J-A01018-15

NON-PRECEDENTIAL DECISION – SEE SUPERIOR COURT I.O.P 65.37

CUSTOM     HOMES,    INC.,   A : IN THE SUPERIOR COURT OF
PENNSYLVANIA CORPORATION,      :      PENNSYLVANIA
                               :
               Appellee        :
                               :
         v.                    :
                               :
JANE YOUNG, AN INDIVIDUAL, AND :
KIKI DOUMAS, AN INDIVIDUAL,    :
                               :
               Appellants      : No. 529 WDA 2014

                 Appeal from the Order March 20, 2014,
               Court of Common Pleas, Washington County,
                      Civil Division at No. 2012-2460

BEFORE: FORD ELLIOTT, P.J.E., DONOHUE and ALLEN, JJ.

MEMORANDUM BY DONOHUE, J.:                    FILED FEBRUARY 24, 2015

     Jane Young and Kiki Doumas (“Young” and “Doumas” respectively;

“Appellants” collectively) appeal from an order of court denying their

objections to a proposed subpoena issued by Custom Homes, Inc. (“Custom

Homes”) on Appellants’ counsel. Following our review, we reverse.

     In 2008, Young and her then-husband, Bruce Goldblatt, entered into a

contract with Custom Homes for the construction of a new home in

Washington County. Young’s parents, Menelaos and Kiki Doumas, gave her

money to purchase the plot of land upon which the house was to be

constructed and for the construction of the house.1 During the construction

of the house, a dispute arose, which ended up in AAA arbitration in


1
 Menelaos Doumas passed away in 2011 and is not named as a party in this
matter.
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Allegheny County. The arbitration resulted in an award for Custom Homes in

the amount of $64,032.     On November 30, 2010, Custom Homes had the

award reduced to a judgment and on May 5, 2011, the judgment was

entered in Washington County. When Custom Homes attempted to execute

on this judgment, it discovered that Young’s real property (two homes,

including the one that was the subject of the arbitration) and her automobile

were encumbered by various liens in favor of Dumas.

     Following   this   revelation,   Custom   Homes      filed    a   complaint    in

Washington    County    against   Appellants   alleging    a      violation   of   the

Pennsylvania Uniform Fraudulent Transfer Act, premised on the theory that

the encumbrances on Young’s property were made with the intent to hinder

or defraud Custom Homes in its attempts to execute on its judgment against

Young. Once the pleadings were closed, Custom Homes issued notice of its

intent to subpoena all documents in the possession of Appellants’ counsel’s

law firm, Jones, Gregg, Creehan & Gerace, LLP, regarding its representation

of not only appellants but also Menelaos Dumas, from January 1, 2008

through July 1, 2011.        Appellants filed objections to this subpoena,

asserting, inter alia, that the documents sought were protected by the

attorney-client privilege and/or work product doctrine.             The trial court




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ultimately denied Appellants’ objections on March 20, 2014.          This timely

appeal followed.2

      Appellants present the following four issues for our review:

            1. Did the trial court commit an error of law when it
               permitted the automatic disclosure of attorney-
               client privileged information under the crime-
               fraud exception based on Custom Home’s mere
               allegation of fraud in its complaint?

            2. Did the trial court commit an error of law in
               permitting     disclosure  of    attorney-client
               information under the crime-fraud exception
               without any evidence presented at a hearing to
               indicate any fraudulent conduct on the part of
               counsel or the Appellants?

            3. Did the trial court commit an error of law in
               compelling the disclosure of attorney work
               product in response to the subpoena issued to
               Appellants’ counsel?

Appellants’ Brief at 4.3

      Appellants first argue that Custom Homes’ mere allegation of fraud

was insufficient to overcome their assertion of attorney-client privilege.

“Whether the attorney-client privilege or the work product doctrine protects

a communication from disclosure is a question of law. This Court's standard



2
  The order at issue is appealable as a collateral order pursuant to Pa.R.A.P.
313. See Saint Luke's Hosp. of Bethlehem v. Vivian, 99 A.3d 534, 540
(Pa. Super. 2014).
3
  Appellants included an additional issue in their statement of questions
involved, see Appellants’ Brief at 4, but it was not included in their Pa.R.A.P.
1925(b) statement of matters complained of on appeal. As such, it is
waived and cannot be raised on appeal. Pa.R.A.P. 1925(b)(4)(vii).


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of review over questions of law is de novo, and the scope of review is

plenary.” Saint Luke's Hosp. of Bethlehem, 99 A.3d at 540 (Pa. Super.

2014).

      Preliminarily, we note that the attorney-client privilege protects both

communications from the client to the attorney and from the attorney to the

client. Gillard v. AIG Ins. Co., 15 A.3d 44, 59 (Pa. 2011).

            The attorney-client privilege is intended to foster
            candid communications between counsel and client,
            so that counsel may provide legal advice based upon
            the most complete information from the client. The
            central principle is that a client may be reluctant to
            disclose to his lawyer all facts necessary to obtain
            informed legal advice, if the communication may
            later be exposed to public scrutiny. Recognizing that
            its purpose is to create an atmosphere that will
            encourage confidence and dialogue between attorney
            and client, the privilege is founded upon a policy
            extrinsic to the protection of the fact-finding process.
            The intended beneficiary of this policy is not the
            individual client so much as the systematic
            administration of justice which depends on frank and
            open client-attorney communication.

