r & Fellman, PC v. Affiniti Colorado, LLC

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
September 12, 2019
2019COA147
No.19CA0574, Kissinger & Fellman, PC v. Affiniti Colorado,
LLC— Attorneys and Clients — Attorney-Client Privilege;
Business Organizations — Corporations — Dissolution
Well-settled Colorado law holds that the attorney-client
privilege survives the death of a client. In this interlocutory appeal
of an order denying a motion for protective order based on the
attorney-client privilege, a division of the court of appeals considers,
as a matter of first impression, whether the privilege survives the
dissolution of a corporation. The division concludes, consistent
with the trending majority view, that the attorney-client privilege
does not survive a corporation’s dissolution when (1) no one with
the authority to assert or waive the privilege remains, and (2) there
are no ongoing post-dissolution proceedings. The division affirms
the district court’s order.
COLORADO COURT OF APPEALS 2019COA147
Court of Appeals No. 19CA0574
City and County of Denver District Court No. 18CV32340
Honorable Michael A. Martinez, Judge
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.
ORDER AFFIRMED
Division A
Opinion by JUDGE FREYRE
Welling and Tow, JJ., concur
Announced September 12, 2019
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
¶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 (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
1
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
1The parties dispute whether EAGLE-Net was properly formed as
an intergovernmental entity. EAGLE-Net asked the district court to
assume its status as an intergovernmental agency for the purpose
of resolving immunity, and we make the same assumption since it
does not affect the outcome. Because no one disputes that EAGLE-
Net had a board of directors, officers, and members, we refer to it as
a “corporation” for purposes of this appeal.
2
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.
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.
3
¶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
4
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
5
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
2 Affiniti did not challenge our decision to grant interlocutory review
under C.A.R. 4.2 in its response to the petition, nor did it argue
that review was improvidently granted.
6
compelling disclosure under the crime fraud exception did not
present a pure issue of law); Fed. Trade Comm’n v. Stefanchik, 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
7
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 disposition of the litigation;
and
(b) The order involves a controlling and
unresolved question of law.
¶ 11 Similarly, C.A.R. 4.2 provides, in relevant part, as follows:
(a) Discretionary Interlocutory Appeals.
Upon certification by the trial court, or
stipulation of all parties, the court of appeals
may, in its discretion, allow an interlocutory
appeal of an order in a civil action. . . .
(b) Grounds for Granting Interlocutory Appeal.
Grounds for certifying and allowing an
interlocutory appeal are:
(1) Where immediate review may promote a
more orderly disposition or establish a final
disposition of the litigation; and
8
(2) The order involves a controlling and
unresolved question of law. For purposes of
this rule, an “unresolved question of law” is a
question that has not been resolved by the
Colorado Supreme Court or determined in a
published decision of the Colorado Court of
Appeals, or a question of federal law that has
not been resolved by the United States
Supreme Court.
¶ 12 Discretionary review, therefore, may be granted when (1)
immediate review may promote a more orderly disposition or
establish a final disposition of the litigation; (2) the order involves a
controlling question of law; and (3) that question of law is
unresolved. Indep. Bank v. Pandy, 2015 COA 3, ¶ 8, aff’d, 2016 CO
49; Kowalchik v. Brohl, 2012 COA 25, ¶ 13.
B. Application
¶ 13 Because there is little dispute that the third factor is satisfied,
we address it first, before turning to the other two factors.
1. Unresolved Question of Law
¶ 14 The question certified by the district court — whether the
attorney-client privilege survives the dissolution of a corporation —
does not involve an exercise of the court’s discretion, but instead
concerns purely a question of law. Adams, 264 P.3d at 644. The
parties agree that neither our supreme court nor a division of this
9
court has decided this issue, and as we explain in the merits
section, most states have not decided this issue either. Therefore,
we conclude that Fellman’s petition presents an unresolved
question of law under C.A.R. 4.2 and section 13-4-102.1.
2. More Orderly Disposition
¶ 15 We next consider whether our review may promote a more
orderly disposition or establish a final disposition of the litigation.
Fellman asserts, and Affiniti does not dispute, that immediate
review may promote a more orderly disposition of the litigation
because the damage that could result from the disclosure of the
privileged communications could not be undone on direct appeal.
Wesp, 33 P.3d at 194 (“[W]hen a secret is out, it is out for all time,
and cannot be caught again like a bird, and put back in its cage.”)
