eDiscovery Assistant

Wellin ex rel. Estate of Wellin v. Farace

2018 WL 11474062 (D.S.C. 2018)

September 5, 2018

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Summary

The court ordered the Defendants to produce ESI in response to the Plaintiff's discovery requests, and also ordered the Defendants to produce a privilege log for any documents withheld on the basis of privilege. The court found that the Defendants had failed to meet their burden of proof in establishing that the documents were privileged, and ordered the Defendants to produce the documents.

Additional Decisions

Wendy C. H. WELLIN, ON BEHALF OF the ESTATE OF Keith S. WELLIN, as its duly Appointed Special Administrator, Plaintiff,
v.
Thomas M. FARACE, Esq., individually and as agent for Nixon Peabody, LLP and Nixon Peabody Financial Advisors, LLC; Nixon Peabody, LLP; and Nixon Peabody Financial Advisors, LLC, Defendants

C/A 2:16-cv-00414-DCN

United States District Court, D. South Carolina, Charleston Division

Signed September 05, 2018

Counsel

Arthur Camden Lewis, Lewis Babcock LLP, Columbia, SC, James M. Griffin, Griffin Humphries LLC, Columbia, SC, Badge Humphries, Griffin Humphries LLC, Sullivan's Island, SC, for Plaintiff.
Benjamin Rogers Gooding, Robert Erving Stepp, Robinson Gray Stepp and Laffitte LLC, Columbia, SC, for Defendants Thomas M. Farace, Esq., Nixon Peabody LLP.

Howard, William L., Special Master

SPECIAL MASTER'S REPORT AND RECOMMENDATION RE: PLAINTIFF'S MOTION FOR PROTECTIVE ORDER FOR MATTHEW R. CROW - ECF NO. 87; PLAINTIFF'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS REQUESTED IN ITS FIFTH REQUEST FOR PRODUCTION AND RESPONSES TO ITS THIRD SET OF INTERROGATORIES, ECF NO. 95; DEFENDANTS’ MOTION TO COMPEL PRODUCTION OF DOCUMENTS AND INFORMATION RELATED TO THE ASSETS OF KEITH WELLIN'S REVOCABLE TRUST, ECF NO. 100

*1 The following motions are before the undersigned, sitting as Special Master, pursuant to the May 30, 2017 Order of the United States District Court for the District of South Carolina, Charleston Division, Hon. David C. Norton presiding:

1) Plaintiff's Motion for Protective Order for Matthew R. Crow - ECF No. 87;

2) Plaintiff's Motion to Compel Production of Documents Requested in its Fifth Request for Production and Responses to its Third Set of Interrogatories - ECF No. 95;

3) Defendants’ Motion to Compel Production of Documents and Information Related to Keith Wellin's Revocable Trust – ECF No. 100.

HISTORY OF THE CASE

This legal malpractice action arises out of alleged actions of the Defendants in the management of the estate plan for Plaintiff's decedent, Keith S. Wellin, spanning a twelve year period, from 2001 through 2013. Plaintiff's allege Defendant attorney Thomas M. Farace (“Farace”), individually and as a partner in and agent for Defendant Nixon Peabody, LLP and its subsidiary, Nixon Peabody Financial Advisors, LLC, began representing Keith Wellin with respect to his estate planning, both individually and as Trustee of the Keith S. Wellin Revocable Living Trust dated December 11, 2001 (“Revocable Trust”), which Trust was drafted by Defendants on Keith Wellin's behalf.

Plaintiff alleges that Keith Wellin and his three children formed Friendship Partners, LP (“Friendship Partners”) in 2003 upon the advice and direction of Defendants, and Keith Wellin funded it with Berkshire Hathaway Class A stock (“BRKa”) having a value at that time of approximately $75,000,000. At the time it was formed, Keith Wellin was a limited partner, owning 98.9% of the partnership units. According to the allegations, the general partner was Friendship Management, LLC, which owned the remaining 1.1% interest, and was controlled by Keith Wellin's three children. In 2007, Keith Wellin assigned his partnership interest in Friendship Partners to the Keith S. Wellin Revocable Trust, though the Plaintiff maintains Friendship Partners was never admitted as a Substitute Limited Partner as required by the Partnership Agreement.

Between 2003 and 2009, Keith's Will and Revocable Trust provided that Keith's full interest in Friendship Partners, as well as a majority of the rest of his estate, would pass to his three children, Peter J. Wellin, Cynthia W. Plum and Marjorie W. King, at his death.

Plaintiff alleges Keith modified his estate plan in 2009, again based upon the advice and help of Thomas Farace as his estate planning attorney, by creating the Wellin Family 2009 Irrevocable Trust, which is at the center of ongoing litigation between the Plaintiff in this case, as well as Wendy C. H. Wellin, individually, and the purported Trust Protector and Trustee of the 2009 Irrevocable Trust, against the Wellin children and at least one Wellin grandchild. The genesis of that ongoing litigation, involving multiple lawsuits (“the underlying litigation”), is as follows.

In the 2009 Revocable Trust, the situs of which was designated as South Dakota, Keith named his three children, Peter S. Wellin, Cynthia W. Plum and Marjorie W. King, as the only named beneficiaries, and designated them as the only individual trustees. Keith named the South Dakota Trust Company, LLC as the sole corporate Trustee, and Thomas Farace was designated as the Trust Protector. The Trust provided that the three Wellin children could not be removed as trustees by the Trust Protector, and also designated them as members of the Trust's distribution committee. To fund the Trust, Keith sold his 98.9% interest in Friendship Partners, LP to the Trust in return for a promissory note having a face value of Forty Nine Million, Eight Hundred Thousand Dollars ($49,800,000.00).[1] The Trust was drawn to be an “intentionally defective grantor trust,” as a result of which any income generated by the Trust would be taxable to Keith, as the grantor, rather than to the Trust.

THE “UNDERLYING LITIGATION”

*2 Keith Wellin filed suit against his children on July 3rd, 2013 (Civil Action No. 2:13-cv-01831-DCN)(“Wellin I”), seeking, inter alia, a return of all assets in the Trust and Friendship Partners, and asserting that the Defendant Wellin Children had defrauded him into entering into the 2009 transactions.[2] Keith subsequently executed various documents, including those which purported to remove Thomas Farace as the designated Trust Protector and substitute Lester Schwartz in his stead. Schwartz then removed the designated corporate Trustee, South Dakota Trust Company, LLC, named Brown Brothers Harriman Trust Company of Delaware, N.A. as the corporate Trustee, and executed documents purporting to effect the following changes to the Trust:

1) Changing the situs of the Trust from South Dakota to Delaware;

2) Limiting the beneficiaries’ right to appoint trust distributions;

3) Restricting the right of the Wellin children as trustees to change the Trust Protector;

4) Deleting the Trust provision that granted the corporate Trustee the contingent power to add beneficiaries;

5) Requiring that certain actions taken by the Trustee be taken by unanimous vote of the Trustees in office; and

6) Granting the Trust Protector the authority to settle litigation brought against or on behalf of the Trust.

In addition, Keith executed documents intended to reacquire some of the Trust assets by substituting the Note owed to him by the Trust, having a value of $50,211,466.55, for a 58% interest in Friendship Partners, pursuant to Article IX(A) of the Trust. The newly executed documents made further changes designed to end the “grantor status” of the Trust, including releasing the power of trust asset substitution, the effect of which would be to shift the tax burden for payment of the Note to the Trust. In that litigation, the Defendant Wellin Children assert the changes made regarding the Trust by Keith and Lester Schwartz on November 20, 2013 were ineffective, invalid and/or incomplete.

