BOKF, N.A. v. BCP Land Company et al

Filing 265

ORDER granting 247 motion for In Camera review of Documents Withheld by Defendant's Under Claims of Privilege. BCP Land Company Defendants shall submit the documents to the Court for in camera inspection by 10/30/2015. The Court will then determine whether to require the production of any or all of the communications at issue. Signed on 10/22/2015 by District Judge M. Douglas Harpool. (Hance, Breanna)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION

BOKF, N.A.,
Plaintiff,
v.
BCP LAND COMPANY, LLC, et al.,
Defendants.

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Case No. 6:14-cv-03025-MDH

ORDER
Before the Court is Plaintiff’s Motion for In Camera Review of Documents Withheld by
Defendants under Claims of Privilege (Doc. 247). Plaintiff requests in camera review of twentysix e-mail communications withheld by the BCP Land Company Defendants under attorney
client privilege on grounds that “[t]here is sufficient evidence to show that these communications
are not privileged and/or fall within the crime-fraud exception[.]” Upon review, the Court
hereby GRANTS Plaintiff’s motion for in camera inspection.
I. BACKGROUND
At the core of this lawsuit is a dispute concerning whether the releases (or non-releases)
of Development Period Reserve Fund (DPRF) funds to Redwine following the sales of certain
parcels of Special Assessment Property were appropriate under the terms of the Trust Indenture.
See Am. Compl. Counts I-II; Am. Countercl. Counts I-III. Further at issue in the case are
Defendants’ actions surrounding the sales of those parcels of property; specifically, whether
Defendants fraudulently and intentionally misrepresented certain facts and/or engaged in a
scheme to defraud Plaintiff in order to obtain the release of DPRF funds. See Am. Compl.
Counts III-IV.

Plaintiff’s current motion argues that certain documents withheld by the BCP Land
Company Defendants on the basis of attorney-client privilege should be reviewed in camera and
ultimately produced to Plaintiff because the communications are not privileged and/or fall within
the crime-fraud exception to attorney-client privilege.

Plaintiff argues five of the e-mail

communications cited on the privilege log are not subject to attorney-client privilege because no
attorney is copied on those e-mails.

Plaintiff further argues all twenty-six e-mail

communications highlighted on the privilege log, including the five e-mails referenced above,
should be produced because those communications lost any privilege under the crime-fraud
exception. To support its argument that the crime-fraud exception applies to the twenty-six
communications at issue, Plaintiff cited an April 2010 e-mail wherein Defendants allegedly
“started creating a fraudulent plan” and compared the subsequent dates of the alleged fraudulent
conduct “implement[ing] the plan” with the dates and subject matter of the twenty-six e-mail
communications sought to be produced.

Plaintiff concludes that, for each of the

communications, “[t]he legal advice was sought during and in furtherance of the frauds.”
The BCP Land Company Defendants oppose in camera review arguing Plaintiff failed to
“make a threshold showing, for each document, separately” that there is “a factual basis adequate
to support a good faith belief by a reasonable person that the BCP Land Defendants were
engaged in intentional fraud and that they communicated with their attorney, Jim Tilden, in
furtherance of that fraud.” Defendants specifically argue: (1) Plaintiff has no viable claim for
fraud because the release of the DPRF funds was governed by the Trust Indenture and any
departure from those terms constitutes an action for declaratory relief or breach of contract rather
than fraud; (2) the allegations of fraud cited in Plaintiff’s motion do not appear in Plaintiff’s
Amended Complaint and do not relate to the alleged misrepresentations cited in the Amended

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Complaint – i.e. Lopez’s five e-mails to the Trustee relating to the sale of the properties in 2012;
and (3) for various reasons, Plaintiff failed to meet its threshold burden to show the crime-fraud
exception applies to any or all of the communications at issue.
II. STANDARD
The Supreme Court has described the rationale behind the crime-fraud exception to
attorney-client privilege as follows:
The attorney-client privilege is not without its costs. Since the privilege has the
effect of withholding relevant information from the factfinder, it applies only
where necessary to achieve its purpose. The attorney-client privilege must
necessarily protect the confidences of wrongdoers, but the reason for that
protection—the centrality of open client and attorney communication to the
proper functioning of our adversary system of justice—ceases to operate at a
certain point, namely, where the desired advice refers not to prior wrongdoing,
but to future wrongdoing. It is the purpose of the crime-fraud exception to the
attorney-client privilege to assure that the “seal of secrecy” between lawyer and
client does not extend to communications made for the purpose of getting advice
for the commission of a fraud or crime.
United States v. Zolin, 491 U.S. 554, 562-63 (1989) (internal citations and quotation marks
omitted).
The Court must engage in a three step process in order to determine whether to compel
the production of privileged documents under the crime-fraud exception. At the first step, the
movant must present “a factual basis adequate to support a good faith belief by a reasonable
person . . . that in camera review of the materials may reveal evidence to establish the claim that
the crime-fraud exception applies.”

