Affiniti Colorado, LLC, a Delaware limited liability company, Plaintiff-Appellee,
v.
Kissinger & Fellman, P.C., a Colorado professional corporation, and Kenneth S. Fellman, Defendants-Appellants.
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[Copyrighted Material Omitted]
Page 608
City
and County of Denver District Court No. 18CV32340. Honorable
Michael A. Martinez, Judge.
COUNSEL:
Ogborn
Mihm, LLP, Michael T. Mihm, Susan H. Jacks, James E. Fogg,
Thomas D. Neville, Denver, Colorado, for Plaintiff-Appellee.
Montgomery Little & Soran, P.C., Christopher B. Little,
Michael R. McCormick, Esther H. Lee, Greenwood Village,
Colorado, for Defendants-Appellants.
Welling
and Tow, JJ., concur.
OPINION
FREYRE, JUDGE.
Page 609
[¶1]
In this C.A.R. 4.2 interlocutory appeal, we are
asked to decide an attorney-client privilege issue not
previously addressed by Colorado courts. No one disputes that
the attorney-client privilege exists " without regard to
the non-corporate or corporate character of the client,"
A v. Dist. Court, 191 Colo. 10, 20, 550 P.2d 315,
323 (1976) (citation omitted), or that a corporation may only
assert or waive the privilege through " individuals
empowered to act" on its behalf, Genova v. Longs
Peak Emergency Physicians, P.C., 72 P.3d 454, 462
(Colo.App. 1993). As well, our supreme court and other courts
presume that the attorney-client privilege ordinarily
survives the death of the client. Wesp v. Everson,
33 P.3d 191, 200 (Colo. 2001) (citing Swidler & Berlin v.
United States, 524 U.S. 399, 118 S.Ct. 2081, 141 L.Ed.2d
379 (1998)) But what happens when the client is a dissolved
corporation and has no one to act on its behalf? Does the
attorney-client privilege survive the corporation's
dissolution? Relying on the majority view of courts in other
jurisdictions that have considered this issue, the district
court answered that question " no." We agree with
the district court and conclude that the policy reasons
supporting the " posthumous" privilege for an
individual client do not support the posthumous privilege for
a corporate client. We hold that when (1) a corporation
dissolves; (2) there are no ongoing post-dissolution
proceedings; and (3) no one with the authority to invoke or
waive the corporation's attorney-client privilege
remains, the privilege ceases to exist. Therefore, we affirm
the district court's order.
[¶2] Defendants, Kenneth S. Fellman and the
law firm Kissinger & Fellman, P.C. (collectively, Fellman),
appeal the district court's order denying their motion
for a protective order. Fellman filed the motion in a
negligent misrepresentation suit brought by plaintiff,
Affiniti Colorado, LLC, alleging that Fellman had made
misrepresentations in an " Opinion Letter" that was
written to induce it to contract with Fellman's
now-dissolved corporate client, EAGLE-Net Alliance
(EAGLE-Net), a purported intergovernmental
entity.[1] Fellman raised immunity under the
Colorado Governmental Immunity Act (CGIA), so the
district court set the matter for a hearing under Trinity
Broadcasting of Denver, Inc. v. City of Westminster, 848
P.2d 916 (Colo. 1993), and ordered limited discovery related
to the immunity issue. After Affiniti requested
communications between Fellman and EAGLE-Net, Fellman sought
a protective order based on the attorney-client privilege.
The district court denied the motion and granted C.A.R.
4.2 certification. We granted Fellman's petition for
review.
Page 610
I.
Background
[¶3] EAGLE-Net was formed to deploy and
operate a broadband internet network, funded by a federal
grant, to provide rural schoolchildren with internet access.
Affiniti is a limited liability company that provides
broadband technology to rural communities. It negotiated and
executed a management agreement with EAGLE-Net in 2013, based
on an Opinion Letter provided by Fellman, acting as
EAGLE-Net's general counsel. Under the agreement's
terms, Affiniti agreed to manage EAGLE-Net's network and
provide capital funding for the project in exchange, in part,
for EAGLE-Net's agreement to grant Affiniti a security
interest in its assets.
[¶4] In 2015, Affiniti sued EAGLE-Net for
breach of the agreement and obtained a judgment. The
litigation eventually depleted EAGLE-Net's assets, and on
May 27, 2017, the board of directors adopted a resolution to
dissolve EAGLE-Net and divest it of its assets. On June 5,
2017, the dissolution process ended, EAGLE-Net ceased to
exist, and Fellman no longer represented EAGLE-Net.
