Summary
The Florida Second District Court of Appeal held that a trust beneficiary litigating in an individual capacity against the trust could not obtain privileged attorney-client communications or work product concerning the litigation. The court also held that sharing information with aligned beneficiaries did not waive the privilege under the common-interest or joint-defense exception, and it quashed the discovery order.
Topics
Practice areas
Questions Presented
- Whether a trust beneficiary who litigates in an individual capacity to retain assets transferred from the trust may obtain the trustee's litigation-related communications under the trustee's statutory duty to provide information to beneficiaries.
- Whether the attorney-client privilege and work product doctrine protect communications among the trustee, its attorneys, and aligned beneficiaries when those parties share a common interest in recovering trust assets.
- Whether the proposed litigation budget, containing litigation strategy and attorney opinions, is protected work product.
Holdings
- Florida's statutory duty requiring a trustee to keep beneficiaries reasonably informed does not require disclosure of privileged materials concerning a pending lawsuit in which a beneficiary litigates individually to retain, rather than return, trust assets.
- The attorney-client privilege belongs to the trustee as the client with respect to litigation-related communications among the trustee and its attorneys when the litigation is undertaken to recover assets for the trust.
- Sharing litigation information among the trustee, aligned beneficiaries, and their attorneys did not waive the attorney-client privilege or work product protection because the participants shared a common interest in recovering the trust assets.
- The proposed litigation budget was protected from compelled disclosure because it contained the litigation strategy and opinions of counsel concerning the pending suit.
Key quotations
“We therefore find that the attorney-client privilege, belonging to the trustee as client, prohibits disclosure of communications among Hardt & Stewart, Barnett, and Myers, Krause absent any waiver.” (851)
“The "common interest" or "joint defense" exception applies among the entities sharing common interests and their attorneys.” (851)
“Accordingly, those portions of the circuit's court order compelling disclosure inconsistent with this opinion are quashed.” (852)
Factual background
Wilber C. Compson created a revocable trust naming Barnett as trustee and providing a testamentary distribution scheme that benefited his wife, his brother, and two educational institutions. After directing Merrill Lynch to transfer approximately two million dollars in securities to the trust, Compson later directed that roughly half of the assets be transferred to his wife individually. After Compson's death, Barnett sued to determine whether the second transfer was invalid and sought to recover approximately $923,000 in trust assets. Mary Compson counterclaimed, and the circuit court ordered production of litigation-related communications, communications shared with aligned beneficiaries and their attorneys, and a proposed litigation budget.
Procedural history
Barnett, as trustee, sued Merrill Lynch and Mary Compson for declaratory relief concerning the validity of a transfer of trust assets and later asserted claims involving mistake and undue influence. Compson counterclaimed against Barnett for breach of fiduciary duty and negligence. The circuit court compelled production of privileged communications, communications shared with aligned beneficiaries, and a proposed litigation budget. Barnett petitioned for certiorari, and the District Court of Appeal granted the petition and quashed the disclosure order to the extent it was inconsistent with the opinion.
Remand instructions
The portions of the circuit court's order compelling disclosure that were inconsistent with the opinion were quashed.