Grubaugh v. Hon blomo/lawrence , 238 Ariz. 264 ( 2015 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
KAREN GRUBAUGH, a single woman, Petitioner,
v.
THE HONORABLE JAMES T. BLOMO, Judge of the SUPERIOR COURT
OF THE STATE OFARIZONA, in and for the County of MARICOPA,
Respondent Judge,
ANDREA C. LAWRENCE and JOHN DOE LAWRENCE, wife and
husband; HALLIER & LAWRENCE, P.L.C. d/b/a HALLIER LAW FIRM,
a public limited company; ABC CORPORATIONS I-X; BLACK and
WHITE PARTNERSHIPS AND/OR SOLE PROPRIETORSHIPS I-X; JOHN
DOES I-X and JANE DOES I-X, Real Parties in Interest.
No. 1 CA-SA 15-0012
FILED 9-22-2015
Petition for Special Action from the Superior Court in Maricopa County
No. CV 2013-007431
The Honorable James T. Blomo, Judge
JURISDICTION ACCEPTED, RELIEF GRANTED IN PART
COUNSEL
Sternberg & Singer Ltd., Phoenix
By Melvin Sternberg
And
Law Office of Paul M. Briggs PLLC, Phoenix
By Paul M. Briggs
Co-Counsel for Petitioner
Broening Oberg Woods & Wilson PC, Phoenix
By Donald Wilson, Sarah L. Barnes, Kevin R. Meyer
Counsel for Real Parties in Interest
OPINION
Presiding Judge John C. Gemmill delivered the opinion of the Court, in
which Judge Donn Kessler and Judge Kenton Jones joined.
G E M M I L L, Judge:
¶1 Plaintiff/petitioner Karen Grubaugh brought this legal
malpractice action against her former attorneys, defendants/real parties in
interest Andrea Lawrence and the Hallier Law Firm (collectively
“Lawrence”), seeking damages for allegedly substandard legal advice
given to Grubaugh during a family court mediation. Grubaugh challenges
the superior court’s ruling that the Arizona mediation process privilege
created by Arizona Revised Statutes (“A.R.S.”) section 12-2238(B) has been
waived or is otherwise inapplicable. We accept special action jurisdiction
and grant relief as described herein. Any communications between or
among Grubaugh, her attorney, or the mediator, as a part of the mediation
process, are privileged under § 12-2238(B). Based on the statute and the
record before us, that privilege has not been waived. Because these
communications are neither discoverable nor admissible, the superior court
is directed to dismiss any claims in the complaint dependent upon such
communications.
¶2 Grubaugh alleges that Lawrence’s representation of
Grubaugh in marital dissolution proceedings fell below the applicable
standard of care. Grubaugh’s malpractice claim is premised, in part, on the
distribution of certain business assets. Agreement regarding the method of
distribution, and the handling of the tax liability resulting therefrom, was
reached during a family court mediation involving Grubaugh, her ex-
husband, their attorneys, and the neutral mediator. Before formal
discovery began in this matter, Lawrence asked the superior court to order
that the A.R.S. § 12-2238(B) mediation privilege was waived as a result of
Grubaugh’s allegations of malpractice. Lawrence seeks to utilize as
evidence communications between herself and Grubaugh, occurring
during and after mediation, which led to Grubaugh’s ultimate acceptance
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Opinion of the Court
of the dissolution agreement. In the alternative, Lawrence moved to strike
Grubaugh’s allegations relating to the mediation if the court held the
pertinent communications are protected as confidential.
¶3 The superior court granted Lawrence’s motion in part,
concluding the mediation privilege was waived as to all communications,
including demonstrative evidence, between the mediator and the parties
and between Lawrence and Grubaugh. The court reasoned in part that the
privilege was not applicable in this instance because the statute did not
contemplate the precise issue presented. The court then ruled that
Lawrence’s alternative motion to strike was moot.
