Wing v. Woodbury & Kesler

Filing 20

MEMORANDUM DECISION granting 15 Motion for Extension of Time. Mr. Christiansen may serve as an expert for defendant. The parties are also ordered to meet and confer by April 29, 2011, in an attempt to stipulate to an amended scheduling order. If the parties cannot reach a stipulation, each party shall submit its proposed scheduling order by 5/6/2011. Signed by Magistrate Judge Paul M. Warner on 4/13/2011. (rlr)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

ROBERT G. WING, as Receiver for
VESCOR CAPITAL CORP.,

MEMORANDUM DECISION AND
ORDER

Plaintiff,
Case No. 2:09cv402
v.
WOODBURY & KESLER, P.C.,
Defendant.

District Judge Dee Benson
Magistrate Judge Paul M. Warner

This matter was referred to Magistrate Judge Paul M. Warner by District Judge Dee
Benson pursuant to 28 U.S.C. § 636(b)(1)(A).1 Before the court is Woodbury & Kesler, P.C.’s
(“Defendant”) motion for a ruling regarding the eligibility of its proposed expert and an
extension of time to submit its expert report.2 The court has carefully reviewed the motion and
memoranda submitted by the parties. Pursuant to civil rule 7-1(f) of the United States District
Court for the District of Utah Rules of Practice, the court elects to determine the motion on the
basis of the written memoranda and finds that oral argument would not be helpful or necessary.
See DUCivR 7-1(f).

1

See docket no. 18.

2

See docket no. 15.

BACKGROUND
Robert G. Wing (“Receiver”), as Receiver for VesCor Capital Corp. (“VesCor”), filed
this action against Defendant for alleged fraudulent transfers. Specifically, the Receiver seeks to
recover legal fees paid to Defendant for legal work performed on behalf of VesCor, an alleged
Ponzi scheme. The Receiver asserts that because VesCor was insolvent when it made the
transfers to Defendant, and Defendant had information that VesCor may be a Ponzi scheme,
those transfers are subject to recovery as fraudulent transfers.
Defendant seeks to employ attorney Erik Christiansen from Parsons Behle & Latimer
(“PBL”) as an expert to testify as to the general duties of counsel in representing clients in such
circumstances and whether Defendant’s actions constituted good faith. Defendant met with Mr.
Christiansen who indicated that he and PBL had represented VesCor after Defendant had
withdrawn but before the instant Receivership. Mr. Christiansen also informed Defendant that
PBL’s representation of VesCor was pursuant to a retainer agreement under which VesCor had
waived the attorney-client privilege and authorized PBL to disclose all information that it
obtained to the Utah Division of Securities.
After meeting with Defendant, Mr. Christiansen spoke with the Receiver who indicated
that he did not believe that there would be an issue with the attorney-client privilege because it
had been waived. Nevertheless, the Receiver indicated that he would not waive any conflict of
interest because he believed that Mr. Christiansen should not testify as an expert. In response,
Defendant filed the instant motion.

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DISCUSSION
Defendant does not dispute that Mr. Christiansen served as counsel for VesCor prior to
the Receivership, nor does it dispute that the Receiver now owns any attorney-client privilege
that VesCor may have held in connection with that representation. Defendant argues, however,
that because VesCor waived the attorney-client privilege, Mr. Christiansen may serve as an
expert on its behalf.
The Receiver objects to Mr. Christiansen’s proposed testimony on the grounds that it is
irrelevant and it may be confusing to the jury. Specifically, the Receiver contends that expert
testimony is unnecessary in this case because the jury will use a “reasonable person” standard
when determining whether Defendant was on notice of VesCor’s fraudulent purpose or
insolvency. Rottlund Co. v. Pinnacle Corp., 452 F.3d 726, 731 (8th Cir. 2006). The Receiver
further argues that a jury would have difficulty distinguishing between his testimony as an expert
and his role as a lawyer for VesCor.
In general, courts have adopted a two-part test to determine whether an expert should be
disqualified in cases where the expert had a prior relationship with the adverse party. See
English Feedlot, Inc. v. Norden Labs., Inc., 833 F. Supp. 1498, 1502 (D. Colo. 1993). “In
particular, disqualification of an expert is warranted based on a prior relationship with an
adversary if (1) the adversary had a confidential relationship with the expert and (2) the
adversary disclosed confidential information to the expert that is relevant to the current
litigation.” Hewlett-Packard Co. v. EMC Corp., 330 F. Supp. 2d 1087, 1092-93 (N.D. Cal.

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2004). “The party seeking disqualification bears the burden of establishing both the existence of
a privilege and its non-waiver.” Mayer v. Dell, 139 F.R.D. 1, 3 (D.D.C. 1991).
In the instant case, the Receiver has not demonstrated that Mr. Christiansen should be
disqualified as an expert. Mr. Christiansen’s participation as counsel may, in typical
circumstances, be the type of confidential relationship that would disqualify him if he had
received confidential information from VesCor. However, VesCor’s blanket waiver of the
attorney-client privilege makes it unreasonable for VesCor to believe that a relationship of
confidentiality existed in the PBL representation. The very purpose of the PBL representation
was to obtain and communicate all information about VesCor to a third party. In addition, no
confidential information could have been communicated, because the communications came
with an express waiver of confidentiality. As a result, anything that was communicated to PBL
was per se not confidential.
Furthermore, the court is not persuaded by the Receiver’s argument that Mr.
Christiansen’s testimony is irrelevant. Issues relating to the substance or admissibility of his
testimony are more properly raised at trial. Nor is the court persuaded that the jury would
necessarily be confused about Mr. Christiansen’s dual role as a fact and expert witness. Indeed,
in a case the Receiver cited in support of this proposition, the court stated that any “potential for
prejudice . . . can be addressed by means of appropriate cautionary instructions and by
examination of the witness that is structured in such a way as to make clear when the witness is
testifying to facts and when he is offering his opinion as an expert.” United States v. York, 572
F.3d 415, 425 (7th Cir. 2009) (quotations and citation omitted). Based on the foregoing, the
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court concludes that the Receiver has failed to meet his burden that Mr. Christiansen should be
disqualified.
Defendant further seeks an extension of time to submit its expert report. The Receiver
does not oppose that portion of Defendant’s motion. In addition, because many of the deadlines
of the most recent scheduling order have passed, the court instructs the parties to meet and
confer by April 29, 2011, in an attempt to stipulate to an amended scheduling order. In the event
that the parties cannot reach a stipulation, both parties shall submit their respective proposed
scheduling orders by May 6, 2011, and the court will enter an amended scheduling order.
CONCLUSION
Based on the foregoing, Defendant’s motion is GRANTED. As such, Mr. Christiansen
may serve as an expert for Defendant. The parties are also ordered to meet and confer by April
29, 2011, in an attempt to stipulate to an amended scheduling order. If the parties cannot reach a
stipulation, each party shall submit its proposed scheduling order by May 6, 2011.
IT IS SO ORDERED.
DATED this 13th day of April, 2011.
BY THE COURT:

PAUL M. WARNER
United States Magistrate Judge

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