(citation omitted). While that is certainly true, it alone is not
enough to satisfy this factor.
¶ 16 While not resolving the entire litigation, review of this privilege
issue will lead to a more orderly disposition of the case because of
the central role it plays in resolving both the qualified immunity
issue and the merits of Affiniti’s negligent misrepresentation claim
10
against Fellman. Indeed, the disclosure of prior communications
between Fellman and EAGLE-Net will directly affect the court’s
resolution of the immunity issue, thereby determining whether the
lawsuit may proceed at all. As well, the district court’s legal finding
that no attorney-client privilege exists means that attorney-client
communications related to the merits — negligent
misrepresentation — will also be substantially affected. Under
these circumstances, we conclude that interlocutory review of this
legal question may — and almost certainly will — promote a more
orderly disposition of the litigation and that the petition satisfies the
requirements of C.A.R. 4.2(b)(1) and section 13-4-102.1(1)(a).
3. Controlling
¶ 17 No division of this court has developed a single definition of
“controlling” for purposes of a C.A.R. 4.2 petition. Indep. Bank, ¶ 9.
Rather, “whether an issue is ‘controlling’ depends on the nature and
circumstances of the order being appealed.” Id. (citing Adams, 264
P.3d at 645 n.8). Factors to be considered in making this
determination include: (1) whether the issue is one of widespread
public interest, see Adams, 264 P.3d at 646; (2) whether the issue
11
would avoid the risk of inconsistent results in different proceedings,
see Shaw Constr., LLC v. United Builder Servs., Inc., 2012 COA 24,
¶ 12, overruled on other grounds by Goodman v. Heritage Builders,
Inc., 2017 CO 13, ¶ 11; Green v. Duke Power Co., 290 S.E.2d 593,
596 (N.C. 1982) (interlocutory appeal proper due to the possibility
that a party will be prejudiced by different juries in separate trials
rendering inconsistent verdicts on the same factual issues); (3)
whether the issue is “case dispositive,” see Kowalchik, ¶ 15 (an
issue is controlling where a failure to join an indispensable party
who cannot feasibly be joined subjects a plaintiff’s complaint to
dismissal and thus, is potentially case-dispositive); and (4) whether
the case involves “extraordinary facts,” Adams, 264 P.3d at 646.
¶ 18 For the following confluence of reasons, we conclude that the
question of law presented here is “controlling.” First, as noted
above, the availability or unavailability of the privilege will
determine not only the outcome of the ancillary immunity
proceeding, but it will also be central to resolving the outcome of
the negligent misrepresentation claim. Therefore, our review of this
legal issue may be “case-dispositive.” Kowalchik, ¶ 15.
12
¶ 19 Additionally, novel attorney-client privilege issues are issues of
“great significance to our legal system,” a relevant factor for
accepting interlocutory review in this court and in our supreme
court. Wesp, 33 P.3d at 194 (granting interlocutory review under
C.A.R. 21); Adams, 264 P.3d at 646 (finding issue not controlling in
part because plaintiffs did not present an issue of widespread
public interest).
¶ 20 Finally, while we agree that interlocutory review of discovery
orders is almost never warranted, precedent exists for reviewing the
precise legal issue presented here. See Garner v. Wolfinbarger, 430
F.2d 1093, 1096-97 (5th Cir. 1970) (the availability of the corporate
attorney-client privilege as against its shareholders is a “controlling
question of law” and proper for interlocutory review under 28 U.S.C.
§ 1292(b)); Radiant Burners, Inc. v. Am. Gas Ass’n, 320 F.2d 314,
317 (7th Cir. 1963) (accepting review under 28 U.S.C. § 1292(b)
based on district court’s finding that corporation’s right to claim the
attorney-client privilege is a controlling question of law); Red Vision
Systems, Inc. v. Nat’l Real Estate Info. Servs., L.P., 108 A.3d 54, 58-
59 (Pa. Super. Ct. 2015) (accepting interlocutory review of whether
13
the corporate attorney-client privilege survives dissolution under
Pennsylvania’s three-part standard); see also Mohawk Indus., Inc. v.
Carpenter, 558 U.S. 100, 110-11 (2009) (“[I]n extraordinary
circumstances,” 28 U.S.C. § 1292(b) creates an escape hatch from
the finality rule for “particularly injurious or novel privilege
ruling[s]” that “involve[] . . . new legal question[s] or [are] of special
consequence.”).