¶4 Grubaugh filed this special action challenging the court’s
order. Because this is a matter involving privilege and imminent disclosure
of potentially privileged information, remedy by appeal is inadequate and
we therefore accept special action jurisdiction. See Roman Catholic Diocese of
Phoenix v. Superior Court ex rel. Cnty. of Maricopa, 204 Ariz. 225, 227, ¶ 2, 62
P.3d 970, 972 (App. 2003); Ariz. Bd. of Med. Exam’rs v. Superior Court, 186
Ariz. 360, 361, 922 P.2d 924, 925 (App. 1996).
ARIZONA’S STATUTORY MEDIATION PROCESS PRIVILEGE
¶5 Arizona’s mediation process privilege is created by A.R.S.
section 12-2238(B):
The mediation process is confidential. Communications
made, materials created for or used and acts occurring during
a mediation are confidential and may not be discovered or
admitted into evidence unless one of the following exceptions
is met:
1. All of the parties to the mediation agree to the
disclosure.
2. The communication, material or act is relevant to a
claim or defense made by a party to the mediation
against the mediator or the mediation program arising
out of a breach of a legal obligation owed by the
mediator to the party.
3. The disclosure is required by statute.
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4. The disclosure is necessary to enforce an agreement to
mediate.
Subsection (C) of § 12-2238 provides further protection for a mediator
against being forced to testify or produce evidence in response to service of
process or subpoena:
Except pursuant to subsection B, paragraph 2, 3 or 4, a
mediator is not subject to service of process or a subpoena to
produce evidence or to testify regarding any evidence or
occurrence relating to the mediation proceedings. Evidence
that exists independently of the mediation even if the
evidence is used in connection with the mediation is subject
to service of process or subpoena.
¶6 When interpreting a statute, we look to the plain meaning of
the language as the most reliable indicator of legislative intent and
meaning. New Sun Bus. Park, LLC v. Yuma Cnty., 221 Ariz. 43, 46, ¶ 12, 209
P.3d 179, 182 (App. 2009); see also Maycock v. Asilomar Dev. Inc., 207 Ariz.
495, 500, ¶ 24, 88 P.3d 565, 570 (App. 2004). When the statute’s language is
“clear and unequivocal, it is determinative of the statute’s construction.”
Janson v. Christensen, 167 Ariz. 470, 471, 808 P.2d 1222, 1223 (1991). This
court will apply the clear language of a statute unless such an application
will lead to absurd or impossible results. City of Phoenix v. Harnish, 214 Ariz.
158, 161, ¶ 11, 150 P.3d 245, 248 (App. 2006).
¶7 The mediation process privilege was not waived when
Grubaugh filed a malpractice action against her attorney because none of
the four specific statutory exceptions in A.R.S. § 12-2238(B) is applicable.
The statute’s language is plain, clear, and unequivocal: The privileged
communications “are confidential and may not be discovered or admitted
into evidence unless one of the following exceptions is met.” A.R.S. § 12-2238(B)
(emphasis added). It provides for a broad screen of protection that renders
confidential all communications, including those between an attorney and
her client, made as part of the mediation process. Further, of the four
exceptions listed in the statute, none excludes attorney-client
communications from mediation confidentiality. The legislature could
have exempted attorney-client communications from the mediation process
privilege, but it did not do so. Cf. Fla. Stat. § 44.405(4)(a)(4) (West 2004)
(specifically exempting from the mediation privilege those
communications “[o]ffered to report, prove, or disprove professional
malpractice occurring during the mediation”).
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¶8 Our construction of this wide-reaching statute is confirmed
by complementary rules of court referencing it. Arizona’s Rules of Family
Law Procedure emphasize that “all communications” in the context of the
mediation are confidential and § 12-2238 is applicable: “Mediation
conferences shall be held in private, and all communications, verbal or written,
shall be confidential. . . . Unless specifically stated otherwise in these rules,
the provisions of A.R.S. § 12-2238 shall apply to any mediation conference
held in conformance with this rule.” Ariz. R. Fam. L. P. 67(A) (emphasis
added). Similarly, the Maricopa County Local Rules further express that
the only exceptions to mediation confidentiality are found in § 12-2238(B):
“Mediation proceedings shall be held in private, and all communications,
verbal or written, shall be confidential except as provided in A.R.S. § 12-2238(B).”
