in the Supreme Court on 29 August 2017.
discretionary review pursuant to N.C. G.S. § 7A-31 of a
unanimous decision of the Court of Appeals, __ N.C.App. __,
788 S.E.2d 170 (2016), affirming an order entered on 13 April
2015 by Judge Jesse B. Caldwell III in Superior Court,
Horack, Talley, Pharr & Lowndes, P.A., by Keith B.
Nichols, for plaintiff-appellee.
Brotherton, Knox & Godfrey, by Lisa G. Godfrey; and Burt
& Cordes, PLLC, by Stacy C. Cordes, for
case we consider whether an attorney-client relationship
exists between defendants and a non-party that contractually
agreed to indemnify defendants. Recognizing its tripartite
nature, we conclude that the contractual duty to defend and
indemnify gives rise to an attorney-client relationship.
Nonetheless, because defendants failed to request that the
trial court provide written findings of fact and did not
present in a timely manner the documents at issue for
appellate review, we must presume the trial court found facts
sufficient to support its conclusion. Given the bare record
before us, we cannot conclude that the trial court
erroneously determined that the attorney-client privilege did
not extend to the communications at issue. Accordingly, we
modify and affirm the decision of the Court of Appeals.
February 2000, the predecessor in interest to defendant Bally
Total Fitness of the Mid-Atlantic, Inc. (Bally Mid-Atlantic)
entered into a lease agreement with the predecessor in
interest to Friday Investments, LLC (plaintiff) for a large
commercial space in Charlotte, North Carolina, in which to
place a health club. Codefendant Bally Total Fitness Holding
Corporation (Bally Holding), the parent company of both Bally
Mid-Atlantic and the original tenant, guaranteed the lease.
Bally Mid-Atlantic later sold some of its health clubs,
including the Charlotte club, to Blast Fitness Group, LLC
(Blast). The Asset Purchase Agreement between Bally
Mid-Atlantic and Blast transferred any obligations arising
under the real property leases of the clubs sold. The
Agreement also included an indemnification clause, wherein
Blast agreed to "defend, indemnify, and hold
[defendants] . . . harmless of, from and against any Losses
incurred . . . on account of or relating to . . . any Assumed
Liabilities, including those arising from or under the Real
Property Leases after the Closing."
May 2014, plaintiff sued defendants for payment of back rent
and other charges due under the lease stemming from
Blast's failure to pay rent on the space defendants had
assigned to Blast. Defendants notified Blast of the lawsuit,
and Blast promptly agreed to indemnify and defend defendants
in accord with their Agreement. During discovery, counsel for
plaintiff requested copies of "post-suit correspondence
and documents exchanged between [defendants] and Blast."
After defendants refused to comply, plaintiff moved to compel
production of the requested documents. Defendants objected
and moved for a protective order, asserting the
attorney-client privilege. The trial court orally ordered
defendants to produce the documents and a privilege log for
in camera review.
April 2015, after completing its in camera review,
the trial court notified counsel via e-mail that it had
denied defendants' motion for a protective order and
granted plaintiff's motion to compel. On 13 April 2015,
the trial court entered its written order summarily denying
defendants' motion for a protective order and granting
plaintiff's motion to compel. At no point did either
party request that the trial court make written findings of
fact and conclusions of law. Defendants appealed the trial
court's interlocutory order, successfully contending that
the subject of the appeal affects a "substantial
right." After settling the record on appeal, and after
the briefing deadline had passed, defendants moved to submit
the documents at issue under seal for in camera
review by the Court of Appeals.
Court of Appeals affirmed the trial court's grant of
plaintiff's motion to compel. Friday Invs., LLC v.
Bally Total Fitness of the Mid-Atl., Inc., __ N.C.App.
