United States District Court, D. Connecticut
RICHARD M. COAN, Plaintiff-Trustee,
SEAN DUNNE et al., Defendants.
ORDER DENYING TRUSTEE'S MOTION FOR CONTEMPT AND
IMPOSING SANCTIONS PURSUANT TO FED. R. CIV. P.
JEFFREY ALKER MEYER, UNITED STATES DISTRICT JUDGE
Richard M. Coan has moved for contempt and discovery
sanctions against debtor-defendant Sean Dunne. Doc. #70. In
essence, the Trustee accuses Dunne of willful failure to
preserve and produce emails from certain email accounts as
well as other discovery misconduct.
referred the Trustee's motion to U.S. Magistrate Judge
Robert M. Spector, who pursuant to 28 U.S.C. §
636(e)(6)(B) entered an order certifying facts to support a
finding of contempt and recommended a range of sanctions
including an award of attorney's fees and costs, an
adverse inference instruction, and a finding of waiver of
privilege. See Doc. #225. Now before me are
Dunne's objections to the Magistrate Judge's ruling,
as well as objections from the remaining defendants. For the
reasons I explain below, I will deny the Trustee's motion
for contempt but I will impose sanctions on Dunne for his
discovery misconduct pursuant to Federal Rule of Civil
Procedure 37 and the Court's inherent authority.
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 facts
and posture of this case are well-known to the parties. The
pertinent facts laid out here are generally taken from those
certified by Judge Spector to which the parties have not
objected but as supplemented by consideration of additional
factual submissions that have been filed subsequent to Judge
2010, Dunne has maintained several email accounts. Dunne
claims that in 2011 or 2012 he stopped using two of these
accounts: email@example.com and firstname.lastname@example.org. Doc.
#225 at 17. Dunne swears that he stopped using the
email@example.com account because his personal assistant
had stopped working for him, and that he closed the
firstname.lastname@example.org account because the Mountbrook server
had been functioning poorly while he was in the United
States, consequently frustrating his email use. Doc. #274-1
at 36 (¶¶ 8-9).
and his agent James Ryan both swear that the Mountbrook
server did not provide for cloud-based email access; these
emails were stored on a private server, and Ryan abandoned
the server in a Dublin building that Dunne gave up to a
creditor in June 2013. Doc. #274-1 at 37 (¶¶ 9-11),
86-87 (¶¶ 1-3). Dunne does not possess the server
and does not have access to the two Mountbrook email accounts
that were stored on the server. Id. at 37 (¶
transitioned from the private-server Mountbrook email service
to Google email. Id. at 36-37 (¶ 9).
Google's “Gmail” service is a web-based email
service that does not involve storage of emails exclusively
on private servers. The first Gmail account that Dunne
opened, in approximately May 2011, was email@example.com.
Id. at 37 (¶ 9). According to documents
obtained by the Trustee from third party sources, Dunne used
the firstname.lastname@example.org account to communicate with Seamus
Reddan, his agent for the sale of Walford, a large property
in Ireland that the Trustee alleges Dunne fraudulently
transferred. Doc. #225 at 19; see Doc. #189 at 32
(¶¶ 145-50) to Coan v. Killilea, No.
15-05019 (Bankr. D. Conn. 2016).
2013, Google informed Dunne that there had been an attempt to
hack the account, and so Dunne closed this account and
created a second Gmail account: email@example.com.
Id. at 37 (¶ 11). According to Dunne, concerns
and notifications about hacking continued, which caused him
to close this second account in approximately December 2013
and then to open a third Gmail account that he continues to
use to this day. Ibid.
corroborate his claim about hacking concerns, Dunne has
produced a copy of a Google notification that was sent to him
in June 2013 advising him that his firstname.lastname@example.org
account had been locked because of too many log-in attempts
and his contemporaneous forwarding of this advisory to a
colleague stating: “Vinny, call me later as somebody
trying to hack my email account. May need to close it
down:” Doc. #274-1 at 89. Similarly, he received
another warning from Google to the email@example.com
account on December 16, 2013. Id. at 91.
short, Dunne had four email accounts that were either
discarded or closed by Dunne by the end of 2013. By that
point in time, Dunne had been sued in 2012 in Connecticut
state court by NALM and had also filed for bankruptcy in
Connecticut in March 2013. In June 2013, Dunne was subject to
formal, on-the-record interrogation by the Trustee at which
time he was asked and answered questions about his email
accounts. Doc. #274-1 at 17-27. He was questioned again in
December 2013 at which time he expressed concern that
“somebody was hacking my e-mail account.”
Id. at 31.
the pendency of the NALM state court action, the federal
bankruptcy, and formal questioning in 2013 about the emails
by the Trustee, neither the Trustee nor any other creditor
made any request to Dunne in 2012 or 2013 to preserve his
emails. It was not until several years later in 2016 that the
Trustee first served a discovery demand for Dunne's
25, 2016, the Trustee subpoenaed Dunne for a wide range of
documents including his emails. Doc. #225 at 14. In addition,
this was the first discovery request for documents related to
Walford. Id. at 20. When Dunne did not comply with
the July 2016 subpoena, the Trustee moved to compel
production of documents that the July 2016 subpoena
requested, and by February 2017, the Bankruptcy Court had
ordered Dunne to produce responsive documents and file an
affidavit certifying that all responsive documents in
Dunne's possession and control had been produced to the
Trustee. Id. at 14-15. Dunne then certified in
February 2017 that he had conducted a good faith search to
find all responsive documents, and that he had provided them
for production. Id. at 15. It stands to reason that,
because the email accounts at issue here were either closed
or unavailable to Dunne by the end of 2013, it was not false
as to these email accounts for Dunne to have certified in
February 2017 that he had conducted a good faith search to
locate and produce documents responsive to the subpoena but
without producing these emails.
