in Re: Michael Hicks and Jerry Fazio

Petition for Writ of Mandamus Conditionally Granted and Majority and Dissenting Opinions filed April 24, 2008 Petition for Writ of Mandamus Conditionally Granted and Majority and Dissenting Opinions filed April 24, 2008. In The Fourteenth Court of Appeals ____________ NO. 14-07-00590-CV ____________ IN RE MICHAEL HICKS AND JERRY FAZIO, Relators ORIGINAL PROCEEDING WRIT OF MANDAMUS D I S S E N T I N G   O P I N I O N The relators have not shown that the trial court clearly abused its discretion by compelling the discovery sought. Under applicable precedent, this court should deny the petition for writ of mandamus in its entirety. The Burden of Proof In original mandamus proceedings in courts of appeals, relators have the Aheavy@ burden of presenting a record and petition that show they are entitled to mandamus relief to correct a clear abuse of discretion by the trial court.[1] The inquiry mandated by precedent is whether the relators (Hicks and Fazio) have established their entitlement to the extraordinary relief of a writ of mandamus, not whether the real parties in interest (Taylor and Heitkamp) have shown that the relators are not entitled to mandamus relief.[2] Indeed, though a court of appeals may not grant mandamus relief without requesting a response, the real parties in interest (Taylor and Heitkamp) are not even required to file a response[3] and any action or inaction on their part in responding to the mandamus petition is not a proper basis for granting mandamus relief.[4] The majority does not mention the relators= heavy mandamus burden, nor does the majority explain how Hicks and Fazio have made the requisite showing that would entitle them to extraordinary relief. Rather, the majority builds its entire analysis on arguments that Taylor and Heitkamp have made in opposition to the mandamus petition. Concluding that the real parties= arguments lack merit, the court then grants mandamus relief. In doing so, the majority incorrectly imposes on Taylor and Heitkamp the burden to show that Hicks and Fazio are not entitled to mandamus relief.[5] To discharge their burden in a mandamus proceeding, Hicks and Fazio must show, among other things, that the trial court clearly abused its discretion in its order of June 18, 2007.[6] On mandamus review of factual issues, a trial court will be held to have abused its discretion only if the party requesting mandamus relief establishes that the trial court reasonably could have reached only one decision, and not the decision the trial court made.[7] Mandamus review of legal issues is less deferential. A trial court abuses its discretion if it clearly fails to analyze the law correctly or apply the law to the facts.[8] The Legal Standard for Determining Whether a Party Has Waived Privilege Hicks and Fazio fail to argue in their petition that Hicks did not waive the attorney-client and work-product privileges by his assignment of claims to Heitkamp in the bankruptcy case.[9] In deciding whether mandamus relief is warranted, this court is required to focus on the arguments presented in the relators= petition.[10] However, the majority focuses on whether Hicks waived the attorney-client and work-product privileges through his written assignment of claims to Heitkamp. Moreover, even if Hicks and Fazio had made this argument, it would lack merit. Under the Texas Rules of Evidence, Hicks waives the privilege as to the litigation file if he Aconsents to disclosure of any significant part of the [litigation file] unless such disclosure itself is privileged.@[11] The majority concludes that Hicks did not waive any privilege because the bankruptcy court order does not contain language expressly and specifically waiving the attorney-client privilege. See ante at pp. 6B8. Texas Rule of Evidence 511, entitled APrivileges Recognized Only as Provided,@ contains no requirement that the consent to disclosure be express.[12] Under the unambiguous language of that rule, Hicks could waive privileges by consenting to disclosure in the bankruptcy court order, even if the order contained no language specifically waiving privilege.[13] Indeed, the Texas Supreme Court has held that Aconsent@ may be given expressly or impliedly, in writing, by spoken word, or by action.[14] Likewise, this court recently held that a party waived the attorney-client and work-product privileges by executing an assignment of its privileges to another party, even though this assignment did not specifically state that any party was waiving a privilege.[15] The majority=s conclusion that a party must express or specify an intent to waive privilege is inconsistent with both the unambiguous language of the applicable rule and precedent from this court and the Texas Supreme Court.[16] Waiver may be express or implied. Therefore, if in the bankruptcy court order Hicks impliedly consented to the disclosure of any significant part of the litigation file, or if he assigned his right to assert the attorney-client privilege in the litigation file to a third party, then Hicks waived the privilege as to this file.