Lawyers for organizations may feel both shudders and relief on reading a recent appellate decision protecting attorney-client privilege for the members of a La Jolla homeowners' association. Shudders, that a local court's discovery order would have required individual homeowners to recount group strategy meetings held by their HOA's lawyers. Relief, that the Fourth District Court of Appeal has blocked the order.
The dispute arises from two construction defect lawsuits against developers and builders of a 140-unit common interest development. The homeowners' association has sued over alleged damage to common areas and about 30 individual homeowners are suing separately over alleged damage inside their individual units.
The discovery dispute concerned whether the HOA's lawyers waived confidentiality when they held meetings for homeowners "to apprise them of the status and goals of the litigation," and in one case to get their vote approving the action.
Defendants alleged the protective circle of attorney-client privilege was broken by the presence of individual homeowners who were not the lawyers' clients. A homeowners' association is a different entity from its individual members, not all of these homeowners had chosen to join the other lawsuit alleging damage inside of homes, and in any case that suit was brought by different lawyers.
The appellate court held confidentiality rights were not waived at the meetings based on a review of Cal. Evidence Code ยงยง 912 and 952 and prior evidentiary rulings specific to homeowners' associations, including their duties to keep members informed. It noted attorney-client privilege can protect third parties to whom disclosure is "reasonably necessary for... the accomplishment of the purpose" of the consultation. While participants in the two lawsuits might have diverging interests in obtaining legal advice, the court found "the Association's attorney was attempting to communicate in the subject meetings with other stakeholders, the individual homeowners, in a manner that would advance their shared interests in securing advice on similar legal and factual issues."
The case is Seahaus La Jolla Owners Association v. Superior Court, at http://www.courts.ca.gov/opinions/documents/D064567.PDF.
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