757 F. Supp. 2d 1339
M.D. Ga.2011Background
- Tindall seeks to compel production of attorney-client communications between Defendants and Chamberlain-Hrdlicka to show advice pertaining to fraudulent transfers under Georgia UFTA.
- The alleged transfers include: (1) a default judgment against H&S Homes, (2) a proposed consent action transferring real property to Horton Industries, and (3) creation of Triangle Homes and its subsidiaries to take over H&S's business.
- Defendants invoke attorney-client privilege; Plaintiff moves for in camera review under the crime-fraud exception to uncover evidence of fraud.
- Court conducts in camera review after finding a factual basis to suspect fraud and that communications may be related to the transfers.
- Court concludes prima facie evidence supports in camera review for all three transfers, but applies the crime-fraud exception only to communications concerning the cessation of H&S and creation of Triangle Homes, not to the default judgment or consent action.
- As to the third transfer, the Court finds strong indicia of fraudulent intent and that Chamberlain attorneys assisted in planning and executing the transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether in camera review is warranted for attorney-client communications | Tindall shows potential crime-fraud connection | Privilege applies absent clear fraud | In camera review warranted |
| Whether the crime-fraud exception permits disclosure of communications about the default judgment | Communications may reveal fraud to avoid judgments | No solid foundation linking communications to fraud | Not proven; privilege survives for default-judgment communications |
| Whether the crime-fraud exception permits disclosure of communications about the consent action | Consent action potentially planned to shield assets from creditors | Non-fraudulent business rationale exists and no clear fraud evidence | Not proven; privilege preserved for consent-action communications |
| Whether the crime-fraud exception applies to the creation of Triangle Homes and its subsidiaries | Strong evidence of a plan to transfer assets to avoid judgments with attorney involvement | Legitimate business justifications offered; lack of direct proof of fraud | Yes; crime-fraud exception applies to communications concerning cessation of H&S and creation of Triangle |
| Scope of the crime-fraud exception across related transactions | Totality of circumstances justifies applying across related acts | Exceptions should be transaction-specific to protect privilege | Limit the exception to communications concerning cessation of H&S and Triangle creation |
Key Cases Cited
- Upjohn Co. v. United States, 449 U.S. 383 (U.S. 1981) (privilege fosters full and frank attorney-client communications)
- Rose v. Commercial Factors of Atlanta, Inc., 262 Ga. App. 528 (Ga. App. 2003) (prima facie showing required to pierce privilege via crime-fraud exception)
- In re Hall County Grand Jury Proceedings, 175 Ga. App. 349 (Ga. App. 1985) (in camera review permitted on a lesser showing to determine privilege applicability)
- United States v. Cleckler, 265 F. App’x 850 (11th Cir. 2008) (two-part test for crime-fraud exception to privilege)
- Zolin, 491 U.S. 554 (U.S. 1989) (preliminary in camera review based on good faith belief evidence may show crime-fraud)
- In re Grand Jury Subpoena, 223 F.3d 213 (3d Cir. 2000) (consideration of facts and rebuttal evidence in camera review)