Harp v. King
2003 Conn. LEXIS 482, 266 Conn. 747, 835 A.2d 953 (2003)
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Rule of Law:
The inadvertent disclosure of attorney-client privileged material does not automatically waive the privilege if reasonable precautions were taken, the disclosure was limited, and prompt measures were taken to rectify the error. Furthermore, the intracorporate conspiracy doctrine bars tort claims predicated on a conspiracy theory against corporate employees acting within the scope of their employment, even if the corporation itself is not a named defendant and the complaint does not explicitly allege a conspiracy.
Facts:
- Wendell C. Harp, an African-American real estate developer, owned and managed seven low and moderate-income housing developments in Connecticut, financed by the Connecticut Housing Finance Authority (CHFA).
- From 1980 to 1991, CHFA loaned Harp approximately $10 million for the construction of his developments.
- By 1994, several of Harp's developments began experiencing financial instability, leading Harp to loan them over $1 million, though all mortgage payments to CHFA were made timely.
- In January 1995, Harp requested that CHFA restructure the financing for four of his seven developments, citing high operating costs and interest rates, while CHFA employees (Gary E. King, Vincent J. Flynn, Lawrence C. Pilcher, Regina Rentz) believed the financial issues were due to Harp's mismanagement.
- CHFA employees Regina Rentz and Joseph L. Marsan conducted audits and reviews, expressing concerns about Harp's accounting methods, potential overcharging, and characterizing his management company, Renaissance Management, as 'ineffective' and the developments as 'deteriorating.'
- On August 29, 1995, the CHFA board of directors, responding to Harp's refinancing request, directed staff to draft and implement a 'supplemental management agreement' and set performance standards for Harp's developments.
- In February 1996, CHFA formally declared Harp's developments in 'technical default' for failure to provide required documentation and resolve maintenance issues, proposing a supplemental management agreement which Harp declined to sign.
- In August 1996, while reviewing CHFA documents under a Freedom of Information Act request, Harp inadvertently discovered two internal memoranda marked 'privileged and confidential,' which he summarized as outlining a scheme by CHFA to discredit him and remove Renaissance as manager; CHFA staff immediately denied his request for photocopies and stopped further review of these specific documents.
Procedural Posture:
- Wendell C. Harp initiated an action in state trial court against Gary E. King, Vincent J. Flynn, Lawrence C. Pilcher, and Regina Rentz, employees of the Connecticut Housing Finance Authority (CHFA), alleging defamation, false light, tortious interference with business expectancies, and intentional infliction of emotional distress.
- Plaintiff Harp filed a motion to compel disclosure of certain internal 'legal strategies memoranda' he had inadvertently seen, arguing that their disclosure waived attorney-client privilege.
- The trial court (Moran, J.) denied Harp's motion to compel, concluding there had been no waiver of the attorney-client privilege.
- Defendant Flynn moved for a protective order to prevent questioning about the memoranda, which the trial court (Devlin, J.) granted, relying on Judge Moran's previous ruling.
- Defendants subsequently moved for summary judgment, arguing Harp's claims were unsupported without the privileged memoranda and barred by the intracorporate conspiracy doctrine.
- The trial court (Devlin, J.) granted the defendants' motions for summary judgment, concluding that Harp's claims were barred by the intracorporate conspiracy doctrine, and rendered judgment thereon for the defendants; Harp then appealed this judgment to the Appellate Court, which was subsequently transferred to the Connecticut Supreme Court.
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Issue:
Does the inadvertent disclosure of attorney-client privileged documents waive the privilege, and does the intracorporate conspiracy doctrine bar tort claims against corporate employees acting within the scope of their employment, even if the corporation itself is not a party and the complaint does not explicitly allege a conspiracy?
Opinions:
Majority - Palmer, J.
Yes, the inadvertent disclosure of attorney-client privileged documents did not waive the privilege, and the intracorporate conspiracy doctrine does bar tort claims against corporate employees acting within the scope of their employment, even if the corporation is not a party and the complaint does not explicitly allege a conspiracy. The court adopted the 'middle of the road' approach for determining whether the inadvertent disclosure of attorney-client privileged material constitutes a waiver. This approach balances the need to preserve confidentiality with encouraging careful handling of privileged material. It involves a five-factor analysis: (1) the reasonableness of precautions taken, (2) the number of inadvertent disclosures, (3) the extent of the disclosures, (4) the promptness of rectification, and (5) whether the overriding interest of justice would be served by relieving the party of its error. Applying this test, the court found that CHFA took reasonable precautions (the memoranda were prominently marked 'privileged and confidential' and their disclosure was a clerical error), the disclosure was limited (only two documents among a voluminous production, and further review/copying was immediately halted), and CHFA promptly rectified the error. The court also concluded that the interest of fairness favored CHFA, especially since Harp was aware the documents were likely privileged. Therefore, the trial court properly denied Harp's motion to compel production of the memoranda. Regarding the intracorporate conspiracy doctrine, the court determined that although Harp's complaint did not explicitly use the term 'conspiracy,' his allegations of 'joint action' and an 'agreement' among the defendants to harm him constituted a civil conspiracy. Citing Day v. General Electric Credit Corp., the court affirmed the principle that employees acting within the scope of their employment cannot conspire with each other or their employer. This is because a corporation acts through its agents (employees), and a single entity cannot conspire with itself. The court found that all the defendants' alleged actions, including audits, default declarations, and proposed agreements, occurred during working hours, in the discharge of official CHFA business, and fell within the purview of their core duties, even if potentially motivated by improper considerations. The court emphasized that the relevant inquiry is whether the conduct was performed within the scope of official duties, not the wrongful nature of the actions themselves. Consequently, summary judgment based on the intracorporate conspiracy doctrine was properly granted for all of Harp's claims, including tortious interference with business expectancies, which was also predicated on the alleged joint scheme.
Analysis:
This case is highly significant for Connecticut law as it formally adopts the 'middle of the road' approach for evaluating inadvertent attorney-client privilege waivers, providing a flexible, multi-factor test to prevent both overly strict and overly lenient outcomes. It also strengthens the application of the intracorporate conspiracy doctrine, clarifying that tort claims predicated on a conspiracy theory against corporate employees acting within the scope of their employment are barred, even without explicit 'conspiracy' allegations or the corporation as a named defendant. This ruling limits the avenues for plaintiffs to pursue claims against multiple individual corporate actors for collective actions taken on behalf of the entity, unless a clear deviation from employment duties for personal gain can be demonstrated.
