Wellin v. Farace et al

Filing 254

ORDER granting 245 Motion to Quash; granting 246 Motion to Quash. Signed by Honorable David C Norton on October 26, 2022. (acho, )

2:16-cv-00414-DCN

Date Filed 10/26/22

Entry Number 254

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
WENDY C.H. WELLIN, on behalf of the
Estate of Keith S. Wellin as its duly appointed
Special Administrator,

)
)
)
)
Plaintiff,
)
)
vs.
)
)
THOMAS M. FARACE, ESQ., individually
)
and as agent for Nixon Peabody, LLP, and
)
NIXON PEABODY, LLP,
)
)
Defendants.
)
_______________________________________)

No. 2:16-cv-00414-DCN
ORDER

This matter is before the court on witness Hood Law Firm, LLC’s (“Hood Law
Firm”) motion to quash, ECF No. 245, and plaintiff Wendy C.H. Wellin’s (“Wendy”), on
behalf of the Estate of Keith S. Wellin as its duly appointed Special Administrator (the
“Estate”), motion to quash, ECF No. 246. For the reasons set forth below, the court
grants both motions.
I. BACKGROUND
Because the parties are well-acquainted with this litigation, the court will provide
only a brief recitation of the underlying facts and focus on the matters at hand. This case
involves claims that defendants Thomas M. Farace, individually and as an agent for
Nixon Peabody, LLP, (“Farace”) and Nixon Peabody, LLP (“Nixon Peabody,” together
with Farace, “defendants”) engaged in legal malpractice while providing estate planning
services to Keith S. Wellin (“Keith”). In approximately 2001, defendants began
representing Keith with respect to his estate planning, both individually and as Trustee of
the Keith S. Wellin Florida Revocable Living Trust dated December 11, 2001 (the
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“Revocable Trust”), which defendants drafted on Keith’s behalf. In 2003, Keith entered
into a series of transactions to reduce the amount of estate taxes due upon his death (the
“2003 Transaction”). Acting on advice from Farace, Keith and his children, Peter J.
Wellin (“Peter”), Cynthia W. Plum (“Ceth”), and Marjorie W. King (“Marjorie”)
(collectively, the “Wellin Children”), established Friendship Partners, L.P. (“Friendship
Partners”). This limited partnership was established using the “Strangi” strategy and was
funded with shares of Keith’s Berkshire Hathaway Class A stock (the “Berkshire Stock”),
valued at approximately $90 million. ECF No. 62-4 at 23–30; ECF No. 62-7 at 26. At
the time Friendship Partners was formed, Keith owned 98.9% of the partnership, while a
separate limited liability company controlled by the Wellin Children owned the
remaining 1.1% of the partnership. Wellin v. Wellin et. al., No. 2:13-cv-01831-DCN
(hereinafter, “Wellin v. Wellin”) (ECF No. 301-1 at 22).
On November 7, 2006, Farace sent Keith a letter enclosing a compilation of
Keith’s net worth and taxable estate. In the letter, Farace stated that most practitioners
were advising clients to no longer rely on the “Strangi” strategy for potential estate tax
savings. Farace accordingly recommended alternative tax-saving techniques, including a
sale of Keith’s limited partnership units to an intentionally defective grantor trust, which
was an option that Farace had previously presented to Keith in 2001. Keith did not
immediately take any action, and the existing structure of Friendship Partners remained
in place.
Keith was diagnosed with cancer in 2008. Around that time, Farace again
recommended that Keith consider selling his limited partnership units to an intentionally
defective grantor trust. On November 2, 2009, pursuant to the advice and direction of

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defendants, Keith established the Wellin Family 2009 Irrevocable Trust (the “Irrevocable
Trust”), which named the Wellin Children as trustees. On November 30, 2009, Keith, via
the Revocable Trust, sold his partnership units in Friendship Partners to the Irrevocable
Trust (the “2009 Transaction”). As a result of the 2009 Transaction, Keith was issued a
promissory note with a face value of $49,800,000, which was approximately 55% of the
value of the underlying Berkshire Stock. Farace predicted a future estate tax savings of
between $14 million and $18 million based on the 2009 Transaction.
After receiving a letter from Farace on January 6, 2010, Keith expressed
confusion regarding the impact of the 2009 Transaction on Keith’s estate tax liability. In
response, Farace sent follow-up letters in January 2010, November 2011, and November
2012 further summarizing the 2009 Transaction. At no point did Keith and Farace
discuss the impact of the 2009 Transaction if the Berkshire Stock were to be sold prior to
Keith’s death. Wellin v. Wellin (ECF No. 599-5 at 5).
In June 2013, Keith terminated his attorney-client relationship with Farace and
hired new counsel. On July 3, 2013, Keith sued his three children seeking to set aside the
2009 Transaction, alleging that he “did not know or understand that he had lost all control
over and access to his partnership interests” in the 2009 Transaction. Wellin v. Wellin
(ECF No. 301). The complaint in that case further alleged that Keith “unknowingly sold
his partnership interest for less than market rate while also retaining the income tax
liability should any of the [Berkshire Stock] or the partnership interests be sold.” Id.
Wellin v. Wellin was later dismissed without prejudice upon settlement of the case. Id.
(ECF No. 978).

