back by Wendy Wellin ("Wendy"). Specifically, the Wellin Children challenge Wendy's assertions of privilege and claw-backs of the July 2, 2011 email bates labeled WCHW - CANDLER 000437, and the July 12, 2011 email bates labeled Hart-Lane000217 - 000218. These two emails were introduced as Exhibit 28 and Exhibit 31, respectively, during the deposition of Wendy's estate planning attorney, Richard Candler ("Candler"), on March 28, 2017. Based on Wendy's counsels' communications with Candler and Candler's testimony during the deposition, the emails were clawed back by Wendy's counsel under the theory they are protected by the attorney-client privilege and/or applicable exceptions to waiver of the same. For ease of reference, these email documents are hereinafter referred to as "Exhibit 28" and Exhibit 31" in this Report and Recommendation.

         Wendy argues that Exhibit 28 and Exhibit 31 were properly clawed back pursuant to Paragraph 11 of the Court's Second Amended Consent Confidentiality Order (ECF No. 359[1]). Paragraph 11 of the Confidentiality Order allows for documents to be clawed back in the case of inadvertent disclosure of privileged information. ECF No. 359. In the event of a dispute regarding the application of privilege to a document that has been clawed back, the Confidentiality Order allows the parties "to challenge a supplying party's claims that information is privileged or protected" and "request[] the Court to determine whether the document or information is privileged or protected" via "in camera review[.]" Id. at 10-11. The Confidentiality Order further provides that "[t]he burden of proving the information or document is privileged or protected shall remain with the party asserting the privilege or protection." Id. at 11. Counsel for Wendy provided the undersigned copies of Exhibit 28 and Exhibit 31 for in camera review during the hearing on this matter on March 7, 2018. The undersigned has reviewed the Exhibits, as well as the applicable law and the arguments of counsel, and makes the following Report and Recommendation to the Court.

         The motion is before the undersigned, sitting as Special Master, pursuant to the February 17, 2015 Order of the United States District Court for the District of South Carolina, Charleston Division, Hon. David C. Norton presiding. See ECF Nos. 270, 258, and 35.[2] The above captioned lawsuits involve multiple issues surrounding the handling and disposition of the assets, trusts, and estate of Keith S. Wellin (Keith). The factual allegations and procedural histories of these cases are extensively outlined in the Order of Judge Norton issued in Wellin I, Case No. 2:13-cv-1831-DCN, ECF No. 158, filed on June 28, 2014, and in the Amended Report and Recommendation of the Special Master, ECF No. 320, filed on July 31, 2015.

         FACTS AND ARGUMENTS OF COUNSEL RELEVANT TO THE PRESENT MOTION

         Candler, an estate planning, administration, and tax planning attorney who represented Wendy between February 2003 and his retirement in 2015, was deposed as a fact witness to this litigation on March 28, 2017. It is undisputed by both parties that Candler never represented Keith Wellin ("Keith"). However, Candler testified that he was authorized by Keith through Keith's estate planning attorney, Tom Farace ("Farace"), to review portions of Keith's estate plan that affected Wendy for use in advising her. Candler also testified that he represented Heather Lane ("Heather"), Wendy's daughter, and provided estate planning advice to her as to her own estate. During the deposition, counsel for the Wellin Children examined Candler on some thirty-five (35) exhibits. Exhibits 28 and 31 were then clawed back by counsel for Wendy based on Candler's testimony.

         1. Exhibit 28 and Arguments of Counsel

         Exhibit 28 is an email sent from Wendy to Candler dated July 3, 2011. The question posed during the deposition as to this document was, "And is that work that she's referring to having a - an independent person appointed to manage Keith's assets, institution, or person?" Exhibit 28 was then clawed back following a privilege discussion between counsel for Wendy and Candler, which led Wendy's counsel to a determination that the document was protected by the attorney-client privilege. On November 8, 2017, counsel for the Wellin Children sent Wendy's counsel a letter requesting clarification as to whether Exhibit 28 contains a request that Candler perform legal work on behalf of Wendy or on behalf of Keith. On November 16, 2017, Wendy's counsel responded and explained the context of Exhibit 28:

