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Kadiyala v. Pupke

United States District Court, S.D. Florida

September 9, 2019

RAVI KADIYALA, individually, and as the assignee of CREDIT UNION MORTGAGE UTILITY BANC, INC., an Illinois corp., Plaintiff,
v.
MARK JOHN PUPKE, et al., Defendants.

          ORDER ON ACCOUNTANT-CLIENT PRIVILEGE FRAUD EXCEPTION AFTER IN CAMERA REVIEW OF DOCUMENTS

          WILLIAM MATTHEWMAN UNITED STATES MAGISTRATE JUDGE

         THIS CAUSE was previously before the Court upon the Parties' Joint Motion Asking the Court to Test, Through In Camera Review, the Claims of Privilege Asserted Against the Production of Certain Documents [DE 150');">150');">150');">150');">150');">150');">150');">150]. This matter was referred to the undersigned by United States District Judge Kenneth A. Marra. See DE 359. On September 5, 2019, the Court entered a Paperless Order granting the motion requesting in camera review. [DE 152]. Defendants, Mark John Pupke and Marie Molly Pupke ("Defendants") submitted, via thumb drive and via email, the documents to the undersigned's chambers as required.

         BACKGROUND

         On or about June 21, 2019, Plaintiff, Ravi Kadiyala ("Plaintiff), served a former defendant in this action, John P. Miller[1], with a subpoena duces tecum. [DE 150');">150');">150');">150');">150');">150');">150');">150, p. 1]. Thereafter, Defendants filed a Motion for Protective Order [DE 126]. The Court held a hearing on the matter on July 25, 2019. On July 26, 2019, the Court entered an Order which, in relevant part, granted in part and denied in part the Motion for Protective Order. [DE 141]. In the Order, the Court limited the scope of the subpoena and required that counsel for both parties and counsel for Mr. Miller "confer and arrange a procedure that permits Defendants' counsel to determine on a pre-production basis whether any of the documents are privileged." Id. at p. 3. The Court also stated that "[i]f Defendants have a good-faith belief that any of the documents are privileged, they shall create a privilege log in compliance with the Local Rules. If the parties cannot resolve the matter, they can bring the issue to the Court for resolution." Id.

         The parties conferred and determined a procedure for production of the documents. [DE 150');">150');">150');">150');">150');">150');">150');">150, p. 2]. After Defendants' counsel reviewed the documents, counsel produced the responsive documents to Plaintiffs counsel, along with a privilege log. Id. Defendants withheld 109 pages of documents on the basis of accountant-client privilege. Id. On August 18, 2019, Defendants also produced to Plaintiffs counsel limited Intuit Quickbooks reports that were created by Defendants' counsel; Defendants' counsel did not, however, produce the actual, unredacted Quickbooks reports. Id. at p. 3.

         In the Parties' motion requesting in camera review, Plaintiff argues that "there is no basis here for Defendants to withhold any document or file that Mr. Miller has produced in response to Plaintiffs Subpoena upon a claim that it is protected from disclosure to Plaintiff Kadiyala by the accountant-client privilege." [DE 150');">150');">150');">150');">150');">150');">150');">150, p. 3]. According to Plaintiff, the accountant-client privilege does not apply because "Plaintiff intends to use this material to show that Defendants were involved in a fraud." Id.

         Defendants, on the other hand, contend that the materials in the privilege log are properly withheld and privileged because the documents would never have been disclosed to third parties, and Defendants-the accountant's clients-do not wish to waive the privilege. [DE 150');">150');">150');">150');">150');">150');">150');">150, p. 4]. With regard to the .qbb (Quickbooks) file, Defendant asserts that "this document is special in that access was only provided to the Miller Defendants in an advisory role and the file itself was never intended to be disclosed to third parties. Furthermore, given the nature of the file, it poses an additional evidentiary concern to Defendants." Id.

         DISCUSSION

         The Court, sitting in diversity jurisdiction, applies the substantive law of the forum state, Florida. See Mesa v. Clarendon Nat. Ins. Co., 799 F.3d 1353, 1358 (11th Cir. 2015); Montanez v. Liberty Mut. Fire Ins. Co., No. 18-CIV-80788-RAR, 2019 WL 3302308, at *3 (S.D. Fla. July 23, 2019). Section 90.5055, Florida Statutes, sets forth the accountant-client privilege.

         The statute states in relevant part that

A client has a privilege to refuse to disclose, and to present any other person from disclosing, the contents of confidential communications with an accountant when such other person learned of the communications because they were made in the rendition of accounting services to the client. This privilege includes other confidential information obtained by the accountant from the client for the purpose of rendering accounting advice.

Fla. Stat. § 90.5055(2). "A communication between an accountant and the accountant's client is 'confidential' if it is not intended to be disclosed to third persons other than: (1) those to whom disclosure is in furtherance of the rendition of accounting services to the client; [or] (2) those reasonably necessary for the transmission of the communication." F.D.I.C. v. Kaplan, 2015 WL 5474489, at *3 (M.D. Fla. Sept. 16, 2015)(citing Fla. Stat. § 90.5055(1)(c)). "To invoke the accountant-client privilege; courts generally require parties to demonstrate the aforementioned elements and to also provide a privilege log to the extent that any documents were withheld from production." TIC Park Ctr. 9, LLC v. Cabot, No. 16-24569-CIV, 2017 WL 9988745, at *9 (S.D. Fla. June 9, 2017).

         There are exceptions to the accountant-client privilege. For example, the privilege does not exist when "[t]he services of the accountant were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or should have known was a crime or fraud." § 90.5055(4)(a). This is the exception relied on by Plaintiff when they argue that the privilege does not protect the documents and Quickbooks file at issue.

         The Court has reviewed the documents listed in the privilege log [DE 150');">150');">150');">150');">150');">150');">150');">150-1]. The two letters (GK000019-000022 and GK000042-43), the internal intake form (GK000171-GK000272), and the Quickbooks file (GK000629) are communications between an accountant, Mr. Miller, and Defendants. Furthermore, it is clear from a review of the documents that they were not intended to be disclosed to third persons. Thus, the only way that Plaintiff would be entitled to production of ...


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