[17] In the bankruptcy court order and through the Chapter 13 bankruptcy plan, Hicks assigned to Heitkamp all claims arising from or related to the claims made in the Taylor Suit,[18] which would include all of his claims against Fazio arising from or related to the claims made in that suit. In the order, Hicks makes this assignment for the benefit of unsecured, nontax creditors in the Hicks bankruptcy case. Hicks also agreed to timely cooperate with Heitkamp to execute instruments so that Heitkamp would be able to obtain Ainformation, testimony, documentation, and such rights as may exist for establishing liability and determining damages for the claims assigned, the proof of liability and any damages as well as the basis for legal recovery, legal documentation and evidentiary proof necessary for obtaining legal recovery of money whether by preparation of a documented claim, mediation, private arbitration, settlement or a trial.@ It was not an abuse of discretion for the trial court to have concluded that the information and documentation needed to determine and prove damages and liability as to all claims by Hicks against Fazio includes the information and documents contained in Fazio=s litigation file for the Taylor Suit. Likewise, the trial court did not abuse its discretion by impliedly determining that, by agreeing to cooperate with Heitkamp so that Heitkamp could obtain documents that include the litigation file, Hicks impliedly consented to the disclosure to Heitkamp of the litigation file, thus waiving the privileges in question.[19] In addition, Hicks irrevocably assigned to Heitkamp rights Ato receive all documentation, information, and testimony from [Hicks].@ In the bankruptcy court order, Hicks also agreed that failure to cooperate in providing information to Heitkamp would be a failure to obey the order. The trial court did not abuse its discretion by impliedly determining that, by assigning to Heitkamp the rights to receive all documentation and information from Hicks and by agreeing to provide this information to Heitkamp, Hicks impliedly consented to the disclosure to Heitkamp of the entire litigation file, thus waiving the privileges in question.[20] In the alternative, Hicks=s assignment to Heitkamp of the rights to receive all documentation and information from Hicks carried with it Hicks=s right to assert privileges that otherwise would preclude disclosure of this information to Heitkamp. Consequently, Hicks may no longer assert these privileges.[21] In analyzing the bankruptcy court order, the majority relies on Hicks=s purported Aintent not to waive the privilege.@[22] Though the majority fails to explain why it believes Hicks did not intend to waive the privilege when he agreed to the assignment in the bankruptcy court order, the only apparent basis for finding such an intent is the affidavit of Hicks=s bankruptcy counsel, in which Hicks=s counsel testifies as to his belief that Hicks had such an intent. In any event, because the bankruptcy court order does not state this intent, any basis for finding such an intent is necessarily extrinsic to the order. No party has argued that the bankruptcy court order is ambiguous, and the majority does not conclude that the bankruptcy court order is ambiguous. Thus, the majority errs in granting mandamus relief based on its consideration of extrinsic evidence as to Hicks=s alleged intent not to waive any privilege.[23] Hicks and Fazio and the majority rely on In re Cooper, 47 S.W.3d 206 (Tex. App.CBeaumont 2001, orig. proceeding), a case in which the judgment debtor assigned to his judgment creditor his Stowers[24] claim against his insurers.[25] In the assignment document, the judgment debtor did not (1) agree to cooperate with the judgment creditor in investigating or prosecuting the assigned claim, (2) expressly waive any privilege, or (3) agree to voluntarily disclose or consent to disclosure of any significant part of matters protected by privilege. See id. at 209. The In re Cooper court held that, A[u]nder these circumstances,@ the trial court abused its discretion by concluding the judgment debtor had waived his attorney-client privilege by making the assignment. See id. According to the majority, In re Cooper stands for the proposition that, for parties to an assignment of rights and claims to effectively waive the attorney-client privilege, they must state specifically in the language of the assignment that the attorney-client privilege is waived. See ante at p. 6. The Cooper opinion does not stand for or support this proposition. See In re Cooper, 47 S.W.3d at 208B09. The holding in In re Cooper was limited to the circumstances before the court; the Cooper court never stated that a party must express or specify an intent to waive the privilege before there can be a voluntary disclosure or consent to disclosure under Rule 511.