meaning of the statute and that the probate proceeding in Oberengadin did not qualify as a "foreign tribunal". By endorsement Order dated May 30, 1991, Judge Lasker, presiding in Part I, denied the motion to quash, but "without prejudice to the moving party's right to make objections to the subpoenas if they are considered to be overbroad or otherwise deficient". Ex. 4 to November 14 Schurtman Declaration. Both Ms. Neuwirth and Mr. Fred I. Sonnenfeld, Esq., who was produced as the representative of Sonnenfeld & Richman, made such objections. It is these objections that give rise to this motion.
In the interest of completeness, the Court also notes that Judge Sporkin of the United States District Court for the District of Columbia, by order dated January 10, 1992, permitted Countess Agusta to intervene, pursuant to Fed.R.Civ.P. 24(a), and to attend depositions then being conducted by Mr. Horler in the District of Columbia. Ex. 2 to February 7 Kaplan Affidavit. After this decision, Mr. Horler apparently acceded to the Countess' requests to allow her to intervene also in this branch of the litigation.
This motion was adjourned for a period from November to April, and during that time counsel were able to resolve many of the specific discovery disputes that necessitated the motion. Remaining for decision, though, are two issues. First, Mr. Horler seeks from Ms. Neuwirth information relating to Alamar, N.V., a Netherlands Antilles corporation for which Mr. Grossman performed services. Mr. Horler suspects that this entity has or had some connection with Count Agusta, in part because some of Mr. Grossman's correspondence with third parties relating to this company mentions another company, Dirce, N.V., which concededly was connected to the Count.
At her deposition, Ms. Neuwirth refused to answer any questions relating to Alamar, on the grounds of attorney-client privilege. She has also refused to turn over to Mr. Horler certain files relating to Alamar, and will likewise not disclose that corporation's principal. Ms. Neuwirth avers that the principal of Alamar adamantly refuses to have his identity revealed, and also has submitted a sworn affidavit stating that her own investigation of the matter has disclosed no relation between Alamar and Count Agusta. March 25 Neuwirth Affidavit at P 5.
Second, Mr. Sonnenfeld has refused to produce some 800 documents from Mr. Grossman's files. These files, it is claimed, relate to Mr. Grossman's legal representation of both Count Agusta and Riccardo Agusta,
and are being withheld on grounds of attorney-client privilege and work product privilege. Mr. Horler is seeking these documents because they may disclose the location of assets of the Estate. The parties have agreed to submit copies of these documents for in camera inspection by the Court.
While the Court would ordinarily undertake to resolve these discovery disputes, the Court must first question, on its own motion, whether it may properly resolve this matter. A federal court is of course compelled to consider its subject matter jurisdiction whether or not the issue is raised by the parties. E.g., Clark v. Paul Gray, Inc., 306 U.S. 583, 83 L. Ed. 1001, 59 S. Ct. 744 (1939). Though the doctrine of abstention is not, strictly speaking, jurisdictional, Winston v. Children and Youth Services, 948 F.2d 1380, 1385 (3d Cir. 1991), cert. denied, 119 L. Ed. 2d 225, 60 U.S.L.W. 3815, 112 S. Ct. 2303 (1992), a District Court also may properly consider whether, in the exercise Of its equitable discretion, abstention may be appropriate on the facts of a particular case. Luckey v. Harris, 896 F.2d 479, 481 (11th Cir. 1989) (Edmonson, J., dissenting from denial of rehearing en banc) (permissible to raise abstention on court's own motion since abstention more than a "pleader's option") (quoting Zwickler v. Koota, 389 U.S. 241, 257, 19 L. Ed. 2d 444, 88 S. Ct. 391 (1967) (Harlan, J., concurring)), cert. denied, 495 U.S. 957 (1990); RR Village Association, Inc. v. Denver Sewer Corp., 826 F.2d 1197, 1206-07 (2d Cir. 1987) (Van Graafeiland, J., dissenting) (same), United Home Rentals Inc. v. Texas Real Estate Commission, 716 F.2d 324, 332 (5th Cir. 1983) (same), cert. denied, 466 U.S. 928, 80 L. Ed. 2d 185, 104 S. Ct. 1712 (1984). Of course, the case for sua sponte consideration of abstention is significantly stronger where, as here, there are so many related proceedings filed prior in time and pending in state (or foreign) courts, and where federal decision of an issue may interfere--or even conflict with--the work of those tribunals. Cf. Luckey, supra, at 481 (Edmonson, J., dissenting from denial of rehearing en banc) (discussing federalism concerns underlying abstention).