¶ 21 For these reasons, we conclude that this is one of those
exceptionally rare cases described in Adams, where the discovery
issue presented involves a controlling issue of law, and that it meets
the criteria for our review under C.A.R. 4.2 and section 13-4-102.1.
III. The Attorney-Client Privilege Does Not Survive a Corporation’s
Dissolution If All Proceedings Have Been Concluded and No
One Remains to Act on the Corporation’s Behalf
¶ 22 Fellman challenges the court’s ruling on three grounds. First,
it contends that because the attorney-client privilege applies equally
to corporations and individuals in Colorado, and because Colorado
law presumes the privilege survives the death of an individual, the
privilege must necessarily survive the dissolution of the corporation.
To hold otherwise, it continues, would contravene well-settled
14
precedent. As part of this contention, Fellman further asserts that
Mr. Fellman was authorized to invoke the privilege because of his
status as former general counsel. Fellman next contends that the
court failed to apply the public policy considerations raised in the
reconsideration motion. Finally, it contends that the district court
did not properly manage discovery. We address and reject each
preserved contention.
A. Standard of Review
¶ 23 We review a court’s discovery ruling for an abuse of discretion.
Bond v. Dist. Court, 682 P.2d 33, 40 (Colo. 1984). We will not
reverse a court’s ruling unless its “decision is manifestly arbitrary,
unreasonable, or unfair, or [it] applies incorrect legal standards.”
Medina v. Conseco Annuity Assurance Co., 121 P.3d 345, 347 (Colo.
App. 2005). This standard of review also applies to a district court’s
conclusions regarding the attorney-client privilege. Black v. Sw.
Water Conservation Dist., 74 P.3d 462, 468 (Colo. App. 2003); see
also Fox v. Alfini, 2018 CO 94, ¶¶ 14, 17, 18 (a district court’s
decision of whether attorney-client privilege applies in the discovery
context is reviewed for an abuse of discretion).
15
B. Attorney-Client Privilege
¶ 24 The attorney-client privilege “protects communications
between attorney and client relating to legal advice.” All. Constr.
Sols., Inc. v. Dep’t of Corrs., 54 P.3d 861, 864 (Colo. 2002). It is
codified in section 13-90-107(1)(b), C.R.S. 2018, which provides as
follows:
An attorney shall not be examined without the
consent of his client as to any communication
made by the client to him or his advice given
thereon in the course of professional
employment; nor shall an attorney’s secretary,
paralegal, legal assistant, stenographer, or
clerk be examined without the consent of his
employer concerning any fact, the knowledge
of which he has acquired in such capacity.
¶ 25 The privilege recognizes that attorneys cannot provide effective
legal advice unless the client reveals all pertinent circumstances of
the case, no matter how embarrassing or inculpatory those facts
are. Wesp, 33 P.3d at 196. Indeed, “the right of parties within our
justice system . . . is rendered meaningless unless communications
between attorney and client are ordinarily protected from later
disclosure without client consent.” Id. And the privilege is
consistent with Rule 1.6(a) of the Colorado Rules of Professional
Conduct requiring that attorneys “not reveal information relating to
16
the representation of a client,” without the client’s informed consent
or unless disclosure is otherwise permitted. The privilege
encompasses confidential communications made by the client to an
attorney and communications from the attorney to the client.
People v. Tippett, 733 P.2d 1183 (Colo. 1987). It rests with the
client and can only be waived by the client. People v. Trujillo, 144
P.3d 539, 542 (Colo. 2006). The burden of establishing the privilege
is on the party seeking to invoke it. Fox, ¶ 19.
¶ 26 Well-settled law presumes that the attorney-client privilege
survives the death of the client because “[k]nowing that
communications will remain confidential even after death
encourages the client to communicate fully and frankly with
counsel. . . . Posthumous disclosure of such communications may
be as feared as disclosure during the client’s lifetime.” Wesp, 33
P.3d at 200 (quoting Swidler & Berlin, 524 U.S. at 407).
¶ 27 The attorney-client privilege applies to corporations and public
entities. See All. Constr. Sols., 54 P.3d at 865-70; see also Ross v.