[26] In the case at hand, Hicks agreed to cooperate with Heitkamp to facilitate Heitkamp=s receipt of documents that include the litigation file. Because the language of the parties= agreement and the circumstances of this case differ significantly from the circumstances in In re Cooper, that case is not on point. Even if Hicks and Fazio had argued in this proceeding that the trial court clearly abused its discretion by compelling discovery because there is no evidence that Hicks waived the attorney-client privilege by his assignment of claims to Heitkamp in the bankruptcy case, for the reasons stated above, this argument would lack merit. Arguments Asserted in the Mandamus Petition In their mandamus petition, Hicks and Fazio assert the trial=s order compelling production of Fazio=s litigation file constitutes a clear abuse of discretion for the following reasons: (1) The requested discovery is a Afishing expedition@ and is not reasonably calculated to lead to the discovery of admissible evidence. (2) The trial court erroneously concluded that Hicks had assigned his claims against Fazio to Heitkamp. (3) Any alleged assignment of a legal malpractice claim against Fazio would be invalid under Texas law and therefore Taylor and Heitkamp are not entitled to discovery seeking evidence in support of potential legal malpractice claims against Fazio. (4) Because Taylor and Heitkamp do not have a valid legal malpractice claim against Fazio, the requested discovery is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence. Hicks and Fazio first contend the trial court abused its discretion by compelling disclosure of Fazio=s litigation file, arguing the requested discovery is a Afishing expedition@ and is not reasonably calculated to lead to the discovery of admissible evidence. In response to the discovery requests in question, however, Hicks and Fazio objected only on the grounds of the attorney-client and work-product privileges,[27] and the trial court has not concluded there is good cause to excuse Hicks=s and Fazio=s failure to assert any other discovery objections. Therefore, by their failure to timely object on any basis other than attorney-client and work-product privilege, Hicks and Fazio effectively waived any complaints that the requested discovery is overbroad, a Afishing expedition,@ is not reasonably calculated to lead to the discovery of admissible evidence, and any objection other than the two privileges they asserted.[28] Because of this waiver, the trial court did not clearly abuse its discretion by compelling discovery that allegedly amounted to a Afishing expedition@ into irrelevant matters. Under their first issue, Hicks and Fazio also assert that the trial court clearly abused its discretion by concluding the bankruptcy court order contains an assignment by Hicks to Heitkamp of his claims against Fazio. Hicks and Fazio claim that the record shows that Hicks did not assign any such claims to Heitkamp. Hicks and Fazio base this argument on extrinsic evidence regarding the meaning of the bankruptcy court order, namely statements made by Hicks=s bankruptcy counsel and copies of prior drafts of a proposed bankruptcy court order. As noted above, when a court order is unambiguous, as in this case, the court should give effect to the plain meaning of the order, and not consider extrinsic matters.[29] Under the unambiguous language of the bankruptcy order, Hicks assigned to Heitkamp all claims Aheld or to be held against [Fazio] whether perpetrated upon, resulting to, or incurred by Michael Porter Hicks, Sr., and/or [his wife and two other companies and their agents], for losses as well as any and all liabilities related in any way or by any legal or factual circumstance or source to that certain personal injury of Charles Taylor . . . arising from or related to the damages suffered or claims made [in the Taylor Suit] . . . .@[30] Contrary to Hicks=s and Fazio=s arguments, the language of the bankruptcy court order shows that Hicks assigned to Heitkamp any claims he had against Fazio. Accordingly, the trial court did not clearly abuse its discretion by concluding that the bankruptcy court order contains an assignment by Hicks to Heitkamp of Hicks=s claims against Fazio.[31] Under their first issue, Hicks and Fazio also assert that any alleged assignment of a legal malpractice claim against Fazio would be invalid under Texas law and therefore Taylor and Heitkamp are not entitled to discovery seeking evidence in support of potential legal malpractice claims against Fazio. In addition, Hicks and Fazio argue that, because Taylor and Heitkamp do not have a valid legal malpractice claim against Fazio, the requested discovery is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence. Again, Hicks and Fazio did not timely assert objections that Taylor and Heitkamp were improperly seeking evidence in support of an invalid malpractice claim or that the requested discovery is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence.[32] Therefore, Hicks and Fazio waived these discovery objections. The trial court did not clearly abuse its discretion by compelling discovery when these objections were not even asserted.