Opinion
Opinion By: Andy Beshear,Attorney General;Gordon R. Slone,Assistant Attorney General
Open Records Decision
The issue presented in this appeal is whether the Department of Financial Institutions (DFI) properly withheld numerous emails under KRS 61.878(1)(i) and (j), and KRE 503 (attorney-client privilege). After reviewing the disputed emails, we conclude that the bulk of the emails were properly withheld but that two emails received from Roger Holloway, III, that were merely forwarded by Commissioner Vice to other DFI staff, were subject to disclosure rather than qualifying under the preliminary exemptions.
On February 29, 2016, Roger W. Holloway, III, submitted an Open Records Request to the Department of Financial Institutions ("DFI" or "the Department") in which he requested copies of "[a]ll emails pertaining to Roger W. Holloway III and Holloway Mortgage Group, LLC from the following[:] Charles Vice, Tammy Scruggs, Jessica Sharpe, Critt Cunningham, and Gary Stephens. This should include emails from October 02, 2014." The Department timely responded to Mr. Holloway's request on March 3, 2016, by providing the records it found to be releasable, but withheld some emails. The Department claimed that these emails were subject to the exceptions at KRS 61.878(1)(i) and (j) (commonly referred to together as the "preliminary exceptions") and/or KRE 503 (lawyer-client privilege) as incorporated by KRS 61.878(1)(l). Mr. Holloway appealed DFI's response on August 22, 2016, explaining that DFI was "hiding information" that could be helpful in actions taken against him by DFI. The Department responded by explaining that Mr. Holloway's license as a mortgage loan originator and his company's license as mortgage loan broker had been suspended and later revoked by DFI. Mr. Holloway appealed DFI's actions to Franklin Circuit Court but the Court dismissed the appeal on May 26, 2016. Mr. Holloway also filed a complaint with the Kentucky Commission on Human Rights against DFI and that claim is still pending. The Department explained that Mr. Holloway had filed numerous Open Records requests to DFI and that it had provided all non-exempt records to him. The Department asserted that there were a small number of emails that were not disclosed that fell under the attorney-client privilege and the preliminary exceptions, along with one document where "legislative privilege" was being claimed at the request of the Legislative Research Commission (LRC). That document was a summary of the Holloway case prepared for LRC after Mr. Holloway had complained to LRC about DFI's actions against him.
On September 15, 2016, this office requested to review the withheld emails and LRC document in camera under the authority of KRS 61.880(2)(c) and 40 KAR 1:030, Section 3. The Department provided the withheld emails on September 28, 2016, and also advised that, after conferring with LRC, the claim of legislative privilege had been withdrawn by LRC and that the previously withheld document had been provided to Mr. Holloway. The Department divided the emails into seven sets, sorted by the originator of the email and the exemption claimed for each set of emails.
Basis for Attorney-Client Privilege
Regarding DFI's assertion of attorney-client privilege, KRS 61.878(1)(l) exempts from the Open Records Act public records or information the disclosure of which is prohibited or restricted or otherwise made confidential by enactment of the General Assembly. "[T]he protections generally afforded by the attorney-client privilege have been recognized and incorporated into the statute by the Kentucky General Assembly."
Hahn v. Univ. of Louisville, 80 S.W.3d 771, 774 (Ky. App. 2001). "The attorney-client privilege attaches to a confidential communication 'made to facilitate the client in his/her legal dilemma and made between two of the four parties listed in [KRE 503]; the client, the client's representatives, the lawyer, or the lawyer's representatives.'"
The St. Luke Hosps., Inc. v. Kopowski, 160 S.W.3d 771, 776 (Ky. 2005). "The privilege exists to protect not only the giving of professional advice to those who can act on it but also the giving of information to the lawyer to enable him to give sound and informed advice."
Upjohn Co. v. United States, 449 U.S. 383, 384, 101 S. Ct. 677, 679-80, 66 L. Ed. 2d 584 (1981). However, the "attorney-client privilege does not apply to all communications between an attorney and a client. Indeed, to fall under the attorney-client privilege, a communication must be confidential, relate to the rendition of legal services, and not fall under certain exceptions."
Commonwealth, Cabinet for Health & Family Servs. v. Scorsone, 251 S.W.3d 328, 330 (Ky. App. 2008). "The privilege only protects disclosure of communications; it does not protect disclosure of the underlying facts by those who communicated with the attorney."
Upjohn Co. v. United States, 449 U.S. 383, 395, 101 S. Ct. 677, 685, 66 L. Ed. 2d 584 (1981).
Basis for Preliminary Exceptions
Regarding the underlying rationale of the preliminary exceptions, both the courts and this office have applied the language of KRS 61.878(l)(i) and (j), commonly known as the ""preliminary exceptions," in a variety of contexts. See
City of Louisville v. Courier-Journal & Louisville Times Co., 637 S.W.2d 658 (Ky. App. 1982);
Kentucky State Board of Medical Licensure v. Courier-Journal and Louisville Times Company, 663 S.W.2d 953 (Ky. App. 1983) (recognizing that "documents defined in subsections [(i)] and [(j)] which become a part of the records adopted by the [agency] as the basis of its final action become releasable as public records ..." but unless those documents are "so adopted and made a part of the [agency's] final action, such documents shall remain excluded under subsections [(i)] and [(j)] of the Act");
University of Kentucky v. Courier-Journal & Louisville Times Co., 830 S.W.2d 373, 378 (Ky. 1992);
Palmer v. Driggers, 60 S.W.3d 591 (Ky. App. 2001); see 99-ORD-220; ll-ORD-052.
