Watt Industries, Inc. v. Superior Court

Opinion

BARRY-DEAL, J.

This petition challenges a ruling upholding a claim of work product “privilege” for notes made by an attorney during nego

[804]

tiations connected with a real estate contract entered by his client. Petitioner contends that the work-product “privilege” does not apply to notes made while the attorney acts as the business agent for a client. We agree with petitioner and therefore issue writ of mandate.

Briefly, the facts are that petitioner Watt Industries, Inc., was engaged in the conversion of certain rental property into condominiums. In connection with that activity petitioner approached tenants Donald and Kathleen DeBernardi with an offer to sell them their unit for 10 per cent below the publicly offered price. At least from petitioner’s viewpoint, one condition to the sale was that the DeBernardis intended to occupy the unit as their primary residence. When a question arose about the DeBernardis’ intentions, Mr. Gerald Katell, an officer of petitioner, telephoned Alan J. Sternberg who was then an attorney for the DeBernardis on business and tax matters.

According to Mr. Katell, Attorney Sternberg made extensive representations about the DeBernardis’ intentions to reside in the unit. On the basis of those representations, Katell agreed to reinstate the agreement to purchase, which otherwise would have lapsed because of financing difficulties.

The deal closed on August 18, 1978, and within three months the DeBernardis placed the unit on the market. The underlying lawsuit followed, seeking a rescission for fraud, and Mr. Sternberg was deposed. He testified that he had spoken to Mr. Katell on the phone. As a result of a motion to compel answers to other questions, he has been ordered to answer questions about the content of the conversation. However, at the deposition he refused to produce notes he made at the time, of the conversation, and a motion to compel production was denied. This petition followed.

California has enacted a statutory work-product rule which, though not so denominated, operates in a somewhat similar fashion to a “privilege.” (See Code Civ. Proc., § 2016, subd. (b);