As to Exhibit 28, the stated reason for the claw back was attorney-client privilege. As Mr. Candler testified, he did not have an attorney-client relationship with Mr. Wellin. And as Mrs. Wellin testified, for most of her marriage, she acted as a secretary for Mr. Wellin, and he liked things to be done quickly when he asked for them. The context of this particular email exemplifies that role of Mrs. Wellin. Mr. Wellin wanted something done, and she asked Tom Farace, but she received his out-of-office reply, so in an effort to get it done, she attempted to ask advice of her own counsel. Ultimately, Farace visited Keith in July 2011 in response to the email Mrs. Wellin originally sent him, and Mr. Wellin's changes were made in August 2011. However, Mrs. Wellin's counsel did not make those changes; instead, he reached out to Tom Farace. Therefore, it does not matter that Mrs. Wellin was reaching out on Mr. Wellin's behalf at the time because the relationship would have had to have been created by Mr. Wellin and Mr. Candler, and no such relationship was created or acted upon. Therefore, the email was properly clawed back as it is protected by attorney-client privilege.

         Letter dated November 17, 2017 (attached as "Exhibit B" to Wellin Children's Motion).

         In opposition to Wendy's counsel's claim that Exhibit 28 is protected by the attorney-client privilege, counsel for the Wellin Children make four general arguments as to why Exhibit 28 should not have been clawed back and the attorney-client privilege does not apply.

         First, they emphasize that Wendy admits she was not emailing Candler in her capacity as Candler's client, but rather her capacity as Keith's "secretary" or agent. Moreover, Wendy admits that no attorney-client relationship between Candler and Keith "was created or acted upon." Accordingly, the Wellin Children contend Exhibit 28 is not a communication made on behalf of a client to the client's attorney such that the attorney-client privilege could apply.

         Second, the Wellin Children argue that, to the extent a privilege does apply, this court has already held that Keith waived privilege over his communications with counsel regarding his estate planning matters prior to 2013 because Keith consistently shared, and authorized his counsel to share, all such communications with his children. See ECF No. 336 at 5-10; see also ECF No. 366 (Order adopting Report and Recommendation). Although the Court's prior holding was focused on communications between Keith and Farace, the Wellin Children contend that the same logic would apply to Exhibit 28. Specifically, they assert that there is no basis to conclude that Keith's willingness to share all matters related to his estate planning extended to communications with Farace, but did not extend to communications regarding the same subject matter that were made by Wendy on Keith's behalf solely because Farace was out of his office. As previously set forth by the undersigned:

Keith's undisputed desire to share his estate planning communications to and from Farace with his children warrants a finding of waiver of the attorney-client privilege in this instance. To the extent such communications were undertaken by Ms. Wellin on behalf of Keith and regarding his estate planning, they should be disclosed.

ECF No. 336 at 9. Accordingly, the Wellin Children contend that any attorney-client privilege that exists as to Exhibit 28 has been waived.

         Third, and closely related to the above, the Wellin Children argue that the record demonstrates that, prior to 2013, Keith had no intention of confidentiality with respect to communications relating to his estate planning for similar reasons that any privilege that did exist was waived-i.e. because Keith consistently shared, and authorized his counsel to share, all such communications with his children such that there was no intention of confidentiality as to the communications. Because the attorney-client privilege only applies where an intention of confidentiality exists, the attorney client privilege does not apply to Exhibit 28, according to the Wellin Children.

         Finally, the Wellin Children point out that the testamentary exception has been applied to communications made by Keith or on Keith's behalf relating to his estate planning. See ECF No. 393. Accordingly, to the extent Exhibit 28 relates to Keith's estate planning, the Wellin Children argue it is subject to the testamentary exception to the attorney-client privilege (if privilege attached in the first place). Although this Court's previous testamentary exception ruling was directed toward the production of materials in the Bennet file, the Wellin Children argue that the testamentary exception is not limited to the file of a single law firm, and the rationale for applying the exception applies equally to communications made on Keith's behalf to other lawyers.

