U.S. Home Corporation v. Settlers Crossing, L.L.C. et al

Filing 484

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 10/18/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
U.S. HOME CORPORATION
:
v.

:

Civil Action No. DKC 08-1863

:
SETTLERS CROSSING, LLC, et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this suit for
breach

of

motion

for

protective

contract,

fraud,

and

declaratory

reconsideration

or,

in

order,

and

for

a

stay

the

filed

judgment

alternative,
by

is
for

the
a

Plaintiff/Counter

Defendant U.S. Home Corporation and Counter Defendants Lennar
Corporation

(collectively,

(ECF No. 439).

“Plaintiffs/Counter

Defendants”).

The issues have been fully briefed, and the

court now rules, no hearing being deemed necessary.
105.6.
I.

Local Rule

For the following reasons, the motion will be denied.

Background1
On

October

Financial,

Inc.

26,

2010,

(“iStar”),

Defendant/Counter
notified

current

Claimant
counsel

iStar
for

Plaintiffs/Counter Defendants, the law firm of Womble Carlyle
Sandridge & Rice, PLLC (“Womble Carlyle”), that it intended to

1

A complete recitation of the underlying facts in this case
is available at U.S. Home Corp. v. Settlers Crossing, LLC, No.
DKC 2008-1863, 2010 WL 958034 (D.Md. Mar. 11, 2010).

serve

a

counsel,

subpoena
the

law

on
firm

Plaintiffs’/Counter
of

Greenberg

Defendants’

Traurig,

LLP

Traurig”), regarding non-privileged materials.
16).
of

former

(“Greenberg

(ECF No. 329-

According to the Declaration of Louis J. Rouleau, a member
Womble

subpoena,

Carlyle,
Mr.

shortly

Rouleau

after

“reached

out

being
to

notified
Greenberg

about

the

Traurig

to

determine how that firm planned on responding to the subpoena,”
but that “initial contact with Greenberg Traurig did not result
in a substantive conversation” because the subpoena had not yet
been served.

(ECF No. 343-2, Rouleau Decl., ¶ 3).

On December

15, 2010, Greenberg Traurig notified Womble Carlyle that it had
been served with the subpoena.
4).

Later

that

day,

Louis

(ECF No. 343-2, Rouleau Decl., ¶
J.

Rouleau,

a

member

of

Womble

Carlyle, telephoned Timothy Bass of Greenberg Traurig to discuss
it.

(Id.).2

2

Mr. Rouleau describes the phone call he had with Mr. Bass
as follows:
When I spoke with Mr. Bass on December 15,
201[0], I requested to coordinate with and
assist Greenberg Traurig in regard to the
subpoena, and mentioned the need to protect
U.S. Home’s privileges.
In response, Mr.
Bass declined my offer and assured me that
Greenberg Traurig would handle the matter
properly on its own, stating something to
the effect of: “We got it.
We know how to
respond.”
(Id. ¶ 5).
2

In

January

documents,
(See

ECF

Womble

2011,

consisting
No.

Greenberg
of

329-18).

Carlyle

that

4,199
On

it

Traurig

pages

January
had

of

25,

produced

eighty-one

material,

to

2011,

received

iStar

Greenberg

production and offered to provide a copy of it.
six

weeks

request

later,

for

a

on

March

cost

11,

estimate

2011,
for

Womble

notified
Traurig’s

(Id.).

Carlyle

getting

a

copy

production, to which iStar responded the same day.
329-19).

iStar.

Some

sent
of

a

the

(ECF No.

Womble Carlyle ultimately requested a full copy of

Greenberg Traurig’s production four days later, on March 15,
2011.

(ECF No. 329-20).

Carlyle

discovered

that

On or about April 13, 2011, Womble
certain

documents

within

Greenberg

Traurig’s production should have been withheld on the basis of
the attorney-client privilege and the work product protection.
(ECF No. 343-2 ¶ 9).
After
allegedly

several

unsuccessful

privileged

documents

attempts
without

to

retrieve

court

the

intervention,

Plaintiffs filed a motion “for enforcement of stipulated order
regarding inadvertent disclosure of privileged material” on May
20, 2011.

