                           ILLINOIS OFFICIAL REPORTS
                                        Appellate Court




          Center Partners, Ltd. v. Growth Head GP, LLC, 2011 IL App (1st) 110381




Appellate Court            CENTER PARTNERS, LTD., URBAN-WATER TOWER
Caption                    ASSOCIATES, MIAMI ASSOCIATES, L.P., and OLD ORCHARD
                           LIMITED PARTNERSHIP, All Illinois Limited Partnerships,
                           Individually and Derivatively on Behalf of Urban Shopping Centers, L.P.,
                           Plaintiffs-Appellees, v. GROWTH HEAD GP, LLC, WESTFIELD
                           AMERICA LIMITED PARTNERSHIP, WESTFIELD AMERICA, INC.,
                           WESTFIELD AMERICA TRUST, ROUSE-URBAN, LLC TRCGP,
                           INC., THE ROUSE COMPANY, L.P., THE ROUSE COMPANY,
                           ROUSE LLC, GGP L.P. AND GENERAL GROWTH PROPERTIES,
                           INC., Defendants-Appellants (Urban Shopping Centers, L.P., Head
                           Acquisition L.P., SPG Head GP, LLC, Simon Property Group, LP, and
                           Simon Property Group, Inc., Defendants).



District & No.             First District, Second Division
                           Docket No. 1-11-0381


Filed                      August 30, 2011


Held                       In an action alleging the breach of fiduciary and contractual duties by
(Note: This syllabus       defendants arising from the acquisition of a business in which plaintiffs
constitutes no part of     were minority limited partners, the trial court properly ordered defendants
the opinion of the court   to disclose all of the attorney-client communications concerning the
but has been prepared      negotiations for the acquisition, even those not disclosed between the
by the Reporter of         defendants, since the disclosure of the communications to a third party
Decisions for the          during the transaction resulted in the waiver of all attorney-client
convenience of the         communications concerning the same subject matter.
reader.)
Decision Under             Appeal from the Circuit Court of Cook County, No. 04-L-12194; the
Review                     Hon. Charles R. Winkler, Judge, presiding.



Judgment                   Affirmed.


Counsel on                 Tabet DiVito & Rothstein, of Chicago (Gino L. DiVito, Karina Zabicki
Appeal                     DeHayes, and Brian C. Haussman, of counsel), and Debevoise &
                           Plimpton LLP, of New York, New York (John S. Kiernan, Carl Riehl,
                           and William H. Taft V, of counsel), for appellants Growth Head GP,
                           LLC, Westfield America Limited Partnership, Westfield America, Inc.,
                           and Westfield America Trust.

                           Grippo & Elden LLC, of Chicago (Lynn H. Murray, Laura K. McNally,
                           and Pei Y. Chung, of counsel), Weil, Gotshal & Manges LLP, of New
                           York, New York (David Lender, pro hac vice, of counsel), and Weil,
                           Gotshal & Manges LLP, of Boston, Massachusetts (Thomas C. Frongillo,
                           pro hac vice, and Ardith M. Bronson, pro hac vice, of counsel), for
                           appellants Rouse-Urban, LLC, TRCGP, Inc., Rouse Company, L.P.,
                           Rouse Company, Rouse LLC, GGP L.P., and General Growth Properties,
                           Inc.

                           Kirkland & Ellis LLP, of Chicago (Jeffrey L. Willian, Alyssa A. Qualls,
                           and S. Maja Fabula, of counsel), for appellee.
Panel                      JUSTICE KARNEZIS delivered the judgment of the court, with opinion.
                           Presiding Justice Cunningham and Justice Connors concurred in the
                           judgment and opinion.



                                              OPINION

¶1           Defendants Growth Head GP, LLC, Westfield America Limited Partnership, Westfield
        America, Inc., Westfield America Trust, Rouse-Urban, LLC, TRCGP, Inc., The Rouse
        Company, L.P., The Rouse Company, Rouse LLC, GGP L.P. and General Growth Properties,
        Inc., appeal from the circuit court’s order in favor of plaintiffs Center Partners, Ltd., Urban-
        Water Tower Associates, Miami Associates, L.P., and Old Orchard Limited Partnership, all
        Illinois limited partnerships, individually and derivatively on behalf of Urban Shopping
        Centers, L.P., which compelled the disclosure of certain attorney-client privileged


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     communications.1 On appeal, defendants contend that (1) the disclosure of privileged
     communications during a business negotiation did not result in a subject-matter waiver of
     all attorney-client communications concerning the same subject matter; (2) the scope of the
     subject-matter waiver as determined by the court was excessive; and (3) certain
     communications are not discoverable because they are protected by the attorney work-
     product doctrine. For the following reasons, we affirm.