On or about December 1, 2013, the Defendant Wellin Children took the steps they claim were necessary to sell the BRKa stock and ultimately distribute approximately $32 million to each of their individual investment accounts, leaving approximately $52 million in the Trust to satisfy the Note to Keith. They maintain that this was necessary to protect the trust and its assets, and that no money has been spent other than for the expenses of this litigation.

Following this action by the Defendant Wellin Children, on December 27, 2013, Lester Schwartz, as the newly designated Trust Protector, brought suit against each of the Wellin children individually, and as Co-Trustees and Beneficiaries of the Wellin Family 2009 Irrevocable Trust, as well as against Friendship Partners, Friendship Management, LLC, and Cynthia W. Plum, as Manager of Friendship Management, LLC. In the suit, Schwartz seeks return of the distributed assets, as well as other damages caused by the sale of the BRKa stock. That suit is currently pending as Civil Action 2:13-cv-3595-DCN.

Defendants challenged Schwartz's standing to bring the suit as Trust Protector, and the Court ruled he did not have standing on April 17, 2014. Thereafter, Larry S. McDevitt agreed to serve as Trustee, and was so appointed by Lester Schwartz in his capacity as Trust Protector on May 2, 2014. Larry S. McDevitt, as Trustee, was then substituted as Plaintiff for Schwartz pursuant to Fed.R.Civ.P. 17(a)(3); Order of Judge Norton filed October 9, 2014, 2:13-cv-03595-DCN, ECF No. 173.

*3 Keith Wellin died during the litigation in November, 2014, and his widow, Wendy Wellin, was substituted in Wellin I as Plaintiff in her capacity as Special Administrator of the Estate of Keith S. Wellin and as Trustee of the Keith S. Wellin Florida Revocable Living Trust u/a/d December 11, 2001.[3]

THE LEGAL MALPRACTICE LITIGATION

In this legal malpractice litigation, Plaintiff alleges the Defendants breached the proper standard of care as an attorney, breached their fiduciary duties to the Plaintiff's decedent, breached their contract with Plaintiff's decedent, and aided and abetted the breach of fiduciary duties by Keith Wellin's son, Peter J. Wellin, and daughter, Cynthia W. Plum. Specifically, Plaintiff alleges the Defendants breached the standard of care required of an attorney, breached their fiduciary duties, and breached their contract by:

(a) Designing and implementing an estate planning structure (the formation and funding of Friendship Partners, Friendship Management, and the 2003 KSW Family Trust dated December 5, 2003) that failed to adequately protect the interests of (Keith) Wellin, and failing to inform or advise (Keith) Wellin as to the inherent risks and consequences of participating in that transaction;

(b) Designing and implementing an estate planning structure (the formation of the 2009 Irrevocable Trust and the sale of interests in Friendship Partners to the 2009 Irrevocable Trust for the Promissory Note) that failed to adequately protect the interests of (Keith) Wellin, and failing to inform or advise (Keith) Wellin as to the inherent risks and consequences of participating in that transaction;

(c) Structuring an irrevocable trust instrument, specifically the 2009 Irrevocable Trust, which had been interpreted by the Wellin Children as depriving (Keith) Wellin of the ability to turn off grantor status to, among other things, avoid certain catastrophic financial consequences, namely incurring a tax burden that could render (Keith) Wellin illiquid and/or insolvent;

(d) Structuring an irrevocable trust instrument, specifically the 2009 Irrevocable Trust, in such a manner as to fail to accomplish (Keith) Wellin's estate planning goals and to protect (Keith) Wellin's interests;

(e) In failing to recognize and advise (Keith) Wellin of the potential tax liability to (Keith) Wellin in connection with the 2009 Irrevocable Trust in the event the Berkshire Hathaway stock owned by Friendship Partners was sold prior to (Keith) Wellin's death;

(f) By aiding and abetting son, Peter J. Wellin, as well as daughter, Cynthia W. Plum, in breaching fiduciary duties owed to (Keith) Wellin;

(g) Continuing to represent (Keith) Wellin and one or more of the Wellin Children after an actual conflict of interest arose between them; and

(h) In otherwise failing to act as a reasonably prudent tax and estate planning practitioner would have acted under the same or similar circumstances.

As to aiding and abetting the breach of fiduciary duties by Peter Wellin and Cynthia Wellin, Plaintiff alleges the Defendants had actual knowledge of alleged improper self-dealing by the Wellin Children, and Defendants knowingly participated in the breach of fiduciary duty by failing to disclose to Keith Wellin the improper self-dealing of Peter J. Wellin and Cynthia W. Plum, who they allege engaged in transactions for their own benefit to the detriment of (Keith) Wellin.

CURRENT MOTIONS

*4 A hearing was held on the above listed motions on July 23, 2018 by the undersigned, sitting as Special Master. Having considered the arguments of counsel, and after reviewing the pleadings, memoranda and exhibits submitted by the parties, I make the following report and recommendations for disposition of the motions under consideration.

Standard of Review

Rule 26(b)(1) of the Federal Rules of Civil Procedure states:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amounts in controversy, the parties; relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within the scope of discovery need not be admissible in evidence to be discoverable.

“District courts have ‘wide latitude in controlling discovery and their rulings will not be overturned absent a showing of a clear abuse of discretion.’ ” State Farm Fire and Casualty Company v. Admiral Insurance Company, 225 F. Supp.3d 474,478-479, (D.S.C. 2016)(citing Ardrey v. United Parcel Serv., 798 F.2d 679, 683 (4th Cir. 1986)); Middleton v. Nissan Motor Co., No. 10-2529, 2012 WL 3612572, at *2 (D.S.C. Aug. 21, 2012).

1) Plaintiff's Motion For Protective Order For Matthew R. Crow - ECF No. 87

This motion was filed on March 15, 2018. At that time, Matthew R. Crow was a named, testifying expert in this litigation, but was also a consulting expert to the Plaintiff (represented by other counsel) in the underlying litigation. Defendant sought to ask questions of Crow during his deposition concerning information and discussions he had with counsel as a consultant in the underlying litigation, to which Plaintiff objected on the grounds that it was protected from discovery by Federal Rule of Procedure 26(b)(4)(D)(“Ordinarily, a party may not, by interrogatories or deposition, discover facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial.”). However, subsequent to the filing of the motion, Crow was named as a testifying expert in the underlying litigation. Consequently, the parties advise that information discoverable as a testifying expert pursuant to Rule 26(b)(3) and/or (4) is in the process of being provided to Defendant in this litigation. Consequently, the parties agree that this motion should be denied as moot, but subject to the right of counsel to raise any subsequent issues that may arise regarding disclosure after review of the information already provided or to be provided.

For the above stated reasons, I recommend that the motion be denied as moot, but subject to the right of counsel to raise any subsequent issues that may arise regarding disclosure after review of the information already provided or to be provided.