Although there are different categories of abstention, De Cisneros v. Younger, 871 F.2d 305, 307 (2d Cir. 1989) (enumerating types of abstention), the Court believes that the so-called Colorado River branch of abstention
is most pertinent here. In Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), the Supreme Court articulated an "exceptional circumstances" exception to the exercise of federal court jurisdiction. Id. at 818. Although, the Court stated, federal courts have a "virtually unflagging obligation . . . to exercise the jurisdiction given them", id. at 817, they may properly decline to do so in light of this exception, which "rests on considerations of '[wise] judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation'". Id. (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 96 L. Ed. 200, 72 S. Ct. 219 (1952)). See also Bath Memorial Hospital v. Maine Health Care Finance Commission, 853 F.2d 1007, 1013 (1st Cir. 1988).
The current test for whether Colorado River abstention is appropriate involves the application of six factors:
"(1) assumption of jurisdiction over a res; (2) inconvenience of the forum; (3) avoidance of piecemeal litigation; (4) order in which the actions were filed; (5) the law that provides the rule of decision; and (6) protection of the federal plaintiff's rights".
De Cisneros, supra, at 307.
In applying these factors, a court is directed to engage in a "careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction". Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 16, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983). Of course, the relative weight to be ascribed to each of these factors may vary in a particular case, e.g., Arkwright-Boston Manufacturers Mutual Insurance Co. v. City of New York, 762 F.2d 205, 211 (2d Cir. 1985) (danger of piecemeal litigation overriding factor justifying abstention), and the analysis of these factors is committed to the sound discretion of the District Court. Will v. Calvert Fire Insurance Co., 437 U.S. 655, 665-666, 57 L. Ed. 2d 504, 98 S. Ct. 2552 (1978).
The first factor, the assumption of jurisdiction over a res, is not directly present in this case. This action is not brought in rem, but rather pursuant to a federal statute which authorizes federal court assistance to persons involved in foreign judicial proceedings. However, if the Surrogate's Court of New York County does appoint a Temporary Administrator, that person will assume temporary control over assets of the Count's Estate. Furthermore, as the Surrogate's opinion of January 8, 1991, makes clear, there are presently restraining orders in effect with respect to certain entities allegedly controlled by the Count. On balance, then, this factor may be said to favor abstention. Cf. Lawrence v. Cohn, 778 F. Supp. 678, 685 (S.D.N.Y. 1991) (Surrogate's Court assumption of jurisdiction over estate supported Colorado River abstention).
The second factor, the inconvenience of the forum, is of no effect, as the Surrogate's Court is only one street removed from federal court in Manhattan.
As in Arkwright, supra, it is the third factor, the danger of piecemeal litigation, that weighs most heavily in favor of abstention. The fact is that many of the issues originally presented to this Court for resolution have been, or are being, litigated in the Surrogate's Court. In that litigation, Countess Francesca Agusta is seeking the appointment of a Temporary Administrator; to be successful, she must demonstrate that there are New York based assets of the Estate, or that the Estate's creditors need protection. More broadly, of course, it is in the Countess' interest to maximize the value of the Estate, in the hope that she will eventually be granted a share of the Estate. Thus, as her attorneys aver in their original motion to intervene in this proceeding:
"Countess Agusta's lawyers have for a period of in excess of 2-1/2 years been involved worldwide in the search for estate assets and have thereby gained extensive knowledge about the estate. By contrast, counsel for Notary Horler have been involved exclusively in this country and for a much more limited period of time. Thus, although Notary Horler's objectives in taking depositions here are not dissimilar to those of Countess Agusta, the background and knowledge of Countess Agusta's attorneys would permit much broader and more effective discovery. In fact, it is from information obtained by Countess Agusta's attorneys that the persons and entities to be deposed were identified". Kaplan Affidavit at P 2 (emphasis in original).
Furthermore, in the event that a Temporary Administrator is appointed in New York, that person will presumably also be seeking discovery of Mr. Grossman's personal representative, in order to locate and secure Count Agusta's assets. The Surrogate's Court should not, in such an event, be confronted with possible issue preclusion with respect to which documents are or are not privileged. There is a real risk that this Court's ruling and the Surrogate's Court ruling on such matters might be inconsistent. That court would be applying the New York law Of attorney-client privilege, while this Court, guided by Federal Rule Of Evidence 501, would likely apply the federal common law attorney-client privilege, see infra. Such a likelihood of inconsistent decisions is a critical element justifying Colorado River abstention. De Cisneros, supra, at 308 (possibility of "contradictory determinations" factor justifying abstention); Arkwright, supra, at 211 (same); Bull & Bear Group, Inc. v. Fuller, 786 F. Supp. 388, 392-93 (S.D.N.Y. 1992) ("existence of parallel actions posing the threat of inconsistent results" factor justifying abstention). See also Arizona v. San Carlos Apache Tribe of Arizona, 463 U.S. 545, 567, 77 L. Ed. 2d 837, 103 S. Ct. 3201 (1983) ("The existence of such concurrent proceedings creates the serious potential for spawning an unseemly and destructive race to the courthouse to see which forum can resolve the same issues first . . .").