(ECF No. 211).

approved

agreement

Order”)

that

set

Plaintiffs sought to enforce a court-

between
forth

the
a

parties

protocol

(“the
whereby

disclosed documents could be “clawed back.”
Confidentiality

Order,

however,
3

the

Confidentiality
inadvertently

Pursuant to the

requesting

party

could

retain a copy of the disclosed documents if it disputed the
claim of privilege or protection by the producing party.
On August 19, 2011, after conducting a motions hearing,
Judge Connelly issued an order granting in part and denying in
part Plaintiffs’ motion (“the Original Order”).

(ECF No. 244).

He held that as to all but one of the documents at issue (“the
contested

documents”),

Plaintiffs

waived

privilege and work product protection.3
for reconsideration.

(ECF No. 253).

the

attorney-client

Plaintiffs then moved

On January 18, 2012, Judge

Connelly issued an order vacating a portion of the Original
Order (“the Reconsideration Order”), holding that all of the
contested documents remained privileged or protected.
317).

(ECF No.

Less than two weeks later, iStar filed an objection to

the Reconsideration Order (ECF No. 329), which, on July 23,
2012, the court sustained (ECF Nos. 433, 434).
On August 6, 2012, Plaintiffs/Counter Defendants filed the
present motion seeking reconsideration of the court’s July 23,
2012,

memorandum

opinion

and

order.

(ECF

No.

439).

iStar

opposed the motion for reconsideration on August 23, 2012 (ECF

3

Specifically, the contested documents are:
Bates No.
3320, Bates No. 3755-57, Bates No. 3578, Bates No. 3760-61,
Bates No. 3762-64, Bates No. 3998-4009, Bates No. 4010-21, and
Bates No. 4027-44.
It is undisputed that the contested
documents were all initially subject to the attorney-client
privilege and/or the work product protection.
4

No. 449), and Plaintiffs/Counter Defendants filed a reply brief
on September 10, 2012 (ECF No. 457).
II.

Motion for Reconsideration
Plaintiffs/Counter Defendants request reconsideration “‘to

correct a clear error of law or prevent manifest injustice,’”
citing

Greenbelt

Auth.,

No.

Ventures,

LLC

08:10–CV–157–AW,

v.

2011

Wash.
WL

Metro.

2175209

Area

(D.Md.

Transit
June

2,

2011), which relied on Federal Rule of Civil Procedure 59(e).
Rule 59(e) governs where there has been a final “judgment.”
Their motion, however, is more appropriately analyzed under Rule
54, as a motion for reconsideration of an interlocutory order
under

Rule

54(b).

See

Fayetteville

Investors

v.

Commercial

Builders, Inc., 936 F.2d 1462, 1469 (4th Cir. 1991) (“Rule 59(e)
is equally applicable only to a final judgment.”).
2012, order was not a final “judgment.”
(“[A]ny

order

or

adjudicates

fewer

liabilities

of

other
than

fewer

decision,
all

than

the

all

See Fed.R.Civ.P. 54(b)

however

claims

the

The July 23,

designated,

or

parties

the
does

that

rights
not

end

and
the

action . . . and may be revised at any time before the entry of
a judgment adjudicating all the claims and all the parties’
rights and liabilities.”).
The precise standard governing a motion for reconsideration
of

an

interlocutory

articulated

in

Rules

order
59(e)

is

unclear.

and
5

60(b)

While
are

not

the

standards

binding

in

an

analysis of Rule 54(b) motions, see Am. Canoe Ass’n v. Murphy
Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003), courts frequently
look

to

these

standards

for

guidance

in

considering

such

motions, Akeva L.L.C. v. Adidas Am., Inc., 385 F.Supp.2d 559,
565-66 (M.D.N.C. 2005).
Public policy favors an end to litigation
and recognizes that efficient operation
requires
the
avoidance
of
re-arguing
questions that have already been decided.
Most courts have adhered to a fairly narrow
set of grounds on which to reconsider their
interlocutory orders and opinions.
Courts
will reconsider an interlocutory order in
the following situations:
(1) there has
been an intervening change in controlling
law; (2) there is additional evidence that
was not previously available; or (3) the
prior decision was based on clear error or
would work manifest injustice.
Id. (citations omitted); see also Beyond Sys., Inc. v. Kraft
Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *1-2 (D.Md.
Aug. 4, 2010) (applying this three-part test when evaluating a
motion for reconsideration under Rule 54(b)).
reconsideration

under

Rule

54(b)

may

not

be

A motion for
used

merely

reiterate arguments previously rejected by the court.

to

Beyond

Sys., Inc., 2010 WL 3059344, at *2.
Plaintiffs/Counter Defendants advance three arguments for
reconsideration, none of which compels revision of the court’s
prior decision.
23,

2012,

order

First, they argue that leaving the court’s July
intact

would

constitute

6

manifest

injustice.