¶2                                         Background
¶3       Plaintiffs and defendants are in the business of owning and operating numerous shopping
     malls across the country. Due to the complex nature of the companies involved in this case,
     we will refer to defendants Westfield America Trust, Westfield America, Inc., Westfield
     America Limited Partnership and Growth Head GP, LLC, collectively as “Westfield.” We
     will refer to defendants Rouse-Urban, LLC, TRCGP, Inc., The Rouse Company, L.P., The
     Rouse Company, Rouse LLC, GGP L.P. and General Growth Properties, Inc., collectively
     as “Rouse.” We will refer to defendants Simon Property Group, LP, and Simon Property
     Group, Inc., collectively as “Simon.”
¶4       In 2001 and 2002, over the course of several months, Westfield, Rouse and Simon
     negotiated to purchase the assets of a Dutch company known as Rodamco North America,
     N.V. (Rodamco). One of Rodamco’s assets was defendant Head Acquisition, L.P. (Head),
     which was the general partner of plaintiff Urban Shopping Centers, L.P. (Urban). Plaintiffs
     are minority limited partners of Urban. Westfield, Rouse and Simon entered into a purchase
     agreement with Rodamco in January 2002. On the same day, Westfield, Rouse and Simon
     entered into a separate joint purchase agreement with one another that concerned the
     allocation of Rodamco’s assets and the purchase price each of them would pay. The purchase
     of Rodamco closed in May 2002. Also on that day, Westfield, Rouse and Simon executed
     an amended Head partnership agreement that included provisions allocating control over
     Urban’s numerous mall interests among themselves.
¶5       Plaintiffs subsequently filed suit alleging breach of fiduciary and contractual duties
     related to the purchase of Rodamco’s assets, specifically the acquisition of Head. Plaintiffs
     sought the discovery of communications between Westfield, Rouse and Simon concerning
     the acquisition of Head and how they agreed to operate and collect revenue from the various
     shopping malls owned by Urban. Westfield and Rouse acknowledged that during the
     negotiations leading up to the purchase of Rodamco, they shared among one another legal
     advice each of them received from their attorneys regarding the purchase. Westfield
     acknowledges specifically that they, along with Rouse and Simon, disclosed (1) their
     attorneys’ positions on particular terms of the transaction; (2) certain communications from
     their attorneys in written documents; and (3) certain legal views concerning specific aspects
     of the transaction and the structure for allocating control over Urban’s mall interests among
     one another.


            1
             Defendants Urban Shopping Centers, L.P., Head Acquisition L.P., SPG Head GP, LLC,
     Simon Property Group, LP, and Simon Property Group, Inc., do not appeal from the court’s order.

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¶6         In October 2008, plaintiffs filed their first motion to compel the attorney-client
       communications that were disclosed among Westfield, Rouse and Simon during their
       negotiations to purchase Rodamco. The motion did not seek those undisclosed attorney-client
       communications. The circuit court granted plaintiffs’ motion to compel, ordering Westfield,
       Rouse and Simon to produce attorney-client communications that had been shared among
       one another during the negotiations.
¶7         In April 2010, plaintiffs filed another motion to compel. This motion, which gave rise
       to this appeal, sought all of the attorney-client communications concerning the purchase
       negotiations, even those communications that were not disclosed among Westfield, Rouse
       and Simon. The motion requested the production of over 1,500 documents identified in
       defendants’ privilege logs. Plaintiffs maintained that because certain attorney-client
       communications were disclosed among Westfield, Rouse and Simon, a subject-matter waiver
       occurred as to all of the communications regarding the purchase of Rodamco, even those not
       disclosed. The circuit court conducted an in camera review of some of the requested
       documents and granted the motion. After denying Westfield’s motion for reconsideration,
       Westfield’s counsel advised the court that it would not produce the documents and requested
       to be held in “friendly contempt.” The court entered a contempt order against Westfield.
       Westfield and Rouse appeal separately from the court’s order compelling disclosure of the
       requested documents and communications.

