Matter of Michigan Boiler and Engineering Co.
| Decision Date | 01 June 1988 |
| Docket Number | Bankruptcy No. 86-06680-B. |
| Citation | 87 BR 465 |
| Parties | In the Matter of: MICHIGAN BOILER AND ENGINEERING COMPANY, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
Hertzberg, Jacob & Weingarten, P.C. by I. William Cohen, Detroit, Mich., for debtor.
Jaffe, Snider, Raitt & Heuer, P.C. by Jay Welford, Detroit, Mich., for trustee.
Kimberly W. Stout, Detroit, Mich., for Robert Larson.
Amy B. Hartmann, Detroit, Mich., for Harry Somerset, III.
This matter involves questions relating to the applicability of the attorney work product, attorney-client, and joint defense privilege.
On December 30, 1986, Michigan Boiler and Engineering Company (debtor) filed a voluntary Chapter 11 bankruptcy case. On February 5, 1987, Mr. Charles Collins was appointed trustee of the debtor's estate. On February 24, 1987, the court entered an order directing that Mr. Robert Larson, Chairman of the Board, director and shareholder of the debtor, Mr. James P. McGuire, Secretary/Treasurer and director of the debtor, Mr. Harry Somerset, III, Chief Executive Officer of the debtor, and William Cohen and Peter Nathan, partners in the law firm of Hertzberg, Jacob and Weingarten (firm), attorneys for the debtor, appear for examinations pursuant to Bankruptcy Rule 2004 and to produce at their examinations certain designated documents. Mr. Cohen appeared at his scheduled 2004 examination, but failed to produce a file consisting of notes of interviews with various corporate officers of the debtor. The trustee then served the firm with a subpoena to compel the production of the file. The firm moved to quash the subpoena contending that the file was protected by the work product doctrine and attorney-client privilege. Thereafter, Messrs. Larson and Somerset moved to intervene to permit them to join in the firm's motion.1 The motion was granted. A hearing on the motion to quash was held, at which members of the firm, Mr. Cohen, Mr. Abraham Singer and Mr. Michael Traison testified, and transcripts of depositions of the intervenors were submitted into evidence.
The facts elicited at the hearing are as follows. The firm was first approached in May of 1986 by James McGuire, a director of the debtor, to discuss possible engagement of the firm to represent the debtor, other related corporate entities, and Mr. McGuire personally. Problems with respect to the debtor were discussed, but the firm was not retained at that time.
Thereafter, in August, 1986, a lawsuit was filed in the Circuit Court for the County of Oakland, State of Michigan, by Mr. Larry Masserant and Mid-American Gunite, Inc. against the debtor, Mr. Robert Larson, Mr. Harry Somerset III, Mr. James McGuire, Clifford Larson, Anthony Opalewski, Michigan Ohio and Metal Fabricators and MBE Mechanical. After this lawsuit was filed, Mr. McGuire and a Mr. Tamborello, a business consultant of the debtor, again came to see Mr. Cohen with respect to the problems involved in the lawsuit. The firm agreed to represent the debtor and filed an answer on behalf of both the debtor and the named individuals. This lawsuit eventually was settled but, as of the date of the hearing on the motion, the suit had not been formally dismissed.
In early December, 1986, the debtor and Robert Larson and Harry Somerset were named, along with other individuals and corporate entities, as defendants in a lawsuit filed in the Circuit Court for the County of Wayne, State of Michigan, by Brand Asbestos Control Co., Inc. The firm undertook to represent the named defendants in that lawsuit. In addition, the firm represented the debtor and the named individuals in a third lawsuit — Tek-Matik, Inc. v. Pro-Coat Systems, Inc., filed on December 22, 1986, in the Oakland County Circuit Court, State of Michigan. The firm withdrew from the lawsuit in April, 1987.
The file which the trustee seeks to obtain contains 174 pages of notes. Counsel for Larson and Somerset, for the purpose of this motion, divided the file into 56 parts. Each part is referred to as a document. Some of the documents contain but one page, but at least one of them contains as many as 22 pages. Counsel for Larson and Somerset also highlighted the entries appearing in the documents, which they contend are not subject to discovery. Approximately two thirds of the documents contain more than one highlighted entry.
