The issue involves a trustee’s attorney-client privilege.

Hammerman was the life beneficiary of a trust of which Northern Trust was the trustee. A subsidiary trust, also handled by Northern, owned a warehouse that was having problems with its tenant, which eventually defaulted. Northern wanted to sell the warehouse in order to resolve and avoid the resulting legal actions. Hammerman had questioned and criticized the way Northern had been handling the matter and also disagreed with the idea of selling, so she removed Northern as trustee. Then she and the successor trustee asked for Northern’s files; it supplied them except for some emails from a lawyer who had advised it – at the trust’s expense – about how to deal with Hammerman’s criticisms. She and the successor trustee filed a petition to get the emails. The trial court ordered production, reasoning that the trustee and beneficiary were entitled to the information since the trust had paid for it. Northern appealed.

This opinion’s introductory paragraph summarizes the court’s conclusions. “We adopt the fiduciary exception to the attorney-client privilege and hold that disclosure to the beneficiary and successor trustee of otherwise privileged communications is required insofar as the trustee seeks legal advice in its fiduciary capacity on matters of trust administration. We further hold that the attorney-client privilege extends to legal advice sought in the trustee’s personal capacity on matters not of trust administration.”

In other words, Northern was right. The court analyzes the rights of the beneficiary and of the successor trustee separately but comes to the same conclusion. They are entitled to privileged communications obtained in a fiduciary capacity but not to those obtained in a personal capacity. “A trustee’s attorney client privilege vis-à-vis a beneficiary extends to all legal advice sought in the trustee’s personal capacity for purposes of self-protection.” Using trust money to pay for the advice doesn’t destroy the privilege, though if that’s a violation of the trust then the beneficiary, etc. can move for an accounting, reimbursement, etc.

The court reverses and tells the trial court to inspect the emails in camera to see if they‘re privileged.

(link to opinion)

The court holds that Rule 13 means what it says. That is necessary in a world where trial judges make rulings like this.

Mirchandani borrowed money from BMO and defaulted. BMO sold and assigned ts rights to TradeCor, which sued him and got summary judgment. Mirchandani then filed suit against BMO and TradeCor, making every allegation that a bright service-station owner (or one with legal counsel behind the scenes) can think of as an alternative to paying his debt. TradeCor moved to dismiss because the allegations were compulsory counterclaims in the first suit. The trail court granted the motion and this opinion affirms. The point of the opinion, though, is that BMO also moved to dismiss, apparently arguing that as its assignee TradeCor stood in its shoes and therefore that it, too, should be treated as a party for Rule 13 purposes. The trial court bought that argument.

The Court of Appeals does not. BMO cited a Third Circuit case holding that a successor-in-interest by virtue of corporate restructuring was the “functional equivalent” of its predecessor, the named party. The court wastes no time on this. “We see no basis here to depart from the plain language of Rule 13 . .. . Even if we chose to follow [the Third Circuit case] in broadening the meaning of “opposing party,” the exceptions recognized therein . . . are very narrow and not applicable here.”

(link to opinion)

Allowing a new exclusion to UIM coverage.

Sally lived with her father. After getting hit while riding her motorcycle she sought UIM benefits under his auto policy. Although she was a relative living in his household, and would therefore normally be covered, the policy excluded relatives who owned a motor vehicle. So AmFam denied her claim; she sued; the trial court ruled for her; AmFam appealed. This opinion reverses, holds the exclusion valid, but remands on reasonable expectations.

Sally argued that the AmFam exclusion was really a disguised “other vehicle’ exclusion. That exclusion (excluding UIM coverage if the policy does not cover the vehicle for liability) is invalid because the statute (20-259.01) allows the policyholder to buy UIM coverage for all insureds. But the statute and public policy do “not restrict the parties’ right to agree on who is an insured.” Sally, because she owned a motorcycle, was by AmFam’s exclusion not an insured at all. That isn’t and end-run around the prohibition of “other vehicle” UIM exclusions because, you see, under the policy she did not merely have no UIM coverage, she had none at all.

Sally also argued reasonable expectations – i.e., her father’s reasonable expectations –  because the exclusion was allegedly buried inconspicuously. The trial court hadn’t had to reach that argument; this court does, says she’s entitled to try to prove it, and therefore remands.

(link to opinion)