City of Memphis, 423 F.3d 596, 601 (6th Cir. 2005) (collecting cases
holding that governmental entities may invoke the attorney-client
17
privilege in civil suits and relying on corporate privilege principles to
define the privilege available to governmental entities). But unlike
the individual client, a corporation cannot speak directly with its
lawyers — it must do so through its agents. Upjohn Co. v. United
States, 449 U.S. 383, 390 (1981); Genova, 72 P.3d at 462. Thus, a
corporation may only assert or waive the attorney-client privilege
through individuals empowered to act on its behalf. Genova, 72
P.3d at 462 (citing Commodity Futures Trading Comm’n v.
Weintraub, 471 U.S. 343, 348 (1985)). Indeed, the authority to
assert and waive a solvent corporation’s attorney-client privilege
rests with its current management. Id.
C. Posthumous Attorney-Client Privilege
¶ 28 Fellman urges us to follow the well-settled general rule that
the privilege survives the death of a natural person, but
acknowledges that whether the privilege survives the dissolution of
a corporation is less settled. See In re Grand Jury Subpoena # 06-1,
274 F. App’x 306, 309 (4th Cir. 2008) (whether “the corporate
attorney-client privilege survives the dissolution of the corporate
18
entity” is an “unsettled legal question”). Thus, we begin with the
well-settled jurisprudence.
¶ 29 In Swidler & Berlin, 524 U.S. at 410, the United States
Supreme Court acknowledged that the attorney-client privilege is
“one of the oldest recognized privileges in the law” and held that it
survives the death of a client. In that case, an individual sought
legal advice concerning investigations related to the firings of White
House Travel Office employees. Id. at 401. The individual later
committed suicide, and a federal grand jury issued a subpoena for
the attorney’s notes. Id. at 402. In the action to enforce the
subpoena, the district court concluded that the notes were
protected by the attorney-client and work-product privileges. Id.
¶ 30 The appellate court reversed and concluded that the
posthumous attorney-client privilege was not absolute in the
criminal context. Id. It found “a posthumous exception to the
privilege for communications whose relative importance to
particular criminal litigation is substantial” and applied the
exception to enforce the subpoena. Id.
19
¶ 31 The Supreme Court disagreed and reversed. Id. at 410. It
recognized that a posthumous privilege, subject to a few exceptions,
was well settled at common law, and found that “a contrary rule
would be a modification of the common law.” Id. at 407. The Court
then discussed the general rationale for the posthumous privilege,
explaining that it encourages frank and open communication and
that “[c]lients may be concerned about reputation, civil liability, or
possible harm to friends or family.” Id. at 407. It held that because
these considerations would be undermined if the posthumous
privilege did not apply in criminal cases, no such exception existed.
Id. at 408. The Colorado Supreme Court adopted this rule in Wesp,
33 P.3d at 197. Thus, both cases reasoned that a posthumous
privilege was justified to (1) ensure full and frank communication
between clients and attorneys; (2) protect a client’s reputation; (3)
avoid civil liability; and (4) avoid embarrassment and potential
harm to friends and family. Swidler & Berlin, 524 U.S. at 407;
Wesp, 33 P.3d at 200.
¶ 32 These justifications, however, do not apply with equal force to
defunct corporations for several reasons. First, while frank and full
20
communications are undoubtedly important between corporations
and their attorneys, a corporation’s privilege is held by its
managers, who often change over time. Thus, no individual
manager can be assured that future managers will not waive the
privilege and reveal confidences.
¶ 33 The United States Supreme Court alluded to this distinction in
Weintraub, 471 U.S. at 345. There, the Court considered whether a
bankruptcy trustee could waive a dissolved corporation’s attorney-
client privilege in bankruptcy proceedings. Id. It noted that
because directors and managers change, and the right to assert or
waive the privilege applies only to current directors and managers,
“[d]isplaced managers may not assert the privilege over the wishes
of current managers, even as to statements that the former might
have made to counsel concerning matters within the scope of their
corporate duties.” Id. at 349. Consequently, even frank and open
communications between corporate managers and their attorneys
are subject to disclosure by future management, undermining this
reason for presuming a “posthumous” privilege following a
corporation’s dissolution.
