United States District Court, D. Connecticut
RICHARD M. COAN, Plaintiff-Trustee,
SEAN DUNNE, et al., Defendants.
ORDER ON DISCOVERY DISPUTE
Jeffrey Alker Meyer, United States District Judge.
Richard M. Coan (“the Trustee”) and defendants
Gayle Killilea, Mountbrook USA, LLC, Wahl, LLC, and TJD21,
LLC (“defendants”) are enmeshed in a discovery
dispute in a case related to ongoing bankruptcy proceedings
against Sean Dunne in this District and in the Republic of
Ireland. See In re Dunne, 13-50484 (Bankr. D. Conn.
filed Mar. 29, 2013); Lehane v. Dunne 2014 7820 P
(H. Ct.) (Ir.); In re Dunne (A Bankrupt) 2013 Bankr.
No. 2478 (H. Ct.) (Ir.). The Trustee and defendants filed
numerous cross-motions to, inter alia, compel the
production of documents and hold each other in contempt, most
of which I ruled on at a hearing on November 16, 2018.
See Doc. #82. I now turn to defendants' two
motions to compel (Doc. #66; Doc. #67) that I took under
advisement at the hearing.
conclude in relevant part that the “common
interest” rule may be invoked to justify a claim of
attorney-client privilege or work-product privilege as to
documents exchanged between the Trustee and two major
creditors as well as the Trustee's international
counterpart in Ireland. I also conclude that, despite the
fact that the Trustee is collaborating with authorities in
Ireland, the Trustee is not required to disclose documents in
the possession of Irish authorities and that the Trustee does
not possess or control.
First Motion to Compel (Doc. #66)
first motion challenges the Trustee's assertion of the
attorney-client privilege to scores of requests for
production from defendants. See Doc. #66 at 9; Doc.
#66-1. I will sustain the Trustee's objection to the
extent the Trustee claims that the attorney-client or work
product privileges may be applied to its communications with
the Irish financial institutions National Asset Loan
Management, Ltd. (“NALM”) and Ulster
Bank-Dunne's two largest bankruptcy creditors-and the
Irish Official Assignee (OA)-who is the equivalent of the
Trustee in the parallel Irish proceedings.
attorney-client privilege protects communications (1) between
a client and his or her attorney (2) that are intended to be,
and in fact were, kept confidential (3) for the purpose of
obtaining or providing legal advice. See United States v.
Krug, 868 F.3d 82, 86 (2d Cir. 2017). The work product
privilege extends to documents prepared in anticipation of
litigation, so that “a lawyer can prepare and develop
legal theories and strategy with an eye toward litigation,
free from unnecessary intrusion by his adversaries.”
Schaeffler v. United States, 806 F.3d 34, 43 (2d
Cir. 2015) (internal quotations omitted).
fact that a document may be disclosed to a third party does
not necessarily constitute a waiver of either the
attorney-client privilege or the work-product privilege. To
the contrary, the privileges may not be waived if there is a
common interest with the third party to whom a communication
is made or disclosed. See Krug, 868 F.3d at 86-87
(attorney-client privilege); United States v. Deloitte
LLP, 610 F.3d 129, 139 (D.C. Cir. 2010) (work-product
“common interest” rule extends the privilege to
communications between parties “where a joint defense
effort or strategy has been decided upon and undertaken by
the parties and their respective counsel.”
Krug, 868 F.3d at 86 (quoting United States v.
Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989)). The rule
protects only “those communications made in the course
of an ongoing enterprise and intended to further the
enterprise.” Schwimmer, 892 F.2d at 243.
“Parties may share a ‘common legal interest'
even if they are not parties in ongoing litigation, ”
and “[a] financial interest of a party, no matter how
large, does not preclude a court from finding a legal
interest shared with another party where the legal aspects
materially affect the financial interests.”