[33] Finally, the trial court could not possibly have erred by compelling discovery so that Taylor and Heitkamp could look for evidence regarding legal malpractice claims against Fazio because that is not the basis upon which the trial court compelled the discovery in question. For these reasons, Hicks and Fazio have not met the mandamus standard with respect to any of the grounds asserted in their petition for mandamus relief. Conclusion The court correctly overrules the second and third issues, concluding that in the June 18, 2007 order, the trial court did not compel Hicks to sign any authorization or waiver and that the trial court did not grant any motion for protective order.[34] Although the court in this case denies the mandamus relief sought in the second and third issues, the court conditionally grants the entire mandamus petition. Even if this court=s granting of mandamus relief as to the first issue were correct, the court still should conditionally grant the petition only in part and deny the petition as to the other relief sought. As to the first issue, Hicks and Fazio have not shown that the trial court clearly abused its discretion by compelling production of the discovery in question. Therefore, the court should deny Hicks=s and Fazio=s petition for writ of mandamus. In conditionally granting mandamus, this court contradicts mandatory precedent by (1) imposing on real parties in interest Taylor and Heitkamp the burden to show that relators Hicks and Fazio are not entitled to mandamus relief, (2) adding to Rule 511 an unwritten requirement that the consent to disclosure be express, and (3) improperly considering extrinsic evidence regarding the meaning of the unambiguous bankruptcy court order. Under applicable precedent, this court instead should deny the petition for writ of mandamus in its entirety. Because it does not, I respectfully dissent. /s/ Kem Thompson Frost Justice Petition for Writ of Mandamus Conditionally Granted and Majority and Dissenting Opinions filed April 24, 2008. Panel consists of Chief Justice Hedges, Justices Frost and Guzman. (Hedges, C.J., majority). [1] See Tex. R. App. P. 52.3, 52.7; Canadian Helicopters, Ltd. v. Wittig, 876 S.W.2d 304, 305 (Tex. 1994) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992) (orig. proceeding); In re Nelson, No. 14-04-00578-CV, 2004 WL 1516156, at *1 (Tex. App.CHouston [14th Dist.] July 8, 2004, orig. proceeding) (mem. op.). [2] See Canadian Helicopters, Ltd., 876 S.W.2d at 305; In re Yamin, No. 14-07-01035-CV, 2008 WL 442575, at *1 (Tex. App.CHouston [14th Dist.] Feb. 19, 2008, orig. proceeding) (mem. op.). [3] See Tex. R. App. P. 52.4. [4] See, e.g., In re Yamin, 2008 WL 442575, at *1(denying mandamus petition because A[r]elator has not established his entitlement to the extraordinary relief of a writ of mandamus@). [5] See Canadian Helicopters, Ltd., 876 S.W.2d at 305; In re Yamin, 2008 WL 442575, at *1. [6] See In re Prudential Ins. Co. of America, 148 S.W.3d 124, 135 (Tex. 2004). [7] Walker, 827 S.W.2d at 840. [8] In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005). [9] This court correctly overrules the second and third issues because the trial court did not grant the relief challenged by Hicks and Fazio in these two issues. See ante at p. 9. In the argument under their second issue, Hicks and Fazio make conclusory statements that Hicks has not waived the attorney-client and work-product privileges. In their petition, Hicks and Fazio do not put forth any argument, analysis, record citations or legal authority in support of the proposition that Hicks did not waive these privileges through his written assignment of claims to Heitkamp. See Tex. R. App. P. 52.3(h); In re Citizens Supporting Metro Solutions, Inc., No. 07-00190-CV, 2007 WL 4277850, at *4 (Tex. App.CHouston [14th Dist.] Oct. 18, 2007, orig. proceeding) (mem. op.) (holding that relator waived argument because its petition did not contain appropriate citations to the record and authorities). By failing to assert this argument, Hicks and Fazio have waived it. [10] See Tex. R. App. P. 52.3, 52.7; Canadian Helicopters, Ltd., 876 S.W.2d at 305; Walker, 827 S.W.2d at 837. [11] See Tex. R. Evid. 511. Because the applicable law equates this consent to disclosure with waiver of any claim of privilege, the majority=s use of the common law definition of waiver is incorrect. See ante at pp. 7B8 (applying majority=s interpretation of common law definition of waiver). [12] See Tex. R. Evid. 511. [13] See id. [14] See Hightower v. City of Tyler, 134 S.W.2d 404, 407 (Tex. Civ. App.CEl Paso 1939, writ ref=d); see also Yancy v. United Surgical Partners Int=l, Inc. 236 S.W.3d 778, 786 n.6 (Tex. 2007) (holding that, in cases decided after 1927, Texas Supreme Court=s notation of Awrit refused@ denotes that the court of appeals opinion is the same as a precedent of the Texas Supreme Court); State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 707 (Tex. 1996) (referring to a writ refused court of appeals opinion