Regions Bank v. Kaplan et al

Filing 743

ORDER re 504 Order on Sealed Motion, affirming Order and overruling objections. Signed by Judge Elizabeth A. Kovachevich on 5/18/2016. (JM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
REGIONS BANK, etc.,
Plaintiff,
v.

CASE NO. 8:12-CV-1837-T-17MAP

MARVIN I. KAPLAN, etc., et al.,
Defendants.
/
ORDER

This cause is before the Court on:
Dkt. 472

Dkt.
Dkt.
Dkt.
Dkt.

499
504
513
515

Dkt. 523

Sealed Crossclaim Defendant Bridgeview Bank Group’s
Motion To Determine that Deposition Testimony of
Marvin Kaplan is Not Privileged (Joined by Regions)
Sealed Response (Kaplan Parties)
Order
Joinder in Objection (Regions)
Sealed Crossclaim Defendant Bridgeview Bank Group’s
Objection to the Magistrate Judge’s Order Determining
Privilege Issue
Sealed Response to Objection

In this case, the assigned Magistrate Judge denied Bridgeview Bank Group’s
Motion to Determine That Deposition Testimony of Marvin Kaplan is Not Privileged (Dkt.
472), finding that Marvin Kaplan met his burden of establishing that his communication
was for the purpose of primarily securing an opinion on law, legal services, or
assistance in some legal proceeding, and was protected by attorney-client privilege. In
making this finding, the assigned Magistrate Judge looked to Marvin Kaplan’s
deposition testimony that his initial meeting with Mr. Parrish was related to a deal for
which he subsequently retained Mr. Parrish, his knowledge that Mr. Parrish was an

Case No. 8:12-CV-1837-T-17MAP
attorney, and that he was paying for time spent with Mr. Parrish in his capacity as a
lawyer. The assigned Magistrate Judge further determined that Marvin Kaplan did not
waive the attorney-client privilege.

Regions objects to the Order based on the record evidence, and requests that
the Order be modified or set aside. Regions asserts that the record clearly established
that Defendant Kaplan was not seeking legal advice from Mr. Parrish when Mr. Parrish
offered business advice as to the SAA transactions. Regions asserts that the Order is
clearly erroneous in finding that Defendant Kaplan was wrong about his own intentions
and inadvertently identified that he was not seeking legal advice from Mr. Parrish,
because there are no facts on which the assigned Magistrate Judge could rely to find
that Defendant Kaplan was seeking or received legal advice.
I. Standard of Review

According to Federal Rule of Civil Procedure 72(a):

When a pretrial matter not dispositive of a party’s claim or defense is
referred to a magistrate judge to hear and decide, the magistrate judge
must promptly conduct the required proceedings, and, when appropriate,
issue a written order stating the decision. A party may serve and file
objections to the order within 14 days after being served with a copy. A
party may not assign as error a defect in the order not timely objected to.
The district judge in the case must consider timely objections and modify
or set aside any part of the order that is clearly erroneous or contrary to
law.
The “clearly erroneous or contrary to law” standard of review is extremely deferential.
Holton v. City of Thomasville Sch. Dist.. 425 F.3d 1325, 1350 (11th Cir. 2005).
A finding is “clearly erroneous” when although there is evidence to support it the
reviewing court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed. United States v. U.S. Gvpsum Co.. 333 U.S. 364, 395
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Case No. 8:12-CV-1837-T-17MAP
(1948). Where there are two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.
An order is contrary to law “when it fails to apply or misapplies relevant statutes,
case law or rules of procedure.” Piaott v. Sanibel Dev.. LLC. 2008 WL 2937804 at *5
(S.D. Ala. July 23, 2008). Further, a magistrate judge is afforded broad discretion in
issuing nondispositive pretrial orders related to discovery. See Tracv P. v. Sarasota
Cntv.. 2007 WL 1364381 at *2 (M.D. Fla. May 9, 2007); L.R. 6.01(c)(18).

II. Discussion
Defendant Kaplan was deposed on April 9, 2015. The cover page of the
deposition indicates that Defendant Kaplan was deposed individually and on behalf of
R1A Palms, LLC, Triple Net Exchange, LLC, MK Investing, LLC and BNK Smith, LLC.
Jon D. Parrish, Esq., appeared on behalf of the Kaplan Parties. At the deposition,
Bridgeview Bank Group conducted its direct examination of Defendant Kaplan, and
Regions agreed to defer its direct examination.
Bridgeview Bank Group filed its Motion to Determine that the Deposition
Testimony of Marvin Kaplan Is Not Privileged on September 2, 2015.

There is a protective order in place in this case. (Dkts. 83, 90). The Order
incorporates the terms of the proposed Confidentiality Order. Paragraph 14 provides:

14.