21
¶ 34 As well, corporations do not have friends or family who could
be embarrassed or harmed, nor do they have a reputation to protect
following dissolution. Red Vision Sys., Inc., 108 A.3d at 67-68
(citing Gilliland v. Geramita, No. 2:05-CV-01059, 2006 WL 2642525,
at *4 (W.D. Pa. Sept. 14, 2006)). Further, unlike an individual,
whose estate can be sued civilly, once a corporation is fully
dissolved, any suit brought against it must be filed within two
years. § 7-90-911, C.R.S. 2018. As one federal district court has
noted,
[a] dissolved corporation does not have the
same concerns as a deceased natural person
and therefore has less need for the privilege
after dissolution is complete. As there are
usually no assets left and no directors, the
protections of the attorney-client privilege are
less meaningful to the typical dissolved
corporation. Moreover, because the
attorney-client privilege has the effect of
withholding relevant information from the
factfinder, it should be applied only when
necessary to achieve its limited purpose of
encouraging full and frank disclosure by the
client to his or her attorney.
City of Rialto v. U.S. Dep’t of Def., 492 F. Supp. 2d 1193, 1200 (C.D.
Cal. 2007); see also Sec. & Exch. Comm’n v. Carrillo Huettel LLP, No.
13 Civ. 1735(GBD)(JCF), 2015 WL 1610282, at *2 (S.D.N.Y. Apr. 8,
22
2015) (“[T]here is no ‘tradition’ of the privilege surviving the demise
of a corporation.”); Trading Techs. Int’l, Inc. v. GL Consultants, Inc.,
Civ. A. Nos. 05-4120, 05 C 5164, 2012 WL 874322, at *4 (N.D. Ill.
Mar. 14, 2012) (corporation dissolved for nearly ten years could not
assert privilege); Lopes v. Vieira, 688 F. Supp. 2d 1050, 1068 (E.D.
Cal. 2010), on reconsideration, 719 F. Supp. 2d 1199 (E.D. Cal.
2010) (shell corporation lacking management did not retain the
power to assert the attorney-client privilege); TAS Distrib. Co. v.
Cummins Inc., No. 07-1141, 2009 WL 3255297, at *2 (C.D. Ill. Oct.
7, 2009) (privilege did not survive corporation’s dissolution); John
W. Gergacz, Attorney-Corporate Client Privilege § 2:8, Westlaw (3d
ed. database updated Mar. 2019) (explaining that the rationale for
the “posthumous” privilege discussed in Swidler & Berlin does not
apply to defunct corporations and suggesting a new presumption
that the privilege does not survive the dissolution of a corporation).
¶ 35 Fellman appears to concede that the only policy reason
supporting the “posthumous” privilege for a dissolved corporation is
to encourage full and frank communications between lawyers and
clients. And it argues that our supreme court’s failure to recognize
23
a “manifest injustice exception” to the privilege in Wesp, 33 P.3d at
200, precludes us from finding any exception to the “posthumous
privilege” presumption here. We are not persuaded.
¶ 36 Rebuttable presumptions, by their very nature, are not
absolute. Cf. Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 105 n.1
(Colo. 1992) (although there is a presumption that an employee is
hired for an indefinite period, it is not absolute and can be
rebutted). Our supreme court rejected the manifest injustice
exception because it was “at odds with the purposes of the
privilege.” Wesp, 33 P.3d at 201. As in Wesp, we reject a presumed
“posthumous” privilege for dissolved corporations because the
reasons justifying an individual’s posthumous privilege simply do
not apply with anything close to equal force to a dissolved
corporation and are outweighed by the truth-seeking goals of the
justice system. Therefore, we conclude that the “posthumous”
privilege articulated in Wesp does not presumptively apply to
dissolved corporations.
¶ 37 Other jurisdictions that have considered this question have
concluded that, although the privilege does not generally survive
24
the dissolution of a corporation, limited post-dissolution
circumstances exist where an individual with the authority to act
on behalf of a corporation may invoke or waive the privilege. We
consider these cases and conclude that in this case, no one with the
authority to act on behalf of EAGLE-Net remains to invoke or waive
the privilege.
¶ 38 In Gilliland, 2006 WL 2642525, the case on which the district
court relied, a federal district court considered the same legal issue
under similar circumstances. There, plaintiffs sued a corporation
for making misrepresentations that induced them to purchase the
corporation’s worthless stock. Id. at *1. At the time of the suit, the
corporation had “ceased operations” and was “for all practical
purposes out of business,” but it had not been dissolved. Id.
Corporate counsel was joined as a defendant, and the plaintiffs
sought discovery of communications related to the representation.
Id. Counsel asserted the privilege. Id. The court concluded that
the privilege belonged to the corporation, the burden of establishing
the privilege was on the party asserting it, and because there was
25
no one left with authority to assert the privilege, the
communications had to be produced. Id. at *3-4.
