Hammerman v. Northern Trust (CA1 6/3/14)

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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)

State v. Salazar-Mercado (5/29/14)

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We follow the criminal cases, albeit loosely, because, as one of our former Chief Justices liked to point out, they make a lot of evidentiary law. This one involves the use of experts.

The defendant was an alleged child molester. The prosecution wanted to put on an expert to testify about a purported syndrome suffered by molestation victims that explains why (as here) their reports of abuse can be tardy and inconsistent. She knew nothing about these particular victims and would express no opinions about the case. The defense made a Daubert objection under our new version of Rule 702. The trial court admitted the testimony; the jury convicted; the Court of Appeals affirmed. The Supreme Court took review and now affirms, meaning that it wasn’t happy with CA2’s opinion.

The defense pointed out that the expert’s testimony was “cold” – i.e., simply explained a subject without reference to the facts of the case. (For some reason the opinion puts quotation marks around “cold” throughout, even after explaining its meaning; we like to think the author knows that usage does not strictly require or permit the subsequent marks and uses them to signal disdain for a cant term.) Rule 702(d) states that an expert can testify who “has reliably applied the principles and methods to the facts of the case.” The defense argued that since this witness hadn’t she couldn’t qualify. After discussing the history and development of Rule 702 the court concludes that it did nothing to prohibit cold testimony if that the witness otherwise qualifies as an expert. The court agrees with the State that 702(d) means that the expert must apply the principles reliably if he or she applies them at all.

The defense also argued, in essence, that the syndrome wasn’t scientifically recognized or accepted, citing cases from elsewhere that have questioned it. But the defense didn’t submit any data, studies or expert testimony to question the syndrome. (An amicus did on appeal but the court says that’s too late). And our courts have accepted such testimony in earlier cases (in fact prosecutors routinely call this expert to give this sort of testimony in this sort of case). There was also no request for a hearing under Rule 104 so that the defense could make a record on the issue. (The lesson is of course that you can’t do one of these challenges the cheap and easy way, just with legal argument.)

The court vacates most of CA2’s opinion, though, and de-publishes the remainder of it.

(link to opinion)

Mirchandani v. BMO/TradeCor (CA1 5/27/14)

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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)