as an opinion of the Texas Supreme Court). [15] See In re General Agents Ins. Co. of Am., Inc., 224 S.W.3d 806, 813B14 (Tex. App.CHouston [14th Dist.] 2007, orig. proceeding). [16] See Tex. R. Evid. 511; Hightower, 134 S.W.2d at 407; In re General Agents Ins. Co. of Am., Inc., 224 S.W.3d at 813B14. [17] See Tex. R. Evid. 511; Hightower, 134 S.W.2d at 407; In re General Agents Ins. Co. of Am., Inc., 224 S.W.3d at 813B14. [18] As used herein, the ATaylor Suit@ refers to the personal-injury lawsuit filed by Charles Taylor against various parties, including his employer, relator Michael Hicks, a non-subscriber under the Texas Workers= Compensation Act. [19] See Tex. R. Evid. 511; Hightower, 134 S.W.2d at 407 (holding that subdivision developer consented to city=s use of water and sewer lines even though developer never expressly consented to this use). [20] See Tex. R. Evid. 511; Hightower, 134 S.W.2d at 407. [21] See In re General Agents Ins. Co. of Am., Inc., 224 S.W.3d at 813B14. [22] See ante at p. 8. [23] See Reiss v. Reiss, 118 S.W.3d 439, 441B42 (Tex. 2003) (holding that unambiguous decree must be enforced literally, without consideration of matters extrinsic to the decree); Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex. 2000) (holding that language of unambiguous judgment must be enforced without consideration of extrinsic evidence as to its meaning); Harrison v. Manvel Oil. Co., 180 S.W.2d 909, 914 (Tex. 1944) (same as Gulf Ins. Co.). [24] See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm'n App.1929, holding approved). [25] In re Cooper, 47 S.W.3d 206, 207B08 (Tex. App.CBeaumont 2001, orig. proceeding). [26] See id. [27] Taylor and Heitkamp agree that they are not seeking to discover Acore work product.@ See Tex. R. Civ. P. 192.5(b), (c) (defining core work product that is not discoverable); In re Bexar County Crim. Dist. Attorney=s Office, 224 S.W.3d 182, 187B88 & n.21 (Tex. 2007) (discussing definition of core work product and exceptions to this definition). Therefore, the majority correctly concludes that the trial court has not compelled Hicks and Fazio to produce any core work product, and this court need not address any issues relating to core work product. [28] See Tex. R. Civ. P. 193.2; Bielamowicz v. Cedar Hill Indep. Sch. Dist., 136 S.W.3d 718, 723 (Tex. App.CDallas 2004, pet. denied). Rule 193.2(f) provides that a party should not object to a discovery request on the grounds that it calls for production of material that is privileged but should instead comply with Rule 193.3. See Tex. R. Civ. P. 193.2(f); see also Tex. R. Civ. P. 193.3. A party objecting to the production of privileged material does not waive the privilege but must comply with Rule 193.3 when the error is pointed out. Tex. R. Civ. P. 193.2(f); see also Tex. R. Civ. P. 193.3. The record in this mandamus proceeding does not reflect that any party has pointed out to Hicks and Fazio this error in objecting to the discovery requests. This error is not relevant to the analysis in this opinion, and it does not affect the waiver by Hicks and Fazio of any other objections. [29] See Reiss, 118 S.W.3d at 441B42; Gulf Ins. Co., 22 S.W.3d at 422; State Farm Lloyds, Inc. v. Williams, 791 S.W.2d 542, 546 (Tex. App.CDallas 1990, writ denied). [30] Emphasis added. [31] In this argument, Hicks and Fazio do not assert that any alleged assignment would be invalid under Texas law. [32] The trial court has not concluded there is good cause to excuse Hicks=s and Fazio=s failure to assert any discovery objections. [33] See Tex. R. Civ. P. 193.2; Bielamowicz, 136 S.W.3d at 723. This court need not and does not address the extent, if any, to which Hicks=s assignment of claims is invalid because it violates Texas public policy. [34] In their argument as to how the trial court allegedly erred by compelling Hicks to sign an authorization, Hicks and Fazio make a conclusory statement that, even if Hicks waived the attorney-client and work-product privileges, Fazio properly has asserted the work-product privilege on his own. The petition does not contain any argument or analysis in support of this proposition, and therefore the argument is waived. See In re Citizens Supporting Metro Solutions, Inc., 2007 WL 4277850177, at *4. In addition, Hicks and Fazio do not present argument or analysis in their petition as to how the trial court clearly abused its discretion by impliedly determining that Taylor and Heitkamp showed that they have a substantial need for the materials in the preparation of their case and that they are unable without undue hardship to obtain the substantial equivalent of these materials by other means. See Tex. R. Civ. P. 192.5(b); In re Bexar County Crim. Dist. Attorney=s Office, 224 S.W.3d at 187B88. Therefore, Hicks and Fazio have waived this argument. In any event, as discussed above, even if Hicks and Fazio had presented argument on this issue in their petition, the trial court did not clearly abuse its discretion by impliedly concluding that Taylor and Heitkamp made this showing.