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Maryland CSA serves up a win for Checkers

A Baltimore law firm’s claims of attorney-client privilege fell on deaf ears in the Court of Special Appeals, which ordered it to turn over documents a Checkers fast-food outlet is seeking in a lease dispute with its landlord.

The decision affirmed a ruling by retired Baltimore County Circuit Judge John F. Fader II, who said Gallagher, Evelius & Jones LLP had made it too difficult for him to determine whether the privilege applied.

Fader said Gallagher did not use the proper “set-up format” in its response to Checkers’ motion to compel; that is, the firm did not provide him with the information he needed in a way that would let him readily assess its claims that the documents were protected from disclosure during discovery, the pretrial information-sharing process.

The appeals court affirmed last week.

“The circuit court has broad discretion to fashion a remedy based on a party’s failure to abide by the rules of discovery,” retired Judge Raymond G. Thieme wrote, citing Warehime v. Dell.

Because the dispute was decided on procedural grounds, neither court reached the merits of the dispute, in which Checkers claimed and Gallagher denied that the firm had represented both sides earlier in their relationship, cancelling out claims of attorney-client privilege.

Ward B. Coe III, an attorney for Gallagher, said the firm is weighing its options with its client and has 30 days to petition the Court of Appeals.

“We’re reviewing the decision and we really can’t comment now…,” he said. “With attorney-client privilege issues, it’s the client’s privilege, so you have to confer with the client and make a decision about it.”

K. Donald Proctor of the Towson firm Proctor & McKee PA, who represented Checkers (also called Joppa Drive-Thru Inc.), said he was pleased with the outcome.

“The case will now be remanded and presumably these documents will be produced and we’ll have a trial on the merits” in the lease dispute, he said. “All this terminates is the dispute between Joppa Drive-Thru and Gallagher Evelius.”

Timing at issue

In February 1998, Checkers entered into a lease with the limited partnership that owned the Joppa Heights Shopping Center. The terms of the lease allowed the fast-food restaurant to extend for seven consecutive five-year terms, as long as it provided notice one year before the end of the lease.

In 2008, Joppa Perring LLC, represented by Gallagher, purchased the shopping center. The law firm contacted the president of Checkers, Philip Dorsey III, whom it had represented in other business partnerships, to request a tenant estoppel certificate — a statement by the tenant giving details about the status of the lease.

The document said the lease would expire on June 30, 2009, which Joppa Perring took to mean that the restaurant would need to renew the lease no later than July 1, 2008.

Checkers, however, did not request a renewal until July 23, 2008. Despite Dorsey’s statement in the estoppel certificate, Checkers argued that the lease did not end until Sept. 1, 2009.

In October 2008, Joppa Perring filed a complaint for declaratory judgment, seeking possession of the land given Checkers’ failure to renew on time.

Two months later, Checkers served Gallagher — which is not a party to the lease dispute — with a subpoena requesting paper and electronic documents related to the purchase of the shopping center and the estoppel certificate.

Gallagher objected to the subpoena, saying the documents are shielded by the attorney-client privilege and the work-product doctrine.

The firm produced a set of non-privileged documents and a log of privileged documents, listing the papers it had not included.

Common representation alleged

Checkers filed a motion for an order to compel production of the disputed documents on Feb. 18, 2009, arguing that Gallagher had represented both Joppa Perring and Checkers in the production of the estoppel certificate.

The fast-food restaurant claimed that under the Maryland Lawyers’ Rules of Professional Conduct, the documents would not be privileged “between commonly represented clients.” Checkers argued that because Gallagher had represented its president in previous matters in which he maintained a partnership interest, he believed the firm would be acting in his best interest.

Gallagher disputed the existence of an attorney-client relationship with Checkers.

The Baltimore County Circuit Court entered an order granting Checkers’ motion for an order to compel on April 7, 2009, based on a lack of information in Gallagher’s opposition to Checkers’ motion to compel.

What Gallagher and Joppa Perring have done “is to generalize about privileges and to state a background involving the attorney client privilege without giving me any ability to view what has been specifically requested followed by a factual statement as to why the court should limit discovery of this or that particular document because something is privileged, work product, etc,” Fader wrote.

The appellate court affirmed without addressing Gallagher’s argument that the “set-up format” Fader sought is required only for the motion to compel, not the response to that motion.

According to Proctor, Checkers has continued operating at the shopping center during the litigation under an agreement with the landlord.

WHAT THE COURT HELD

Case:

Gallagher Evelius & Jones LLP v. Joppa Drive-Thru Inc. d/b/a Checkers, No. 00356 Sept. Term 2009. Reported. Opinion by Thieme, J., retired, spec. assigned. Filed Oct. 28, 2010.

Issue:

Did the court err in granting Checkers’ motion for an order to compel production of documents, which Gallagher Evelius Jones alleged were subject to attorney-client and/or work product privilege?

Holding:

No; the circuit court has the inherent power to control and supervise discovery as it sees fit so long as it does not abuse its discretion.

Counsel:

Ward B. Coe III for appellant; K. Donald Proctor for appellee.

RecordFax#10-1028-01 (16 pages)