¶8                                            Analysis
¶9         In this appeal, we must first determine whether disclosing attorney-client
       communications with a third party during a business transaction results in the waiver of all
       attorney-client communications concerning the same subject matter.
¶ 10       Westfield and Rouse maintain that disclosing certain communications within the context
       of a business negotiation did not result in a subject-matter waiver as to all communications
       regarding the purchase of Rodamco.
¶ 11       Before we determine whether there was a subject-matter waiver of certain
       communications, we must address the applicable standard of review of the contempt order.
       Generally, the standard of review for contempt orders is abuse of discretion. Western States
       Insurance Co. v. O’Hara, 357 Ill. App. 3d 509, 515 (2005). However, because a trial court
       lacks the discretion to compel the disclosure of privileged information, we apply a de novo
       standard of review in determining the applicability of the attorney-client privilege. Illinois
       Emcasco Insurance Co. v. Nationwide Mutual Insurance Co., 393 Ill. App. 3d 782, 785
       (2009).
¶ 12       The attorney-client privilege provides that when “legal advice of any kind is sought from
       a professional legal advisor in his capacity as such, the communications relating to that
       purpose, made in confidence by the client, are protected from disclosure.” Fischel & Kahn,
       Ltd. v. Van Straaten Gallery, Inc., 189 Ill. 2d 579, 584 (2000). The purpose of the attorney-
       client privilege “is to enable a person to consult freely and openly with an attorney without
       any fear of compelled disclosure of the information communicated.” In re Marriage of
       Decker, 153 Ill. 2d 298, 312-13 (1992). Nevertheless, the privilege is to be construed “within

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       its narrowest possible limits.” Waste Management, Inc. v. International Surplus Lines
       Insurance Co., 144 Ill. 2d 178, 190 (1991). Illinois adheres to a “strong policy of
       encouraging disclosure, with an eye toward ascertaining that truth which is essential to the
       proper disposition of a lawsuit.” Waste Management, 144 Ill. 2d at 190. The party claiming
       the attorney-client privilege bears the burden of presenting factual evidence that establishes
       the privilege. Cox v. Yellow Cab Co., 61 Ill. 2d 416, 419-20 (1975).
¶ 13        Notwithstanding the application of the privilege, the privilege can be waived by the client
       when the client voluntarily discloses the privileged information to a third party. Illinois
       Emcasco Insurance Co., 393 Ill. App. 3d at 786; Decker, 153 Ill. 2d at 313. The scope of the
       waiver extends to all communications relating to the same subject matter. In re Grand Jury
       January 246, 272 Ill. App. 3d 991, 997 (1995); People v. O’Banner, 215 Ill. App. 3d 778,
       793 (1991). Most courts refer to this type of waiver as the subject-matter waiver doctrine.
       The doctrine requires a party who discloses some privileged communication to reveal all
       privileged communications on the same subject matter.
¶ 14        In Illinois, as far back as 1914, our supreme court recognized subject-matter waiver with
       respect to attorney-client privilege. In People v. Gerold, 265 Ill. 481 (1914), our supreme
       court held that when a client voluntarily testifies to confidential communications between
       himself and his attorney, the waiver extends to those communications concerning the same
       subject matter as the disclosed communications. Gerold, 265 Ill. at 448. The following cases
       also illustrate the subject-matter waiver doctrine. In In re Grand Jury January 246, this court
       held that where a client discloses in a deposition portions of her conversation with her
       attorney, the disclosure amounts to a waiver of the attorney-client privilege as to the
       remainder of the conversation or communication about the same subject matter. In re Grand
       Jury January 246, 272 Ill. App. 3d at 997. In O’Banner, this court held that where a
       defendant has taken the stand and testified as to portions of conversations with her attorney,
       this conduct amounts to a waiver of the attorney-client privilege as to the remainder of the
       conversation or communication about the same subject. O’Banner, 215 Ill. App. 3d at 793.
¶ 15        Here, in 2001 and 2002, when Westfield, Rouse and Simon disclosed privileged attorney-
       client communications among one another regarding the purchase of Rodamco and
       specifically the acquisition of Head, those disclosures resulted in a subject-matter waiver of
       all privileged communications regarding the purchase. Westfield, Rouse and Simon
       discussed over the course of several months, the purchase of Rodamco and how they would
       structure the purchase. Defendants disclosed among one another their attorneys’ positions
       on specific terms of the transaction and the structure for allocating control over Urban’s mall
       interests, as well as various written documents containing privileged attorney-client
       communications. These disclosed communications and documents are clearly waived, and
       the scope of the waiver extends to all communications relating to the same subject matter,
       i.e., the purchase of Rodamco. Similar to the above cases of Gerold, In re Grand Jury
       January 246 and O’Banner, when Westfield, Rouse and Simon disclosed certain attorney-
       client communications among each other, this resulted in a subject-matter waiver of all of
       the attorney-client communications regarding the purchase of Rodamco.
¶ 16        Although defendants maintain that the above cases are distinguishable because the
       disclosures in those cases occurred in the context of litigation rather than a business