Inadvertent Disclosure of Privileged Material
(a) The inadvertent production of any document or other
information during discovery in this action shall be without
prejudice to any claim that such material is protected by any
legally cognizable privilege or evidentiary protection
including, but not limited to, the attorney-client privilege or
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Case No. 8:12-CV-1837-T-17MAP
the work product doctrine, and no party shall be held to have
waived any rights by such inadvertent production.
(b) Upon written notice of an unintentional production by the
producing party or oral notice if notice must be delivered at a
deposition, the receiving party must promptly return or
destroy the specified document and any hard copies the
receiving party has and may not use or disclose the
information until the privilege claim has been resolved.
This case was removed on the basis of federal question jurisdiction. In federal
question cases, privileges are determined under federal common law. Fed. R. Ev. 501;
Universal City Dev. Partners. Ltd. v. Ride & Show Engineering. Inc.. 230 F.R.D. 688,
690 (M.D. Fla. 2005). The federal law of privilege governs even where the evidence
sought might be relevant to a pendent state claim. Hancock v. Hobbs. 967 F.2d 462,
466 (11th Cir. 1992)
The elements of the attorney-client privilege are:

(1) the asserted holder of the privilege is or sought to become a client; (2)
the person to whom the communication was made (a) is [the] member of
a bar of a court, or his subordinate and (b) in connection with this
communication is acting as a lawyer; (3) the communication relates to a
fact of which the attorney was informed (a) by his client (b) without the
presence of strangers (c) for the purpose of securing primarily either (i) an
opinion on law or (ii) legal services or (iii) assistance in some legal
proceeding, and not (d) for the purpose of committing a crime or tort; and
(4) the privilege has been (a) claimed and (b) not waived by the client.
See In re Grand Jury Proceedings 88-9(MIAl 899 F.2d 1039, 1042 (11th Cir. 1990).
A. Objection - Record Establishes that Communications at Issue Were Not
Legal Advice
Regions objects to the Order because the substance of the communication
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Case No. 8:12-CV-1837-T-17MAP
between Mr. Parrish and Defendant Kaplan is not legal advice, but general business
advice not protected by attorney-client privilege.

The subject encounter involves a meeting between Defendant Kaplan, who is
named as an individual Defendant and who is also an agent for the entities named as
Defendants, and prospective retained outside counsel.
Before the testimony which is the subject of this Motion, counsel had the
following exchange:

Mr. Ellison:

Q.

So let me-let me-let me preface that by saying
your initial conversation with David Rosenberg,
you said you didn’t leave with negative feelings
after that meeting.
No. ButDon’t -

Mr. Parrish:
Mr. Ellison:

Q.

But others may have. We’ll leave it at that.

Mr. Parrish:

Leave the attorneys out of it, is all I’m asking.

Mr. Ellison:

Sure.

Mr. Parrish:

I think that’s appropriate. Right?

Mr. Ellison:

I’m with you to-to an extent.
A.

No.

Mr. Ellison:

All right. You know, actually, let me make this record, Jon, if
you don’t mind.

Mr. Parrish:

Sure.

Mr. Ellison:

And you can do what you need to do.

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Case No. 8:12-CV-1837-T-17MAP
(Dkt. 515-1, pp. 13-14.

Immediately before the testimony which is the subject of the Motion, Order and
Objections, Defendant Kaplan was questioned as to whether, prior to 2012, any person
in any capacity, whether as Defendant Kaplan’s counsel or not as his counsel, told
Defendant Kaplan not to invest in the Smith deal. Defendant’s counsel, Mr. Parrish,
interposed an objection to that question, as it potentially invoked a privileged
conversation and instructed Defendant Kaplan not to answer. The question was then
rephrased, and Defendant’s counsel permitted the following question:

Q.

Prior to January of 2012, other than Mr. Rosenberg, did you
have a conversation with an attorney concerning the Smith
deal? I don’t want to know the substance of the
conversation. I’m just asking you if you had a conversation
with an attorney concerning the Smith deal prior to January
of 2012.

Mr. Parrish: And I’ll permit that question.
A.

Yes.

(Dkt. 515-1, p. 14).
Defendant Kaplan then testified:
Q.

In speaking with Mr. Parrish, were you seeking legal advice?
Again, not telling me what was talked about, but in speaking
with him, were you seeking legal advice?

A.

No.

Q.

Okay. What did Mr. Parrish tell you?

A.

He said-l was telling him about the deal, and he said it
sounded too good to be true.

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Case No. 8:12-CV-1837-T-17MAP
Mr. Parrish: I’m going to interpose a privilege objection to
that, despite what the client says, and move to
have that stricken and sealed, because I think
it may constitute advice, despite what he has
so indicated.
Mr. Ellison:

Okay.

