Utah Court of Appeals
Can parties waive attorney-client privilege by contesting settlement authorization? Terry v. Bacon Explained
Summary
The Terrys sued defendants for medical malpractice. When defendants moved to enforce an oral settlement agreement for $15,000, the Terrys denied authorizing their former counsel to accept the offer. The trial court found the attorney-client privilege was waived and that a binding settlement existed based on former counsel’s credible testimony.
Practice Areas & Topics
Analysis
In Terry v. Bacon, the Utah Court of Appeals addressed when parties waive the attorney-client privilege in settlement enforcement proceedings, providing important guidance for practitioners handling disputed settlement agreements.
Background and Facts
The Terrys filed a medical malpractice lawsuit against Dr. Bacon and other defendants following complications from spinal surgery that left Mr. Terry with permanent paralysis and severe pain. When defendants moved to enforce an oral settlement agreement for $15,000, the Terrys denied ever authorizing their former counsel to accept the offer. Their former counsel testified that he was authorized to settle, while the Terrys claimed they never agreed to such a low settlement amount that would net them only $6,000 after attorney fees.
Key Legal Issues
The case centered on whether the Terrys had waived the attorney-client privilege by contesting their authorization of the settlement agreement. The court also addressed whether the parties had a meeting of the minds sufficient to create a binding settlement contract, and whether such oral agreements must be in writing to be enforceable.
Court’s Analysis and Holding
The Court of Appeals held that the Terrys waived their attorney-client privilege by placing their communications with former counsel “at the heart of the case.” The court explained that parties cannot use the privilege “both as a sword and a shield” – they cannot rely on statements about what was not communicated while simultaneously preventing defendants from accessing information needed to refute those assertions. The court applied the correctness standard for privilege waiver determinations and the clear error standard for factual findings regarding meeting of the minds.
Practice Implications
This decision demonstrates that clients who dispute settlement authorization risk waiving privilege protections for communications directly related to that issue. Courts will limit such waivers to the specific subject matter at issue, but practitioners must carefully consider strategic implications before challenging settlement authority. The case also reinforces that trial courts’ credibility determinations in settlement disputes receive substantial deference on appeal.
Case Details
Case Name
Terry v. Bacon
Citation
2011 UT App 432
Court
Utah Court of Appeals
Case Number
No. 20100893-CA
Date Decided
December 22, 2011
Outcome
Affirmed
Holding
A party waives the attorney-client privilege when they place attorney-client communications at the heart of the case by contesting whether they authorized their attorney to enter into a settlement agreement.
Standard of Review
Correctness for legal questions including waiver of attorney-client privilege and interpretation of case law; clear error for factual findings including meeting of the minds; mixed question of fact and law for substantive unconscionability with legal determinations reviewed for correctness and factual findings for clear error
Practice Tip
When clients dispute whether they authorized settlement agreements, carefully consider whether such arguments waive attorney-client privilege regarding those specific communications.
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