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Keith died on September 14, 2014. On February 10, 2016, the Estate filed the
instant action against defendants alleging causes of action for negligence, breach of
fiduciary duty, breach of contract, and aiding and abetting breach of fiduciary duty. ECF
No. 1, Compl. In the amended complaint, now the operative complaint, the Estate further
alleges that defendants designed and implemented estate planning structures in 2003 and
2009 that “failed to adequately protect the interests of [Keith].” E.g., ECF No. 9, Amend.
Compl. ¶ 51. The Estate further alleges that defendants failed to “inform or advise
[Keith] as to the inherent risks and consequences of participating in [the] transaction[s].”
See, e.g., id. ¶ 51. Finally, the Estate alleges that defendants aided and abetted Peter and
Ceth in breaching fiduciary duties owed to Keith in connection with the 2009
Transaction. Id. ¶ 69.
On November 6, 2019, the court granted summary judgment in favor of
defendants, finding that the Estate’s claims were barred by the statute of limitations. ECF
No. 208. On January 6, 2020, the court denied the Estate’s motion to alter or amend
judgment. ECF No. 214. The Estate appealed the grant of defendants’ motion for
summary judgment and denial of the motion to alter or amend to the United States Court
of Appeals for the Fourth Circuit, ECF No. 216, and on November 21, 2021, the Fourth
Circuit vacated the court’s judgment and remanded the case for further proceedings, ECF
No. 219 (reproducing the Fourth Circuit opinion).
On September 19, 2022, Hood Law Firm filed a motion to quash or modify a
subpoena that it had been served. ECF No. 245. On the same day, the Estate filed a
motion to quash or modify the subpoena served upon Hood Law Firm and two other law
firms. ECF No. 246. The Estate responded in opposition to both motions on October 3,