Mr. Parrish: And if you guys treat it as advice, then I will assume it is
advice, soMr. Ellison:

Okay. Okay. Let’s move on......

After the single disclosure, and the privilege objection immediately following it,
Defendant Kaplan was repeatedly instructed not to answer questions concerning
communications with Mr. Parrish during that time. (Dkt. 515-1, pp. 19-20).

Defendant

Kaplan testified that Mr. Parrish’s visit to his office was an introduction (Dkt. 515-1, p.
18), and Defendant Kaplan hired Mr. Parrish after that meeting (Dkt. 515-1. p. 19).

Defendant Kaplan’s purpose in meeting with Mr. Parrish was to establish an
attorney/client relationship to receive legal advice on a matter not related to this case.
Defendant Kaplan also discussed a matter related to this case, and at a later time
retained Mr. Parrish to represent Defendant Kaplan in this case. Mr. Parrish met with
Defendant Kaplan in his capacity as a lawyer, and charged Defendant Kaplan a fee for
the meeting. The key question, in determining the existence of a privileged
communication is “whether the client reasonably understood the conference to be
confidential.” U.S. v. Schaltenbrand. 930 F.2d 1554, 1562 (11th Cir. 1991)(citing Kevlik
v. Goldstein. 724 F.2d 844, 849 (1st Cir. 1984)).
Defendant Kaplan’s brief testimony reveals the mental impression of the
attorney Defendant Kaplan was consulting. In light of the overall purpose of the
meeting, Defendant Kaplan’s knowledge that Mr. Parrish was a lawyer, the fact that

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Case No. 8:12-CV-1837-T-17MAP
Defendant Kaplan was charged a fee for the meeting, what Mr. Parrish said in that
\

meeting arguably constitutes legal advice rather than business advice.

After consideration, the Court overrules Plaintiff’s Objection as to this issue.

B. Objection - Record Establishes that Communications At Issue Were Not
Made For the Purpose of Securing Legal Advice
Regions objects to the Order because the finding that Defendant Kaplan
inadvertently identified that he was not seeking legal advice from Mr. Parrish is not
supported by record evidence, and is contrary to Defendant Kaplan’s unequivocal
testimony that Defendant Kaplan was not seeking legal advice.
When Defendant Kaplan was questioned as to whether Defendant Kaplan was
seeking legal advice, Defendant Kaplan denied that Defendant Kaplan was seeking
legal advice.

The attorney-client privilege is personal to the client, but generally the client’s
attorney asserts the privilege on behalf of the client when the issue arises. That is what
was done during Defendant Kaplan’s deposition. After the single initial inadvertent
disclosure, Defendant Kaplan was repeatedly instructed not to answer questions
regarding communications with Mr. Parrish during that meeting. Regardless of
Defendant Kaplan’s testimony that the communication at issue did not involve legal
advice, Defendant Kaplan’s counsel immediately objected on the basis of attorneyclient privilege, and moved to strike and seal that testimony.
In the context of an attorney-client privilege issue arising at deposition, it is not
unusual for an individual client to have an opinion different from his counsel as to the
same communication. Given the context, with Defendant’s counsel immediately
interposing a privilege objection that overrides an individual’s testimony, the Court views

Case No. 8:12-CV-1837-T-17MAP
the objection as providing appropriate guidance on an arguable issue.
After consideration, the Court overrules Plaintiff’s Objection as to this issue.

C. Order is Contrary to Law Because It Misapplies the Predominate Factor Test
To the Entire Meeting Rather Than The Subject Matter of Each Topic
Regions argues that the Magistrate’s conclusion that the entire meeting was
privileged, even if certain topics, such as the SAA transactions, did not involve legal
advice, is contrary to law. Regions argues that a communication may contain both
privileged and non-privileged materials, and that the non-privileged part is discoverable.
Regions argues that the fact that Mr. Parrish’s statement was made during a meeting
covering other unrelated topics for which legal advice may have been given does not
trigger a privilege for the subject testimony.
The Court recognizes that attorney-client privilege does not extend to every
statement made to a lawyer. Defendant Kaplan testified that he was meeting with Mr.
Parrish on another matter unrelated to the SAA Ponzi scheme and unrelated to
Defendant Kaplan’s investment in Smith. (Dkt. 515-1, p, 19). Even if the primary
purpose of the meeting was for an unrelated matter, the testimony that is the subject of
this Motion is brief. The Court has found that, in light of the context, it is arguable that
the exchange involves legal advice.
After consideration, the Court overrules the Objection. Accordingly, it is

ORDERED that Plaintiffs Objections are overruled and the Order of the
assigned Magistrate Judge is affirmed.

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Case No. 8:12-CV-1837-T-17MAP

DONE and ORDERED in Chambers in Tampa, Florida on this
2016.

Copies to:
All parties and counsel of record

10

day of May,