Finally, the Surrogate's Court is better situated to resolve these claims of privilege than is this Court. Mr. Sonnenfeld, the attorney interposing the privilege claim, has stated that a portion of the 800 documents submitted for in camera review are work product documents relating to the Surrogate's Court litigation itself:
"Many of the withheld documents are Mr. Grossman's work product drafts of affidavits and memoranda of law which Mr. Grossman worked upon in two different litigations, namely, the action instituted by Francesca Agusta in Supreme Court, New York County, against Corrado Agusta in 1988 to impress a trust upon the apartment at Olympic Towers, which she now contends is owned by the decedent's estate, and the litigation commenced by Francesca Agusta in the Surrogate's Court, New York County, for the appointment of a temporary administrator". April 21 Sonnenfeld Affidavit at P 6 (emphasis added).
It can hardly be doubted that the court in which the underlying litigation is pending is better placed to analyze claims of privilege than this Court, which is a relative stranger to the case for which the allegedly privileged documents were generated.
To be sure, Mr. Horler is not currently a party to the Surrogate's Court action; he has invoked a federal statute which permits a federal District court, in its discretion, to use its powers to aid persons involved in a foreign judicial proceeding. 28 U.S.C. § 1782 (West 1966) ("The district court . . . may order him to give his testimony . . .); Lo Ka Chun v. Lo To, 858 F.2d 1564 (11th Cir. 1988) (district court has the discretion to determine whether to honor request for assistance); In re Letters Rogatory from Tokyo District Court, 539 F.2d 1216, 1219 (9th Cir. 1976) (same). Yet the fact remains that he, the Temporary Administrator in the Bahamas, the Countess and, if one is appointed, the Temporary Administrator in New York, are at this point united in interest: all are seeking to locate and preserve the Estate's assets. It serves absolutely no purpose for every interested party to engage in his or her own parallel discovery expedition.
The fourth factor in the abstention inquiry is the order in which the actions were filed. This, too, favors abstention, as the Surrogate's Court action was filed in July 1989, while this special proceeding was filed in February 1991. Furthermore, as previously indicated, there has already been extensive litigation in that action, including prolonged discovery by the parties and the issuance of restraining orders by the surrogate. See Arkwright, supra, at 211 (relative progress of two actions relevant consideration in assessing weight to be ascribed to this factor). See also Bull & Bear, supra, at 393 (". . . the fact that the instant case is related to more than one state court action militates in favor of abstention").
The application of the fifth factor--which law provides the rule of decision--is somewhat problematic on the facts of this case, since there is no underlying "claim" to be adjudicated. Cf. De Cisneros, supra, at 308 ("When the underlying substantive law is federal, abstention is disfavored, though the inverse proposition will not alone support a surrender of federal jurisdiction") (emphasis added). Thus, although the Court has federal statutory jurisdiction, the only issue of "federal law" in the case is the application of the federal common law of attorney-client and work product privilege to Mr. Sonnenfeld's claims. Fed. R. Evid. 501; Von Bulow by Auersperg v. Von Bulow, 811 F.2d 136, 141 (2d Cir. 1987) (applying federal common law privilege). As Mr. Horler is therefore not seeking to vindicate any substantive rights granted him by federal law, the case for abstention notwithstanding the presence of federal statutory jurisdiction is strengthened. Cf. Moses H. Cone, supra, at 23-26 (important federal substantive policies underlying claim counselled against abstention).