In re Thirty-Third Statewide Investigating Grand Jury, 86 A.3d 204,

216-17 (Pa. 2014) (internal citations omitted). “Protection under attorney-

client privilege is subject to limits, exceptions, and waiver. For example, the

crime-fraud exception results in loss of the privilege's protections when the

advice of counsel is sought in furtherance of the commission of criminal or

fraudulent activity.”   Nationwide Mut. Ins. Co. v. Fleming, 924 A.2d

1259, 1265 (Pa. Super. 2007). Furthermore, “[t]he party who has asserted




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attorney-client privilege must initially set forth facts showing that the

privilege has been properly invoked; then the burden shifts to the party

seeking disclosure to set forth facts showing that disclosure will not violate

the attorney-client privilege, e.g., because the privilege has been waived or

because some exception applies.” Id. at 1266. In this appeal, our inquiry

focuses only on the second half of this standard: whether Custom Homes

sufficiently established the crime-fraud exception to the attorney-client

privilege.

      To establish that an exception to the privilege applies, the party

seeking disclosure “must establish[] a prima facie case that the party

asserting the privilege is committing a crime or fraud or continuing the same

in exercising the privilege[.]”   Brennan v. Brennan, 422 A.2d 510, 517

(Pa. Super. 1980).     Mere allegations of crime or fraud will not suffice;

“before the fact may be shown, the court must be satisfied that the

evidence proposed to establish the fact is sufficient to go to the jury for the

purpose. To drive the privilege away, there must be something to give

colour to the charge; there must be prima facie evidence that it has

some foundation in fact.” Nadler v. Warner Co., 184 A. 3 (Pa. 1936)

(internal citation omitted) (emphasis added).

       For instance, Brennan involved a custody suit in which the father

moved to Florida and took the parties’ children with him.     Counsel for the

father appeared alone at a conciliation and refused to disclose his client’s



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home address and phone number.          Counsel refused because the father

specifically requested that he not reveal this information and asserted the

attorney-client privilege as the basis for his refusal.   The trial court held

counsel in contempt and imposed a fine for every day that counsel continued

to withhold the information. On appeal, after first determining that a client’s

home address and telephone number could be protected by the attorney-

client privilege, this Court turned its attention to whether the mother had

sufficiently established a prima facie case that a crime or fraud was being

committed. We concluded that she had not, noting that the trial court did

not receive any evidence on this issue and made no finding that any criminal

or fraudulent conduct had occurred. Brennan, 422 A.2d at 517.

      Similarly, in this case, Custom Homes presented no evidence to the

trial court to support its claim.4     Instead, it relied on the allegations

contained in its complaint to serve as the “evidence” needed to meet its

burden of proof. Custom Homes’ Brief at 5-6, 9-13.5 This cannot suffice.



4
   For instance, Custom Homes could have deposed Young, Bruce Goldblatt,
or, if she were deemed competent, Dumas, in order to develop the evidence
required to meet its burden.
5
  Custom Homes relies on these allegations in two ways: first, by arguing
that Appellants have admitted the allegations either directly or by failure to
deny with adequate specificity; and second, by arguing that because it
survived Appellants’ demurrer, it has per se established a prima facie case of
fraud. From our review of the record, we disagree that Appellants admitted
conduct alleged by Custom Homes that would establish fraud, directly or
otherwise. Moreover, we note that the trial court did not reach the merits of
Appellants’ demurrer; rather, it concluded that the demurrer was


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The standard as set forth above is clear: the party seeking disclosure must

present evidence to establish that his allegation has a basis in fact. Nadler,

184 A. at 3; see also In re Investigating Grand Jury of Philadelphia

Cnty. No. 88-00-3503, 593 A.2d 402, 407 (Pa. 1991); Fleming, 924 A.2d

at 1266; Brennan, 422 A.2d at 517. Custom Homes has not put forth any

evidence in support of its position, and so it failed to meet its burden of

proof to vitiate the attorney-client privilege.6

      Because Custom Homes has failed to meet its burden, the order

denying Appellants’ objections to Custom Homes’ subpoena is vacated.

Having reached this conclusion, Appellants’ remaining issues are moot and

we need not address them.

      Order vacated. Case remanded. Jurisdiction relinquished.




insufficiently pled and provided Appellants leave to plead over. Trial Court
Opinion, 10/18/12. Rather than doing so, Appellants filed an answer to the
complaint.     Contrary to Custom Homes’ position, there has been no
determination that it has set forth a prima facie case in support of its claim.
6
  We note that the trial court did not consider whether Custom Homes
satisfied its burden of proof as set forth in the myriad cases cited above.
Rather, the trial court reasoned, “As [Appellants] failed to posit any
counterargument to [Custom Homes’ assertion of] the crime/fraud
exception, this [c]ourt agreed that Custom Homes has satisfied its burden.”
Trial Court Opinion, 6/3/14, at 2. Thus, the trial court palpably misapplied
the law in reaching it decision.


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Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/24/2015




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