Zolin, 491 U.S. at 572.

The reviewing court will

“determine, separately for each document, whether [movant has] made the threshold showing
required in Zolin – ‘a factual basis adequate to support a good faith belief by a reasonable
person’ that the [opposing party] was engaged in intentional fraud and communicated with
counsel in furtherance of the fraud.”

In re BankAmerica Corp. Sec. Litig., 270 F.3d 639, 642

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(8th Cir. 2001). The fraud at issue, about which the opposing party has allegedly conferred with
counsel, must require proof of fraudulent intent as opposed to mere negligent intent or
inadvertence. Id. at 643. Moreover, whether the opposing party communicated with counsel in
furtherance of the fraud concerns client’s, rather than the attorney’s, mindset. Id. at 642-43. The
threshold showing at the first step is “a lesser evidentiary showing . . . than is required ultimately
to overcome the privilege” and “need not be a stringent one.” 491 U.S. at 572.
At the second step, after the court finds the movant has satisfied the threshold showing,
the court will exercise its sound discretion to determine whether to engage in in camera review
based on the facts and circumstances of the particular case. Zolin, 491 U.S. at 572. In exercising
its discretion, the court will consider factors such as the volume of materials the movant has
asked the court to review, the relative importance to the case of the allegedly privileged
information, and the likelihood that evidence produced through in camera review will establish
that the crime-fraud exception applies. Id.
At the third and final step, assuming the court decides to exercise its discretion to review
the documents in camera, the court will review the documents and apply the crime-fraud
exception if the moving party has “ma[de] a prima facie showing that the legal advice has been
obtained in furtherance of an illegal or fraudulent activity.”

In re Green Grand Jury

Proceedings, 492 F.3d 976, 982-83 (8th Cir. 2007). Such a prima facie showing requires the
movant to show: (1) evidence that, if believed by the trier of fact, would establish the existence
of a crime or fraud, and (2) the communications were made in furtherance thereof. See id.; see
also Triple Five of Minnesota, Inc. v. Simon, 213 F.R.D. 324, 327 (D. Minn. 2002) aff'd, 2002
WL 1303025 (D. Minn. 2002).

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III. DISCUSSION
The Court has carefully reviewed Plaintiff’s and Defendants’ arguments concerning the
twenty-six e-mail communications at issue and finds Plaintiff has presented a factual basis that is
adequate to support a good faith belief by a reasonable person that in camera review of the
e-mails may reveal evidence to establish that the BCP Land Company Defendants were engaged
in intentional fraud and communicated with counsel in furtherance of the fraud.
A. Applicable Frauds
Plaintiff’s Amended Complaint asserts claims for fraudulent misrepresentation
(Count IV) and violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”)
(Count III). To prevail on its RICO claim, Plaintiff must show a pattern of racketeering activity,
including the commission of at least two predicate acts. The Amended Complaint alleges
Defendants engaged in a pattern of racketeering activity through the predicate acts of wire fraud
and bank fraud. As more fully outlined in the Court’s prior order (Doc. 104), both fraudulent
misrepresentation and wire fraud require proof of fraudulent intent.1 Therefore, Plaintiff must
establish the crime-fraud exception on facts related to Defendants’ alleged fraudulent
misrepresentation and/or wire fraud. See, e.g., Triple Five of Minnesota, 213 F.R.D. at 327
(citing RICO predicate offenses as basis for crime fraud exception).
B. Factual Basis to Support In Camera Review
The facts underlying Plaintiff’s fraudulent misrepresentation and RICO claims are
contained in the Amended Complaint and will not be repeated in full here. In sum, Plaintiff
alleges Defendants created a scheme to defraud the Trustee into releasing DPRF funds by
transferring/selling portions of the Special Assessment Property to strawmen, by making

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The Supreme Court has refused to require intent to defraud as an element of bank fraud brought under subsection
(2) of 18 U.S.C. § 1344. Loughrin v. United States, 134 S. Ct. 2384, 189 L. Ed. 2d 411 (2014).