Second, they argue that the court misread the Fourth Circuit’s
opinion

in

Hanson

v.

United

States

Agency

for

International

Development, 372 F.3d 286 (4th Cir. 2004), when it found that
case

non-dispositive.

And

third,

they

re-argue

that

they

satisfied the requirements of finding inadvertent waiver of the
contested documents under Federal Rule of Evidence 502.
A.

Manifest Injustice

Plaintiffs/Counter Defendants contend that “even if Hanson
does not preclude a waiver . . . and Plaintiffs did not satisfy
Rule 502(b),” the court’s July 23, 2012, order should be vacated
in the “interests of justice and fairness.”
6).

(ECF No. 439-1, at

Plaintiffs/Counter Defendants then go on to cite a number

of cases that demonstrate circumstances in which a court has
relied on the “interests of justice” to find that an inadvertent
disclosure of a privileged document did not constitute a waiver.
(See, e.g., id. at 6 (citing Peterson v. Bernardi, 262 F.R.D.
424 (D.N.J. 2009)).

Crucially, Plaintiffs/Counter Defendants do

not cite any case in which a court has granted a motion for
reconsideration based on “manifest injustice.”
that

Plaintiffs/Counter

Defendants

Thus, it appears

improperly

conflate

two

different standards.
The cases relied on by Plaintiffs/Counter Defendants merely
address the same issue that was already adjudicated in the July
23,

2012,

order:

whether

an
7

inadvertent

disclosure

of

a

privileged document constitutes a waiver.

The reference to the

“overriding interests in justice” in these cases have to do with
a multi-factor test that several courts, including courts within
this district, applied to situations involving an inadvertent
disclosure prior to the enactment of Federal Rule of Evidence
502.

See, e.g., Victor Stanley, Inc. v. Creative Pipe, Inc.,

250 F.R.D. 251, 259 (D.Md. 2008).4

The reference has nothing to

do

is

with

Peterson,

whether
262

Plaintiffs/Counter

reconsideration
F.R.D.

at

warranted.

428-29.

Defendants,

in

In

effect,

See,
other

only

e.g.,
words,

reiterate

previously-made arguments by contending that the “interests of
justice” militate a finding of no waiver; they do not present
any reason to alter the July 23, 2012, order.5
B.

Hanson and Rule 502

Plaintiffs/Counter

Defendants

dispositive of the entire matter.

re-argue

that

Hanson

is

They do not, however, proffer

4

Because Rule 502 did not “supplant applicable waiver
doctrine generally,” however, it is not uncommon for courts to
look to such multi-factor tests today.
See Fed.R.Evid. 502
explanatory note (revised 11/28/2007); see also 8 Charles Alan
Wright et al., Federal Practice and Procedure § 2016.3 (3d ed.
2012) (noting that “the pre–2008 case law will remain pertinent”
to applying Rule 502).
5

Separately, whether iStar’s counsel may have violated an
ethical duty to notify Plaintiffs’/Counter Defendants’ of the
possible disclosure of privileged documents is not an issue
properly before the court and, moreover, is not a sufficient
basis for setting aside the July 23, 2012, order.
8

any new evidence that was previously unavailable, advance any
intervening change in controlling law, or identify any clear
error

that

would

conclusion.

warrant

Instead,

revising

the

Plaintiffs/Counter

court’s

earlier

Defendants

merely

reiterate arguments that were previously rejected.
For example, Plaintiffs/Counter Defendants assert that in
Hanson, “the Fourth Circuit held that an attorney’s unilateral
disclosure

does

not

waive

the

client’s

privilege

unless

the

client authorized the disclosure, in which even a waiver by
counsel is possible.”

(ECF No. 439-1, at 13).

They go on to

point out that “it is undisputed . . . that neither Plaintiffs
nor

Womble

Carlyle

authorized

Greenberg

Plaintiffs’ privilege documents.”

(Id.).