¶ 39 As noted by the district court here, the “trending majority
view” in other jurisdictions follows the rule that the attorney-client
privilege does not survive a corporation’s dissolution if there is no
one with the authority to assert it. See Sec. & Exch. Comm’n v.
Pence, No. 17-23744-MC-MORENO, 2017 WL 5624271, at *3 n.3
(S.D. Fla. Nov. 20, 2017) (privilege did not survive corporation’s
dissolution); Carrillo Huettel LLP, 2015 WL 1610282, at *4 (where
the business license had expired and the corporate charter was
revoked, no privilege remained because the entities had no one to
assert it); TAS Distrib., 2009 WL 3255297, at *2 (privilege did not
survive corporation’s dissolution); City of Rialto, 492 F. Supp. 2d at
1200 (corporation dissolved fifty years earlier could not assert the
privilege); Lewis v. United States, No. 02-2958 B/AN, 2004 WL
3203121, at *4 (W.D. Tenn. Dec. 7, 2004) (defunct entity had no
assets to protect). And the reasoning of Gilliland has been cited
with approval and adopted by other courts. See Red Vision Sys.,
Inc., 108 A.3d at 65 (collecting cases); see also Restatement (Third)
26
of the Law Governing Lawyers § 73 cmt. k (Am. Law Inst. 2000)
(“When a corporation or other organization has ceased to have a
legal existence such that no person can act in its behalf, ordinarily
the attorney-client privilege terminates . . . .”).
¶ 40 Fellman urges us to follow a different line of cases upholding
the attorney-client privilege post-dissolution. See City of Rialto, 492
F. Supp. 2d at 1201 (the general rule that a dissolved corporation
cannot assert privilege does not apply to a successor corporation);
Reilly v. Greenwald & Hoffman, LLP, 127 Cal. Rptr. 3d 317, 324
(Cal. Ct. App. 2011) (absent a waiver from the corporate client, the
attorney must assert the privilege); Travelers of N.J. v. Weisman, No.
L-16977-06, 2011 WL 519920, at *7 (N.J. Super. Ct. App. Div. Feb.
16, 2011) (unpublished opinion) (there was no time limit on the
attorney-client privilege); Randy Int’l Ltd. v. Automatic Compactor
Corp., 412 N.Y.S.2d 995, 997 (N.Y. Civ. Ct. 1979) (a defunct
corporation may still assert attorney-client privilege). But these
cases are distinguishable, because unlike Gilliland and this case,
they involved ongoing post-dissolution proceedings where a person
27
associated with those proceedings possessed the authority to invoke
or waive the privilege on behalf of the dissolved corporation.
¶ 41 For example, in Reilly, the dissolved corporation was going
through windup proceedings. 127 Cal. Rptr. 3d at 324. The court
held that “the persons authorized to act on the dissolved
corporation’s behalf during the windup process — its ongoing
management personnel — should be able to assert the privilege.”
Id. (quoting Favila v. Katten Muchin Rosenman LLP, 115 Cal. Rptr.
3d 274, 298 (Cal. Ct. App. 2010)).
¶ 42 Likewise, in Weisman, the court held that the attorney-client
privilege could be invoked by “successors, assigns or trustees in
dissolution,” even after dissolution. 2011 WL 519920, at *7.
However, that case did not involve a dissolved corporation and
therefore it did not address situations where there are no
successors, assigns, or trustees.
¶ 43 Moreover, in Randy, the court stated that the attorney-client
privilege survived even if the corporation was no longer functioning
or operating because, under New York law, “the privilege may be
raised by anyone,” even former attorneys. 412 N.Y.S.2d at 997.
28
However, Randy was decided before the Supreme Court’s decision
in Weintraub, which held that a corporation’s bankruptcy trustee,
and not the bankrupt corporation’s former directors, holds the
privilege. Weintraub, 471 U.S. at 353-55.
¶ 44 We reject Fellman’s assertion that these cases are contrary to
the general rule that the privilege does not survive dissolution and
instead conclude that they represent exceptions to the general rule.
As recognized by the court in Red Vision Systems, Inc., “the
disparate results turn not upon the application of different rules of
law, but upon differences in facts.” 108 A.3d at 65. “The key fact is
whether the corporation is ‘dead’ as opposed to being in some other
state, such as a windup phase, bankruptcy or liquidation, or having
merged into or been acquired by a successor.” Id.