2) Plaintiff's Motion To Compel Production Of Documents Requested In Its Fifth Request For Production And Responses To Its Third Set Of Interrogatories, ECF No. 95

*5 The Plaintiff first argues that the Defendants’ objections to all of the Plaintiff's requests for production and interrogatories should be struck or deemed waived because their objections are boilerplate, and are not specific enough to meet the requirements of Rule 33(b)(4) and Rule 34(b)(2)(B), Fed.R.Civ.P. Rule 33(b)(4) provides that “[t]he grounds for objecting to an interrogatory must be stated with specificity.” Rule 34(b)(2)(B), states in pertinent part:

(B) For each item or category, the response must either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons.

“ ‘Mere recitation of the familiar litany that an interrogatory or a document production request is “overly broad, burdensome, oppressive, and irrelevant” ’ does not suffice as a specific objection.” Allison v. McCabe, Trotter & Beverly, P.C., 2017 WL 6363635 at *2 (D.S.C. Dec. 12, 2017)(citing Mainstreet Collection, Inc. v. Kirkland's, Inc., 270 F.R.D. 238, 240 (E.D.N.C. 2010)) (quoting Momah v. Albert Einstein Med. Ctr., 164 F.R.D. 412, 417 (E.D. Pa. 1996)).

Plaintiff's assertion of waiver due to lack of specificity will be discussed in relation to the motion to compel responses to the individual requests for production and interrogatories.

Plaintiff next asserts Defendants should be compelled to respond to the following requests for production from the Plaintiff's Fifth Set of Requests for Production, and interrogatory questions from the Third Set of Interrogatories:

a) Request for Production No. 2. This request for production seeks all of the Defendants’ billing records reflecting work performed for Cynthia W. Plum or Samuel Plum. Plaintiff seeks the legal bills in redacted form, excluding information protected from disclosure by the attorney-client privilege. Defendants object on the grounds that the request seeks information that is protected by the attorney-client privilege and the attorney work-product doctrine. Defendants further objected on the grounds that the request seeks information that is neither relevant to the claims and defenses in this case nor proportional to the needs of the case.

(i) Attorney-Client Privilege

Rule 501 of the Federal Rules of Evidence provides as follows:

Except as otherwise provided by the Constitution of the United States or provided by Act of Congress or in rules prescribed by the Supreme Court pursuant to statutory authority, the privilege of a witness ... shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience. However, in civil actions and proceedings, with respect to an element of a claim or defense as to which State law supplies the rule of decision, the privilege of a witness ... shall be determined in accordance with state law.

In accordance with the second sentence of Rule 501, state law supplies the rule of decision to be applied in this diversity matter. Hatfill v. New York Times Co., 459 F. Supp. 2d 462, 465 (E.D. Va. 2006); Mordesovitch v. Westfield Ins. Co., 244 F. Supp.2d 636 (S.D.W. Va. 2003).

In South Carolina, the fee agreement between attorney and client is generally not protected by the attorney-client privilege. Strickland v. Capital City Mills, 74 S.C. 16, 7 L.R.A.N.S. 426 (1906). As the Strickland court explained:

“The general rule excludes from evidence all confidential communications of a professional nature between attorney and client, unless the client, for whose benefit the rule is established, waives the privilege. This is based upon a wise public policy which considers that the interests of society are best promoted by inviting the utmost confidence on the part of the client in disclosing his secrets to his professional adviser, under the pledge of the law that such confidence shall not be abused by permitting a disclosure of such communications. This rule, however, is subject to limitations, and should not be extended beyond its legitimate scope and purposes. We see no reason why the contract between the client and attorney as to the fee to be paid for professional services, and the assignment of an interest in a judgment recovered in payment of services rendered, should fall within the rule of privileged communications. This is knowledge which is not communicated by the client to the attorney, but is knowledge of the attorney derived from his own act in creating the fact sought to be disclosed, and not from a revelation of any secret of the client. The fee contract, whether regarded as made preliminary to the relation of attorney and client, or at the close of such relation in compensation for services rendered, or whether made during the existence of such relation, is really collateral to the professional relation, is not strictly a part of it, and has no bearing upon the merits of the latter, upon which the professional aid was invoked. As to such a contract the parties ordinarily stand in adversary relation.

*6 Strickland, 54 S.E. at 221-222.

In State v. Doster, 276 S.C. 647, 652, 284 S.E.2d 218, 219 (1981), the South Carolina Supreme Court explained that “the privilege must be tailored to protect only confidences disclosed within the [attorney-client] relationship.” The Court recognized the essential elements giving rise to the privilege, as stated by Wigmore, to be:

“(1) Where legal advice of any kind is sought (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose (4) made in confidence (5) by the client (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived.” 8 Wigmore, Evidence § 2292 (McNaughton rev. 1961).

In considering this issue, the Fourth Circuit Court of Appeals noted in N.L.R.B. v. Harvey, 349 F.2d 900, 904 (C.A. 4th Cir. 1965) that “[g]enerally, the identity of the attorney's client is not considered privileged matter.” In so holding, the Court quoted from the case of United States v. Pape, 144 F.2d 778, 782 (2nd Cir. 1944), cert. denied 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944) as follows:

“The authorities are substantially uniform against any privilege as applied to the fact of retainer or identity of the client. The privilege is limited to confidential communications, and a retainer is not a confidential communication, although it cannot come into existence without some communication between the attorney and the – at that stage prospective – client.”

Thus, as the Fourth Circuit has observed, “ ‘[t]he identity of the client, the amount of the fee, the identification of payment by case file name, and the general purpose of the work performed are usually not protected from disclosure by the attorney-client privilege’ ”. In re Grand Jury subpoena, 204 F.3d 516, (4th Cir. 2000) (citing Chaudhry v. Gallerizzo, 174 F.3d 394, 402 (4th Cir. 1999)) (quoting Clarke v. American Commerce National Bank, 974 F.2d 127, 129 (9th Cir. 1992)(“However, correspondence, bills, ledgers, statements and time records which also reveal the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided, such as researching particular areas of the law, fall within the privilege.”)).

As stated at the hearing, the Plaintiff seeks only the billing statements for work performed by Defendants on behalf of Ceth and Samuel Plum in their redacted form, to exclude privileged communication that reveals the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided, such as researching particular areas of the law. Consequently, I conclude the requested documents are not protected from disclosure by the attorney client privilege.

(ii) Work Product Doctrine

Federal law applies to determine whether or not information is protected by the work-product privilege. This is so because the privilege is a creature of Federal Rule of Civil Procedure 26(b)(3), which codified the privilege as first recognized by the Supreme Court in Hickman v. Taylor, 329 U.S. 496 (1947). See, Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Murray Sheet Metal Co., Inc., 967 F.2d 980, 983-984 (4th Cir. 1992); Doe v. United States (In re Doe), 662 F.2d 1073, 1078 (4th Cir. 1981) cert. denied, 455 U.S. 1000, 102 S. Ct. 1632, 71 L.Ed.2d 867 (1982); First S. Bank v. Fifth Third Bank, N.A., Civ. No. 10-2097, 2013 WL 1840089 at 4 (D.S.C. May 1, 2013); United Coal Cos. V. Powell Constr. Co., 839 F.2d 958, 966 (3d Cir. 1988); PepsiCo, Inc. v. Baird, Kurtz & Dobson LLP, 305 F.3d 813, 817 (8th Cir. 2002). The party asserting the privilege bears the burden of establishing the documents the party seeks to protect were prepared in anticipation of litigation. In re Grand Jury Proceedings, Thursday Special Grand Jury, Sept. Term, 1991, 33 F.3d 342, 352 (4th Cir. 1994); see also, Carnes v. Crete Carrier Corp., 244 F.R.D. 694, 697 (N.D. Ga. 2007); United States v. Roxworthy, 457 F.3d 590, 593 (6th Cir. 2006). “Thus, in resolving the question of whether matters are immune from discovery because of a work product rule, attention must be turned first to whether the documents or tangible things were prepared in anticipation of litigation or for trial ....” National Union Fire Ins. Co., 967 F.2d at 984.

