HLC Properties v. Sup. Ct. (MCA) 9/29/03 CA2/5

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B167458

Case Date: 09/29/2003

Preview:Filed 9/29/03

CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION FIVE

HLC PROPERTIES LIMITED, et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY,

B167458 (Los Angeles County Super. Ct. No. SC062601)

OPINION Respondent; MCA RECORDS, INC., et al., Real Parties in Interest.

ORIGINAL PROCEEDINGS; petition for extraordinary writ. Terry B. Friedman, Judge. Petition granted. Girardi & Keese, Thomas V. Girardi, Howard B. Miller; Law Offices of Mark A. Brodka and Mark A. Brodka for Petitioner. No appearance on behalf of Respondent. Irell & Manella, Steven A. Marenberg, Steve Kang and Philip M. Kelly for Real Parties in Interest.

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On this petition for a writ of mandate we hold that an entity that is the legal successor of a deceased individual's ongoing business organization is, under Evidence Code section 953, subdivision (d),1 the holder of the attorney-client privilege that belonged to that business organization. FACTS AND PROCEDURAL HISTORY A. Background Facts Petitioner HLC Properties, Limited (HLC)2, is a limited partnership formed in 1980 for the purpose of managing the entertainment empire created by Harry Lillis Crosby, professionally known as Bing Crosby (Crosby), who died in 1977. Crosby's personal representative and widow transferred to HLC his interests in various record masters, television programs, motion pictures, radio programs, music compositions, music publishing agreements, literary works, and the contract rights related to those interests, as well as the right of publicity. The general partner of HLC, Hillsborough Productions, Inc., was to manage the operations, including making all creative and business decisions about the interests transferred to HLC. Before Crosby's death, the business interests transferred to HLC were owned by Crosby but managed and operated by a staff of employees that had managed Crosby's holdings for decades. Basil Grillo (Grillo), the manager and accountant who had run Crosby's organization for over 30 years, said that when he first began working for Crosby in 1945 or 1946, the Crosby operation was already so extensive that six months
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All further statutory references are to the Evidence Code unless otherwise indicated. Thomas E. O'Sullivan as trustee for the Wilma Wyatt Crosby Trust, a plaintiff in the underlying action, is also named as a petitioner but did not actively participate in this proceeding.
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passed before he even met Crosby. That operation included musicians, singers, writers and agents, all of whom were involved in the creative and business aspects of records, motion pictures and radio and television programs. It also had interests in other fields. At times, business activities operated within formal entities. For example, Bing Crosby Productions was engaged in motion picture and television production. Bing Crosby Enterprises, Inc., was formed, but was later liquidated in the 1950's. The various businesses and entertainment interests of Crosby generally were managed under the name "Bing Crosby Enterprises," but that operation was not a formal entity. It appears that any formal business entity that Crosby utilized for his operations was dissolved or otherwise liquidated, for there is no suggestion of the existence of such an entity at his death. There is no indication of how or in what manner those entities were terminated--whether by a formal dissolution or informal liquidation. Bing Crosby Enterprises continued operating after Crosby's death, and Crosby's personal representative continued to employ its staff and maintain its offices. In 1981, the probate court approved the transfer of the entertainment assets managed by Bing Crosby Enterprises to HCL, which, according to the HLC Properties, Ltd. Limited Partnership Agreement, was to "engage in the business of managing and controlling the property and rights." B. The current dispute On July 31, 2000, HLC filed a lawsuit against real parties in interest MCA Records, Inc., GRP Records, Inc., UMG Recordings, Inc., MCA, Inc., and Universal Studios, Inc. (collectively MCA), alleging they had underpaid royalties due on several recording contracts Crosby had entered into with MCA's predecessors in interest. In the course of pretrial discovery, MCA propounded a demand for production of documents to HLC. HLC responded by producing some documents but withholding others that it listed

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in a privilege log as containing protected attorney-client communications.3 MCA did not file a motion to compel production of the documents withheld. MCA later issued a thirdparty deposition subpoena for production of documents to Crosby's former lawyers, who produced some documents, but HLC's attorney submitted a "supplemental privilege log," adding three documents to the original list. MCA did not file a motion to compel production of those additional documents. Eight days before trial, MCA issued a subpoena to HLC, requiring it to produce at trial, 59 of the documents listed by HLC in its privilege logs. MCA notified HLC that it believed HLC had no privilege with respect to attorney-client communications in those 59 documents. At the final status conference in the case, MCA alerted the trial court that it had issued the subpoena and that the parties did not agree on whether the documents sought were privileged. The trial court gave the parties two days to file briefs on the issue. On the first day of trial, the court considered the enforceability of the subpoena in view of the attorney-client privilege objections. The trial court held that the privilege did not apply because the court interpreted the Evidence Code to provide that the privilege of an individual is terminated once the estate is wound up and the personal representative discharged. The trial court did not recognize Bing Crosby Enterprises as a holder of the privilege. This petition followed. STANDARD OF REVIEW We review the trial court's interpretation of Evidence Code provisions governing the attorney-client privilege de novo, as it presents a question of law. (Wang v. Massey Chevrolet (2002) 97 Cal.App.4th 856, 868.)

Some of the documents were also withheld on the grounds they contained attorney work product or confidential income tax information. Those asserted privileges are not at issue here. 4

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DISCUSSION The attorney-client privilege permits the holder of the privilege to refuse to disclose any confidential communication between a client and a lawyer, with some exceptions that are not relevant here. (

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