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intentionally false representations to the Trustee indicating certain lots had been sold and the
DPRF funds should be released, by obtaining release of DPRF funds by means of the false
representations, and then by splitting the released funds and refusing to pay special assessments
on the “sold” properties.

See Am. Compl. ¶¶ 125-130, 154-165, 186-190, 202, 205-207.

Plaintiff’s fraudulent misrepresentation claim cites six allegedly misrepresentations made by
Lopez to the Trustee on August 24, 2012, September 13, 2012, November 12, 2012, December 4,
2012, December 27, 2012, and November/December 2013 that state certain lots had been sold
and DPRF proceeds should be released to Redwine. Plaintiff’s RICO claim alleges the same
representations “were made in furtherance of the scheme to defraud the Trustee, to avoid having
to pay assessments, and to avoid obligations under the Replenishment Covenant and
Replenishment Guarantee”; specifically, Plaintiff alleges Defendants entered into an agreement
to use false representations in order to obtain bank property via wire transfers and then
perpetrated their scheme by using the misrepresentations cited above in order to transmit DPRF
proceeds to Redwine.
Attached to Plaintiff’s Amended Complaint is an April 2010 communication from
Redwine to Kynion, Jury, and Lopez that discusses financial concerns with the Branson Special
Assessment Property and the need/desire to eliminate the DPRF. See Am. Compl., Ex. 20.
Plaintiff now submits an additional April 2010 e-mail communication from Kynion to Redwine
and Jury discussing concerns and considerations moving forward with the Branson Special
Assessment Property including a suggestion to shield assets from bondholders and questions
about any risks associated with Kynion purchasing a portion of the properties and not paying tax
assessments on those properties. See Pl’s Mot., Ex. 2. Plaintiff also submits a June 2012
communication from Kynion to “John & Jacky” wherein Kynion directs the e-mail recipients to

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bid on lots 9-12 and 30-35 using purchaser’s name Grace Properties Branson, LLC assuming that
name was available or Oobneb, LLC otherwise and insisting that “[o]ur name will never show up
on any of the documents or communications” and “[t]he auction guy does not need to know who
we are or anyone else for that matter” and “make sure nothing of our information shows up.”
See Pl’s Mot., Ex. 3.

Plaintiff attached to its Amended Complaint an August 2012

communication between Jury, Redwine, Kynion, and Lopez that outlines the target dates for
sales of specific lots of the Special Assessment Property and target dates for submission of
requests to release DPRF funds. See Am. Compl., Ex. 21.
The e-mail communications sought to be discovered by Plaintiff are as follows:
Privilege Log No.
202

Date
4/18/2012

Author
Jury

205

7/14/2012

Jury

Recipient
Redwine, Lopez,
Tilden
Redwine, Lopez

206

8/17/2015

Jury

Redwine, Lopez

207-213, 209.5

8/28/20128/29/2012

Jury/Tilden

Tilden or Tilden,
Redwine, Lopez/Jury

250-259

5/15/20135/16/2013

Tilden/Lopez/
Jury

260-262

5/17/20135/18/2013

Lopez/Redwine

Lopez, Redwine Jury/
Tilden, Redwine,
Jury/Tilden, Lopez,
Redwine
Jury, Redwine/
Lopez, Jury

263-264

5/22/20135/23/2013

Tilden/Lopez

Lopez/Tilden,
Redwine, Jury

Subject
Potential sale of BCP Land
Company property
“BCP Land Company analysis and
potential Redwine/BCP Land
Company litigation with Southwest
Trust – Subject reflects work
product from litigation and
attorney/client communications”
“Sales of BCP Land Company
property and consequences of said
sales; assessments – Subject
reflects issues to be discuss with
counsel”
“Sales of BCP Land Company
property and consequences of said
sales; assessments”
“Sales of BCP Land Company
property”

“Sales of BCP Land Company
property – Subject reflects
attorney-client privileged
communications.”
“Sales of BCP Land Company
property”