Ariz. Local R. Prac. Super. Ct. (Maricopa) 6.5(b)(1) (emphasis added).
¶9 The history of the mediation process privilege further
supports its application in this case. From 1991 to 1993, mediation
confidentiality was codified in A.R.S. § 12-134. The current statute was
created by an amendment in 1993. The 1991 statute differed significantly
from the current version by expressly limiting confidentiality to
“communications made during a mediation.” A.R.S. § 12-134 (West 1993)
(Emphasis added.) In contrast, the current statute states that the
“mediation process” is confidential. When the legislature alters the
language of an existing statute, we generally presume it intended to change
the existing law. State v. Bridgeforth, 156 Ariz. 60, 63, 750 P.2d 3, 6 (1988).
Therefore, by casting a wider net of protection over mediation-related
communications, acts, and materials, the legislature altered the statute by
increasing its reach.
¶10 In holding that the mediation process privilege had been
waived, the superior court reasoned that the situation at hand was
analogous to one in which a party impliedly waives the attorney-client
privilege. The mediation process privilege, however, differs from the
attorney-client privilege, which may be impliedly waived. See Church of
Jesus Christ of Latter-Day Saints v. Superior Court in & for Maricopa Cnty., 159
Ariz. 24, 29, 764 P.2d 759, 764 (App. 1988); see also State Farm Mut. Auto. Ins.
Co. v. Lee, 199 Ariz. 52, 56–57, ¶¶ 10–11, 13 P.3d 1169, 1173–74 (2000). The
attorney-client privilege originated at common law and was subsequently
codified by the Arizona legislature. At common law, the privilege was
impliedly waived when a litigant’s “course of conduct [was] inconsistent
with the observance of the privilege.” Bain v. Superior Court in & for
Maricopa Cnty., 148 Ariz. 331, 334, 714 P.2d 824, 827 (1986).
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¶11 Consistent with the common law, the codified attorney-client
privilege includes a broad waiver provision: “A person who offers himself
as a witness and voluntarily testifies with reference to the communications
. . . thereby consents to the examination of such attorney, physician or
surgeon.” A.R.S. § 12-2236. Moreover, there is no indication that the
legislature, when codifying the attorney-client privilege, intended to
abrogate the common law implied waiver of the privilege. See Church of
Jesus Christ of Latter-Day Saints, 159 Ariz. at 29, 764 P.2d at 764 (holding that
A.R.S. § 12-2236 does not abrogate common law forms of waiver); Carrow
Co. v. Lusby, 167 Ariz. 18, 21, 804 P.2d 747, 750 (1990) (“[A]bsent a
manifestation of legislative intent to repeal a common law rule, we will
construe statutes as consistent with the common law”); see also Wyatt v.
Wehmueller, 167 Ariz. 281, 284, 806 P.2d 870, 873 (1991) (explaining that if
the common law is to be “changed, supplemented, or abrogated by statute,”
such a change must be express or a necessary implication of the statutory
language).
¶12 In contrast to the attorney-client privilege, Arizona’s
mediation process privilege has no common law origin. It was created
entirely by the legislature. Therefore, this court must rely upon the
language of the statute to determine its meaning. Unlike waiver of the
attorney-client privilege under the statute and common law, the statutory
waiver provisions of the mediation process privilege are specific and
exclusive:
The mediation process is confidential. Communications
made, materials created for or used and acts occurring during
a mediation are confidential and may not be discovered or
admitted into evidence unless one of the following exceptions
is met.
A.R.S. § 12-2238(B). By expressly shielding the entire mediation process,
other than when an exception provided by the statute applies, § 12-2238(B)
“occup[ies] the entire field” of methods by which the mediation process
privilege might be waived. The statute therefore leaves no room for an
implied waiver under these circumstances. Cf. Church of Jesus Christ of
Latter-Day Saints, 159 Ariz. at 29, 764 P.2d at 764 (explaining that attorney-
client privilege statute allows room for implied waiver under the common
law).