Trustee renewed his motion to compel and for contempt in July
2017, and in August 2017, the Bankruptcy Court found Dunne in
contempt and ordered him to produce all documents responsive
to the July 2016 subpoena, including a list of all email
accounts he had used since the start of 2010. Ibid.
The Bankruptcy Court also ordered the Trustee to serve a copy
of the order on Google and AT&T so that those companies
could produce emails from two of Dunne's email accounts
with Dunne's cooperation. Ibid. Dunne then
appealed the Bankruptcy Court's contempt order.
Ibid. While Dunne's appeal was pending, Google
informed the Trustee in November 2017 that its users could
obtain and produce account content themselves or by using the
Google Takeout feature. Ibid.
record, however, is not clear whether this feature existed in
2013 at the time that Dunne closed two of his Gmail accounts
or whether this feature would have allowed Dunne in 2017 to
recover email accounts that had been closed many years
before. To the contrary, Google further advised the Trustee
in January 2018 that “[t]he firstname.lastname@example.org
account was deleted by the user and purged by Google in
2013.” Id. at 18-19. The reasonable inference
from this record is that Dunne could have done nothing at the
time he was served with the July 2016 subpoena or later to
recover the email@example.com and firstname.lastname@example.org
accounts that he had closed in 2013. Nevertheless, in
December 2017, the Trustee moved in the Bankruptcy Court for
further contempt against Dunne on the ground that Dunne had
neither used Google Takeout, nor executed a consent order
that Google had provided him, nor taken any further steps to
produce email account content. Id. at 15-16.
January 2018, the Bankruptcy Court entered an order finding
Dunne in further contempt, ordering him to submit a sworn
affidavit or declaration regarding the document requests he
had not yet complied with, and to file a privilege log of any
withheld documents or communications that would allow the
parties to assess Dunne's claims of privilege.
Id. at 16. Dunne filed an unsworn certification on
February 9, 2018, listing his email accounts at
email@example.com; firstname.lastname@example.org; and
email@example.com. Ibid. He claimed he only had
access to the firstname.lastname@example.org account, from which he
produced 1, 800 pages of email. Ibid.
February 23, 2018, Dunne produced to opposing counsel but did
not file with the Bankruptcy Court a privilege log listing 2,
518 documents as privileged. Ibid. Although it
appears that Dunne was supposed to and should have filed this
log with the Bankruptcy Court, it is hard to understand the
Trustee's claim of prejudice in light of the fact that
the Trustee timely received a copy of this privilege log.
District Court affirmed the Bankruptcy Court's contempt
findings on September 27, 2018. Ibid.; see In re
Dunne, 2018 WL 4654698 (D. Conn. 2018) (Shea, J.). Judge
Shea affirmed the finding that Dunne had failed to comply
with the July 2016 subpoena, 2018 WL 4654698 at *5, affirmed
the finding that Dunne was unable to show why he was unable
to produce records from all of his email accounts,
id. at *7, *9, and affirmed the Bankruptcy
Court's order directing the Trustee to subpoena Google
and AT&T, id. at *9. Judge Shea remanded for
consideration whether Dunne had acted in bad faith to warrant
an award of attorney's fees. Id. at *8-*9.
2018, Dunne hired an IT consultant to ensure that the
email@example.com account had been fully searched. Doc.
#225 at 21. The parties have since disputed the appropriate
search terms for the IT consultant to use. See Doc.
#304 at 24-25; Doc. #329 at 10.
January 2, 2019, other defendants produced numerous emails
from the firstname.lastname@example.org account that Dunne had not
produced. Doc. #225 at 21. The Trustee has also learned that
Dunne regularly communicates via text, and Dunne has conceded
that while the July 2016 subpoena requests text messages, he
automatically deleted his texts and so has only produced
texts that postdate September 1, 2018. Ibid. On
January 18, 2019, Dunne filed revised and supplemental
privilege logs with the Court. Id. at 22.
Spector concluded that Dunne's production continued to be
incomplete, that his privilege logs continued to list
nonprivileged material, and that Dunne had unacceptably
delayed in retaining an IT consultant. Id. at 24.
Judge Spector then concluded that on this basis Dunne should
be held in further contempt, and went on to consider
appropriate sanctions. Judge Spector recommended that Dunne
be held responsible for attorney's fees involved with the
Trustee's contempt motion, the cost of searching
Dunne's remaining electronically stored information for
responsive and nonprivileged documents to the July 2016
subpoena, an adverse inference about Walford arising from
Dunne's deleted emails, and a waiver of Dunne's
privilege as to any new documents discovered between now and
trial. Id. at 25-30.
both Judge Shea's and Judge Spector's prior rulings,
Dunne retained new counsel who has substantially supplemented
the factual record to shed light on on Dunne's actions
and his state of mind with respect to his closing of the
email accounts. Docs. #274, #329. It is this additional
information that leads me in this ruling not to view
Dunne's actions quite as unfavorably as they may have
been viewed by both Judge Shea and Judge Spector. This is not
to excuse Dunne for his prior failure to comply with
discovery demands, but my focus remains on evaluating
Dunne's actions and state of mind in light of the current
record before me.
Trustee has moved for the Court to hold Dunne in contempt
pursuant to Federal Rules of Civil Procedure 37 and 45 as
well as under the Court's inherent powers. Doc. #70 at 1.
Federal Rule of Civil Procedure 37(b)(2)(A) empowers the
Court to issue discovery sanctions in its discretion
“[i]f a party . . . fails to obey an order to provide
or permit discovery.” Among the permissible sanctions a
court may impose are treating as a contempt of court the
failure to obey a discovery order. Id. at
37(b)(2)(A)(vii). Similarly, “a valid subpoena is a