This office used the foregoing guidance regarding the attorney-client privilege and the preliminary exceptions to analyze the emails provided for in camera inspection and made the following determinations regarding those emails:
1. Emails from Commissioner Vice . The first set of eight emails were from Commissioner Charles Vice, and DFI claimed that these emails were exempt from disclosure by the attorney-client privilege and/or the preliminary exceptions. There are two emails (dated September 17, 2016, 11:10 a.m., and July 27, 2015, 9:51 a.m.) in this batch in which Commissioner Vice merely forwards emails from Mr. Holloway to Jessica Sharpe, General Counsel, Gary Stephens, attorney and Tammy Scruggs, Director, Non Depository Institutions Division, with only "FYI," or no comment at all. These emails do not contain a "full and frank discussion of ideas among agency members" that would be the type of communication protected under the preliminary exceptions. These emails also do not contain confidential communications among attorneys and clients for the purpose of rendering legal advice and services. These two emails are not privileged communications pursuant to the preliminary exceptions or KRE 503. These two emails must be released to Mr. Holloway.
The remaining six emails meet the elements of the attorney-client privilege: (1) confidential communications between an attorney, or attorneys, and their client (DFI officials or employees), or among attorneys; (2) for the purpose of, or relating to the rendition of legal services, and (3) do not fall under certain exceptions. See KRE 503. As these emails were properly withheld under the attorney-client privilege, they would not be subject to disclosure even after final action by the agency, as they could be if withheld under the preliminary exceptions, and so we will not review how the preliminary exceptions applies to these emails.
2. Emails from Jessica Sharpe, Gary Stephens and Critt Cunningham . Other emails provided for review were from Jessica Sharpe, General Counsel, and Gary Stephens and Critt Cunningham, both attorneys with DFI. Our review of these emails indicate that they are for the purpose of providing legal advice in the administrative actions regarding Mr. Holloway, the appeal of those actions in Franklin Circuit Court, or the administrative complaint pending before the Kentucky Human Rights Commission that was filed by Mr. Holloway. These communications are confidential communications between attorneys and clients for the purpose of rendering legal advice and services, and thus are privileged communications pursuant to KRE 503, as incorporated through KRS 61.878(1)(l). Each of Ms. Sharpe's and Mr. Stephens' emails is clearly marked with a statement indicating that the communication is confidential and subject to the attorney-client privilege. Although the emails from Mr. Cunningham are not marked with such a statement, our review of these emails finds that the failure to mark them as confidential or privileged, does not necessarily deprive them of their privileged nature. As with the emails from Commissioner Vice, these emails were properly withheld under the attorney-client privilege and they would not be subject to disclosure after final action by the agency, as they could be if withheld under the preliminary exceptions, and so we will not review how the preliminary exceptions applies to these emails.
3. Emails from Tammy Scruggs . There were two sets of emails from Tammy Scruggs, Director, Nondepository Institutions Division. The first set of emails were marked as being withheld pursuant to attorney-client privilege. Our review of these emails determined that they were from Tammy Scruggs and sent to one or more of the DFI attorneys (Critt Cunningham, Gary Stephens, and/or Jessica Sharpe) for the purpose of requesting legal advice or services in the administrative actions regarding Mr. Holloway, the appeal of those actions in Franklin Circuit Court, or the administrative complaint pending before the Kentucky Human Rights Commission that was filed by Mr. Holloway. These communications are confidential communications for the purpose of rendering legal advice and services, and thus are privileged communications pursuant to KRE 503, as incorporated through KRS 61.878(1)(l).
The second set of emails from Ms. Scruggs were marked as being withheld pursuant to the preliminary exceptions of KRS 61.878(i) and (j). Upon our review, we have determined that these emails are not of the type that would have been incorporated into the final agency action but are of the type that are necessary for the free flow of information among DFI employees and that disclosure would restrain those employees "from theorizing, questioning, hypothesizing, or commenting in regard to their assigned duties for fear of having their drafts, notes, and preliminary comments thrown into the public arena as if they were 'final action of a public agency.'" 96-ORD-205, p. 4; 14-ORD-014.
The Department of Financial Institutions, having provided the withheld records to permit assessment of the claimed exemptions, we find that DFI has satisfied its statutory burden of proving that the bulk of the withheld records do fall within the claimed exemptions as construed by the courts and this office. We therefore affirm, in part, the partial denial of Mr. Holloway's request, but find that two emails from Commissioner Vice withheld under the preliminary exceptions and/or attorney client privilege were improperly withheld from release. The Department did violate the Open Records Act in failing to disclose the two emails where Commissioner Vice merely passed on emails he had received from Mr. Holloway.
This office is not permitted to reveal the content of the records provided for in camera review per KRS 61.880(2)(c) and 40 KAR 1:030, Section 3. Given the information that was ultimately provided on appeal regarding the current status of the Department's administrative investigation, administrative hearings and court cases regarding Mr. Holloway, the instant appeal presents no basis to depart from the lines of controlling legal authority outlined above.
Either party may appeal this decision by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882 . Pursuant to KRS 61.880(3), the Attorney General must be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.