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2022. ECF No. 247. The Estate replied on October 11, 2022, ECF No. 249, while Hood
Law Firm did not file a reply. The court held a hearing on the motions on October 11,
2022.1 ECF No. 250. As such, the motions have been fully briefed and are now ripe for
review.
II. STANDARD
Under Federal Rule of Civil Procedure 45, a party may compel a nonparty’s
attendance to a deposition. Rule 45 also permits the subpoenaed nonparty to quash or
modify a subpoena where it, inter alia, “requires disclosure of privileged or other
protected matter” or “subjects a person to undue burden.” Fed. R. Civ. P. 45(d)(3)(A).
The scope of discovery under a subpoena is the same as the scope of discovery under
Federal Rule of Civil Procedure 26(b). Cook v. Howard, 484 F. App’x 805, 812 (4th Cir.
2012). When discovery is sought from nonparties, however, its scope must be limited
even further. Va. Dep’t of Corr. v. Jordan, 921 F.3d 180, 189 (4th Cir. 2019). As the
Fourth Circuit explained in Jordan,
Nonparties are “strangers” to the litigation, and since they have “no dog in
[the] fight,” they have “a different set of expectations” from the parties
themselves. Cusumano v. Microsoft Corp., 162 F.3d 708, 717 (1st Cir.
1998). Bystanders should not be drawn into the parties’ dispute without
some good reason, even if they have information that falls within the scope
of party discovery. For example, a party’s email provider might well
possess emails that would be discoverable from the party herself. But
unless the email provider can offer important information that cannot be
obtained from the party directly, there would be no cause for a subpoena
against the provider.
A more demanding variant of the proportionality analysis therefore applies
when determining whether, under Rule 45, a subpoena issued against
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At the hearing, the court also heard arguments on defendants’ motion for
summary judgment, ECF No. 144 (as supplemented by ECF No. 238). That motion
remains pending as the court has asked for supplemental briefs on an issue discussed
during the hearing.
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a nonparty “subjects a person to undue burden” and must be quashed or
modified. Fed. R. Civ. P. 45(d)(3)(A)(iv). As under Rule 26, the ultimate
question is whether the benefits of discovery to the requesting party
outweigh the burdens on the recipient. In re Modern Plastics Corp., 890
F.3d 244, 251 (6th Cir. 2018); Citizens Union of N.Y.C. v. Att’y Gen. of
N.Y., 269 F. Supp. 3d 124, 138 (S.D.N.Y. 2017). But courts must give the
recipient’s nonparty status “special weight,” leading to an even more
“demanding and sensitive” inquiry than the one governing discovery
generally. In re Public Offering PLE Antitrust Litig., 427 F.3d 49, 53 (1st
Cir. 2005).
Id.
Likewise, Federal Rule of Civil Procedure 26(c) authorizes the court to “issue an
order to protect a party or person from annoyance, embarrassment, oppression, or undue
burden and expense” by forbidding or limiting the scope of discovery. “The standard for
issuance of a protective order is high,” Wellin v. Wellin, 211 F. Supp. 3d 793, 800
(D.S.C. 2016), order clarified, 2017 WL 3620061 (D.S.C. Aug. 23, 2017), and the
movant “bears the burden of establishing good cause,” Slager v. S. States Police
Benevolent Ass’n, Inc., 2016 WL 4123700, at *2 (D.S.C. Aug. 3, 2016). A motion for a
protective order requires the court to “weigh the need for the information versus the harm
in producing it.” Wellin, 211 F. Supp. at 800 (quoting A Helping Hand, LLC v. Balt.
Cnty., 295 F. Supp. 2d 585, 592 (D. Md. 2003)). In determining whether to quash a
subpoena or issue a protective order, as with most matters of discovery, the court wields
broad discretion. Cook, 484 F. App’x at 812 (motions to quash); Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 36 (1984) (protective orders).
III. DISCUSSION
The court considers Hood Law Firm and the Estate’s motions to quash together.
Hood Law Firm filed a motion to quash or modify the subpoena for a Rule 30(b)(6)
deposition of Hood Law Firm or, in the alternative, for a protective order directing
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defendants to narrow the scope of Topic (f) in that subpoena. The Estate objects to the
same topic in the 30(b)(6) notice issued to Hood Law Firm and further objects to
subpoenas containing the same topic issued to two other law firms: (1) Evans, Carter,
Kunes & Bennett, P.A. and (2) Rosen Hagood, LLC. Defendants informed the Estate
that they intend to notice similar Rule 30(b)(6) depositions for all three firms. The parties
stated at the hearing that they agreed to stipulate that the court’s order on the subpoena to
Hood Law Firm would apply to the subpoenas to the other two law firms. The court thus
reviews topic (f) as stated in the 30(b)(6) notice of intent to depose Hood Law Firm,
noting that its ruling applies to the notices issued to the other firms.
Topic (f) requests: “Work performed by Hood Law Firm, LLC as shown on
Invoices produced in this case.” ECF No. 245-1 at 6. According to Hood Law Firm, the
Estate produced 1,773 pages, consisting of thousands of time entries, to defendants,
representing more than eight years of work that Hood Law Firm performed on behalf of
Keith and the Estate in federal court litigation related to this action. In its amended
complaint, the Estate seeks attorneys’ fees incurred based on defendants’ alleged
negligence, breach of fiduciary duty, and breach of contract, Amend. Compl. ¶¶ 54, 60,
66, and defendants argue that they should be allowed to depose a representative from
Hood Law Firm about the time entries to determine the reasonableness of the attorneys’
fees sought.
Hood Law Firm and the Estate present similar arguments on why the subpoena
should be quashed or modified. In essence, they argue that it would be unduly
burdensome to prepare “a witness or witnesses to answer questions about thousands of
time entries involving multiple attorneys for work performed over more than eight

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years.” ECF No. 245 at 4. In response, defendants argue that it is unreasonable for the
Estate to seek to recover all legal fees expended in related litigation but simultaneously
object to inquiries about the nature of the work performed by the firms. Defendants also
argue that because the Estate produced thousands of pages of legal fee invoices, the
Estate has effectively shifted the burden onto defendants to negate proximate cause—an
element of the Estate’s legal malpractice claim.
Federal Rule of Civil Procedure 30(b)(6) requires a corporation to respond to a
deposition notice by designating and producing someone familiar with the topics listed in
the notice. Fed. R. Civ. P. 30(b)(6); see Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253,
268 (2d Cir. 1999). The designated witness testifies on the corporation’s behalf and,
thus, testifies not only on his personal knowledge of a subject, but on corporate
knowledge. See Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir.
2006). Thus, in order to comply with the rule, the corporation has an affirmative duty to
ensure that its designee has knowledge of all information on the noticed topics reasonably
available to the corporation and is prepared to provide complete, binding answers on that
information. See Bd. of Trs. of Leland Stanford Jr. Univ. v. Tyco Int’l Ltd., 253 F.R.D.
524, 526 (C.D. Cal. 2008) (noting that Rule 30(b)(6) implicitly requires a corporate
designee to review all matters known or reasonably available to the corporation in
preparation for the deposition, even if the documents are voluminous and reviewing them
would be burdensome). As a corollary to the corporation’s duty to designate a deposition
witness, it must prepare its designee to be able to give binding answers on its behalf and
perform a reasonable inquiry for information that is noticed and reasonably available to
it. State Farm Mut. Auto. Ins. Co. v. New Horizont, Inc., 250 F.R.D. 203, 216 (E.D. Pa.