¶13 The parties do not contend that the communications at issue
here come within any of the four exceptions specifically delineated within
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A.R.S. § 12-2238(B). In finding an implied waiver, the superior court
reasoned in part that the statute “did not contemplate the exact issue”
presented by this case. But we cannot reach the same conclusion in light of
the language of the statute, which does not allow us to infer the existence
of an implied waiver. See Morgan v. Carillon Inv., Inc., 207 Ariz. 547, 552, ¶
24, 88 P.3d 1159, 1164 (App. 2004) (explaining that even though the
legislature did not include a specific provision that would have been
beneficial, the court will not ”interpret” the statutes “to add such a
provision”), aff’d, 210 Ariz. 187, 109 P.3d 82 (2005). The privilege is therefore
applicable.
¶14 Additionally, a plain-language application of the statute in
this case does not produce an absurd result, but is supported by sound
policy. See State v. Williams, 209 Ariz. 228, 237, ¶ 38, 99 P.3d 43, 52 (App.
2004) (examining a rule’s policy implications in deciding whether its
application would lead to absurd results) See also State v. Estrada, 201 Ariz.
247, 251, ¶ 17, 34 P.3d 356, 360 (2001) (explaining that a result is “absurd”
when “it is so irrational, unnatural, or inconvenient that it cannot be
supposed to have been within the intention of persons with ordinary
intelligence and discretion” (internal quotation omitted)). By protecting all
materials created, acts occurring, and communications made as a part of the
mediation process, A.R.S. § 12-2238 establishes a robust policy of
confidentiality of the mediation process that is consistent with Arizona’s
“strong public policy” of encouraging settlement rather than litigation. See
Miller v. Kelly, 212 Ariz. 283, 287, ¶ 12, 130 P.3d 982, 986 (App. 2006). The
statute encourages candor with the mediator throughout the mediation
proceedings by alleviating parties’ fears that what they disclose in
mediation may be used against them in the future. Id. The statute similarly
encourages candor between attorney and client in the mediation process.
¶15 Another reason confidentiality should be enforced here is that
Grubaugh is not the only holder of the privilege. The privilege is also held
by Grubaugh’s former husband, the other party to the mediation. See A.R.S.
§ 12-2238(B)(1).1 The former husband is not a party to this malpractice
action and the parties before us do not claim he has waived the mediation
process privilege. It is incumbent upon courts to consider and generally
protect a privilege held by a non-party privilege-holder. See Tucson Medical
Center Inc. v. Rowles, 21 Ariz. App. 424, 429, 520 P.2d 518, 523 (App. 1974).
The former husband has co-equal rights under the statute to the
1 The mediator may also be a holder of the privilege, but we need not reach
that issue in this opinion.
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confidentiality of the mediation process. Although the superior court did
rule that the privilege was not waived as to communications between the
mediator and the former husband, waiving the privilege as to one party to
the mediation may have the practical effect of waiving the privilege as to
all. In order to protect the rights of the absent party, the privilege must be
enforced.
¶16 Accordingly, we hold that the mediation process privilege
applies in this case and renders confidential all materials created, acts
occurring, and communications made as a part of the mediation process, in
accordance with A.R.S. § 12-2238(B).
¶17 In her reply, Grubaugh identifies several classifications of the
communications at issue, asserting that some are covered by the mediation
process privilege while others are not. [Reply at 2] Rather than this court
undertaking to identify precisely the application of the mediation process
privilege to specific communications, it is more appropriate to allow the
superior court to determine, in the first instance, which of the
communications, materials, or acts are privileged under A.R.S. § 12-2238(B)
as part of the mediation process and which are not confidential under the
statute.