         In support of their argument that Exhibit 28 was properly clawed back, counsel for Wendy argue that the email is protected from disclosure by the attorney-client privilege, as it represents a confidential communication between a client (Wendy) and her attorney (Candler) that was not disclosed to any third party. Although Wendy requested legal advice on behalf of Keith, Candler neither represented Keith nor performed any work for him, Wendy's counsel further avers. Accordingly, counsel for Wendy claim that "any legal advice Mrs. Wellin requested would have been directed to her for the purpose of her informed decision making as opposed to Mr. Wellin directly." ECF No. 722 at 7.

         Counsel for Wendy further contend that the Wellin Children's arguments as to Exhibit 28 and waiver via third-party disclosure, which mirror the analysis applied from previous rulings in this case, are not persuasive. By making these arguments, counsel for Wendy asserts that the Wellin Children are attempting to expand prior rulings of this Court into a blanket waiver of the attorney-client privilege. Specifically, they point out that the Court's previous decision relating to waiver of the attorney-client privilege were directed solely towards Keith's communications (or communications made on Keith's behalf) with Farace and the law firm Nixon Peabody.

         Moreover, Wendy's counsel contends that the testamentary exception only applies to statements made from the deceased to his counsel about the execution of his will or similar document. Because Candler was not Keith's attorney and the subject matter of Exhibit 28 does not include discussion of the execution of a will or similar document, it does not fall within the testamentary exceptions according to Wendy's counsel. Instead, they maintain that Exhibit 28 is a confidential communication between Wendy and her attorney requesting legal advice that was not intended to be, and was not, shared with a third party. As such, Wendy claims Exhibit 28 is protected from discovery by the attorney-client privilege and was properly clawed back during Candler's deposition.

         2. Exhibit 31 and Arguments of Counsel

         Exhibit 31 is an email from Wendy to Candler dated July 19, 2011, to which Wendy also copied her daughter, Heather, as a recipient. During Candler's deposition, Exhibit 31 was clawed back on the stated basis that Candler's representation of both Wendy and Heather constituted a "joint representation" such that Heather's inclusion to the communication did not constitute a waiver of Wendy's attorney-client privilege. Wendy's counsel also explained and clarified their position in regards to Exhibit 31 in their letter to opposing counsel dated November 16, 2017:

As to Exhibit 31, my objection was "And I'm going to claw this back because I found out today about the joint representation. So I'm going to claw that back." I understand your position to be is [(sic)] that Exhibit 31 should not have been clawed back because the interest between Mrs. Wellin and Heather Lane was not identical and because the representation was concurrent. While we can agree that the representation of Mrs. Wellin and Heather Lane was not joint as to Mrs. Wellin's estate planning, Candler did represent them concurrently regarding estate matters, and their interests are identical in this email; therefore, if not the joint client doctrine, the common interest exception to waiver of the attorney-client privilege applies. Specially, Mrs. Wellin and Heather Lane's interests are identical in this correspondence because Mrs. Wellin included Heather to find out whether Heather was interested in planning around an asset of Mrs. Wellin's, specifically the house in Florida. Mrs. Wellin wanted to know whether Heather wanted the home as part of Mrs. Wellin's estate should something happen to Mrs. Wellin. Moreover, the email was properly clawed back because federal common law supports the extension of privilege to agents, and familial relationships can certainly form the basis of an agency relationship. As observed by the Middle District of North Carolina, "[c]ases finding an agency relationship sufficient to uphold an attorney-client privilege involve relationships with familial or professional aspects." Atwood v. Brulington Indus. Equity, Inc., 908 F.Supp 319, 323 (M.D. N.C. 1995)(citing In re Grand Jury Proceedings, 947 F.2d 1188 (4th Cir. 1991) (accountant-client relationship) and Kevlik v. Goldstein, 724 F.2d 844 (1st Cir. 1984) (father-son relationship)). The key question in determining the existence of a privileged communication is whether the client reasonably understood the conference to be confidential, and including Heather in this aspect of her estate planning was meant to [be] confidential.