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2008); see also Wilson v. Lakner, 228 F.R.D. 524, 528–29 (D. Md. 2005) (explaining that
a corporation’s designated deponent is required to make a good faith effort to find out
relevant facts).
But reasonably-available information does not mean all information, and Rule
30(b)(6) establishes burdens for both parties. Specifically, before issuing the notice of
deposition, defendants must “describe[] with reasonable particularity the matters on
which examination is requested.” Fed. R. Civ. P. 30(b)(6); see Whiting v. Hogan, 2013
WL 1047012, at *11 (D. Ariz. Mar. 14, 2013) (“The burden is on Plaintiffs, as the party
requesting the deposition, to satisfy the ‘reasonable particularity’ standard of Rule
30(b)(6).”). Additionally, Rule 45 permits a subpoenaed party to quash a subpoena
where it requires disclosure of privileged or other protected matter” or “subjects a person
to undue burden.” Fed. R. Civ. P. 45(d)(3)(A). Courts applying these rules have
concluded that there is no requirement that a corporate deponent be familiar with
information beyond what is relevant to the case or what the deponent can reasonably be
expected to prepare for. See U.S. ex rel. Smith v. Boeing Co., 2009 WL 2777278, at *8
n.16 (D. Kan. 2009) (“[W]hen voluminous documents extending over years are involved,
an entity preparing Rule 30(b)(6) witnesses must understand what is being
requested . . . . Simply asking a party to provide testimony concerning a 390-page
contract or a 190-page manual does not satisfy the requirement of reasonable
particularity.”); see also Bierk v. Tango Mobile, LLC, 2021 WL 698479, at *3 (N.D. Ill.
Feb. 23, 2021) (“There is no requirement that a Rule 30(b)(6) witness memorize
thousands of pages of documents and be able to recall in exacting detail the minutia of
such voluminous records.”); Holden v. Port Auth. of N.Y. & N.J., 2018 WL 11222516, at

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*1 (S.D.N.Y. Dec. 12, 2018) (“[A] 30(b)(6) witness cannot be expected to know and
testify about every detail of [] every subject.”); Murphy v. Kmart Corp., 255 F.R.D. 497,
506 (D.S.D. 2009) (finding that the plaintiff did not notice a Rule 30(b)(6) deposition
with reasonable particularity where the plaintiff sought information “regarding (1) the
corporate history of four corporate entities, (2) the corporate relationship between these
entities, and (3) the bankruptcy of [the parent company]”).
Here, Topic (f) notices an intent to depose Hood Law Firm on all work that its
lawyers performed in the related litigation, as reflected in the invoices, without any
limitation. The court finds the topic to be overly expansive. Defendants requested that
the Estate produce all invoices over the relevant time period, and the Estate diligently
complied with that request. Now, Hood Law Firm—and the other two firms that
rendered services—are being asked to provide supplemental information about those
documents that defendants requested. Certainly, the Estate put the matter of those firms’
performance directly at issue by claiming that the legal fees would not have been incurred
but for defendants’ negligence, but it is counterproductive for all parties to have Hood
Law Firm’s 30(b)(6) deponent prepare to answer questions on every single service
provided by the firm over the course of eight-and-a-half years just for Hood Law Firm to
arrive at the deposition and ask about the select few entries it has in mind. Due to the
agreed-upon time constraints for the deposition, defendants would not have time to ask
about every single entry anyways, so defendants would not be prejudiced by having to
narrow their requests.
Therefore, under either 30(b)(6)’s reasonable particularity standard or under Rule
45(d)’s undue burden standard, the court grants the motion to quash and orders

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defendants to refine Topic (f) to specify which time entries it intends to cover with Hood
Law Firm’s designee. Hood Law Firm and the Estate argue, in the alternative, that the
court should enter a protective order or order defendants to pay reasonable costs as
needed to fully prepare the corporate deponent to answer questions about all invoice
entries. The court agrees that alternatively, if defendants wish to retain the right to
question Hood Law Firm on any and all invoices, defendants should pay costs as
necessary to prepare Hood Law Firm’s deponents for such questioning. If defendants
elect this route, Hood Law Firm should provide defendants with an invoice of the fees as
calculated based on the time spent reviewing the invoices and a reasonable hourly rate.
IV. CONCLUSION
For the reasons set forth above, the court GRANTS the motions to quash in
accordance with this order.
AND IT IS SO ORDERED.

DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
October 26, 2022
Charleston, South Carolina

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