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Released Opinions

July 11, 2013

Today, the Supreme Court of Georgia released its last round of April Term opinions [UPDATE: one additional opinion will be released on Friday morning] at noon, including several important cases. Summaries of the two opinions within our coverage and the opinions are below.

S12G0552. SHEKHAWAT et al. v. JONES et al.

This case is a medical malpractice action against several doctors at the Medical College of Georgia. In 2003, a baby was transferred to MCG with a life-threatening condition. During surgery, the child had to be re-intubated on two occasions. Although the child survived the injury, he also suffered permanent disability, which the Jones allege was caused by lack of adequate oxygen during the intubation process. The doctors filed a motion for summary judgment that they were not liable because they were entitled to official immunity and the trial court granted summary judgment in their favor on that point.

The Court of Appeals (Miller, Ellington, Doyle) affirmed in part and reversed in part, finding that the doctors had not established that they were entitled to official immunity. While the doctors contended they were acting within the scope of their employment as MCG faculty, there was also evidence that the child was a private-pay patient, which could potentially remove official immunity. The Court of Appeals separately affirmed the trial court’s extension of qualified immunity to a resident who was also present. The doctors petitioned for certiorari.

On Monday, September 10, 2012, the Supreme Court granted the petition in a 6-1 vote (Hines, dissenting) to consider the following question:

  1. Did the Court of Appeals err in holding that Dr. Shekhawat and Dr. Matthews were not entitled to official immunity?

The case was heard on January 16, 2013.

On July 11, 2013, the Supreme Court unanimously reversed the decision of the Court of Appeals (Thompson, concurring specially). Writing for the Court, Chief Justice Hunstein explained that the sole issue used in determining whether a state employee may be liable as a defendant is whether that individual was acting within the scope of their employment. The Court said that its earlier decision in Keenan conflated the test for official immunity with the test for sovereign immunity and overruled it. Thus, the only question is the scope of the state employment, and because the doctors in question were acting within that scope, they are entitled to official immunity.

S12G1924. ST. SIMONS WATERFRONT, LLC v. HUNTER, MACLEAN, EXLEY & DUNN, P.C.

This case involves a legal malpractice action by St. Simons Waterfront, LLC (SSW) against Hunter Maclean, an approximately 60-lawyer firm located on Georgia’s coast. Hunter Maclean represented SSW in connection with the development and sale of condos on St. Simons Island. In late 2007 and early 2008, buyers began to rescind their agreements and SSW wanted to try to enforce the specific performance provision of the sales contract. During a conference call on February 18, 2008, SSW expressed its displeasure about Hunter Maclean’s hesitation to pursue specific performance. After that call, attorneys at Hunter Maclean consulted with their in-house counsel and decided to locate outside counsel to handle the buyer claims for SSW. Hunter Maclean also consulted with an outside attorney to assess the issues. During this time, Hunter Maclean continued to represent SSW in closings on the development. Hunter Maclean’s understanding of the relationship with SSW after the February 18 call is that Hunter Maclean was adverse to SSW and would need outside counsel. SSW’s representatives testified that Hunter Maclean never informed them that the firm had a conflict of interest.

After obtaining new counsel, SSW sued Hunter Maclean, alleging legal malpractice, breach of fiduciary duty, and fraud. SSW’s lawsuit relates specifically to Hunter Maclean’s alleged failures to advise SSW about the requirements of the Georgia Condominium Act and to properly draft the purchase agreement. During discovery, SSW sought a variety of documents and depositions of the outside attorney consulted by Hunter Maclean and their in-house general counsel. In September 2011, the trial court required the depositions of some attorneys involved, but not the outside lawyer consulted by Hunter Maclean. The trial court determined that the deposition of the in-house counsel was appropriate because he was a partner at the firm and the conflict of interest negated any attorney-client privilege. The trial court found that no attorney-client relationship existed between the in-house counsel and Hunter Maclean and that any documents prepared up until June 2008 (when the representation ended) are not protected by work product. The trial court granted a certificate of immediate review and the Court of Appeals granted Hunter Maclean’s interlocutory application. Appeals by both parties followed.

The Court of Appeals (Dillard, Ellington, Phipps) unanimously vacated the lower court decision. Recognizing that this issue had not been previously addressed by a Georgia appellate court, Judge Dillard first explained the basis for the attorney-client privilege, noting that the privilege applies to communications between corporate employees and corporate in-house counsel. But there is no similar bright-line rule for attorneys who consult their law firm’s in-house counsel about a potential malpractice action by a current client. The Court of Appeals rejected the bright-line rule, applied in some other jurisdictions, that imputes any conflict of interest to the in-house counsel (thus eliminating the privilege). Such an approach would require firms to retain outside counsel or hastily withdraw from representation of their clients. Instead, Georgia courts should follow a fact-specific approach that reviews whether the firm counsel represents outside clients, whether the firm counsel was involved in the representation at issue, the structure of any ad hoc relationship of someone serving as in-firm counsel, and other factors. In addition, there may be situations where a firm must withdraw from representation but such withdrawal would implicate other ethical duties. In those situations, informed consent from the client should be sought. The Court of Appeals then remanded the case for additional fact finding, including an examination of the totality of the circumstances.

SSW petitioned for certiorari. On November 27, 2012, the Supreme Court unanimously granted the petition for certiorari to consider the following issue:

  1. What rules govern a law firm’s assertion of the attorney-client privilege and work product doctrine to prevent disclosure of communications and documents with in-house counsel to its former client in a malpractice action?

The case was heard on February 8, 2013.

On July 11, 2013, the Supreme Court unanimously vacated the case and remanded with direction while upholding the existence of an in-house counsel privilege. Writing for the Court, Chief Justice Hunstein explained that the same analysis for privilege and work product protections should apply in law firm in-house counsel situations as in normal attorney-client relationships, and that the conflict of interest that may arise when a firm begins acting in its own defense does not affect the protections of privilege and work product. While recognizing the careful analysis of the Court of Appeals decision, the majority outlined a restructured framework that removed the Rules of Professional Conduct from the analysis. The Court explained that the factors used to determine whether an in-house counsel privilege exists are: whether “there is a genuine attorney-client relationship between the firm’s lawyers and in-house counsel; (2) the communications in question were intended to advance the firm’s interests in limiting exposure to liability rather than the client’s interests in obtaining sound legal representation; (3) the communications were conducted and maintained in confidence, and (4) no exception to the privilege applies.”

As a side note, Judge Dillard points us to a decision yesterday by the Massachusetts Supreme Court on the same issue, following a similar analytic approach.

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