*7 In Chaudhry, the Fourth Circuit Court of Appeals analyzed whether or not the Defendant's legal billing statements were protected by privilege. Chaudhry, 174 F.3d at 402-403. The Court noted the legal bills revealed the identity of federal statutes researched by Defendant's attorney. Id., 174 F.3d at 403. Since the records would divulge confidential information, the Court concluded they were protected from disclosure by the attorney-client privilege. Id. In reaching its conclusion, the Court further noted that the work product doctrine prohibited the disclosure of the Defendant's Research Memorandum. See Rule 26(b)(3), Fed, R. Civ. P. (“an attorney is not required to divulge, by discovery or otherwise, facts developed by his efforts in preparation of the case or opinions he has formed about any phase of the litigation.”). As the Court explained, “[f]act work product is discoverable only ‘upon a showing of both a substantial need and an inability to secure the substantial equivalent of the materials by alternate means without undue hardship.’ ” Id., (quoting In re Grand Jury Proceedings, 33 F.3d 342, 348 (4th Cir. 1994)). “Opinion work product is even more carefully protected, since it represents the thoughts and impressions of the attorney.” Id., (citing In re Grand Jury Proceedings, 33 F.3d at 348.).

However, Plaintiff does not here seek information protected by the work product doctrine. As Plaintiff's counsel explained at the hearing on the motion, Plaintiff only seeks the billing statements in redacted form, with privileged information redacted. Consequently, the work product doctrine is not implicated.

(iii) Relevance

Defendants further assert the information sought is irrelevant. Relevance is defined by Federal Rule of Evidence 401, which provides that “evidence is relevant if (a) it has any tendency to make a fact more or less probable than it would be without the evidence, and (b) the fact is of consequence in determining the action.”

In this malpractice action, Plaintiff asserts Farace was aware of conflicting interests between the Wellin Children and Keith Wellin during the time he prepared the 2009 estate plan and 2009 Irrevocable Wellin Family Trust. Plaintiff alleges, despite knowing of the conflict of interest, Defendant Farace continued to represent Ceth and Samuel Plum, Keith's daughter and son-in-law. Plaintiff further asserts Defendant Farace aided and abetted Ceth's breaches of fiduciary duty owed to Keith Wellin. Plaintiff points out that Samuel Plum recommended Defendant Farace to Keith Wellin, resulting in Keith's decision to use him as his estate planning attorney.

Defendants argue in response that the billing statements are irrelevant because their representation of the Plums and the initial referral of Mr. Farace to Keith Wellin by Samuel Plum have been disclosed, and Plaintiff has had the ability to explore these topics in depositions. They assert “Plaintiff is free to make whatever arguments she wants to make out of these facts, but the details and nature of the work performed on behalf of the Plums do not make any fact that is of consequence in this case more or less probable than it would be without this evidence.” Br. of Def., ECF 99, p. 6.

Plaintiff argues the billing statements are relevant because they “reflect the nature and extent” of work performed by Defendants for the Plums during the relevant time period. Plaintiff is mistaken to the extent she argues the billing statements in redacted form will provide information regarding the specific nature of the work performed because, as the Fourth Circuit noted in Chaudhry, 174 F.3d at 402, that information is protected from discovery by the attorney-client privilege. Clarke v. American Commerce National Bank, 974 F.2d at 129. However, “[a] discovery request is relevant ‘if there is any possibility that the information sought might be relevant to the subject matter of [the] action.’ ” Machinery Solutions, Inc. v. Doosan Infracore America Corporation, 323 F.R.D. 522 (2018)(quoting Wilson v. Decibels of Or., Inc., Case No. 1:16-cv-00855-CL, 2017 WL 1943955, at *2 (D. Or. May 9, 2017); Jones v. Commander, Kan. Army Ammunitions Plant, 147 F.R.D. 248, 250 (D. Kan. 1993)). I conclude the extent of work performed by Defendants on behalf of the Plums during the relevant time period might prove to be relevant to the subject matter of the action.

(iv) Proportionality

*8 The scope of discovery under Federal Rule of Civil Procedure 26 “is defined by whether the information sought is (1) privileged, (2) relevant to a claim or defense, and (3) proportional to the needs of the case.” Machinery Solutions, Inc., 323 F.R.D. at 526.

Whether a discovery request is proportional is determined by “considering the importance of the issues at stake in the action, the amounts in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Id.; Rule 26(b)(1), Fed. R. Civ. P.

“While the party seeking discovery has the burden to establish its relevancy and proportionality, the party objecting has the burden of showing the discovery should not be allowed and doing so through ‘clarifying, explaining and supporting its objections with competent evidence.’ ” Machinery Solutions, Inc., 323 F.R.D. at 526 (quoting Wilson v. Decibels of Or., Inc., Case No. 1:16-cv-00855-CL, 2017 WL 1943955, at *2 (D. Or. May 9, 2017)).

Defendant Nixon Peabody asserts generally that the request for production of the redacted billings statements is not proportional to the needs of the case. However, they provide no explanation as to why it is disproportional, other than their assertion that they have already disclosed the fact that they have represented the Plums during the relevant time period. The issues at stake in the controversy are significant, and the amount in controversy is in excess of $280 million dollars. Defendant was the preparer of the requested records, and is certainly in the best position to have access to them. There is no argument supported by competent evidence to establish that the records are inaccessible to Defendant Nixon Peabody, nor is there information from which the court can evaluate any burden or expense, in order to determine if they outweigh the likely benefit of the proposed discovery. In short, the Defendant has failed to carry its burden to clarify, explain and support their argument that the requested discovery is disproportionate to the needs of the case with competent evidence.

For the above reasons, I recommend that the Defendant Nixon Peabody be required to produce the requested billing statements, redacted to exclude the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided.

b) Requests for Production No. 3 and 4. Request No. 3 seeks “all documents in [Defendants’] possession dated from 2004 to 2013 concerning Treasury Department Circular No. 230 and efforts to ensure Defendants’ compliance with it, including related policies, procedures, and internal memoranda or communications regarding the same.” Request for Production No. 4 seeks “[a]ll documents reflecting Thomas Farace's participation and asserted lead role in your implementation of such policies and procedures addressing Circular 230 compliance, as reflected in Farace's 2005 Annual Evaluation, Nixon Peabody 004403, 004420, and in his 2006 Annual Evaluation, Nixon Peabody 004477.”

Defendants objected to these requests for production on the grounds that the information sought is neither relevant nor proportional to the needs of the case. They further objected on the grounds that the requests are unduly burdensome and the burden and expense of responding to the requests far outweighs the benefit Plaintiff may allege it would receive in discovering the requested information. Finally, Defendants assert these requests are presented by Plaintiff solely for the purposes of harassment, annoyance, oppression, and undue burden and expense.