On the issue of privilege, this Court would likely look to Proposed Federal Rule of Evidence 503
, which stated that "The privilege may be claimed by . . . the personal representative of a deceased client . . .". Cf. In re Request for Judicial Assistance, 669 F. Supp. 403, 407 (S.D. Fla. 1987) (applying federal law on motions to vacate or quash discovery orders issued pursuant to § 1782). Even granting that this is a correct statement of federal law, identifying the "personal representative" of Count Agusta is less than simple: Mr. Horler claims that, as official administrator of the Estate, he has succeeded to the privilege, which, of course, he desires to waive. Mr. Sonnenfeld, representing the estate of Mr. Grossman, the Count's former attorney, disputes this assertion, contending that only Dr. Zinsli, the suspended Swiss executor of the will, could waive the privilege. New York law, on which the parties here relied in briefing this issue, is likewise unclear on this point. The New York statute codifying the attorney-client privilege is silent on this issue, see N.Y. Civ. Prac. L. & R. § 4503 (McKinney 1966 & 1992 Supp.), and there is some conflict in the cases. Compare Matter of Fishman, 32 A.D.2d 1063, 303 N.Y.S.2d 905, 907 (2d Dep't 1969) (Hopkins, J., concurring) (executor may waive privilege), aff'd, 27 N.Y.2d 809, 264 N.E.2d 356, 315 N.Y.S.2d 866 (1970) with Matter of Alexander, 205 Misc. 894, 895, 130 N.Y.S.2d 648, 650 (Surr. Ct. Suffolk Co. 1954) (power to waive privilege terminated by death of client) and Matter of Williams, 179 Misc. 805, 808-09, 39 N.Y.S.2d 741, 746 (Surr. Ct. N.Y. Co. 1942) (same). See also Matter of Beiny, 129 A.D.2d 126, 517 N.Y.S.2d 474, 479 (1st Dep't 1987) ("While it is questionable whether even a duly appointed executor would have had the power to waive the decedent's attorney-client privilege . . . it is quite certain that one merely named as an executor in an unprobated will would have had no authority whatsoever to do so") (citations omitted). Since this precise question arises, for obvious reasons, most frequently in the state court system, this Court believes that the Surrogate's Court should address it in the first instance.
The sixth and last Colorado River factor is whether the federal plaintiff's rights will be adequately protected in the state forum. As noted above, Mr. Horler is not presently a party to the state action, so this factor would seem initially to weigh against abstention. But see Cannady v. Valentin, 768 F.2d 501, 503 (2d Cir. 1985) (Colorado River abstention permissible despite lack of identity between federal and state plaintiffs). However, Mr. Horler is seeking only the production of certain documents relating to the decedent's estate, and is acting only as a fiduciary for the estate. If the Surrogate's Court determines that a Temporary Administrator should be appointed, that person will have an identity of interest with Mr. Horler.
Finally, our decision to abstain on Colorado River grounds is influenced, in part, by the special expertise of the Surrogate's Court in matters related to the probate and administration of wills. Although this case may not fail within the so-called "probate exception" to federal court jurisdiction, since jurisdiction is invoked pursuant to a federal statute rather than diversity of citizenship, Ashton v. Josephine Bay & C. Michael Paul Foundation, 918 F.2d 1065, 1071-72 (2d Cir. 1990) (holding case for exercise of federal jurisdiction stronger in interpleader action than in diversity action), abstention is particularly appropriate in cases whose resolution may interfere with ongoing probate proceedings. Ashton, supra, at 1071 (". . . a federal court may not probate a will, administer an estate, or entertain an action that would interfere with pending probate proceedings in a state court . . .") (emphasis added); Bassler v. Arrowood, 500 F.2d 138, 142 (8th Cir. 1974) ("The area of probate and decedents' estates presents many varied problems. State courts deal with these problems daily and have developed an expertise which should discourage federal court intervention. These local problems should be decided by state courts"), cert. denied sub nom. Lee v. Arrowood, 419 U.S. 1116, 42 L. Ed. 2d 815, 95 S. Ct. 796 (1975); Phillips, Nizer, Benjamin, Krim & Ballon v. Rosenstiel, 490 F.2d 509, 516 (2d Cir. 1973) ("There is particularly strong reason for abstention in cases, which, though not within the exception for matters of probate and administration or matrimony and custody actions, are on the verge . . ."); Reichman v. Pittsburgh National Bank, 465 F.2d 16, 18 (3d Cir. 1972) ("special ability" of state courts to decide trusts and estate issues justified abstention). But cf. Giardina v. Fontana, 733 F.2d 1047, 1053 (2d Cir. 1984) (party urging application of probate exception in federal court had previously contended in Florida probate court that probate court lacked jurisdiction).
For all these reasons, this special proceeding is hereby dismissed without prejudice, in order that the issues presented may be resolved in the Surrogate's Court of New York County when and if a Temporary Administrator is appointed.
Dated: July 7, 1992
White Plains, New York
Charles L. Brieant