¶ 45 Applying the rule and its exceptions here, we note first that
Fellman admitted in the district court that EAGLE-Net has been
dissolved, that it no longer represents EAGLE-Net, and that
“EAGLE-Net’s dissolution in 2017 indicates EAGLE-Net’s inability to
consent to having” Fellman assert or waive the privilege. No one
asserts that EAGLE-Net is still in windup, bankruptcy, or similar
29
proceedings. 3 Therefore, the district court’s finding that EAGLE-Net
is a dissolved corporation with no management to act on its behalf
is supported by the record.
¶ 46 We next reject Fellman’s related contention that, as
EAGLE-Net’s former general counsel, Fellman possesses the
authority to invoke the privilege for EAGLE-Net. It relies on the
exceptions noted above finding that a successor-in-interest,
bankruptcy trustee, person managing windup, or statutory
liquidator retains the authority to invoke or waive the privilege
during post-dissolution proceedings. Fellman asks us to create a
“former general counsel” exception without citing any authority in
support. We decline this request because it is inconsistent with
existing precedent precluding former corporate directors and
managers from invoking the corporation’s attorney-client privilege.
See Weintraub, 471 U.S. at 343; Genova, 72 P.3d at 463. And, it is
inconsistent with the Supreme Court’s holding that a former
3 Although Fellman briefly mentions that dissolved corporations can
sue and be sued in Colorado after dissolution, it does not develop
this argument, so we do not consider it further. See Holley v.
Huang, 284 P.3d 81, 87 (Colo. App. 2011) (declining to address
undeveloped contentions).
30
manager cannot assert the privilege as a shield to protect his or her
own interest. Weintraub, 471 U.S. at 353-54.4 Accordingly, we
conclude that Mr. Fellman lacks the authority to invoke the
privilege.5
D. Public Policy Claims
¶ 47 Fellman contends that the district court ignored important
public policy reasons supporting the survival of the privilege after
the dissolution of an intergovernmental agency. But Fellman
conceded that this argument was first raised in its motion to
reconsider saying, “We apologize to the Court, but Defendants’
4 We do not consider Fellman’s argument, made for the first time at
oral argument, that Mr. Fellman was part of EAGLE-Net’s
management. See Rucker v. Fed. Nat’l Mortg. Ass’n, 2016 COA 114,
¶ 35 (declining to address argument first raised during oral
argument).
5 We reject Fellman’s assertion that Colo. RPC 1.6 requires
corporate counsel to invoke the privilege, because the rule permits
disclosure when the attorney must “comply with other law or a
court order.” Colo. RPC 1.6(b)(8). Mr. Fellman satisfied his ethical
obligation by filing the motion for protective order. Cf. Lewis v.
United States, No. 02-2958 B/AN, 2004 WL 3203121, at *1 (W.D.
Tenn. Dec. 7, 2004) (ethical obligations satisfied by filing motion to
quash); Red Vision Sys., Inc. v. Nat’l Real Estate Info. Servs., L.P.,
108 A.3d 54, 69 (Pa. Super. Ct. 2017) (although an attorney sought
to invoke the privilege, based on his professional requirements, he
did not meet the burden to invoke it and therefore attorney-client
privilege was inapplicable).
31
briefs did not fully address broader public policy implications
regarding EAGLE-Net’s status as a public entity.” Therefore, we
conclude this argument is waived. See Landmark Towers Ass’n v.
UMB Bank, N.A., 2018 COA 100, ¶ 45 (argument raised for the first
time in motion for reconsideration was “too late”); Snipe v. Am.
Family Mut. Ins. Co., 134 P.3d 556, 557 (Colo. App. 2006)
(explaining that because arguments were either not raised in the
trial court or raised for the first time in a motion for
reconsideration, they were not timely raised and would not be
considered on appeal).
E. Alleged Mishandling of Discovery
¶ 48 Finally, we reject Fellman’s argument that the district court
mishandled discovery by not conducting a balancing test of the
privacy interests at stake or conducting an in camera review of the
documents. Because this is beyond the scope of our C.A.R. 4.2
order, we do not address it. See Adams v. Corrs. Corp. of Am., 264
P.3d 640, 644 (Colo. App. 2011) (“Where the appeal would address
only whether the trial court had abused its discretion in a discovery
matter, interlocutory review is generally not allowed.”).
32
IV. Conclusion
¶ 49 The order is affirmed.
JUDGE WELLING and JUDGE TOW concur.
33