STANLEY v. TRINCHARD

SALLY SHUSHAN, Magistrate Judge

GRANTED IN PART AND DENIED IN PART

Before the undersigned is the motion of a non-party, Michele Gaudin ("Gaudin), to quash portions of a subpoena duces tecum served by the plaintiff, H.S. Stanley, Jr. ("Stanley"), bankruptcy trustee for the involuntary bankruptcy of Gary Hale ("Hale"). Some description of the extraordinary history of this litigation is necessary for the resolution of Gaudin's motion to quash.

On October 17, 1980, Douglas Frierson was found dead in St. Tammany Parish. Hale was employed by the St. Tammany Parish Sheriff's office as a detective and was assigned to the investigation of Frierson's death. Rec. doc. 1. On October 24, 1980. Hale arrested Gerald Burge ("Burge"), but he was later released because of a lack of evidence. Id. In July, 1981, Hale resigned from the Sheriff's office. Three years later Burge and a second person, Joe Pearson ("Pearson"), were indicted for Douglas Frierson's murder. Id. In September, 1986. Burge was convicted after a trial at which Pearson testified against him. In June, 1990. Burge was granted a new trial. At a second trial in 1992 he was found not guilty. Id.

In June, 1991, Burge filed a civil rights action against St. Tammany Parish, the St. Tammany Parish District Attorney's office, the Sheriff's office. Sheriff Patrick Canulette and Hale. The claims against the District Attorney's office were dismissed on the basis of prosecutorial immunity, and the remaining claims were dismissed as prescribed. Burge v. Parish of St. Tammany, 996 F.2d 786 (5th Cir. 1993) ("Burge I"). The Fifth Circuit reversed and held that Burge's pursuit of state habeas remedies tolled the prescriptive period. The action was remanded. Id. The District Court granted in part and denied in part the defendants' motions for summary judgment. Burge appealed and the case returned to the Fifth Circuit. Burge v. Parish of St. Tammany, 187 F.3d 452 (5th Cir. 1999) ("Burge III"). The summary judgment in favor of the District Attorney in his official capacity was affirmed. The appeals of the Sheriff in his official capacity and Hale were dismissed for lack of jurisdiction and the case was remanded. Id. Burge added claims for spoliation of evidence against Captain McCormick and Sheriff Strain, which were dismissed on summary judgment. In May, 2001, a jury returned a verdict in favor Burge and against Sheriff Strain and Hale. Burge v. St. Tammany Parish, 336 F.3d 363 (5th Cir. 2003), cert. denied, 124 S.Ct. 1074 (January 12, 2004) ("Burge IV"). Sheriff Strain and Burge appealed, but Hale did not appeal. The Fifth Circuit reversed the entry of judgment against Sheriff Strain and affirmed the dismissal of Burge's state law claim. The Fifth Circuit found that Burge failed to present sufficient evidence to impose section 1983 liability on the Sheriff. The dismissal of the claims for spoliation of evidence was affirmed. Id.

It is necessary to return to the events leading up to the May, 2001, trial. By October 20, 2000, Burge reached a settlement agreement with the Sheriff of St. Tammany Parish, his employees, Hale, Northwestern National Insurance Company ("Northwestern National") and American Druggist Insurance Company ("American Druggist"). All of Burge's claims for compensatory damages that arose or may have occurred out of any tortious acts or conduct by the Sheriff and Hale between September 1, 1980 and August 31, 1983 were compromised. Burge reserved his rights to proceed further against the Sheriff and Hale for their conduct which occurred after August 31, 1983. Exhibits E and F to Rec. doc. 87. Although agreement was reached on this settlement by October, 2000, the agreement was not executed until December 20, 2000 and a motion for partial dismissal was not completed until April 16, 2001. Id.

An explanation for the nature of the settlement and partial dismissal of claims is found in Burge's original complaint in this action. It alleged that American Druggists issued a policy that provided coverage to the Sheriff and Hale for the period from September 1, 1980 to September 1, 1983. The policy was alleged to provide coverage for the period from when Hale began his investigation into Frierson's death through his resignation from the Sheriff's office in July, 1981. It alleged that Northwestern National assumed responsibility for American Druggist's obligations by a reinsurance endorsement. Clare Trinchard and her firm, Trinchard Trinchard, appeared for Northwestern National. Coverage issues were raised and Northwestern National declined to provide a defense. In 1995. Northwestern National undertook the defense of the Sheriff and Hale, but only for the policy period and Trinchard enrolled as counsel of record for the Sheriff and Hale for that period. Gaudin enrolled as counsel for Northwestern National. Rec. doc. 1. Stanley does not allege that Gaudin ever enrolled as counsel for Hale.