*9 Circular 230 is an Internal Revenue Service document containing the Regulations governing practice before the Internal Revenue Service. It is 44 pages long, contains five subparts, and 99 regulations. The work which Plaintiff alleges Defendants’ undertook on behalf of the Plaintiff's decedent included tax planning and reporting. As Rule 26(b)(1) of the Federal Rules of Civil Procedure provides: “[i]nformation within this scope of discovery need not be admissible in evidence to be discoverable.” Nevertheless, it must appear to be “reasonably calculated to lead to the discovery of admissible evidence.” Id. Based on the subject matter contained in Circular 230 and the allegations of mishandling of Keith Wellin's estate planning, I conclude the requests are relevant. However, for the following reasons, I conclude both requests are overbroad, unduly burdensome, and not proportional to the needs of the case.

The Defendants have the burden of demonstrating that the requests subject them to an undue burden. Hodgdon v. Nw. Univ., 245 F.R.D. 337, 341 (N.D. Ill 2007); Ohio Valley Envtl. Coal Inc. v. U.S. Army Core Engineers, 2012 WL 112325 at 2 (N.D.W. Va. 2012); Kursner v. Clemens, 2005 WL 1214330 at 2 (S.D.N.Y. 2005); In re County of Orange, 2008 B.R. 117, 121 (Bankr. S.D.N.Y. 1987). As previously noted, mere objections to discovery requests on the grounds that the requests are unduly burdensome or overbroad, without more, are insufficient. However, such is not the case when a discovery request is overly broad on its face. See, e.g., Swackhammer v. Sprint Corp. PCS, 225 F.R.D. 658 (D. Kan. 2004) (“Unless an interrogatory is overly broad on its face, the party resisting discovery has the burden to support its objection.”); Hammon v. Lowe's Home Ctrs, Inc. 216 F.R.D. 666, 672 (D. Kan. 2003); McCOO v. Denny's, Inc., 192 F.R.D. 675, 686 (D. Kan. 2000); See also State Farm Casualty Company v. Admiral, 225 F. Supp.3d at 485 (where interrogatory is in fact too vague to answer, then Court should not compel an attempt to answer despite failure of objecting party to state grounds for objection with specificity, citing Rule 26(b)(2)(C)).

Requests No. 3 and 4 are clearly overbroad on their face. The Defendant law firm has more than six hundred attorneys, and is located in 17 different locations throughout the world. A review of Circular 230 reveals that it governs virtually every aspect of practice in front of the IRS, including filing of documents, retention of documents, disciplinary actions, duties and restrictions relating to practice before the IRS, handling of taxpayer checks, standards with respect to tax returns and documents, affidavits and other papers, competence, sanctions and general provisions. Request No. 3 seeks all documents, including internal memoranda and communications regarding Circular 230 and compliance with it. Presumably, this includes any and all electronic communication, which implicates all correspondence and internal emails of potentially six hundred lawyers, their paralegals and administrative staff in any way referencing tax matters during a nine year time span.

In request number 4, Plaintiff seeks all documents reflecting Thomas Farace's participation in policies and procedure involving compliance with Circular 230 requirements, which again, potentially implicates all documents making any reference to a tax matter.

As the above demonstrates, Requests No. 3 and 4 employ language that is so broad it is virtually impossible to determine what documents or communications should be identified and included in a response. It is virtually boundless as to subject matter, and is so overbroad as to be unduly burdensome. As the court noted in Dauska v. Green Bay Packing Inc., 291 F.R.D. 251 at 261 (E.D. Wisc. 2013),

Requests which are worded too broadly or are too all inclusive of a general topic function like a giant broom, sweeping everything in their path, useful or not. They require respondent either to guess or move through mental gymnastics which are unreasonably time-consuming and burdensome to determine which of many pieces of paper may conceivably contain some detail, either obvious or hidden, within the scope of the request. Id.; see also, Krause v. Nevada Mut. Ins. Co., 2014 WL 496936 at 6 (D. Nev. Feb. 6, 2014)(declining to require Defendant to further respond to discovery request, as compliance would be unreasonably time consuming, burdensome and unfair where discovery request would require that the reviewing party scour the voluminous records contained within the general category identified for any and all documents that might be relevant to any and all claims or defenses, and compliance would operate “like a giant broom,” requiring the Defendants to engage in the mental gymnastics and time-consuming process identified in Dauska).

*10 For the above reasons, it is recommended that the Plaintiff's motion to compel production of documents pursuant to Plaintiff's Fifth Request for Production, requests No. 3 and 4, be denied as overbroad and unduly burdensome.

(c) Request for Production No. 5. In this Request, Plaintiff seeks “[a]ll documents describing or referring to the litigation of Estate of Strangi v. Commissioner of Internal Revenue, 115 T.C. 478 (T.C. 2000), and its related cases/opinions (including those issued by the U.S. Tax Court in 2003 and by the U.S. Court of Appeals for the Fifth Circuit in 2002 and 2003), in the context of Estate Planning for your clients, including, but not limited to, memoranda explaining these cases and their impact on clients’ existing estate plan and/or their application to your Estate Planning Group, including but not limited to marketing efforts. Such documents may reference such concepts as the ‘Family Limited Partnership (Strangi),’ FARACE 02839, ‘Strangi Structure,’ FARACE 010867, ‘Strangi case,’ FARACE 002971, OR ‘Strangi discount,’ K. Wellin Estate 08936.”

Defendants objected to this Request on the ground that it is vague, ambiguous, overly broad and unduly burdensome. They further objected on grounds that the information sought is irrelevant to the issues on the case, and is not proportional to the needs of the case.

I conclude this Request, like Requests No. 3 and 4, is worded too broadly or is too all inclusive of a general topic. Dauska v. Green Bay Packing Inc., 291 F.R.D. at 261; see also, Krause v. Nevada Mut. Ins. Co., 2014 WL 496936 at 6 (D. Nev. Feb. 6, 2014)(declining to require Defendant to further respond to discovery request, as compliance would be unreasonably time consuming, burdensome and unfair where discovery request would require that the reviewing party scour the voluminous records contained within the general category identified for any and all documents that might be relevant to any and all claims or defenses, and compliance would operate “like a giant broom,” requiring the Defendants to engage in the mental gymnastics and time-consuming process identified in Dauska).

Plaintiff's request seeks, inter alia, all documents “referring” to the Strangi case, which would require the reviewing party to look at every document, every letter and every electronic or other communication from the date of the Strangi case to the present, to include communications describing the general nature of the tax issues involved in the case, even if the document contained no reference to the Strangi name. Furthermore, as Defendants point out, Defendant Farace has already produced his entire file involving Keith Wellin, has been deposed for seven hours as a 30(b)(6) witness and for an additional seven hours in the underlying litigation, and is still to be personally deposed for an additional seven hours in this case.

Rule 26(b)(2)(C) of the Federal Rules of Civil Procedure addresses limitations on frequency and extent of discovery, and provides:

(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that:

(i) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;

*11 (ii) the party seeking discovery has had ample opportunity to obtain the information by discovery in the action, or

(iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).

