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Coan v. Dunne

United States District Court, D. Connecticut

April 8, 2019

RICHARD M. COAN et al., Plaintiffs,
SEAN DUNNE et al., Defendants.



         Defendants Gayle Killilea, Mountbrook USA, LLC, Wahl, LLC, and TJD21, LLC move to quash a subpoena served by plaintiff Trustee Richard M. Coan on the law firm of Heagney Lennon & Slane LLP (HLS). Defendants principally argue that the subpoena improperly demands the production of privileged materials, and the Trustee counters that the documents fall within the scope of the crime-fraud exception. Because I conclude that the Trustee has not established a sound basis for application of the crime-fraud exception, I will grant defendants' motion to quash to the extent that the subpoena demands production of privileged information.


         This is a financial fraud case that is related to bankruptcy proceedings in Connecticut and the Republic of Ireland involving real estate developer Sean Dunne. See Coan v. Dunne, 2019 WL 302674, at *1-*2 (D. Conn. 2019) (generally describing the history of this case). The law firm of HLS is based in Greenwich, Connecticut, and represented one or more of the defendants as counsel in connection with the acquisition and conveyance of certain real estate properties in Greenwich including properties at 22 Stillman Lane and 42 Bote Road. An attorney from HLS acted as trustee in both of those purchases. Doc. #244-2; Doc. #244-3. HLS also incorporated defendant Wahl, LLC, which defendant Killilea owns. Doc. #244-5. As trustee, HLS conveyed 22 Stillman Lane to Wahl. Doc. #244-5. HLS acted as authorized signatory for Wahl when it issued a mortgage to Newinvest, a nonparty to this suit that the Trustee alleges defendants control. Doc. #244-6.

         On January 18, 2019, the Trustee served a subpoena on HLS pursuant to Federal Rule of Civil Procedure 45. See Doc. #205-1. The subpoena requests the production of 27 different categories of documents, including virtually all communications between HLS and defendants, all documents concerning the properties that are at the center of this litigation, all documents concerning defendants' finances, and all communications concerning defendants with numerous third parties-including defendants' foreign counsel. Doc. #205-1 at 11-13.

         On its face, the subpoena demands the production of every single attorney-client privileged communication between HLS and any of the defendants. For one among many examples, Item #5 of the subpoena demands the production of “[a]ll directives and/or instructions made to you by Sean Dunne, Gayle Killilea, John Dunne, or the Dunne Entities concerning any business or financial transaction related thereto.” Doc. #205-1 at 11. Similarly, Item #10 demands the production of “[a]ll communications between you and Sean Dunne, Gayle Killilea, John Dunne, or the Dunne Entities concerning the Greenwich Properties, including, but not limited to, emails, calendars, diaries, notes, reports, or memoranda concerning or reflecting any conversation, telephone call, or meeting of whatever kind between you and Dunne, Killilea, John Dunne, and/or the Dunne Entities.” Ibid. Many of the other requests demand “communications” on varied subject matters between defendants and their attorneys at HLS.

         Defendants move to quash the subpoena principally on the ground that it seeks privileged information and is unreasonably broad. Although defendants also argue that the subpoena did not provide a reasonable time for compliance, I understand this objection to be moot insofar as it is represented that HLS has produced nonprivileged documents. Doc. #244 at 4 n.3. As to the privileged documents, the Trustee maintains that the crime-fraud exception applies.


         Under Federal Rule of Civil Procedure 45, the Court is required to quash or modify a subpoena if the subpoena “requires disclosure of privileged or other protected matter, if no exception or waiver applies, ” or if the subpoena “subjects a person to undue burden.” Fed.R.Civ.P. 45(d)(3)(A). In addition, under Rule 26, the Court has the authority to “issue an order to protect a party or person from annoyance, embarrassment, oppression, or expense.” Fed.R.Civ.P. 26(c).

         As a preliminary matter, the subpoena plainly requests information protected by the attorney-client privilege and the work-product privilege. The 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 by counsel 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).

         Both these privileges are subject to a “crime-fraud” exception. See In re Richard Roe, Inc., 168 F.3d 69, 71 (2d Cir. 1999). “[A] party seeking to invoke the crime-fraud exception must at least demonstrate that there is probable cause to believe that a crime or fraud has been attempted or committed and that the communications were in furtherance thereof.” Id. at 70 (internal quotations omitted).[1]

         As the Second Circuit has cautioned, “[g]iven that the attorney-client privilege and work product immunity play a critical role in our judicial system, ” the crime/fraud and other exceptions “should not be framed so broadly as to vitiate much of the protection they afford.” Roe, 168 F.3d at 71. For this reason, the crime/fraud exception “applies only when the communications between the client and his lawyer further a crime, fraud or other misconduct, ” and “[i]t does not suffice that the communications may be related to a crime, ” because “[t]o subject the attorney-client communications to disclosure, they must actually have been made with an intent to further an unlawful act.” United States v. Jacobs, 117 F.3d 82, 88 (2d Cir. 1997), abrogated on other grounds by Loughrin v. United States, 573 U.S. 351 (2014).

         The Trustee argues that the documents he seeks “were in furtherance of the Dunnes' global scheme to hinder, delay and defraud Debtor's creditors.” Doc. #244 at 2. To support this sweeping claim, the Trustee devotes a total of four pages to allegations of facts that are sometimes supported by citations to primary source documents and sometimes supported by no citation at all. Doc. #244 at 4-7. The Trustee then confuses his presentation with some needless repetition and a sprinkling of a few more facts and citations in later parts of his memorandum. Doc. #244 at 11-14.

         According to the Trustee, one of the HLS lawyers (Thomas Heagney) took title as trustee to the properties at 22 Stillman Lane and 42 Bote Road in January 2011, and then in May 2011 Heagney conveyed the property to Wahl. Doc. #244 at 4-5. In August 2012, Heagney encumbered 22 Stillman Lane with a mortgage by Newinvest, which was a purported third-party lender that allegedly loaned funds to Wahl. Id. at 5. The Trustee alleges that this mortgage was fraudulent, because Gayle Killilea and John Dunne actually financed and controlled ...

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