Hale was not represented at the May, 2001 trial. The judgment against the Sheriff and Hale, inclusive of legal interest, was more than seven million dollars. Of course, as a result of Burge IV there is no judgment against the Sheriff. After the judgment became final, Burge put Hale into involuntary bankruptcy proceedings. Stanley was appointed trustee and was authorized to recover potential assets. He filed this action in April, 2002 against Trinchard, her law firm and Northwestern National. Stanley alleges that Trinchard and her firm committed legal malpractice and that Northwestern National is liable to Hale for breaches of fiduciary duty. Stanley alleges that as a result of their joint negligence Hale suffered damages, including the judgment against him for more than seven million dollars. Rec. doc. 1 at p. 14.

On May 28, 2004, there was a status conference to consider the implications of Burge IV on Stanley's claims. The District Court stated:

The Fifth Circuit's reversal of the judgment against Sheriff Strain is final, as is the Amended Judgment entered against Hale on July 25, 2001. However, based on the Interrogatories answered by the jury, a substantial portion of the damages awarded by the jury represents damages for the 42 U.S.C. § 1983 liability of Sheriff Strain as well as Hale. Gary Hale's liability to Burge for his violation of Burge's constitutional rights pursuant to 42 U.S.C. § 1983 during his employment as a Deputy Sheriff was settled prior to the trial. He can have no 42 U.S.C. § 1983 liability for the periods during which he was not employed as a Deputy Sheriff and the jury found no conspiracy to violate Burge's constitutional rights between Hale and Sheriff Strain. The only judgment in favor of Burge and against Hale individually is for his state tort of intentional infliction of emotional distress, and that judgment is final.

As that judgment now stands, Hale's bankruptcy estate may be called upon to satisfy Burge's claim to the entire multimillion dollar damage award against Strain and Hale for their violation of Burge's constitutional rights and against Hale for intentional infliction of emotional distress, when Hale individually can only be liable for damages flowing from the state tort of intentional infliction of emotional distress.

Rec. doc. 70 at pp. 3-4. The parties were ordered to submit briefs on the standing of any party to initiate an action for relief from judgment on Hale's behalf and whether such relief is appropriate under Fed.R.Civ.P. 60(b). Id. Gaudin and Northwestern insist that Stanley has taken no action to seek Rule 60(b) relief on Hale's behalf. Stanley does not make a direct comment on this issue. It is not clear whether Stanley contends that his obligation only extends to marshaling and collecting Hale's assets and not to minimizing Hale's liabilities. It would appear that where a trustee is confronted with multiple creditors and multiple assets, he may have an obligation to take action to reduce the claims against the estate as well as maximize the recoveries for the estate. Certainly this would have been in Hale's best interest prior to being forced into bankruptcy.

The case is set for trial on March 7, 2005. Rec. doc. 61. The parties are on a discovery schedule. Rec. docs. 62 and 69. Stanley's deposition is set for August 9, 2004, and counsel for Burge is to be deposed on August 10 and 11. Rec. doc. 69. On June 9, 2004, Stanley caused a subpoena duces tecum to be issued to Gaudin for three categories of documents:

1. Her correspondence file in the Burge lawsuit;

2. Her attorney notes and legal research files in the Burge lawsuit, including any analysis of the coverage issues; and

3. Documents related to her professional or "of counsel" relationship to Trinchard's firm.

Exhibit A to Rec. doc. 87. Gaudin filed a motion to quash. Rec. doc. 87. She states there are no documents responsive to the third category, so Stanley is not entitled to any relief as to that category. Gaudin was required to prepare a more complete privilege log (Rec. doc. 96) which was done. Stanley filed an opposition in which he requests that the documents be produced in time for the August 9, 2004 depositions. Rec. doc. 102. Gaudin and Northwestern filed reply memoranda. The parties reduced and redefined the issues pertaining to category nos. 1 and 2 in the subpoena into four new categories.