I conclude the relevant information sought in this request can be obtained by requiring Thomas Farace to provide a copy of all brochures, memoranda, letters or other documents prepared by him or under his direction for purposes of educating a client regarding the tax implications or use of the Strangi case in tax and/or estate planning. For the above reasons, I conclude the motion to compel production of materials described in request for production No. 5 should be denied in part as overly broad and unduly burdensome, and should be limited to requiring production of a copy of all brochures, memoranda, letters or other documents prepared by Thomas Farace or under his direction for purposes of educating a client regarding the tax implications or use of the Strangi case in tax and/or estate planning.

(d) Request for Production No. 8 and Interrogatories No. 2 and 3

The Motion to Compel with regard to this request for production and interrogatory responses has been resolved between the parties, and is, therefore, moot. Defendant is to supplement her answers to provide the basis for her assertion of privilege under the work product doctrine. Therefore, it is recommended that the motion to compel with regard to Request No. 8 and Interrogatories No. 2 and 3 be denied as moot.

(e) Request for Production No. 9, Request for Responses to Interrogatories No. 7-11 and 13-14. These requests seek financial information about the Defendants in support of their claim for punitive damages. Defendants intend to move for summary judgment as to punitive damages, and the Plaintiff has withdrawn this part of the motion to compel, to be reasserted, if necessary, following a determination by the court of Defendant's motion for partial summary judgment on the issue of punitive damages, if that motion is denied. See ECF No. 111.

(f) Interrogatory No. 4. In this interrogatory, Plaintiff seeks a preliminary list of persons the Defendants are a) likely to call; and b) may call as a witness at trial. Defendants have agreed to provide the requested list, and therefore, it is recommended that this part of the motion to compel be denied as moot.

(g) Interrogatory No. 6. In this interrogatory, Plaintiff requested that Defendants, Nixon Peabody and Nixon Peabody Financial Advisors, LLC identify all secondary source materials related to estate planning and/or tax law that they maintained in their physical library in Rochester, New York, and in their firm or their Private Client Group's electronically accessible library (if one existed) from 2001 to 2013.

Defendants object to this request, arguing it is irrelevant to the issues in the case and is overly broad in scope and unduly burdensome. I disagree with the Defendants’ contention that this request seeks information that is irrelevant to the issues in the case. The efficacy of the tax and estate planning for Keith Wellin is a central issue in this malpractice litigation and the underlying litigation.

*12 As to the assertion that the request for production is overly broad and unduly burdensome, “[g]enerally the party resisting discovery bears the burden of showing that the requested discovery is irrelevant to the issues or is overly broad, unduly burdensome, unreasonable, or oppressive.” Ashmore v. Allied Energy, Inc., 2016 WL 301169 *3 (D.S.C. Jan. 25, 2016)(citing Brady v. Grendene USA, Inc., No. 12cv604-GPC (KSC), 2012 WL 6086881, at *2 (S.D. Cal. Dec. 6, 2012)). For the court to consider this objection, the responding party has the obligation of establishing the burden by submitting affidavits or offering evidence which reveals the nature of the burden. See Ashmore, 2016 WL 301169 at *3 (citing Convertino v. U.S. Dep't of Justice, 565 F. Supp.2d 10, 14 (D.S.C. 2008)) (“This Court only entertains an unduly burdensome objection when the responding party demonstrates how [discovery of] the document is overly broad, burdensome, or oppressive, by submitting affidavits or offering evidence which reveals the nature of the burden.”)(internal quotation marks and citation omitted). Although Defendants make these assertions as to this request, they have failed to provide evidence to support it. Consequently, I conclude Defendants should be compelled to provide the requested information to the extent such information is available. In this regard, Defendants argue they have no way of knowing what books were maintained in past years in their library. “The court cannot compel a party to furnish information they do not have.” Machinery Solutions, Inc. v. Doosan Infracore America Corporation, 323 F.R.D. 522, 530 (D.S.C. 2018)(quoting Hoffman v. Jones, No. 2:15-cv-1748-EFB P, 2017 WL 5900086, at *8 (E.D.Cal. Nov. 30, 2017)). In the event there are no prior records reflecting what books were so maintained, I recommend Defendants be compelled to provide a list of tax and estate planning written materials currently in their library in the Rochester, New York Office and an explanation by affidavit as to why such records for years 2001 through 2013 are no longer available. As to electronic sources of materials, I recommend that the response be limited to identification of the electronic source(s) available to the lawyers at that location (i.e. westlaw data base; lexis nexis data base, etc.).

(h) Interrogatory No. 12. In this interrogatory, Plaintiff sought information regarding the number of claims made under Nixon Peabody's malpractice insurance during the last three years. The parties have advised the undersigned that that request is now moot. Therefore, I recommend that the request be denied as moot.

(3) Defendants’ Motion to Compel Production of Documents and Information Related to Assets of Keith Wellin's Revocable Trust

Defendants move for an order compelling Plaintiff to either identify those assets that have been transferred out of Keith Wellin's Revocable Trust since Keith Wellin's death, or to identify where within the documents produced the information can be found.

According to Defendants, the vast majority of Keith's assets were placed in a revocable trust entitled the Keith S, Wellin 2001 Florida Revocable Living Trust (Trust). The Trust essentially replaces the functions of a will, specifying how the assets of the Trust are to be distributed after Keith's death. Wendy Wellin was named as successor trustee upon the death of Keith Wellin, which occurred in November of 2014.

Defendants served upon Plaintiff a Third Set of Interrogatories, which consisted of the following interrogatory:

Provide a full accounting of the Keith S. Wellin 2001 Florida Revocable Living Trust, including assets currently held by the Trust and any expenditures by the Trust since the date of Keith Wellin's death.

Defendants also served upon Plaintiff their Third Requests for Production, which included the following two requests:

(1) Produce all documents evidencing all assets currently owned by the Keith S. Wellin 2001 Florida Living Revocable Trust. This includes, but is not limited to, all real property, cash, stocks, bonds, mortgages, notes, or other items of value.

(2) Produce all documents evidencing any transfers of assets to or from the Keith S. Wellin 2001 Florida Living Revocable Trust after the date of Keith Wellin's death.

Plaintiff responded to these discovery requests, initially objecting on the grounds that (a) the interrogatory was “improper” and sought to impose an undertaking by the Plaintiff not within the scope of the Federal Rules of Civil Procedure because it requested that Plaintiff prepare an accounting; (b) it was “grossly” overbroad and unduly burdensome; (c) the interrogatory sought to require Plaintiff to create an inventory based on documents already produced, the burden of which would be the same on Defendants as it would be for Plaintiff; (d) the term “accounting is vague and ambiguous; (e) the information sought is protected from disclosure by the attorney work product doctrine and the attorney-client privilege; and, (f) the information sought is not relevant to issues in the case and is not proportional to the needs of the case.

*13 Thereafter, Plaintiff supplemented its answers to interrogatories and requests for production after the parties consulted, providing sufficient information to identify the assets currently held in the Trust. This has narrowed the motion to compel to the identification of assets previously held in the Trust at Keith's date of death but thereafter distributed, either as an expense of the Estate or as a distribution pursuant to the terms of the Trust.

Plaintiff asserts that the Estate has identified for Defendants the current and historical accounts held by the Trust and has identified where in the Plaintiff's document production the account statements can be located. Plaintiff argues the Defendants are now in an equal position to identify any expenditures or distributions from the Trust following Keith's death, and thus, Plaintiff asserts that it has now fully answered the Defendant's discovery requests. Plaintiff further states that the documents that have been produced are the documents in existence responsive to Defendants’ requests for production under Rule 34 that are not protected from discovery by attorney-client privilege or the work product doctrine. Plaintiff states “[n]o other documents exist except for those that are privileged.” PL Response in Opposition to Defendants’ Motion to Compel Production of Documents and Information Related to Assets of Keith Wellin's Revocable Trust, ECF No. 104, p. 4.

