In Re Ginn-LA St. Lucie Ltd., LLLP
439 B.R. 801
Bankr. S.D. Florida2010Background
- Trustee moved to compel turnover of information and documents related to Credit Suisse transaction under 11 U.S.C. §§ 521(a) & 542(e).
- Law Firms represented Debtors and non-debtors under a Joint Defense, Common Interest and Information Sharing Agreement (JDA) executed May 1, 2008.
- JDA contained a Privilege Protection Clause preserving confidentiality and privileges even if interests later became adverse.
- Debtors’ prepetition structure around the Credit Suisse loan, including a $675 million guaranty by Debtors with liens on assets, is key to the dispute.
- Court found the JDA void ab initio and thus unenforceable in bankruptcy, affecting privilege claims and turnover obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the JDA permits withholding turnover of discoverable information. | Trustee argues JDA impermissibly shields information. | Respondents contend JDA preserves privilege despite adverse later interests. | No; JDA void ab initio, cannot block turnover. |
| Whether a prebankruptcy agreement can contract around the adverse-litigation exception in bankruptcy. | Trustee emphasizes public policy and statutory duties to investigate estates. | Respondents rely on Restatement § 75 to preserve privilege among co-clients. | Void ab initio; policy disfavors enforcement in bankruptcy. |
| Whether the privilege claims for documents shared with non-debtors are enforceable against the Trustee. | Trustee seeks turnover of otherwise discoverable documents. | Respondents argue some communications remain privileged due to JDA. | Not enforceable; privilege protections void under JDA. |
Key Cases Cited
- In re Mirant Corp., 326 B.R. 646 (Bankr.N.D.Tex. 2005) (co-client privilege not enforced to shield adverse post-transaction disclosures)
- In re Teleglobe Commc'ns Corp., 493 F.3d 345 (3d Cir. 2007) (discussion of co-client/common-interest privileges and enforceability considerations)
- Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn L.L.P., 91 N.Y.2d 34 (N.Y. 1997) (New York majority rule: former client access to files upon termination, with exceptions)
- Official Comm. of Unsecured Creditors v. Fleet Retail Fin. Group (In re Hechinger Inv. Co. of Del.), 285 B.R. 601 (D. Del. 2002) (supports limitations on joint representations in bankruptcy investigations)
- Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (binding pre-1981 Fifth Circuit decisions by incorporation)