Based on the foregoing information and the timeline outlined in Plaintiff’s motion, the
Court finds Plaintiff has satisfied the threshold showing required by Zolin for each separate
document – i.e. a factual basis adequate to support a good faith belief by a reasonable person that
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the BCP Land Company Defendants were engaged in intentional fraud and communicated with
counsel in furtherance of the fraud. As stated by the Supreme Court, the threshold requirement
for in camera review is not intended to be strict. Here, the April 18, 2012 e-mail allegedly “was
sent before BCP Defendants made misrepresentations in 2012 and 2013 but after BCP
Defendants devised their fraudulent plan in April 2010, and BCP Defendants have admitted it
relates to the topics discussed in Kynion’s April 2010 e-mail.” The July 14, 2012 e-mail does
not copy an attorney and was sent after Kynion secretly bid on certain lots (see his June 2012 email discussed above) but before the purchase agreements on those lots were signed and before
the alleged misrepresentation related that sale was made; the e-mails concern both “BCP Land
Company analysis” and potential litigation with the Trustee. The August 17, 2012 e-mail does
not copy an attorney, was sent one week prior to the first alleged misrepresentation, and concerns
subject matter related to the alleged ongoing RICO scheme to defraud. The August 28-29, 2012
e-mails were sent within five days after the first alleged misrepresentation and release of DPRF
funds, prior to the subsequent alleged misrepresentations and releases, and it concerns subject
matter relating to the alleged ongoing RICO scheme to defraud. Finally, the May 2013 e-mails
were made after Kynion failed to pay special assessments on the purchased properties, after
Trustee’s counsel requested copies of the 2012 purchase contracts and settlement statements but
before such documents were forwarded, and reportedly concerns the sales of property at issue in
the scheme to defraud. These e-mails may involve communications with an attorney to assist in
“covering up” wrongdoing.2

Moreover, these e-mails were sent prior to the final alleged

misrepresentation in late 2013/early 2014.

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See In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998) (“The exception does not apply if the
assistance is sought only to disclose past wrongdoing . . . but it does apply if the assistance was used to cover up and
perpetuate the crime or fraud.”); see also In re Green Grand Jury Proceedings, 492 F.3d 976, 985 n. 9 (8th Cir.
2007) (distinguishing In re BankAmerica Corp. Sec. Litig., 270 F.3d 639, 643 (8th Cir. 2001)).

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Defendants’ arguments that there is no legitimate basis for a fraud claim and that the
frauds cited in Plaintiff’s motion do not relate to the frauds alleged in the Amended Complaint
are rejected at this time.3 The Court finds Plaintiff has presented a factual basis adequate to
support a good faith belief by a reasonable person that in camera review of the materials may
reveal evidence to establish Plaintiff’s claim that the crime-fraud exception applies. The Court
will address Defendants’ arguments concerning the merits of Plaintiff’s fraud-based claims
through the pending dispositive motions (Docs. 258).
DECISION
Because Plaintiff has satisfied the threshold finding in Zolin and because the Court,
exercising its sound discretion, finds in camera review appropriate based on the facts and
circumstances of the case, Plaintiff’s Motion for In Camera Review of Documents Withheld by
Defendants under Claims of Privilege (Doc. 247) is hereby GRANTED. BCP Land Company
Defendants are ORDERED to submit the communications withheld pursuant to privilege log
numbers 202, 205, 207-213, 209.5, and 250-264 for in camera inspection by 5:00 p.m. on
October 30, 2015.4

IT IS SO ORDERED.
Date: October 22, 2015

/s/ Douglas Harpool_______________
DOUGLAS HARPOOL
UNITED STATES DISTRICT JUDGE

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The Court agrees that “Fraud #3” cited in Plaintiff’s motion does not appear in the Amended Complaint. Plaintiff
argues Fraud #3 is an extension of the scheme to defraud cited in the Amended Complaint. The Court need not
address that issue because it finds the frauds explicitly alleged in the Amended Complaint accompanied by the
exhibits submitted to the Court form a valid basis for in camera review.   

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Defendants shall e-mail the communications to Chambers at [e-mail] or, alternatively,
mail hard copies of the communications to Chambers at 222 John Q. Hammons Parkway, Springfield, MO 65806.

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