Construction Defects
Privilege Issues Are Important in Homeowner Association Construction Defect Litigation
Michael G. Thornton
June 25, 2014
Attorneys in Homeowners Association (“HOA”) construction defect cases must meet with the homeowners to provide litigation updates and it can sometimes be difficult to preserve the attorney-client privilege for the communications made to a diverse group of owners. This point was recently illustrated in the case of Seahaus La Jolla Owners Association v. Superior Court of San Diego County(2014) 224 Cal.App.4th 754. The HOA had sued the developers and builders of their development alleging damage in common areas. The HOA’s lawyer scheduled litigation update meetings for the individual homeowners, including a group of homeowners who had separately sued for defects in their units. The defendants sought to depose individual homeowners about disclosures made by the HOA’s counsel at the meetings. The HOA claimed that the communications were protected by the attorney-client privilege and by the “common interest” doctrine. The Court of Appeal found that the “common interest” doctrine applied because the litigation update meetings “were held to accomplish the purpose for which the association’s lawyers were consulted.” Thus, the meetings were protected from disclosure and were not subject to discovery.
In HOA construction defect litigation unusual facts can often arise, particularly around the issue of privilege. Our firm had a recent case in which we represented the developer of a condominium project. Before filing suit, the HOA’s construction expert gave a PowerPoint presentation to the HOA’s Board of Directors about the defects he found and the cost to repair them. The HOA president testified that the HOA, not the HOA’s attorneys, had hired the expert consultant. Nossaman obtained a court order requiring the HOA to provide a copy of the PowerPoint presentation. That presentation had a big impact on the case because the HOA’s expert had claimed much lower repair costs in the presentation than he claimed in the lawsuit. The PowerPoint presentation could be used to attack the expert’s credibility as a witness.
These two examples highlight the importance of HOA attorneys taking steps to preserve the attorney-client privilege and work product protection whenever possible and of defense attorneys examining whether the HOA might have waived those privileges in some “unique” circumstances.
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