Next Week at the Court

On Monday, February 4 and Friday, February 8, the Supreme Court will hear argument in a number of cases, three of which are within the scope of our coverage. Summaries of the cases and issues are below.

Monday, February 4, 2013 10:00 am Sitting

S13Q0212 Wilson et al. v. The Automobile Insurance Co. of Hartford, Connecticut

This case focuses on whether an insured is entitled to the limits of an umbrella policy for uninsured motorist benefits. Wilson and his wife have a personal umbrella policy of $1 million in addition to their personal automobile policy, which included uninsured motorist coverage of $100,000 per person and $300,000 per accident. In October 2010, Wilson was on his motorcycle when an uninsured driver ran a stop sign and hit him, causing serious injuries. Wilson claims his medical expenses alone are more than $600,000. Wilson presented a claim to his insurer, claiming that the umbrella policy provided additional uninsured motorist benefits up to the policy limits and the insurer denied the claim. The Wilsons sued, seeking a declaration that the umbrella policy provided uninsured motorist coverage up to its limits and the insurer removed the case to federal court.

After extensive briefing in the case, the U.S. District Court for the Northern District of Georgia determined that it needed answers to two questions of Georgia law. Thus, on September 27, 2012, the District Court certified the following questions to the Supreme Court of Georgia:

1. Whether the offer/rejection requirements of the Georgia Uninsured Motorist Act, O.C.G.A. § 33-7-11, apply to a policy of umbrella insurance renewed after January 1, 2009?
2. Whether the notice requirements set forth in O.C.G.A. § 33-7-11(b)(1)(D)(ii)(III) apply to a policy of umbrella insurance?

The case will be heard on February 4, 2013.

Monday, February 4, 2013 2:00 pm Sitting

S13A0333 Sherman v. Atlanta Independent School System et al.

This is a second case involving the constitutionality of using school taxes collected in a tax allocation district (TAD) for non-educational purposes. The City of Atlanta has used TAD projects for redevelopment efforts. These projects use bonds paid for with revenue from increases in school property tax  and municipal tax receipts as a result of the redevelopments.

In 2008, Sherman sought an injunction to stop the school system from using property tax revenues for the Beltline and Perry Bolton projects, relying on a case from the Supreme Court of Georgia in 2008. In October 2011, the trial court found the use of school tax revenue for redevelopment projects to be constitutional and Sherman appealed.

The case will be heard on February 4, 2013.

Friday, February 8, 2013 10:00 am Sitting (Special Session in Vidalia)

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 will be heard on February 8, 2013.