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Commonwealth Land Title Insurance Co. v. Funk

Superior Court of Delaware, New Castle

June 17, 2015

COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Florida Corporation, Plaintiff,
v.
VANCE A. FUNK, IV and THE LAW OFFICES OF VANCE A. FUNK, a Delaware Professional Association, Defendants.

Submitted: May 12, 2015

Upon Defendants' Renewed Motion to Compel and for Sanctions,

Bradley P. Lehman, Esquire, Zarwin, Baum, DeVito, Kaplan, Schaer & Toddy, P.C., Wilmington, Delaware, Phillip A. Magen, Esquire, (pro hac vice), Zarwin, Baum, DeVito, Kaplan, Schaer & Toddy, P.C., Philadelphia, Pennsylvania Attorneys for Plaintiff.

Jeffrey M. Weiner, Esquire, Wilmington, Delaware, Attorney for Defendants.

MEMORANDUM OPINION

PAUL R. WALLACE, JUDGE

I. INTRODUCTION

Before the Court is the Renewed Motion to Compel and for Sanctions of Defendants, Vance A. Funk, IV and the Law Offices of Vance A. Funk (collectively, "Funk" or "Funk Defendants"), heard on April 27, 2015. The Funk Defendants seek to compel Plaintiff Commonwealth Land Title Insurance Company ("Commonwealth") to produce email communications between Commonwealth and counsel it retained for its insureds, Alessio and Nancy Baffone (collectively, the "Baffones"). Commonwealth asserts the emails are protected by attorney-client privilege and are therefore not discoverable. For the reasons set forth more fully below, the Funk Defendants' Motion to Compel is DENIED.

II. FACTUAL AND PROCEDURAL BACKGROUND[1]

This matter involves a claim for contractual indemnification arising out of a property sale in which the Funk Defendants served as the closing agent. Part of the closing required the Funk Defendants to ensure the Baffones had a priority mortgage on the property. When a dispute arose over which mortgage had priority-the Baffones' or the property sellers' (Angelo and Mary Galantino – the "Galantinos")-litigation soon followed. The matter was heard here and ultimately appealed to the Delaware Supreme Court. That Court found that, as a matter of law, the Galantinos' mortgage-as a purchase money mortgage-had priority over the Baffones' mortgage.

Commonwealth retained James F. Harker, Esquire, of Cohen Seglias Pallas Greenhall & Furman PC ("Cohen Seglias") to represent the Baffones' interests in the Supreme Court appeal. During the appeal and on the remanded proceedings in this Court, Mr. Harker exchanged certain email communications with Nate Tincher, Esquire, at Commonwealth. Some of those communications attached email chains including communications with the Galantinos' counsel, David E. Matlusky, Esquire.

As part of this indemnification claim, Commonwealth seeks damages for both the purchase money for the competing mortgage and for the attorneys' fees incurred in the underlying litigation and appeal. The Funk Defendants propounded discovery requests on Commonwealth seeking:

(1) Communications between Plaintiff Commonwealth and the Galantinos and their counsel pertaining to the Galantinos' Mortgage referenced in paragraphs 10, 12, 20 and 29 of the Complaint;
(2) [Support for the] $39, 827.00 in attorneys' fees and costs incurred by Plaintiff in connection with the Superior Court Action and the Appeal alleged in paragraph 7(b) of the Complaint.[2]

In response, Commonwealth produced copies of Cohen Seglias invoices for services rendered to Commonwealth. Some of the invoice entries indicate email communications made between Mr. Harker and Mr. Tincher.

The Funk Defendants also served a Subpoena Duces Tecum on Cohen Seglias, requesting "[a]ll non-privileged documents in connection with representation of Baffone, Alessio & Nancy. . . commencing on or about 9/16/01 through 5/14/13."[3] Cohen Seglias produced its entire Baffone file save the email communications between Mr. Harker and Mr. Tincher. The Funk Defendants now seek to compel Commonwealth to produce those emails under Superior Court Civil Rule 37.[4] As requested by the parties at argument on this motion, the Court has reviewed those emails in camera for their discoverability.

