Opinion
CIVIL ACTION NO. 03-2225 SECTION "E" DIVISION 3
June 3, 2004
Pursuant to an expedited hearing, this Court issued its Order and Reasons on April 23, 2004, denying the defendants' motion to compel production of privileged documents. The Court did not. however, specifically address the Rule 30(b)(6) deposition topics listed in the notice. The plaintiff objected to testimony regarding the following topics listed, to wit: (1) the purpose of the CRIIMI MAE Credit Committee, including but not limited to its role in determining whether to approve requests by borrowers and whether to foreclose on a given property; (2) persons in attendance at any CRIIMI MAE Credit Committee meeting at which any issues relating to Mobile Home were discussed: (3) the dates and substance of any meetings and/or discussions of members of the CRIIMI MAE Credit Committee or any person reporting and/or providing information to the CRIIMI MAE Credit Committee relating to Mobile Hotel; (4) all decisions made by the CRIIMI MAE Credit Committee relating to Mobile Hotel, including but not limited to decisions made with respect to inter-company loans, any franchise issues, and acceleration of the indebtedness; and (g) all recommendations of and/or reports by D.J. Morakis to the CR1IMI MAE Credit Committee relating to Mobile Hotel.
Defendants submit that whether or not the plaintiffs documents are privileged, the defendants are entitled to depose witnesses with knowledge of the activities and decisions of the CRIIMI MAE Credit Committee and have a right to testimony of plaintiffs representatives on issues relating to the inter-company funding and the franchise change ( i.e., the core of the defendants' defenses and counterclaims). Defendants submit that they are entitled to discovery of what the plaintiff knew and when, what it considered and why, and the reasons for decisions which allegedly forced Mobile Hotel into bankruptcy.
All of the aforesaid documents, which the Court previously found privileged ( i.e., attorney-client and work product) were prepared after May 29, 2001, when the loan at issue was transferred to special servicing due to the alleged technical default including the Borrower incurring additional debt. The four categories of documents withheld are business plans, status reports, the annual budget evaluating the litigation budget for this matter and summarizing events in the litigation and Criimi Mae's proposed actions, as well as a Memorandum of Agenda for Litigation Committee, which were prepared by an employee of Criimi Mae. For reasons previously stated in some detail, the Court found the documents privileged.
The very same information sought via deposition testimony enumerated above and detailed in the defendants' 30(b)(6) notice is similarly privileged. The fact that the information may be relevant to Mobile Hotels alleged defenses and counterclaim does not erase privileged status of the documents and information requested via 30(b)(6) notice.
In its reply the defendant has raised the issue of waiver, referring to deposition testimony of D. J. Morakis and Lea Land, corporate respresentative of LaSalle Bank and CRIMII MAE. Their deposition transcripts are not yet available. Nevertheless, the defendants recount the testimony of Ms. Land regarding the disclosure of the "privileged" Business Plans to a third party Rating Agency, Standard Poors. The document and information therein was disclosed for the purpose of soliciting an opinion on whether the Credit Committee's proposed recommendation on a particular loan would affect the securities rating of the particular transaction. Defendants note that Standard Poors did in fact render an opinion on the Credit Committee's proposed recommendation and did so in response to a September 24, 2001 letter from D. J. Morakis. Additionally, defendants highlight that certain recommendations of the Criimi Credit Committee with respect to inter-company loans, franchise issues and the acceleration of the indebtedness were, in some cases, communicated to the borrower.
Neither the attorney-client not the work product privilege is absolute; both privileges can be waived. The attorney-client privilege is waived if the holder of the privilege voluntarily discloses or consents to disclosure of any significant part of the matter or communication. "The privilege protects only confidential communications of the client to the attorney." "Generally disclosure of confidential communications of attorney work product to a third party, such as an adversary in litigation, constitutes waiver as to those items." " When relayed to a third party that is not rendering legal services on the client's behalf, a communication is no longer confidential, and thus it falls outside of the reaches of the privilege."
See Shields v. Sturm. Ruger Co., 864 F.2d 379, 381 (5th Cir. 1989); United States v. El Paso Co., 682 F.2d 530, 538 (5th Cir. 1982).
Indus. Clearinghouse, Inc. v. Browning Mfg. Div. of Emerson Elec. Co., 953 F.2d 1004, 1007 (5th Cir. 1992).
Genentech. Inc. v. United States International Trade Comm'n, 122 F.3d 1409, 1415 (Fed. Cir. 1997).
Nguyen v. Excel Corp., 197 F.3d 200, 207 (5th Cir. 1999).
The Court here notes that fact-versus-communication distinction in determining waiver of the attorney client privilege; however, the distinction is not crucial insofar as disclosure of the Business Plans to Standard Poors is concerned. Mere disclosure of the underlying fact would not waive the privilege or protection as to a communication containing that fact. But revealing that a communication contained that fact discloses the substance of the communication and, thus, waives the privilege (or the work-product protection, if disclosed to an adversary) as to the communication. Disclosing or describing an attorney-client communication waives the privilege or protection. Disclosure of attorney-client communications to financial professionals destroys the confidentiality with respect to those documents.
See El Paso, 682 F.2d at 538 n. 10 (disclosure to a third party of the facts contained in a privileged communication does not affect the privileged nature of the communication).
See El Paso. 682 F.2d at 538: High Tech Communications, 1995 WL 45847 at * 5 (E. D. La. Feb. 2, 1995).
See Ferko v. NASCAR, 218 F.R.D. 125, 134-35 (E. D. Tex. 2003) ( citing El Paso, 682 F.2d at 540 and United States v. Kovel, 296 F.2d 918, 922 (2nd Cir. 1961)).
LaSalle Bank has not countered the defendants' argument regarding waiver of privilege and/or protection by disclosure of the "Business Plans" to Standard Poors. Additionally, LaSalle Bank does not dispute that Morakis disclosed the substance of certain "privileged" communications to the defendants ( i.e., adversaries). Inasmuch as the plaintiff bears the burden of proving that the documents withheld are subject to the claimed privilege/protection which has not been waived by disclosure, it appears on this record that the plaintiff has failed to carry its burden of proof with respect to the "Business Plans." Additionally, to the extent that the "Status Reports" reflect Mr. Morakis' communications with the borrowers/defendants and simply serves to record routine daily activity with respect to the loan in question, the status reports shall be produced in readacted format to delete protected/privileged information.
In view of the foregoing, the defendants are entitled to re-depose the plaintiff with respect to the aforesaid "Business Plans," the redacted "Status Reports" and any corresponding topics listed in the defendants' 30(b)(6) notice. These topics are relevant to Mobile Hotel's defenses and counterclaims, the merits of which are for district judge to determine.
Accordingly,
IT IS ORDERED that this Court's Order dated April 23, 2004 is MODIFIED as specifically set forth hereinabove and thus LaSalle Bank shall provide the defendants with (1) copies of the "Business Plans" previously withheld in full and (2) copies of the "Status Reports" in redacted format.
IT IS FURTHER ORDERED that the defendants shall be permitted to re-depose the Mr. Morakis and Ms. Lands for the purpose of addressing the aforesaid documents, as well as any corresponding topics set forth in the 30(b)(6) notice.
IT IS FURTHER ORDERED that, on or before Monday, June 7, 2004, counsel for the parties shall jointly contact the Chambers of the undersigned Magistrate Judge for the purpose of scheduling new discovery deadlines.