__, 788 S.E.2d 170 (2016). Before discussing the merits of
the appeal, the Court of Appeals denied defendants'
request to present the records for appellate review as
untimely because the request was made after plaintiff had
submitted its brief to the Court of Appeals. Id. at,
788 S.E.2d at 175; see N.C. R. App. P.
9(b)(5)(a). On the merits, the Court of Appeals held
that a tripartite attorney-client relationship did not exist
between defendants and Blast because "an indemnification
provision in an asset purchase agreement, standing alone, is
insufficient to create a common legal interest between a
civil litigant indemnitee and a third-party indemnitor."
Friday Invs., LLC, __ N.C.App. at __, 788 S.E.2d at
172. The Court of Appeals reasoned that defendants and Blast
shared merely a common business interest and that this
distinction rendered inapplicable our previous decision in
Raymond v. North Carolina Police Benevolent
Ass'n, 365 N.C. 94, 98, 721 S.E.2d 923, 926 (2011)
(recognizing the tripartite attorney-client relationship). As
a result, the attorney-client privilege did not extend to the
communications between defendants and Blast. This Court
allowed discretionary review. Friday Invs., LLC v. Bally
Total Fitness of the Mid-Atl., Inc., 369 N.C. 185, 793
S.E.2d 685 (2016).
primary purpose of the discovery rules is to facilitate the
disclosure prior to trial of any unprivileged
information that is relevant and material to the lawsuit so
as to permit the narrowing and sharpening of the basic issues
and facts that will require trial." Bumgarner v.
Reneau, 332 N.C. 624, 628, 422 S.E.2d 686, 688-89 (1992)
(emphasis added) (citation omitted). Rule 26 provides for a
broad scope of discovery, allowing "[p]arties [to]
obtain discovery regarding any matter, not
privileged, which is relevant to the subject matter
involved in the pending action." N.C. G.S. § 1A-1,
Rule 26(b)(1) (2015) (emphasis added).
attorney-client privilege is the oldest of the privileges for
confidential communications known to the common law."
Upjohn Co. v. United States, 449 U.S. 383, 389, 101
S.Ct. 677, 682, 66 L.Ed.2d 584, 591 (1981) (citation
omitted). For the privilege to apply and thus exclude
relevant evidence, "the relation of attorney and client
[must have] existed at the time the [particular]
communication was made." In re Investigation of
Miller, 357 N.C. 316, 335, 584 S.E.2d 772, 786 (2003)
(quoting State v. McIntosh, 336 N.C. 517, 523, 444
S.E.2d 438, 442 (1994)).
an attorney-client relationship arises between an attorney
and a single client the attorney represents. See id.
at 335, 584 S.E.2d at 786. This Court, however, has also
recognized a multiparty attorney-client relationship in which
an attorney represents two or more clients. See Dobias v.
White, 240 N.C. 680, 685, 83 S.E.2d 785, 788 (1954)
(indicating that an attorney-client relationship can exist
when "two or more persons employ the same attorney to
act for them in some business transaction"). "The
rationale for recognizing this tripartite attorney-client
relationship is that individuals with a common interest in
the litigation should be able to freely communicate with
their attorney, and with each other, to more effectively
defend or prosecute their claims." Raymond, 365
N.C. at 99, 721 S.E.2d at 926 (citation omitted).
Raymond a former police officer and member of the
Southern States Police Benevolent Association (SSPBA)
contacted the SSPBA and spoke with an SSPBA attorney in
confidence, seeking legal advice regarding his recent
demotion. Id. at 95-96, 721 S.E.2d at 924-25. The
SSPBA then referred the officer to outside legal counsel paid
for by the SSPBA. As a dues-paying member, the former
officer's SSPBA membership entitled him to various SSPBA
services, including legal representation in grievance and
disciplinary matters. Recognizing the tripartite nature of
the arrangement, this Court held that an attorney-client
relationship existed between the former police officer, the
SSPBA and its attorney, and the outside legal counsel
selected by the association to represent the former officer.
Id. at 99, 721 S.E.2d at 927. As such, ...