Schaeffler, 806 F.3d at 40, 42.
with the Trustee that the common interest rule applies here
because the Trustee and the creditors and OA have a common
legal interest in maximizing the value of Dunne's
bankruptcy estate. The Second Circuit has a taken a broad
view of what may constitute a common legal interest. See
ibid. (recognizing common legal interest in
restructuring transaction to reduce tax liability). So, too,
have district and bankruptcy courts in contexts similar to
the one here. See, e.g., FDIC v. Fid. &
Deposit Co. of Md., 2013 WL 6181127, at *4-*5 (S.D. Ind.
2013) (recognizing common interest between trustee and
committee of creditors in maximizing estate value); In re
Mortg. & Realty Tr., 212 B.R. 649, 653 (Bankr. C.D.
Cal. 1997) (recognizing, in Chapter 11 case, common interest
between debtor and committee of creditors in maximizing
common interest the Trustee and creditors share fits within
this expansive universe. The Trustee owes a fiduciary duty to
the creditors, Germain v. Conn. Nat'l Bank, 988
F.2d 1323, 1330 n.8 (2d Cir. 1993), and while the Trustee is
also the debtor's fiduciary, ibid., the scope of
both fiduciary duties is to marshal the estate's assets
and “maximize the realization of estate
liquidation.” In re Drexel Burnham Lambert Grp.,
Inc., 123 B.R. 702, 708 (Bankr. S.D.N.Y. 1991).
acknowledge that the Trustee and two of Dunne's major
creditors, NALM and Ulster Bank, are working together to
pursue claims against defendants and recover Dunne's
assets. Doc. #66 at 2. And although an agreement to pursue a
common legal strategy need not be in writing, to the extent
that the Trustee, Ulster, and NALM entered into joint
prosecution agreement, see Doc. #75 at 12, such an
agreement reinforces their claim to a common interest.
See HSH Nordbank AG N.Y. Branch v. Swerdlow, 259
F.R.D. 64, 72 n.12 (S.D.N.Y. 2009) (Lynch, J.). Similarly,
while the OA is not a creditor of Dunne's estate, a
common legal interest still exists between the Trustee and
the OA in view of their common function and goal. Defendants
argue that because the OA is pursuing assets in Ireland and
South Africa, rather than in the United States, the lack of
overlap in assets destroys any common interest. Doc. #66 at
16. But the Bankruptcy Court has already recognized the
relationship between the OA and the Trustee as a
“symbiotic” one and that “[t]he Trustee and
the Official Assignee are acting together and are, in
essence, de facto co-administrators of each other,
working for the same purpose.” In re Dunne,
2015 WL 7625609, at *5 (Bankr. D. Conn. 2015). Indeed,
defendants complain earlier in their motion about the overlap
between the OA and Trustee's actions. Doc. #66 at 2.
Thus, even if there is no overlap in assets between the
United States and elsewhere, this litigation has not
proceeded in separate national silos, see, e.g.,
Doc. #65 (defendants' objection to Trustee's
application to retain counsel in Ireland), and the Trustee
and OA have a common legal interest in developing a common
strategy to pursue Dunne's assets.
therefore conclude that the common interest rule applies to
otherwise privileged communications between the Trustee,
NALM, Ulster Bank, and the OA in furtherance of their joint
legal strategy. Not every document defendants request will
necessarily be subject to privilege under the common interest
rule. If defendants mean to argue, for instance, that
communications that are not between an attorney and a client
are not subject to the attorney-client privilege, they may be
correct. See Doc. #66 at 16. And a communication
that is not privileged in the first place of course cannot
have that privilege extended through the common interest
rule. But I will deny defendants' motion to compel to the
extent that defendants have argued as a categorical matter
that communications between the Trustee and Ulster Bank,
NALM, and the OA in furtherance of their common litigation
strategy waive the attorney-client privilege or work product
doctrine. And in doing so, I sustain the Trustee's
objection to the extent it invokes the common interest rule
over otherwise privileged communications so shared.
Supplemental Motion to Compel (Doc. #67)
also seek to compel the Trustee to produce a number of
documents from the parallel Irish bankruptcy proceedings that
the Trustee claims not to possess or control. Doc. #67 at
2-4. The Trustee objects that the OA possesses the documents
defendants seek, and ...