[¶5] During the litigation, federal
government officials notified Affiniti that EAGLE-Net had
failed to obtain the necessary approval to grant Affiniti a
security interest in its assets, contrary to representations
allegedly made in the Opinion Letter. Because of the
resulting difficulties in collecting on the judgment,
Affiniti then brought this negligent misrepresentation action
premised on those alleged misrepresentations.
[¶6] As relevant here, Fellman filed a
motion to dismiss, asserting that (1) EAGLE-Net was an
intergovernmental agency; (2) Fellman was general counsel for
this public entity; and (3) Fellman was, therefore, entitled
to immunity under the CGIA. When the court ordered limited
discovery and Affiniti requested communications between
Fellman and EAGLE-Net, Fellman filed the motion at issue
here. The court denied the motion and ordered Fellman to
comply with Affiniti's discovery requests.
[¶7] Fellman then moved for reconsideration
and raised several new issues. It argued that (1) because
EAGLE-Net was a public entity, special policies, not
considered by the court, applied; (2) the work product and
deliberative process privileges, not considered by the court,
applied; and (3) the public official privilege protected its
communications with EAGLE-Net. In denying reconsideration,
the district court found that the motion was premised on the
same legal theory and that nothing in the motion altered the
analysis or the outcome.
II.
Jurisdiction
[¶8] Before discussing the merits, we
address whether interlocutory review under C.A.R. 4.2 is a
proper channel to review the district court's order
finding that the attorney-client privilege does not survive
the dissolution of a corporation. As recognized by the
division in Adams v. Corrections Corp. of America,
264 P.3d 640, 644 (Colo.App. 2011), interlocutory review of
discovery orders that address " only whether the trial
court . . . abused its discretion in a discovery matter"
is generally not allowed. Id. ; see also
In re W.R. Grace & Co.-Conn., 984 F.2d 587, 589 (2d
Cir. 1993) (" Pretrial discovery orders are generally
not appealable . . . ." ). We fully agree with this
general proposition, and our decision to review the privilege
issue presented here should not be viewed as a departure from
it.[2] Indeed, we note that the general rule
in Adams is in accord with numerous federal
decisions considering the propriety of reviewing discovery
orders under the comparable federal interlocutory review
statute, 28 U.S.C. § 1292(b) (2018). These decisions have
consistently found such orders improper for interlocutory
review. See Quantum Corp. v. Tandon Corp.,
940 F.2d 642 (Fed. Cir. 1991) (denying review of court's
order denying the request for bifurcation of proceedings to
avoid disclosure of patent infringement opinions); Oasis
Research, LLC v. EMC Corp., Nos. 4:10-CV-435,
4:12-CV-526, 2015 WL 5318119, *4 (E.D. Tex. Sept. 11, 2015)
(unpublished opinion) (denying review because order
compelling disclosure under the crime fraud exception did not
present a pure issue of law); Fed. Trade Comm'n v.
Stefanchik,
Page 611
No. C04-1852RSM, 2006 WL 3474204, *1-2 (W.D. Wash. Nov. 30,
2006) (unpublished order) (denying interlocutory review
because the question whether the client's knowledge of
his attorney's knowledge waived the privilege did not
involve a controlling question of law); Isaacson v. Keck,
Mahin & Cate, 875 F.Supp. 478, 481 (N.D. Ill. 1994)
(denying review of court's order issued after reviewing
materials because the issue did not involve an unresolved
question of law); McCann v. Commc'ns Design
Corp., 775 F.Supp. 1506, 1533-34 (D. Conn. 1991)
(discovery orders generally never present controlling
questions of law).
[¶9] Having first articulated the general
rule, the division in Adams also recognized that
when a discovery order " presents a question of law,
such as the availability of a corporation's
attorney-client privilege . . ., interlocutory review is
occasionally granted." 264 P.3d at 644. Because we are
the first division to accept interlocutory review of a
discovery order, we explain why, in our view, this is one of
those exceptionally rare cases, as contemplated by
Adams, that meets the exacting criteria for our
review under C.A.R. 4.2 and section 13-4-102.1, C.R.S. 2018.
A.
Applicable Law
[¶10] Section 13-4-102.1(1) provides:
The court of appeals, under rules promulgated by the Colorado
supreme court, may permit an interlocutory appeal of a
certified question of law in a civil matter from a district
court or the probate court of the city and county of Denver
if:
(a) The trial court certifies that immediate review may
promote a more orderly disposition or establish a final
...