Traurig

to

disclose

As the court already

explained in its prior opinion, however, “Hanson crucially does
not address whether Plaintiffs in fact waived privilege as to
the contested documents.”
372

F.3d

at

recognize that

294)).
Hanson

(ECF No. 433, at 17 (citing Hanson,

Plaintiffs/Counter

Defendants

fail

to

does not fully answer the question of

whether a waiver occurs where an attorney discloses a privileged
document without the client’s consent.
holds

that

this

scenario

does

not

While Hanson certainly

constitute

an

intentional

waiver by the client, it does not address whether the disclosure
is

nonetheless

inadvertent.

Thus,

implicated.
9

Rule

502

is

necessarily

With respect to Plaintiffs’/Counter Defendants’ contention
that,

even

if

Rule

502

were

applicable,

they

satisfied

its

requirements, Plaintiffs/Counter Defendants again do not submit
any

previously-unavailable

new

evidence,

point

to

any

intervening change in relevant law, or pinpoint any clear error
that would permit revisiting the court’s holding that privilege
was waived as to the contested documents.

Instead, Plaintiffs

repeatedly stress that Greenberg Traurig was a third party over
whom Womble Carlyle had no control.

(See, e.g., 439-1, at 18).

For the reasons already stated in the court’s prior opinion,
this position is simply untenable.

Furthermore, if Greenberg

Traurig truly were a third party and not in any way an agent (or
former

agent)

of

Plaintiffs/Counter

Defendants,

Plaintiffs

Counter Defendants likely would have waived privilege as to the
contested
Traurig.

documents
See

by

Newman

disclosing
v.

State,

those
384

items

Md.

to

285,

Greenberg

306

(2004)

(“[G]enerally the presence of a third party will destroy the
attorney-client privilege.” (citing E.I. Dupont de Nemours & Co.
v. Forma-Pack, Inc, 351 Md. 396, 416 (1998))).
the

relationship

among

Plaintiffs/Counter

No matter how

Defendants,

Womble

Carlyle, and Greenberg Traurig is viewed, the disclosure of the
contested documents constituted a waiver of all privileges.
sum,

Plaintiffs/Counter

Defendants

10

fail

to

demonstrate

In
any

compelling

reason

to

reconsider

the

court’s

July

23,

2012,

order.
III. Motion for Protective Order
In the alternative, Plaintiffs/Counter Defendants request a
protective
against

order

“bar[ring]

Plaintiffs

and

counterclaims.”

use

of

the

strik[ing]

contested

iStar’s

(ECF No. 439-1, at 26).

documents

proposed

new

Rule 26(c) provides,

in pertinent part, that “[t]he court may, for good cause, issue
an

order

to

embarrassment,
Fed.R.Civ.P.
Defendants

protect

a

oppression,
26(c)(1).

argue

that

party

or

or

undue

To
iStar

that

person

from

burden
end,

improperly

annoyance,

or

expense.”

Plaintiffs/Counter
used

the

contested

documents in contravention of Rule 26(b)(5)(B), which states:
If information produced in discovery is
subject to a claim of privilege or of
protection as trial-preparation material,
the party making the claim may notify any
party that received the information of the
claim and the basis for it. After being
notified, a party . . . must not use or
disclose the information until the claim is
resolved . . . .
Fed.R.Civ.P.

26(b)(5)(B).

Specifically,

Plaintiffs/Counter

Defendants take issue with iStar’s reliance on the contested
documents in a June 6, 2011, brief, which was filed more than
two months before Judge Connelly first resolved the privilege
status of the contested documents via the Original Order.
ECF No. 439-1, at 27-28 (citing ECF No. 212)).
11

(See

What

Plaintiffs/Counter

Defendants

fail

to

acknowledge,

however, is that the June 6, 2011, brief that iStar filed was
part

of

Order.

the

motions

practice

that

resulted

in

the

Original

In other words, iStar discussed the contested documents

only to resolve the question of privilege itself.

It would be

wholly illogical to read Rule 26(b)(5)(B) as prohibiting the use
of documents “subject to a claim of privilege” when resolving
that very claim of privilege.
Accordingly,

Plaintiffs/Counter

Defendants

good cause for issuing a protective order.
denied.
to

fail

to

show

Their motion will be

Moreover, because Plaintiffs’/Counter Defendants’ basis

strike

the

portions

of

iStar’s

amended

counterclaim

is

without merit, that request for relief will also be denied.
IV.

Conclusion
For the foregoing reasons, the motion for reconsideration

filed by Plaintiffs/Counter Defendants U.S. Home Corporation and
Lennar

Corporation

will

be

denied.

A

separate

order

follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

12

will