United States District Court, S.D. Florida, Miami Division
ORDER CONCERNING PRIVILEGE CLAIM RE: ATTORNEY ROBERT
JONATHAN GOODMAN UNITED STATES MAGISTRATE JUDGE
response to Orders [ECF Nos. 1');">1');">1');">120; 1');">1');">1');">124] requiring additional
briefing about a discovery dispute not resolved at a
discovery hearing, the parties have submitted memoranda [ECF
Nos. 1');">1');">1');">122-1');">1');">1');">123; 1');">1');">1');">127-1');">1');">1');">128] addressing Defendants' theory that
they are entitled to communications involving attorney Robert
Stamen. Defendants assert two arguments, either of which (if
accepted as applicable) would be sufficient to require
production of documents (and testimony) in spite of
Plaintiffs' attorney-client privilege assertion: (1');">1');">1');">1)
waiver (generated by disclosure of communications with
another attorney), and (2) the “at issue”
reasons outlined below, the Undersigned concludes that (a)
Plaintiffs have not waived the attorney-client privilege, and
(b) the “at issue” theory is insufficient to
generate a waiver. Therefore, the attorney-client privilege
protecting communications with attorney Stamen remain intact
and, in the absence of further developments, Defendants are
not permitted to obtain documents to and from Mr. Stamen that
are subject to the attorney-client privilege, nor will they
be permitted to ask deposition questions that would disclose
privileged communications with Mr. Stamen.
and Procedural Background
Kipnis and Kenneth Welt are the two Plaintiffs listed in the
Amended Complaint. [ECF No. 72]. Mr. Welt is the Chapter 7
bankruptcy trustee for the bankruptcy estate of Lawrence
Kibler. Mr. Kipnis and Mr. Kibler are (or were) the owners of
Miller & Solomon General Contractors, Inc., one of the
largest general contractors in South Florida.
lawsuit involved Custom Adjustable Rate Debt Structures
(“CARDS”), which Plaintiffs allege to be
“one of a number of very sophisticated income tax
shelter schemes” that Defendants and other unnamed
co-conspirators “promoted and sold on a national and
international level for their own financial gain and to
defraud Messrs. Kipnis and Kibler” and others. [ECF No.
72, 1');">1');">1');">1');">p. 1');">1');">1');">1]. Defendants are a German Bank and its affiliate;
they offer banking and credit services for financial
allege that Defendants did not disclose the illegitimate
nature of the CARDS transactions, causing the United States
Tax Court's judgment requiring Messrs. Kipnis and Kibler
to pay millions of dollars in tax liability and interest
after the Court concluded that the transaction lacked
economic substance and disallowed losses stemming from the
transaction. Plaintiffs contend that the transactions
disallowed by the Tax Court could not have occurred without
the Defendants' participation. They allege that they paid
substantial fees to Defendants and others in connection with
the CARDS transactions.
Tax Court trial concerning the CARDS transactions, Mr. Kibler
testified that Mr. Stamen, attorney Ron Braley, and Mike
DeSiato (an accountant) had been “engaged to look at
this transaction for us.” [ECF No. 1');">1');">1');">11');">1');">1');">19-1');">1');">1');">1, p. 5');">p. 5]. He
also testified that he “understood from our CPA, who
was retained to explain this to us, and the attorneys
involved, how this worked.” [ECF No. 1');">1');">1');">11');">1');">1');">19-1');">1');">1');">1, p. 6]. He
explained that he “just reviewed” the loan
documentation and “relied on my partner to do the
extensive investigation, along with the two attorneys that we
hired, Mr. Braley and Mr. Robert Stamen.” [ECF No.
1');">1');">1');">11');">1');">1');">19-1');">1');">1');">1, p. 7].
Amended Complaint does not expressly allege reliance on
advice from attorneys and accountants.
recent discovery hearing, Plaintiffs' counsel
unequivocally stated that Plaintiffs will not rely on the
advice of Mr. Stamen, an attorney, in this action. Although
the advice of counsel theory is typically used as a
defense, it arose here because Defendants argue that
Plaintiffs may use it as a basis to pursue their claims.
Specifically, Defendants are concerned that Plaintiffs will
contend that they entered into certain purported tax shelters
on the advice of their attorneys and accountants. They are
also concerned that Plaintiffs' concession does not
provide them with adequate protection because Mr. Kibler
already testified, in the Tax Court trial, that he
did rely on Mr. Stamen's advice.
counsel stated that he plans to take Mr. Kibler's
deposition and anticipates that Mr. Kibler, who is not
technically a party himself to this case, [1');">1');">1');">1" name="FN1');">1');">1');">1" id="FN1');">1');">1');">1">1');">1');">1');">1] will repeat his
testimony that he relied on Mr. Stamen's legal advice.
And defense counsel further argued that Mr. Kibler may well
repeat this testimony at trial, which means that the issue of
reliance will arise notwithstanding the concession by
post-hearing memorandum [ECF No. 1');">1');">1');">122, p. 3], Plaintiffs
explain that their counsel raised the so-called reliance
issue with Mr. Kibler and “can represent to the Court
on his behalf that, like Plaintiffs, Mr. Kibler will not, in
his personal capacity, rely on the advice of attorney Stamen
in any testimony in this lawsuit.” And, according to
Plaintiffs, “that should settle the issue.” [ECF
No. 1');">1');">1');">122, p. 3].
initially withheld from production as privileged memoranda
containing Mr. Braley's advice. Mr. Braley, subpoenaed by
Defendants, also withheld and logged as privileged his legal
advice. In a meet-and-confer, Defendants argued that the
memoranda is not privileged because Mr. Braley had copied Roy
Hahn, a member of the conspiracy, on them. According to
Plaintiffs, Messrs. Kipnis, Kibler, and Braley were unaware
that Hahn was a member of the conspiracy at the time, but
nevertheless, his receipt of the advice broke the privilege.
Therefore, Plaintiffs and Mr. Braley produced the documents.
contend that they did not waive the attorney-client privilege
for communications with Mr. Stamen. They explain that their
disclosure of certain privileged documents concerning Braley
was because they “acceded to Defendants' argument,
rather than force motion practice[.]” [ECF No. 1');">1');">1');">128, p.
2]. They also advise that none of the substance of the
communications between Messrs. Kipnis, Kibler, and Braley
were ever privileged in the first place “because it was
shared with non-privileged participants, ” which they
say means that “no privilege was waived.” [ECF
No. 1');">1');">1');">128, p. 2');">p. 2]. Therefore, Plaintiffs further contend, the
production of the Braley documents “cannot effect a
waiver as to communications with another attorney at another
law firm (Stamen) who did not disclose his advice to members
of the conspiracy.” [ECF No. 1');">1');">1');">128, p. 2');">p. 2].
addition, Plaintiffs also argue that they “never made
an intentional election to waive their privilege with
Braley” because that waiver “was forced upon them
by Braley's decision to copy a member of the conspiracy