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       negotiation, we find no reason to distinguish between a waiver occurring during the course
       of litigation or during a business negotiation. Once the privileged communication is
       disclosed to a third party, the privilege is waived, and the scope of the waiver extends to all
       communications relating to the same subject matter. We uphold the court’s order requiring
       the discovery of all of the communications relating to the purchase of Rodamco.
¶ 17        Defendants next maintain that the scope of the subject-matter waiver as determined by
       the circuit court was excessive. Defendants contend that many of the documents the court
       ordered disclosed fell outside the subject matter of the waiver.
¶ 18        Here, the circuit court conducted an in camera review of some of the documents that
       were the subject of the motion to compel. Westfield identifies four possible documents that
       exceeded the scope of the subject-matter waiver, arguing that those documents and many
       others were unrelated to the purchase of Rodamco and should not be disclosed. Rouse does
       not specifically identify any documents that exceeded the scope of the subject-matter waiver,
       but contends that many of Rouse’s 279 documents the court ordered disclosed exceeded the
       scope of the subject-matter waiver.
¶ 19        Defendants have the burden of proving the existence of the privilege. Cox, 61 Ill. 2d at
       419-20. Additionally, the privilege is to be construed very narrowly. Waste Management, 144
       Ill. 2d at 190. In light of the circuit court’s in camera review of the documents in question,
       if defendants claim that the court’s disclosure order was excessive, they have the burden of
       pointing out the excessive rulings, with specificity. They have not done so. Defendants’
       minimal arguments on appeal fall short of overcoming their burden. In the absence of
       specific contentions regarding specific documents, we cannot find that the court’s in camera
       review and subsequent determinations regarding the documents and the applicability of the
       attorney-client privilege were in error. Further, to clarify, we do not hold that disclosure of
       certain privileged communication during negotiations nullifies all privileged communication
       and information as related to a particular business transaction, but, rather and specifically,
       as related only to the subject matter of the privilege that is already waived.
¶ 20        Lastly, Westfield maintains that even if this court finds a subject-matter waiver, 13 of
       Westfield’s documents are not discoverable because they are protected pursuant to the
       attorney work-product doctrine. Westfield contends that because it did not disclose these
       specific documents to Simon or Rouse during the negotiations to purchase Rodamco, it did
       not waive any work-product protection for the documents.
¶ 21        The work-product doctrine is designed to protect the right of an attorney to thoroughly
       prepare his case and to preclude a less diligent adversary attorney from taking undue
       advantage of the former’s efforts. Hickman v. Taylor, 329 U.S. 495 (1947). In Illinois, work-
       product protection is afforded to those documents generated in preparation for trial or
       litigation. Waste Management, 144 Ill. 2d at 196. The work-product doctrine grants broader
       protection for documents and communications than is afforded by the attorney-client
       privilege. Waste Management, 144 Ill. 2d at 196.
¶ 22        Here, Westfield’s contention that 13 specific documents are afforded work-product
       protection is without merit because the documents were not generated in preparation for trial
       or litigation. The documents were prepared to assist or guide Westfield’s co-purchase of


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       Rodamco. At that time, the parties were not involved in litigation. Therefore, the documents
       fall outside the scope of the work-product doctrine and are discoverable.
¶ 23        Accordingly, we affirm the judgment of the circuit court.

¶ 24      Affirmed.




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