The file was submitted to the court for in camera review. Since the file did not reveal whom the firm was representing when the challenged entries were made, Mr. Cohen was called as a witness to identify each highlighted entry to indicate whom the firm was representing when the challenged entries were made. Mr. Cohen, after examining the file, testified that all of the documents contain entries related, in whole or in part, to representation of the corporate entity; that none of the entries were made while the firm was representing Larson and Somerset individually; that one of the tabbed documents, number 21, was not produced in the firm; and that document number 20 is missing from the file. He further testified that all of the entries fall into three categories, and marked the first entry of each document to designate the category of the entry. Unless otherwise noted, the category assigned to the first entry of a document applies to all entries on that document. The categories are as follows: 1) entries made while the firm was representing the debtor only; 2) entries made while the firm was representing the debtor and the individuals jointly; and 3) entries of statements made by Larson and Somerset to the firm concerning corporate matters when the firm was representing the debtor only — statements which, if disclosed, may expose the officers to personal liability.2
The trustee, on behalf of the debtor, waived whatever privilege was available to the debtor.
The court will first consider whether the work product privilege is available to the firm as to any of the entries in the file.
The attorney work product doctrine Advance Publications, Inc. v. United States (In re Antitrust Grand Jury), 805 F.2d 155, 163 (6th Cir.1986).
An attorney's work product may consist of factual material — "written or oral information transmitted to the attorney and recorded as conveyed by the client," or may consist of so-called opinion work product, i.e., "any material reflecting the attorney's mental impressions, opinions, conclusions, judgments or legal theories." Antitrust Grand Jury, 805 F.2d at 163.
Work product consists of tangible and intangible material which reflects an attorney\'s efforts at investigating and preparing a case, including one\'s pattern of investigation, assembling of information, determination of the relevant facts, preparation of legal theories, planning of strategy, and recording of mental impressions. Hickman v. Taylor, 329 U.S. 495, 511, 67 S.Ct. 385, 393, 91 L.Ed. 451 (1947); Besly-Welles Corp. v. Balax, Inc., 43 F.R.D. 368, 371 (E.D.Wis.1968).
In re Grand Jury Subpoena Dated November 8, 1979, 622 F.2d 933, 935 (6th Cir.1980) (per curiam). Opinion work product has generally been shielded from discovery. In re Murphy, 560 F.2d 326, 336 (8th Cir.1977). In contrast, fact work product, unless otherwise privileged, is subject to discovery if the party seeking discovery establishes a "`substantial need of the materials in the preparation of its case'" and is "`unable without undue hardship to obtain the substantial equivalent of the materials by other means.'" United States v. Leggett & Platt, Inc., 542 F.2d 655, 660 (6th Cir.1976) quoting from Fed.R.Civ.P. 26(b)(3).3 See also Hickman v. Taylor, 329 U.S. 495, 511, 67 S.Ct. 385, 393, 91 L.Ed. 451 (1946).
"The work product doctrine is designed primarily to preserve the `integrity of the adversarial system' by preventing the discovery of certain documentation prepared by an attorney or his agent in anticipation of litigation." In re Federal Copper of Tennessee, Inc., 19 B.R. 177, 182 (Bankr.M. D.Tenn.1982). The work product doctrine, when applicable, serves to protect disclosure to an adversary. In re Kaleidoscope, Inc., 15 B.R. 232, 242 (Bankr.N.D.Ga.1981). It has no application in cases where a client "seeks to obtain documents and other tangible things created or amassed by an attorney during the course of the attorney's representation of that client." In re Kaleidoscope, Inc., 15 B.R. at 242; 4 J. Moore, J. Lucas & T. Currier, Moore's Federal Practice ¶ 26.642 (2d ed. 1987). In re Calestini, 321 F.Supp. 1313, 1316 (N.D.Cal.1971). And where legal files are amassed during the joint representation of a number of clients, "the entire contents of those legal files belong jointly to the clients in question, with each having an undivided ownership interest in, and equal right of access to, all of those files." In re Kaleidoscope, Inc., 15 B.R. at 244. The entire file was compiled during the firm's representation of the debtor and the debtor and Larson and Somerset jointly. The work product doctrine would not have been available to the firm to deny the debtor access to the file prior to the filing of the bankruptcy case. Since the trustee succeeds to the debtor's interest in the file, the work product doctrine is not available to the firm to deny the trustee access to the file.
It remains necessary to consider what entries, if any, are protected by the attorney-client privilege or the joint defense privilege. It is the contention of Larson and Somerset that the category three entries, the entries made while the firm was representing the debtor only, but which...
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