III. STANDARD OF REVIEW

On a motion to compel discovery, the Court determines whether the discovery sought is reasonably calculated to lead to admissible, non-privileged evidence.[5] A party asserting a privilege bears the burden of establishing that the requested documents or communications are in fact, and as a matter of law, protected by privilege.[6]

IV. DISCUSSION

Commonwealth claims that the emails the Funk Defendants seek are protected by attorney-client privilege under Delaware Rule of Evidence 502.[7] The Funk Defendants argue that that privilege has been waived, and that they are entitled to see the contents of the emails as they relate to the claim for attorneys' fees and alternate avenues of equitable relief that were available in the underlying action.

As the asserter of the privilege, Commonwealth bears the burden of establishing that the emails are privileged. To invoke the protection of attorney-client privilege, Commonwealth must show that the communications were made: "(1) for the purpose of seeking, obtaining or delivering legal advice, (2) between privileged persons, and (3) that confidentiality was intended."[8] Commonwealth represents in its brief that Commonwealth retained Mr. Harker to "represent the common legal interests of the Baffones and Commonwealth in the underlying litigation."[9] Although the Funk Defendants claim there is insufficient evidence of an attorney-client relationship between Cohen Seglias and Commonwealth, both parties agreed to the Court reviewing the communications at issue in camera. Having done so, it is clear that there was an attorney-client relationship between Cohen Seglias and Commonwealth, as Commonwealth represents.[10] It is further clear that the communications were intended to be confidential, and that they were made for the purpose of seeking legal advice.

A. The Baffones Did Not Waive Attorney-Client Privilege on Behalf of Commonwealth.

The Funk Defendants argue that the Baffones waived any privilege they held when Cohen Seglias produced the contents of the Baffones' file. Indeed, intentional disclosure of privileged communications to third parties surrenders the privilege as to those communications.[11] Commonwealth argues that because Cohen Seglias represented its individual legal interests, albeit in common with the Baffones, the Baffones' waiver has no effect as to Cohen Seglias/Commonwealth communications not intentionally disclosed.

The Court agrees that Commonwealth, itself an independent privilege holder, "should not be forced unwillingly into a waiver of [that] privilege based on another client's decision to waive the privilege."[12] Thus, because Cohen Seglias represented both Commonwealth's and the Baffones' common legal interest, [13] the Baffones' waiver is of no moment to Commonwealth's assertion of privilege against the Funk Defendants. The emails between Mr. Harker and Mr. Tincher are therefore not discoverable because they are protected attorney-client communications.

B. The "At Issue" Exception to Attorney-Client Privilege Does Not Apply.

Commonwealth also argues that the emails do not fall within the "at issue" exception to attorney-client privilege. The "at issue" exception, another form of attorney-client privilege waiver, applies when: "(1) the party [asserting privilege] injects the communications themselves into the litigation, or (2) the party injects an issue into the litigation, the truthful resolution of which requires an examination of the confidential communications."[14] The principles of waiver and fairness underlie this exception-a litigant holding the privilege may not use it to both shield itself from discovery and "rely subsequently on the substance of those communications to prove its case."[15] And the Court considers the ability of the party seeking the communication to obtain the information sought from reliable alternate sources when determining whether the privilege should apply.[16]

The Court finds that Commonwealth did not place the contents of the communications "at issue" simply by alleging attorneys' fees as part of its damages.[17] Further, Commonwealth need not and does not rely on the contents (i.e., the "substance") of those communications between Mr. Harker and Mr. Tincher to pursue its indemnification claim against the Funk Defendants. That cause of action against the Funk Defendants exists irregardless of any equitable form of relief considered for the Commonwealth's insureds in the underlying action.

Moreover, the Funk Defendants have already obtained the rest of the Baffones' file from Cohen Seglias, including the documents prepared in anticipation of a potential Chancery action. The Funk Defendants are thus not disadvantaged here; they not only were able to obtain information on the Chancery action from an alternative source, they have already obtained such information.[18]The Court finds that the emails' contents are not "at issue" in this litigation and are therefore protected by attorney-client privilege.

V. CONCLUSION

The Court thus finds that Commonwealth has met its burden of establishing the privileged nature of the communications at issue here. The Funk Defendants' motion to compel the email communications between Cohen Seglias and Commonwealth is consequently DENIED. The accompanying motion for sanctions is also DENIED. Commonwealth shall, however, produce redacted versions of all other communications within the email chains submitted to the Court in camera, as these are not subject to attorney-client privilege and are otherwise discoverable.

IT IS SO ORDERED.


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