DISPOSITION OF MEDIATION-PRIVILEGED CLAIMS
¶18 In light of our determination that the mediation process
privilege has not been waived, it is necessary to address Lawrence’s
alternative argument. Lawrence cites Cassel v. Superior Court, 244 P.3d 1080
(Cal. 2011), for the proposition that claims involving confidential
mediation-related communications should be stricken from the complaint.
In Cassel, a client brought a malpractice action against his former attorneys,
claiming they coerced him into accepting an improvident settlement
agreement during the course of a pretrial mediation. 244 P.3d at 1085. The
client alleged the attorneys misrepresented pertinent facts about the terms
of the settlement, harassed him during the mediation, and made false
claims that they would negotiate an additional “side deal” to compensate
for deficits in the mediated settlement. Id. The court explained that absent
an absurd result or implication of due process rights, California’s mediation
privilege statute “preclud[ed] judicially crafted exceptions” to allow an
implied waiver of their express technical requirements.2 Id. at 1088. It held
2 In pertinent part, the California statute provides:
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that all communications, including attorney-client communications, were
confidential and undiscoverable if made “for the purpose of, in the course
of, or pursuant to, [the] mediation.” Id. at 1097. Accordingly, it granted the
attorneys’ motion in limine to exclude all evidence related to these
communications, id., even if that meant the former client would be unable
to prevail in his malpractice action, id. at 1094 (refusing to create an
exception to statute even when the “equities appeared to favor” it); see also
Alfieri v. Solomon, 329 P.3d 26, 31 (Or. Ct. App. 2014), review granted, 356 Or.
516 (explaining that a trial court “did not err in striking the allegations that
disclosed the terms of [a mediated] settlement agreement” because there
was no “valid exception to the confidentiality rules” governing the
agreement).
¶19 We agree with the reasoning of the California Supreme Court.
Application of the mediation process privilege in this case requires that
Grubaugh’s allegations dependent upon privileged information be stricken
from the complaint. To hold otherwise would allow a plaintiff to proceed
(a) No evidence of anything said or any admission made for
the purpose of, in the course of, or pursuant to, a mediation
or a mediation consultation is admissible or subject to
discovery, and disclosure of the evidence shall not be
compelled, in any arbitration, administrative adjudication,
civil action, or other noncriminal proceeding in which,
pursuant to law, testimony can be compelled to be given.
(b) No writing . . . prepared for the purpose of, in the course
of, or pursuant to, a mediation or a mediation consultation, is
admissible or subject to discovery, and disclosure of the
writing shall not be compelled, in any arbitration,
administrative adjudication, civil action, or other noncriminal
proceeding in which, pursuant to law, testimony can be
compelled to be given.
(c) All communications, negotiations, or settlement
discussions by and between participants in the course of a
mediation or a mediation consultation shall remain
confidential.
Cal. Evid. Code § 1119 (West 1997).
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with a claim, largely upon the strength of confidential communications,
while denying the defendant the ability to fully discover and present
evidence crucial to the defense of that claim. Cassel, 244 P.3d at 1096. A
privilege should not be invoked in a way that unfairly prevents one party
from defending against a claim of another. See Elia v. Pifer, 194 Ariz. 74, 82,
¶ 40, 977 P.2d 796, 804 (App. 1998). As already noted, the legislature could
have, but did not, create an exception to this privilege for attorney-client
communications and legal malpractice claims. Striking from the complaint
any claim founded upon confidential communications during the
mediation process is the logical and necessary consequence of applying the
plain language of this statutory privilege.
CONCLUSION
¶20 Arizona’s mediation process privilege promotes a strong
policy of confidentiality for the mediation process. The Arizona Legislature
specified the exceptions to the application of the privilege and left no room
for implied common-law waiver. The privilege applies under the facts of
this dispute. We therefore vacate the order of the superior court that
declared the privilege inapplicable. We also direct the superior court to
determine which communications are privileged and confidential under
A.R.S. § 12-2238 and to strike from the complaint and ensuing litigation any
allegation or evidence dependent upon such privileged communications.
:ama
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