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Fireman's Fund Insurance Company et al v. Superior Court of the State of California

June 28, 2011

FIREMAN'S FUND INSURANCE COMPANY ET AL., PETITIONERS,
v.
SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES, RESPONDENT; FRONT GATE PLAZA, LLC ET AL., REAL PARTIES IN INTEREST.



(Los Angeles County Super. Ct. No. MC019168) ORIGINAL PROCEEDINGS in mandate. Brian Yep, Judge, and Arnold H. Gold, Temporary Judge (pursuant to Cal. Const., art. VI, § 21). Petition granted and remanded with directions.

The opinion of the court was delivered by: Croskey, J.

CERTIFIED FOR PUBLICATION

The petitioners, Fireman's Fund Insurance Company and National Surety Corporation (hereinafter, collectively Fireman's Fund) seek a writ of mandate vacating the trial court's order of November 18, 2010 which required an attorney, who was a member of a law firm that had formerly represented Fireman's Fund in this litigation, to answer at her deposition five questions to which objections of attorney-client privilege and/or work product privilege had been asserted. In overruling these objections, the trial court generally held that (1) the attorney-client privilege applies only to communications directly between an attorney and his or her client, but does not extend to communications among and between multiple counsel (or other reasonably necessary parties) who are representing the client and (2) the absolute work product privilege applies only to an attorney's work product that has been reduced to written form.

As we explain, the trial court's ruling improperly restricted the scope of these two privileges. We will therefore grant the petition and remand with directions.

FACTUAL AND PROCEDURAL BACKGROUND

Front Gate Plaza LLC (hereinafter Front Gate) owns and operates a shopping mall in Lancaster, California. Primero Management, Inc. (Primero) provides management and accounting services for Front Gate. Raymond Arjmand, either individually or as trustee for the Arjmand Family Trust (Arjmand), is a managing member of Front Gate and the principal of Primero. Primero apparently provides management and accounting services not just for Front Gate, but for other Arjmand-owned entities as well.

In April of 2008,*fn1 Front Gate filed this action against Fireman's Fund alleging, among other things, bad faith in the handling of certain property damage claims that had allegedly been sustained by Front Gate on July 20, 2006 as the result of wind and rain storms. Front Gate claimed that Fireman's Fund had conducted an improper investigation and evaluation of the claims and, as a result, monetary benefits due under Fireman's Fund's policy were unreasonably delayed or denied.

In May of 2009, Fireman's Fund's counsel, Carlson, Calladine & Peterson, LLP (CCP), was contacted by Sunil Chand (Chand), the acting director of accounting for Primero, who claimed to be a whistleblower in possession of evidence demonstrating that Front Gate's insurance claims were fraudulent. Chand spoke with attorney Melissa Dubbs, an associate at CCP. Chand initially made several calls to Dubbs without disclosing his name. Dubbs referred Chand to Pamela Pierce (Pierce), an investigator retained by CCP, who traced Chand's calls and discovered his identity.

According to Chand, he had discovered, while working at Primero, that his employer was engaging in financial and accounting irregularities with respect to Front Gate and another Arjmand entity, not a party to these proceedings. According to Chand, Front Gate sought insurance compensation for expenses which did not arise from covered events, submitted inflated repair bids from vendors who were part of Arjmand's scheme, and split insurance proceeds with the vendors who had submitted the inflated bids. Chand was fired by Arjmand on June 2, 2009, shortly after he informed Arjmand that he had filed amended 1099 forms for certain vendors and asserted that he no longer wished to be a party to Arjmand's fraud.*fn2 According to Front Gate, Chand was a vindictive former employee who had lied on his resume, saw conspiracies where none existed, and had a history of making baseless accusations against prior employers.

On or about June 7, 2009, Chand met with Dubbs and investigator Pierce in CCP's office in San Francisco. He brought with him and delivered documents that he had copied from Primero's records. At the request of Dubbs, CCP partner Donald Carlson wrote a check to Chand for $1,000 to reimburse him for his time and travel expense in coming from Los Angeles to San Francisco.*fn3

In August 2009, CCP attorney Robert Peterson advised Front Gate's counsel that CCP had received 5,450 pages of documents "which, in our opinion, constitute evidence of a criminal conspiracy and crimes on the part of your clients." Peterson demanded that Front Gate produce the documents described by Chand because they were responsive to Fireman's Fund's discovery requests.

In September 2009, Fireman's Fund filed a cross-complaint against Front Gate. Primero, Arjmand and others,*fn4 alleging that Front Gate had submitted fraudulent claims to Fireman's Fund and had conspired with others to commit insurance fraud. Fireman's Fund's motion for leave to file the cross-complaint was supported, in part, by a declaration from Chand, which had been drafted by attorney Peterson.

The parties became embroiled in protracted discovery disputes over the so-called "Chand documents/incident" because real parties refused to produce copies of the documents that Chand had provided to CCP and sought to preclude Fireman's Fund from using these documents in this litigation. On November 6, 2009, at Fireman's Fund's request, the trial court designated retired Los Angeles Superior Court Judge Arnold Gold (hereinafter, the Referee) to assist the court with "issues raised by the Chand documents incident[.]" Specifically, the court authorized the Referee to "hear, determine and make recommendations" as to: "(1) All discovery and evidentiary issues and the use of the Chand documents in the litigation, (2) whether defendants had violated their ethical and legal duties, and (3) whether plaintiffs or any other party or attorney had violated their legal or ethical duties by suppressing or withholding documents or evidence in previous responses to defendant's discovery request[.]"

The dispute at issue in this writ proceeding surrounds certain questions propounded at the deposition of attorney Dubbs.*fn5 We note that, at the first session of her deposition, in response to Fireman's Fund's assertion of the attorney-client and work-product privileges,*fn6 it was argued that the crime-fraud exception applied, based on Chand's alleged theft of the documents. A hearing was held, and the Referee determined that the crime-fraud exception did not apply. That ruling is not at issue in this proceeding.

Thereafter, real parties requested, in September of 2010, that the Referee compel attorney Dubbs to answer ten specific questions to which Fireman's Fund had previously objected on privilege grounds. On October 3, 2010, the Referee issued his Fourth Report and Recommendation (Fourth Report) recommending that Dubbs be compelled to answer all ten questions. Fireman's Fund then agreed to let her answer five of those questions. (Question Nos. 1, 2, 3, 4 and 8.) With respect to the remaining five questions (Nos. 5, 6, 7, 9 and 10), however, Fireman's Fund argued that the attorney client and/or the absolute work product privileges (Code of Civ. Proc. § 2018.030, subd. (a))*fn7 applied and she could not be compelled to answer them. Over Fireman's Fund's objections, the trial court approved the Referee's recommendation and, on November 18, 2010, ordered that Dubbs answer the following five questions (and "reasonable follow-up questions seeking non-privileged information"):

(5) Q: "Do you know how Mr. Peterson drafted the declaration of Mr. Chand without meeting with Mr. Chand?"*fn8

A: "I think I know."

Q: "And what is it?"*fn9

(6) Q: "What did you tell Mr. Carlson in order for him to write a personal check to Mr. Chand?"

(7) Q: "Was Pamela Pierce aware that Sunil Chand was paid $1,000 on your initial meeting with Mr. Chand?"

A: "Yes. . . . She was aware of it because she and I had a discussion about how to - how to pay Mr. Chand - ...


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