pdrGrayson Dental Lab, LLC. v. Progressive Dental Reconstruction, Inc.
203 So. 3d 213
| Fla. Dist. Ct. App. | 2016Background
- Purchaser (Grayson Dental Lab) bought a dental laboratory business from Seller (Progressive Dental Reconstruction) in 2009 and later sued alleging accounting/bookkeeping fraud and fraudulent inducement.
- Purchaser sought discovery of business and financial records that Seller had transmitted to its accounting firm for preparation of Seller’s 2008 and 2009 federal tax returns (trial balances, cash disbursement journals, bank reconciliations, general ledger entries, fixed asset records).
- Seller’s accounting firm confirmed possession of approximately three boxes of documents and testified that the tax returns themselves are not privileged; Seller did not show the boxes contained accountant-client communications or work-product notations.
- Trial court denied Purchaser’s request to obtain those documents from the accounting firm; Purchaser petitioned this Court for writ of certiorari arguing irreparable harm from the denial.
- The district court found the requested documents were not privileged merely because they were sent to Seller’s accountant and that non-production would cause irreparable harm to Purchaser’s fraud claim, and thus quashed the trial court’s order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are client financial records sent to an accountant protected from discovery? | Records are necessary to prove Seller provided fraudulent information to Purchaser; accountant-held copies should be producible. | Sending records to an accountant creates accountant-client privilege or protects them from discovery. | Financial records remain discoverable; transmission to accountant does not shield them. |
| Do the specific tax-related documents sought qualify as privileged accountant work product? | Documents are raw business records, not privileged work product; Purchaser needs them to compare what Seller gave Purchaser vs. what Seller provided to accountant. | Some documents could contain accountant work-product or privileged notations requiring protection. | Seller presented no evidence of privileged work-product; documents must be produced, subject to redaction/in-camera review if privilege later claimed. |
| Does denial of discovery warrant certiorari review due to irreparable harm? | Non-production would irreparably harm Purchaser because appellate review cannot replicate lost discovery's effect on the case outcome. | Denial was proper and not certiorari-worthy. | Certiorari review appropriate; denial caused potential irreparable harm and was quashed. |
| Was the discovery scope appropriate after narrowing? | Purchaser narrowed request to documents used to prepare 2008–2009 tax returns; request is reasonable and tailored. | Seller argued broader discovery or other objections; urged upholding denial. | Scope as refined was acceptable; court ordered production of identified documents. |
Key Cases Cited
- Giacalone v. Helen Ellis Mem’l Hosp. Found., Inc., 8 So. 3d 1232 (Fla. 2d DCA 2009) (certiorari review appropriate where denial of discovery causes irreparable harm)
- Office of the Attorney Gen. v. Millennium Commc'ns & Fulfillment, Inc., 800 So. 2d 255 (Fla. 3d DCA 2001) (irreparable harm supports review of discovery denials)
- Travelers Indem. Co. v. Hill, 388 So. 2d 648 (Fla. 5th DCA 1980) (review warranted because post-judgment assessment cannot recreate lost discovery)
- Bd. of Trs. of Internal Improvement Trust Fund v. Am. Educ. Enters., LLC, 99 So. 3d 450 (Fla. 2012) (financial information and tax returns are discoverable in fraudulent inducement actions)
- Aspex Eyewear, Inc. v. Ross, 778 So. 2d 481 (Fla. 4th DCA 2001) (financial records discoverable when the documents or their status are at issue)
- Paper Corp. of Am. v. Schneider, 563 So. 2d 1134 (Fla. 3d DCA 1990) (documents transferred to accountant do not gain privilege and remain subject to production)
- In re Hillsborough Holdings Corp., 176 B.R. 223 (M.D. Fla. 1994) (client documents in accountant’s possession not privileged due to accountant’s notations; redaction and in-camera review appropriate)
- Affiliated of Fla., Inc. v. U-Need Sundries, Inc., 397 So. 2d 764 (Fla. 2d DCA 1981) (parties must disclose portions of files not protected by attorney-client privilege)