George and Sheila Byers filed a lawsuit against USAA, their homeowners insurer, as well as other defendants (Masters Distribution, Inc.; Clifton Michael Potter; and Crawford and Company). Among other causes of action in their operative complaint, the Byerses allege USAA is liable for breach of contract and breach of the covenant of good faith and fair dealing related to the installation of hardwood flooring at their Orinda home. The complaint’s prayer for relief includes a prayer: “For attorneys’ fees and costs.”

During discovery, the Plaintiffs responded to an interrogatory propounded by USAA, indicating that they were indeed pursuing attorney fees known as “Brandt” fees referring to Brandt v. Superior Court (1985) 37 Cal.3d 813, a California Supreme Court case that provides for attorney fees as damages caused by an insurer’s breach of the covenant of good faith and fair dealing.

USAA then served document requests asking Plaintiffs for production of “each and every fee agreement with YOUR attorneys in the instant litigation” and “each and every billing record, fee statement, invoice, receipt and proof of payment from YOUR attorneys in the instant litigation.”

The Plaintiffs refused to produce any documents for various reasons including “attorney-client privilege and/or work product doctrine.”

Following a hearing on USAA’s motion to compel, the trial court granted USAA’s motion. The Court of Appeal affirmed the trial court in the published case of Byers v. Superior Court -A169321 (May 2024).

On appeal Plaintiffs “assert several interrelated arguments. They contend that the trial court abused its discretion by forcing them to waive the attorney-client privilege during litigation as a condition of seeking Brandt fees.”

The Court of Appeal said that it “determined that writ review is warranted because the Byerses asserted that compliance with the order would violate a privilege or privacy rights and the petition raises ‘questions of first impression that are of general importance to the trial courts and to the profession, and where general guidelines can be laid down for future cases. ‘ “

And it went on to conclude “that the Byerses’ admission that they are seeking Brandt fees as an element of their damages is an implied waiver of the attorney-client privilege at least as to the attorney fees documents that the Byerses plan to rely upon to seek to prove the amount of fees they reasonably incurred to establish their right to benefits under USAA’s insurance policy.”

“The parties have not cited, nor are we aware of, any controlling authority specifically holding that a party claiming Brandt fees impliedly waives the attorney-client privilege as to documentation supporting the fees, including fees agreements and invoices.”

It “is well established in other contexts that ‘[w]here privileged information goes to the heart of the claim, fundamental fairness requires that it be disclosed for the litigation to proceed.’ “

“We agree with the trial court that USAA has a right to learn during discovery of the attorney fees aspect of the Byerses’ alleged damages and that by seeking such damages the Byerses have impliedly waived the attorney–client privilege. The Byerses have put at issue the attorney fees they incurred in an effort to seek coverage under their insurance policy, and disclosure of documents supporting their claim for such fees is necessary to fairly adjudicate the issue of damages.”