Regarding Plaintiff's first assertion that the information sought by Defendants is irrelevant to the issues, I disagree. As noted previously, “[a] discovery request is relevant ‘if there is any possibility that the information sought might be relevant to the subject matter of [the] action.’ ” Machinery Solutions, Inc. v. Doosan Infracore America Corporation, 323 F.R.D. 522 (2018)(quoting Wilson v. Decibels of Or., Inc., Case No. 1:16-cv-00855-CL, 2017 WL 1943955, at *2 (D. Or. May 9, 2017); Jones v. Commander, Kan. Army Ammunitions Plant, 147 F.R.D. 248, 250 (D. Kan. 1993)). This is a legal malpractice action in which the Plaintiff alleges, inter alia, that the estate planning by Thomas Farace caused Keith Wellin to suffer a liquidity crisis, adversely affecting his net worth. Thus, as Defendants argue, information as to the assets of the Trust are relevant on the issue of Keith Wellin's financial state in the last years of his life, as well as the ability of the Trust to fulfill Keith Wellin's bequests.

Plaintiff next argues the requests are not proportional to the needs of the case. Whether a discovery request is proportional is determined by “considering the importance of the issues at stake in the action, the amounts in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Id.; Rule 26(b)(1), Fed. R. Civ. P.

One of the central issues in this case is the financial condition of Keith Wellin and, after his death, of the Trust. Plaintiff claims the actions of the Defendants have caused damages in excess of $280 Million Dollars, which is certainly a significant amount in controversy. As will be discussed in the following paragraphs, I conclude the Plaintiff has superior access to the information sought by Defendants, and I further conclude the correct financial information could be important in resolving the issues.

*14 At the hearing on this motion, the undersigned requested that the Plaintiff consult with Plaintiff's current estate attorneys, Evans, Carter, Kunes & Bennett, P.A., to determine how feasible it would be, using their computer program, to collate the requested information regarding the expenditures and distributions from the Trust following Keith Wellin's death. Plaintiff's counsel did so, and reported back to the undersigned in pertinent part by letter as follows:

“We learned that while Evans, Carter, Kunes and Bennett, P. A. maintains within accounting software information sufficient to generate a working draft of combined expenditures of Keith Wellin, The Estate, and the Revocable Trust (beginning on Mr. Wellin's date of death), this information is not complete and is stored in a way that would permit production without the disclosure of mental impressions and other work product of attorneys at Evans, Carter, Kunes and Bennett, P. A.”

See Letter from Lewis Babcock, LLP., dated My 24, 2018, attached to this Report as Exhibit A.

Nevertheless, as the letter notes, counsel did confirm that “the Estate has already provided the account statements of the Revocable Trust through this spring, such that the Defendant can track the expenditures itself.” Id.

In their Response in Opposition to the Defendants’ Motion to Compel, Plaintiff states that all documents in existence responsive to the Defendants’ requests have been produced that are not protected from discovery by attorney-client privilege or the attorney work-product doctrine. Presumably, this would include the documents available in the accounting software that are referred to in the letter and are described as containing the mental impressions and other work product of the attorneys at Evans, Carter, Kunes and Bennett, P. A. As Defendants argue in their Reply, to assert attorney-client privilege or work product protection of information, a party must provide a privilege log sufficient to allow the opposing party to evaluate the assertion. Rule 26(b)(5)(A) reads as follows:

(A) Information Withheld. When a party withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as trial preparation material, the party must:

(i) expressly make the claim; and

(ii) describe the nature of the documents, communications, or tangible things not produced or disclosed – and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.

Consequently, to meet this obligation, Plaintiff will have to review each document to assess the claim of privilege and/or protection. Having this responsibility, it is not unduly burdensome to require that Plaintiff provide a copy of each document they review for privilege which is responsive to the Defendants’ requests to the Defendants, redacting comments containing mental impressions and other work product to preserve the claimed privilege or protection.

As noted earlier in this report, the attorney-client privilege “must be tailored to protect only confidences disclosed within the [attorney-client] relationship,” and the essential elements of the communication giving rise to the privilege are:

*15 State v. Doster, 276 S.C. at 652, 284 S.E.2d at 219. Consequently, notations on documents merely providing accounting information such as the amount, the identity of a recipient and/or the purpose of a disbursement or expenditure in the course of administration of a Trust would not normally be protected from disclosure by the attorney-client privilege.

Nor would financial information in the administration of a trust normally be protected by the work product doctrine.[4] To be protected by the work product doctrine, the party asserting the protection bears the burden of establishing the documents the party seeks to protect were prepared in anticipation of litigation. In re Grand Jury Proceedings, Thursday Special Grand Jury, Sept. Term, 1991, 33 F.3d 342, 352 (4th Cir. 1994); see also, Carnes v. Crete Carrier Corp., 244 F.R.D. 694, 697 (N.D. Ga. 2007); United States v. Roxworthy, 457 F.3d 590, 593 (6th Cir. 2006). “Thus, in resolving the question of whether matters are immune from discovery because of a work product rule, attention must be turned first to whether the documents or tangible things were prepared in anticipation of litigation or for trial ....” National Union Fire Ins. Co., 967 F.2d at 984.

*16 In determining the applicability of the privilege, most courts look to whether or not the document was prepared because of the prospect of litigation. Tobbaccoville USA, Inc., 387 S.C. at 294 (citing Nat'l Union Fire Ins. Co., 967 F.2d at 984). As the Fourth Circuit noted in National Union Fire Ins. Co., “[t]he document must be prepared because of the prospect of litigation when the preparer faces an actual claim or a potential claim following an actual event or series of events that reasonably could result in litigation.” Id., 967 F.2d at 984.

To highlight the distinction between a document created because of the prospect of litigation and one prepared with the general possibility of litigation in mind, the Court further explained:

We take notice of the fact that members of society tend to document transactions and occurrences to avoid the foibles of memory and to perpetuate evidence for the resolution of future disputes. And because litigation is an ever-present possibility in American life, it is more often the case than not that events are documented with the general possibility of litigation in mind. “Yet [t]he mere fact that litigation does eventually ensue does not, by itself, cloak materials” with work product immunity.

Id., 967 F.2d at 984 (citing Binks Mfg. Co. v. National Presto Indus., Inc., 709 F.2d 1109, 1118 (7th Cir. 1983)). Consequently, “determining the driving force behind the preparation of each requested document is therefore required in resolving a work product immunity question.” Id.

Plaintiff asserts in its Reply that no accountings, either annual or final, have been filed with the Charleston County Probate Court, where this estate is being administered. However, it is still unclear to the undersigned whether or not the Trust document specifically disclaims any obligation of the Trustee to provide an accounting; whether or not the Charleston County Probate Court will require an accounting; or whether any accounting providing the disbursements to date from the Trust has been provided or is contemplated for the prospective beneficiaries, even if not required to be filed with the court.