         Letter dated November 17, 2017 (attached as "Exhibit B" to Wellin Children's Motion).

         In conjunction with the above letter of counsel, Wendy's Response in Opposition to the present Motion further sets forth and expands the reasons Wendy's counsel believes Exhibit 31 was properly clawed back under the Confidentiality Agreement.

         First, Wendy's counsel argues that Exhibit 31 is protected from disclosure by the express terms of the Florida attorney-client privilege statute. Wendy's counsel contends that Florida privilege law controls by application of the choice of law analysis utilized by the Court previously in this litigation. (See ECF No. 503, pp. 7-20).[3] Under Florida law, a communication remains confidential if it is "not intended to be disclosed to third persons other than: 1. Those to whom disclosure is in furtherance of the rendition of legal services to the client. 2. Those reasonably necessary for the transmission of the communication." Fla. Stat. § 90.502(1)(c). According to Wendy's counsel, the disclosure of the communication set forth in Exhibit 31 to Heather was in furtherance of the rendition of legal services to Wendy, as Wendy was seeking a dialogue with Candler and Heather so that she could make an informed decision about an asset of her estate, the response to which would assist Candler in offering legal advice to Wendy as to her potential estate. Furthermore, Wendy contends there was a mutual intent and understanding between the parties to Exhibit 31 that the communication was to remain confidential. Accordingly, Wendy argues that Exhibit 31 is protected from discovery by the express terms of the Florida attorney-client privilege statute.

         Wendy's counsel also cites to a variety of case law from various jurisdictions, including Florida and South Carolina, for the proposition that third-party disclosure of communications that otherwise would be subject to the attorney-client privilege does not necessarily destroy privilege. Generally, these cases relate to what is described by the United States Bankruptcy Court for the Southern District of Florida as the "agency exception" to waiver of the attorney-client privilege in a case that is also cited by Wendy's counsel in support of their position. In re Int'l Oil Trading Co., LLC, 548 B.R. 825, 834, 62 Bankr. Ct. Dec. 145 (U.S. Bankr. S.D. Fla. 2016). In these cases cited by Wendy's counsel, courts have variously applied the agency exception to circumstances where non-attorney professionals and non-professionals such as accountants, interpreters, or certain family members of the client are present during attorney-client commutations for purposes of facilitating ease of communication and effective representation between the client and attorney.[4]

         In further support for this position, Wendy's counsel cites to the First Circuit case of Kevlik v. Goldstein, 724 F.2d 844, 849 (1st Cir. 1984), which stands for the proposition that the attorney client privilege was not waived in a situation in which a father "acting in a normal and supportive parental fashion" was present with his son during a conference with a potential attorney wherein he "explained in full detail the events that happened on the night of [his] arrest." (previously cited in letter from Wendy's counsel, attached to Wellin Children's motion as Exhibit B).

         Second, Wendy argues that the common interest doctrine is an exception to the attorney-client privilege, which applies to Exhibit 31 because Candler represented both Wendy and Heather concurrently regarding their respective estates. Quoting Florida case law, Wendy notes that "the common interest exception to waiver is a common law doctrine by which Courts uphold attorney-client privilege, in spite of the disclosure of attorney-client communications to a third party, because that third party shares a 'common interest' with the client." ECF No. 722 at 11 -12 (quoting in part In re Int'l Oil Trading Co., LLC, supra, 548 B.R. at 832). Because Candler represented Wendy and Heather concurrently regarding their respective estates and neither Florida nor South Carolina law expressly requires that individuals have separate counsel for the common interest doctrine to apply, Wendy argues that Exhibit 31 is privileged and confidential pursuant to the common interest exception to waiver of the attorney-client privilege.

