Boileau, In re
| Decision Date | 27 June 1984 |
| Docket Number | No. 83-6259,83-6259 |
| Citation | 736 F.2d 503 |
| Parties | 10 Collier Bankr.Cas.2d 1246, 1 Fed.R.Serv.3d 593, Bankr. L. Rep. P 69,919, 15 Fed. R. Evid. Serv. 1584 In re Paul J. BOILEAU, Debtor. In re BOILEAU & JOHNSON, INC., a California corporation, Consolidated Debtor. Paul J. Boileau, Debtor and Debtor in Possession, Appellant, Steven B. Dillaway, Court Appointed Examiner, Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Gregg A. Johnson, Milberg, Johnson, De Phillips & Lamson, San Diego, Cal., for appellant.
Chris Schatz, Lighter & Castro, San Diego, Cal., for appellee.
Appeal from the United States District Court for the Southern District of California.
Before ELY, TANG and SKOPIL, Circuit Judges.
This is a section 1292(b) interlocutory appeal from an order of the district court affirming the bankruptcy judge's ruling granting a motion by the court-appointed examiner to compel the production of certain documents claimed to be protected by the attorney-client privilege. We affirm.
The present appeal arises from bankruptcy proceedings initiated on June 21, 1982, by the filing of an involuntary petition for relief under Chapter 7 of the Bankruptcy Code against Paul J. Boileau ("debtor"), doing business as Boileau & Johnson. On July 13, 1982, the bankruptcy court ordered relief under Chapter 7 (Liquidation) of the Code. Thereafter, on July 15, 1982, the Court upon the debtor's motion converted the case to a Chapter 11 proceeding (Reorganization).
On July 29, 1982, the Official Unsecured Creditors' Committee brought a motion for the appointment of a trustee, which was opposed by the debtor. Subsequent to the filing of the motion, debtor's counsel proposed to the Committee that debtor employ an independent examiner, thereby obviating the need for a trustee. The Committee agreed, apparently on the condition that the debtor be removed entirely from business management and operations and that the Committee receive expanded powers. The bankruptcy judge felt, however, that a hearing should be held to determine whether to appoint a trustee. The court nonetheless approved a stipulation, which provided for the appointment of an examiner to investigate the business. The order appointing the examiner was entered September 2, 1982, and the motion to appoint a trustee was ultimately taken off calendar.
After the examiner's appointment, two of Boileau's secured creditors initiated adversary proceedings seeking relief from the automatic stay in bankruptcy in order to foreclose on deeds of trust securing promissory notes from Boileau & Johnson. The examiner and the Committee filed counterclaims, seeking to set aside the trust deeds as fraudulent conveyances.
Next, the examiner filed a motion in the two adversary proceedings to compel the production of four letters written to Boileau and his corporation prior to bankruptcy. The examiner stated that the documents were needed "to establish the true facts and circumstances during the time of the alleged fraudulent conveyances."
The bankruptcy court granted the motion to compel. The day after, however, the court granted summary judgment on the counterclaims in favor of the secured creditors and granted relief from the stay. Because the production of the letters was intended for the purpose of producing evidence to support these counterclaims, it might appear that the production issue is moot. Yet this is not the case. The examiner continues to demand the letters pursuant to the order compelling production. It is also apparent that the examiner seeks production of the documents independently of the two adversary actions.
The district court upheld the bankruptcy court's order compelling production and certified the case to this court pursuant to 28 U.S.C. Sec. 1292(b). We accepted jurisdiction.
Debtor argues that the bankruptcy court erred in compelling production of the letters, because they are protected by the attorney-client privilege. The existence of the privilege is not disputed. Rather, the dispute centers on whether the court-appointed examiner had authority to waive the attorney-client privilege. Boileau contends that this authority resides in him as debtor in possession, not in the examiner. The examiner maintains, however, that Boileau cannot invoke the attorney-client privilege. The examiner contends that he stands in the position of a trustee in bankruptcy and that he alone can waive the privilege.
The majority of courts have held that a trustee in bankruptcy has the authority to waive a corporate debtor's attorney-client privilege. See, e.g., Citibank, N.A. v. Andros, 666 F.2d 1192, 1195 (8th Cir.1981) (); In re Inv. Bankers, Inc., 30 B.R. 883, 886 (D.Colo.1983) (); In re Nat'l Trade Corp., 28 B.R. 872, 874 (N.D.Ill.1983) (same); In re Silvio De Linegg Ocean Devs. of Am., 27 B.R. 28, 28 (S.D.Fla.1982) (same); In re Featherworks Corp., 25 B.R. 634, 643 (E.D.N.Y.1982) (). But see Commodity Futures Trading Comm'n, 722 F.2d 338, 342 (7th Cir.1983) (). No case law has come to this court's attention, however, as to an examiner's authority to waive the privilege. Yet we need not reach this issue under the distinctive facts of the instant case.
As a rule, an examiner's duties are more restricted than those of a trustee. In re American Bulk Transp. Co., 8 B.R. 337, 340 (D.Kan.1980). In the case at bar, however, an examiner with expanded powers was appointed by stipulation of the parties, to avoid designation of a trustee. Not only is the examiner in question directed to perform the customary duties imposed by 11 U.S.C. Sec. 1106(a)(3) (investigation) and (4) (filing and transmittal of investigative report), but he is also empowered to perform a myriad of functions normally carried out by a trustee. See Order Appointing Examiner (filed Sep. 2, 1982); 11 U.S.C. Secs. 704; 1106(a)(1). We therefore reject debtor's contention that the examiner lacked the authority to waive the attorney-client privilege.
We also reject Boileau's claim that only he, as debtor in possession, had the authority to waive the privilege. Although such authority can pass to a debtor in possession by operation of law, Featherworks, 25 B.R. at 643, it has not passed to the debtor in the instant case. Boileau's role as "debtor in possession" is nominal. He has been removed from any substantial participation in the management of Boileau & Johnson. Moreover, the Official Creditors Committee has been given the authority to carry out many of the functions of a debtor in possession and a trustee. Stipulation (...
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