For the foregoing reasons, I recommend that the Defendants’ Motion be denied in part and granted in part. I recommend (a) that the Plaintiff be required to supplement the Response in Opposition to the Defendants’ Motion to Compel by affidavit certifying that there is no obligation of the Trustee to provide an accounting of disbursements from the Trust to the Charleston County Probate Court or to any other court, nor is there a requirement, or an intention, even in the absence of requirement, to provide such accounting information to the beneficiaries or to any other entity, and that the affidavit give the reasons for its conclusions; (b) that the Plaintiff be required to provide a privilege log for any responsive documents withheld from disclosure on the basis of attorney-client privilege or work product protection; (c) that in the course of their review of each document for privilege, that they provide a copy to Defendants of each document that is responsive to their requests after redaction of any mental impressions or other privileged information, if the document can be so redacted without disclosing the asserted privileged communications or work product protected information; (d) that the Defendants’ Motion to Compel be granted if Plaintiff cannot certify by affidavit that there is no obligation to provide the requested accounting information, but that Defendants’ Motion be otherwise denied to the extent there is no obligation of the Trustee to prepare an accounting according to the affidavit filed by Plaintiff; (e) that Defendants’ right to challenge the assertion of privilege or work product protection be preserved.

*17 In conclusion, for the foregoing reasons, it is respectfully recommended as follows:

1) As to Plaintiff's Motion For Protective Order For Matthew R. Crow, ECF No. 87, that it be denied as moot, but subject to the right of counsel to raise any subsequent issues that may arise regarding disclosure after review of the information already provided or to be provided;

2) As to Plaintiff's Motion To Compel Production Of Documents Requested In Its Fifth Request For Production And Responses To Its Third Set Of Interrogatories, ECF No. 95 –

a) Request for Production No. 2 – that the Defendant, Nixon Peabody, be required to produce the requested billing statements, redacted to exclude the motive of the client in seeking representation, litigation strategy, or the specific nature of the services provided.

b) Requests for Production No. 3 and 4 – that the motion to compel as to these requests be denied as overbroad and unduly burdensome;

(c) Request for Production No. 5. - that the motion to compel production of materials described in request for production No. 5 be denied in part as overly broad and unduly burdensome, and should be limited to requiring production of a copy of all brochures, memoranda, letters or other documents prepared by Thomas Farace or under his direction for purposes of educating clients regarding the tax implications or use of the Strangi case in tax and/or estate planning;

(d) Request for Production No. 8 and Interrogatories No. 2 and 3 – that the motion to compel with regard to Request No. 8 and Interrogatories No. 2 and 3 be denied as moot;

(e) Request for Production No. 9, Request for Responses to Interrogatories No. 7-11 and 13-14. No action is required, as this part of the motion to compel has been withdrawn;

(f) Interrogatory No. 4. - that the motion to compel regarding this interrogatory be denied as moot.

(g) Interrogatory No. 6. – that the motion to compel as to this interrogatory be denied in part, but granted to the extent that Defendants be compelled to provide a list of tax and estate planning written materials currently in their library in the Rochester, New York Office and, to the extent they have it, a list of such materials in their library between 2001 and 2013. To the extent they are unable to provide this information, I recommend the Defendant Nixon Peabody be required to provide an explanation by affidavit as to why such records for years 2001 through 2013 are unavailable As to electronic sources of materials, I recommend that the response be limited to identification of the electronic source(s) available to the lawyers at that location (i.e. westlaw data base; lexis nexis data base, etc.).

(h) Interrogatory No. 12. - that the motion to compel a response to this interrogatory be denied as moot.

(3) As to Defendants’ Motion to Compel Production of Documents and Information Related to Assets of Keith Wellin's Revocable Trust, ECF No. 100

(a) that the Defendants be required to supplement their Response in Opposition to the Defendants’ Motion to Compel by affidavit certifying that there is no obligation of the Trustee to provide an accounting of disbursements or distributions from the Trust following the death of Keith Wellin to the Charleston County Probate Court or to any other court, nor is there a requirement or an intention, even in the absence of requirement, to provide such accounting information to the beneficiaries or to any other entity, and that the affidavit give the reasons for its conclusions;

*18 (b) that the Plaintiff be required to provide a privilege log for any responsive documents withheld from disclosure on the basis of attorney-client privilege or work product protection;

(c) that in the course of their review of each document for privilege, that they provide a copy to Defendants of each document that is responsive to Defendants’ requests after redaction of any mental impressions or other privileged information, if the document can be so redacted without disclosing the asserted privileged communications or work product protected information;

(d) that the Defendants’ Motion to Compel be granted in full if Plaintiff can not certify by affidavit that there is no obligation to provide the requested accounting information as set forth in (3)(a) above, and, in that event, that Plaintiff be compelled to compile and provide a list of all disbursements and distributions from the Trust since the date of Keith Wellin's death;

Respectfully submitted this 5th day of September, 2018.

Footnotes

[1]

According to the Plaintiff, at that time, the BRK stock held by Friendship Partners, LP was worth approximately Ninety Million Dollar.

[2]

Keith Wellin also gifted Ten Million Dollars to each of his three children and to his wife, Wendy C.H. Wellin, in January, 2013. In the underlying litigation, Keith Wellin sought, and Wendy Wellin, as Special Administrator of the Estate of Keith S. Wellin and as Trustee of the Keith S. Wellin Florida Revocable Living Trust u/a/d December 11, 2013, seeks return of the gifts to the Wellin Children, alleging he was taken advantage of and misguided by his son, Peter Wellin, in breach of his fiduciary duties, during a time when Keith Wellin was temporarily incapacitated due to medication he was taking.

[3]

The factual allegations and procedural histories of the above outlined pending lawsuits are further outlined in the Order of Judge Norton issued in Wellin I, ECF No. 158, on June 28, 2014.

[4]

See, for example- S. C. Code SECTION 62-7-813. Duty to inform and report.

(b) Unless the terms of a trust expressly provide otherwise, a trustee who accepts a trusteeship or undertakes the administration of an irrevocable trust created on or after the effective date of this article, or of a revocable trust which becomes irrevocable whether by the death of the settlor or by the terms of the trust on or after the effective date of this article, shall:

(1) within ninety days after the trustee accepts a trusteeship or undertakes administration of an irrevocable trust or a revocable trust that has become irrevocable whether by the death of the settlor or by the terms of the trust, notify the qualified beneficiaries, as defined in Section 62-7-103(12), of:

(2) throughout the administration of the trust, keep the distributees and the permissible distributees, as defined in Section 62-7-103(21) and (25), reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests, provided that the attorney-client privilege between the trustee and the trustee's attorney is not violated;

...

(c) Unless the terms of a trust expressly provide otherwise, a trustee who accepts a trusteeship or undertakes the administration of an irrevocable trust created on or after the effective date of this article, or of a revocable trust which becomes irrevocable on or after the effective date of this article, shall:

(1) have a continuing duty to:

...

(B) send annually, and upon the termination of the trust, a written report of the trust property which may be in any format which provides the distributees and permissible distributees, or other qualified beneficiaries who have requested in writing, with information necessary to protect their interests. The report may include a copy of the fiduciary income tax return, or copies of bank or brokerage statements, or an informal list of assets and if feasible, the market values of those assets, the liabilities, the receipts and the disbursements, including the source and amount of the trustee's compensation;

HISTORY: 2005 Act No. 66, Section 1; 2013 Act No. 100, Section 2, eff January 1, 2014.