1. Documents drafted by and exchanged between the Trinchard firm and Gaudin.

Stanley seeks documents from Gaudin's file that were: (1) drafted by Trinchard and her firm and received by Gaudin; or (2) sent by her to the Trinchard firm. Rec. doc. 106 at p. 6. Stanley contends he is entitled to these documents because he is standing in Hale's shoes. Hale consented to the release of his file in the possession of the Trinchard firm (Rec. doc. 17 at p. 3), so Stanley urges that he, as trustee, is also entitled to the requested documents from Gaudin's file. The undersigned ruled in a prior motion that Hale was entitled to examine the Trinchard firm's file on its representation of him. Rec. doc. 17. That file was described as Hale's file. Id. at p. 3. Gaudin's file is not Hale's file. She did not represent Hale. Her client was Northwestern. Stanley does not dispute that these documents were subject to the existence of a joint defense privilege associated with the Burge litigation prior to Stanley filing this action. While Stanley argues that the exchange of documents between Gaudin and Trinchard constitutes a waiver, this is inconsistent with the joint defense privilege. The only other basis for Stanley's claim of waiver is that Hale's request for "his" file from the Trinchard firm waives the privilege. Where there is a jointly held privilege, one party to a common defense may not unilaterally waive such a privilege. Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product Doctrine, A.B.A., Sec. of Lit. (4th Ed. 2001) ("Epstein"), pp. 285-86. Stanley is not entitled to the documents within the first category.

2. Documents exchanged by Gaudin and her client, Northwestern National.

Stanley contends that any attorney-client privilege for documents exchanged between Gaudin and her client. Northwestern National, was waived when Northwestern National produced its claim file in the Burge litigation to the Ohio Liquidator for American Druggist. Northwestern National demonstrates that, pursuant to Ohio statutes, the confidentiality of all such records is to be maintained. Notwithstanding these statutory provisions, Stanley obtained the claim file from the Ohio Liquidator. Stanley does not demonstrate that the Ohio Liquidator possessed any authorization from Northwestern to release the documents or that in its capacity as the liquidator for American Druggist it was authorized to waive the privilege held by Northwestern National, which was domiciled in Wisconsin. Northwestern and Gaudin contend that the production of the claim file by the Ohio Liquidator was an inadvertent waiver of Northwestern National's privilege.

The requirement under Ohio law that the Liquidator maintain the confidentiality of the claim file demonstrates that Northwestern National did not place it in the public domain when it produced it to the Ohio Liquidator nor was it careless in doing so. Indeed it had a reasonable expectation that the confidentiality of the documents would be maintained. Because of the Ohio requirements for confidentiality, the liquidator's voluntary production will not be construed as a waiver of Northwestern's privilege. See Epstein at p. 333.

3. Documents drafted by other members of the "joint-defense" group.

Stanley seeks documents from Gaudin's file that were drafted by other defense counsel in the Burge litigation and received by Gaudin. These documents were drafted by counsel for the Louisiana Insurance Guaranty Association and St. Tammany Parish Sheriff's Department. Gaudin contends she acted with these counsel and the Trinchard firm as a joint defense group. Stanley acknowledges the presence of the joint defense or common interest privilege. See Epstein at pp. 211-19. He contends, however, that because he stands in Hale's shoes and Hale is entitled to his file from Trinchard, he is entitled to Gaudin's documents that were subject to the joint defense privilege. This argument was rejected in category no. 1.

4. Two documents prepared by Trinchard firm during Burge litigation.

Stanley seeks two documents: (1) a summary prepared by the Trinchard firm of the original file in the St. Tammany Parish Sheriff's office; and (2) a chronology prepared by the Trinchard firm in of the events in Burge. Stanley contends that he is entitled to all documents prepared by the Trinchard firm. The documents were received by Gaudin as part of the conduct of the joint defense of the case. The undersigned has already determined that Stanley is not entitled to such documents from Gaudin's file even if he is fully vested with all of Hale's rights.

Gaudin's motion to quash will be granted. Her request for protective order, fees and costs will be denied.

IT IS ORDERED that Gaudin's motion to quash, and for protective order and for costs and fees (Rec. doc. 87) is GRANTED in PART and DENIED in PART in accord with the terms of this minute entry.