         Finally, to the extent South Carolina privilege law is applicable, rather than Florida law, Wendy's counsel contends the communication is protected from disclosure by South Carolina's own "agency exception" to waiver of the attorney-client privilege. Specifically, citing to State v. Hitopoulus, 279 S.C. 549, 550, 309 S.E.2d 747, 748-49 (1983) and State v. Thompson, 329 S.C. 72, 75, 495 S.E.2d 437, 438-39 (1998), Wendy's counsel outlines that the South Carolina Supreme Court devised a two-factor balancing test to determine whether the attorney-client privilege extends to communications between a client and a non-lawyer: (1) the need of the attorney for the assistance of the non-lawyer to effectively represent his client, and (2) the increased potential for inaccuracy in the search for truth if the trier of fact is deprived of valuable witnesses. According to Wendy's counsel, Heather's inclusion to Exhibit 31 and her assistance as to the subject matter of the communication by way of her response to the same would be necessary to Candler for him to effectively advise Wendy as to her estate. As the communication was confidential in nature and Heather was "acting as an agent to respond to Candler regarding her desire for a potential asset in her mother's estate[, ]" counsel for Wendy argues that Exhibit 31 falls into the exception delineated by the Supreme Court in Hitopoulus and Thompson[5]

         Counsel for the Wellin Children attacks each of these positions in turn. First, they argue that Heather's inclusion as a recipient of the communication set forth in Exhibit 31 destroyed any intention of confidentiality such that the attorney-client privilege would not apply. Even if the attorney-client privilege did attach, the Wellin Children's counsel asserts that confidentiality was waived by the inclusion of a third-party to the communication under the general principles of attorney-client privilege law.

         Moreover, the Wellin Children argue there is no evidence that Heather acted as Wendy's agent for purposes of the agency exception to waiver of the attorney-client privilege. Citing to South Carolina law, counsel for the Wellin Children contend that the test to determine agency is whether or not the purported principal has the right to control his alleged agent. ECF No. 718 at 7 (citing to Peoples Fed. Sav. & Loan Ass'n v. Myrtle Beach Golf & Yacht Club, 310 S.C. 132, 145, 425 S.E.2d 764, 773 (Ct. App. 1992). Citing to Florida law, the Wellin Children's counsel also assert that the agent must consent to the purported efforts of the principal to manifest control. Id. at 8 (citing to McCaskill v. Navient Sols., Inc., 178 F.Supp. 3s 1281, 1292 (M.D. Fla. 2016). Ultimately, they claim the agency exception does not apply to Exhibit 31 because there is no evidence that Heather ever manifested consent to be subject to the control of Wendy or to act on her behalf.

         Next, counsel for the Wellin Children summarily dismiss Wendy's claim that the common interest exception would apply to Exhibit 31. Specifically, citing to a previous decision by the Court in this case, the Wellin Children contend that the common interest doctrine only applies when parties with separate lawyers consult together under the guise of a common interest or defense. Id. (citing to ECF No. 502 at 33-34). Because Exhibit 31 involves a communication between two clients of the same attorney, the Wellin Children contend that the common interest exception to waiver of the attorney client privilege does not apply.

         Counsel for the Wellin Children also assert that the joint client exception does not apply to Exhibit 31. They note that, under both Florida and South Carolina Law, the joint client doctrine (as well as the common interest doctrine) is typically only applied in the context of communications that take place during existing litigation or prior to anticipated litigation. Id. at 8-9. However, they concede that some courts have applied the joint client doctrine in non-litigation context where two or more clients retain a single attorney to assist them on a single matter in which they share a common legal interest. Id. at 9. Nevertheless, citing to Duplan Corp. v. Deering Miliken, Inc., 397 F.Supp 1146, 1174-75 (D.S.C. 1974), the Wellin Children contend that this non-litigation exception is only applicable in two scenarios: (1) where a communication is shared with multiple clients because one client owes a duty to the other client that necessitates the sharing of information, or (2) where joint clients of a single attorney are entering into a direct transaction with one another and therefore need to share information. Id. at 9-10. Additionally, the Wellin Children note that other jurisdictions have required a higher degree of "commonality of interest" as to the subject matter of the communication between co- clients than is required under the common interest doctrine. Id. at 10-11. Because Exhibit 31 is an email that was sent at a time when Wendy does not claim that she or Heather were involved in or anticipating litigation, the standard application of the joint client exception would not apply, according to counsel for the Wellin Children. Moreover, counsel for the Wellin Children note that Wendy does ...


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