United States District Court, S.D. New York
SECURITIES INVESTOR PROTECTION CORPORATION, Plaintiff-Applicant,
BERNARD L. MADOFF INVESTMENT SECURITIES LLC, Defendant. In re: BERNARD L. MADOFF, Debtor. IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff,
JO ANN CRUPI and JUDITH BOWEN, Defendants. Adv. Pro. Nos. 08-01789 (SMB), 10-04216 (SMB)
LIQUIDATION (Substantively Consolidated)
DISCOVERY ARBITRATOR'S SECOND DECISION AND
Trustee has moved to compel the production of documents in
the possession of Guston & Guston, a law firm that
previously represented defendants Jo Ann Crupi and Judith
Bowen (the "Defendants") in connection with a real
estate transaction and other matters. For the reasons set
forth below, that application is granted in part and denied
Decision and Order dated December 7, 2016, I directed that
Guston & Guston submit to me, for in camera
review, certain documents in its possession that the
Defendants had withheld from production based on a claim of
attorney-client privilege. (See ECF No. 92-2
("Decision and Order") at 12). I did so after
concluding that the Trustee had made an adequate preliminary
showing that the crime-fraud exception to the attorney-client
privilege might apply to those documents. (Id. at
Decision and Order did not reach the Defendants'
contention that Ms. Bowen, who was not implicated in the
Madoff fraud, could shield the documents from disclosure even
if Ms. Crupi had sought legal advice from Guston & Guston
in furtherance of criminal activity. As I explained, there
was no need to address that issue unless I determined, after
my review, both that the withheld documents were privileged
and that the communications at issue were made in furtherance
of a scheme or fraud. (Id. at 11-12).
Defendants' counsel originally produced the Guston &
Guston documents identified on the privilege log on December
15, 2016. Thereafter, by email dated January 4, 2017, I
advised counsel of certain deficiencies in the Guston &
Guston production, which counsel promptly agreed to
address. By letter dated January 17, 2017, counsel
then produced (a) an annotated privilege log; (b) copies of
the documents previously produced (now further identified by
exhibit numbers); (c) an additional 43 emails that were not
part of the Defendants' original production; and (d) a
supplemental privilege log.
reviewed the Defendants' latest submission, I find that
the Defendants have failed to meet their burden with respect
to virtually all of the documents that they allege are
privileged. In addition, certain of the documents that are
privileged fall within the crime-fraud exception.
Accordingly, for the reasons set forth below, the Defendants
will be required to produce both these categories of
documents to the Trustee.
explained in the Decision and Order, because the complaint in
this adversary proceeding alleges claims for relief under
both state and federal law, the applicability of the
privilege must be decided based upon the application of
federal common law. (Id. at 7 (citing
Fitzpatrick v. Am. Int'l Grp., Inc., 272 F.R.D.
100, 104 (S.D.N.Y. 2010)). "The burden of establishing
the existence of an attorney-client privilege, in all of its
elements, rests with the party asserting it." United
States v. Int'l Bhd. of Teamsters, Chauffeurs,
Warehousemen & Helpers of Am., AFL-CIO, 119 F.3d
210, 214 (2d Cir. 1997). Accordingly, the Defendants bear
that burden here. To prevail on their privilege claim with
respect to a particular document, the Defendants consequently
must show that it constituted "(1) a communication
between client and counsel, which (2) was intended to be and
was in fact kept confidential, and (3) made for the purpose
of obtaining or providing legal advice." United
States v. Constr. Prods. Res., Inc., 73 F.3d 464, 473
(2d Cir. 1996).
non-privileged documents that the Defendants have improperly
withheld from production fall into a number of broad
many of the documents are merely transmittal letters or
emails that enclose or attach other documents. These
"cover" communications neither furnish nor request
legal advice and do not reveal any privileged communications.
These documents consequently cannot be withheld from
discovery merely because they were sent to or from counsel.
See, e.g., P&B Marina, Ltd. P'ship v.
Logrande, 136 F.R.D. 50, 54 (E.D.N.Y. 1991)
("[T]ransmittal letters or acknowledgements of receipt
that do not include legal advice or disclose privileged
matters are not subject to the attorney-client
there are drafts (or portions of drafts) of documents
intended to be shared with the seller's counsel and
communications between Guston & Guston and the Defendants
concerning those drafts. Although some of these draft
documents may never have been revealed to the seller, it is
clear that any advice from counsel that may have been sought
or given with respect to these documents related to business
strategy, rather than legal issues. These documents therefore
also must be produced. See TVT Records v. Island Def Jam
Music Grp., 214 F.R.D. 143, 144 (S.D.N.Y. 2003)
("[O]nly those communications related to legal, as
contrasted with business, advice are protected.")
(internal quotation marks omitted)
there are numerous documents related to the Defendants'
desire to take possession of the Mantoloking house before the
actual closing date pursuant to a use and occupancy
agreement. Once again, these documents, which were ultimately
intended for the seller's review and signature, were not
intended to be confidential. Accordingly, these documents
must be produced.
there are documents relating to such routine business issues
as the progress of the transaction, the procurement of flood
insurance, the escrowing of funds, and the proposed closing
date. These business-oriented communications obviously were
not intended to be kept confidential. Indeed, virtually by
definition, they were meant to be conveyed to third parties,
such as insurance brokers, the seller of the property, and
the seller's counsel. The privilege is therefore
inapplicable to these documents.
the materials include the first page of a draft
"RESPA" statement. Congress enacted the Real Estate
Settlement Procedures Act of 1974 in an effort to
"protect consumers from 'abusive practices' that
result in 'unnecessarily high settlement
charges.'" Cohen v. J.P. Morgan Chase &
Co., 498 F.3d 111, 122 (2d Cir. 2007) (citing 12 U.S.C.
§ 2601(a)). The furnishing of an estimate of the amount
of cash required to close the transaction in no way conveys
any legal advice, nor does it reveal any information that the
Defendants have shown was intended to be kept confidential.
Indeed, the Defendants themselves make the point that the
monetary details of the transaction have been fully disclosed
to the Trustee. (See letter to the Discovery
Arbitrator from Eric R. Breslin, Esq., dated Nov. 18, 2016
("Breslin Nov. Ltr."), at 3). There consequently is
no basis for asserting privilege with respect to this
there are materials related to the legal fees that the
Defendants' counsel charged for their services in
connection with the acquisition of the Mantoloking house and
an estate planning issue. It is, however, black letter law
that "[a]ttorneys' bills and communications
regarding retainer agreements are not privileged."
Duttle v. Bandler & Kass, 127 ...