Monterey Bay Military Hous. v. Ambac Assurance Corp.
| Docket Number | Civil Action 19 Civ. 9193 (PGG) (SLC) |
| Decision Date | 25 May 2023 |
| Parties | MONTEREY BAY MILITARY HOUSING, LLC, MONTEREY BAY LAND, LLC, MEADE COMMUNITIES LLC, FORT BLISS/WHITE SANDS MISSILE RANGE HOUSING LP, RILEY COMMUNITIES LLC, FORT LEAVENWORTH FRONTIER HERITAGE COMMUNITIES, I, LLC, FORT LEAVENWORTH FRONTIER HERITAGE COMMUNITIES, II, LLC, CARLISLE/PICATINNY FAMILY HOUSING LP, BRAGG COMMUNITIES LLC, FORT DETRICK/WALTER REED ARMY MEDICAL CENTER LLC, PICERNE-FORT POLK FUNDING, LLC, RUCKER COMMUNITIES, LLC, STEWART HUNTER HOUSING LLC, SILL HOUSING, LLC, AETC HOUSING LP, AMC WEST HOUSING LP, LACKLAND FAMILY HOUSING, LLC, and VANDENBERG HOUSING LP, Plaintiffs, v. AMBAC ASSURANCE CORPORATION, JEFFERIES MORTGAGE FINANCE, INC., JEFFERIES & COMPANY INC., JEFFERIES L.L.C., JEFFERIES GROUP LLC, DANNY RAY, and CHETAN MARFATIA, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Before the Court is Jefferies'[1]letter-motion seeking to reopen the deposition of non-party witness Mark Connor (“Mr Connor”), an attorney and former Lieutenant Colonel in the United States Army (the “Army”) Office of General Counsel. (ECF Nos. 669 at 1 (the “Motion”); 684-1 at 12).[2] Jefferies contends that, during Mr. Connor's April 24, 2023 deposition (the “Deposition”), the Army's counsel, Major Patrick Doyle (“Major Doyle”), improperly instructed Mr. Connor not to answer certain questions as outside the authorized scope of the Deposition. (ECF No. 669 at 1, 3). The Army, represented by the Office of the United States Attorney for the Southern District of New York, opposes the Motion. (ECF No. 675). For the reasons set forth below, the Motion is DENIED.
The factual background of this action is set out in detail in prior decisions issued by the Honorable Paul G. Gardephe and the undersigned. See Monterey Bay Mil. Hous., LLC v. Ambac Assurance Corp., No. 19 Civ. 9193 (PGG) (SLC), 2023 WL 315072 (S.D.N.Y. Jan. 19, 2023) (“Monterey Bay III”); Monterey Bay Mil. Hous., LLC v. Ambac Assurance Corp., No. 19 Civ. 9193 (PGG) (SLC), 2021 WL 4173929 (S.D.N.Y. Sept. 14, 2021) (“Monterey Bay II”); Monterey Bay Mil. Hous., LLC v. Ambac Assurance Corp., 531 F.Supp.3d 673 (S.D.N.Y. 2021) (“Monterey Bay I”).[3]The Court incorporates those factual summaries and all defined terms.
As is relevant to the Motion, the Military Housing Privatization Initiative of 1996 (“MHPI”) authorized the United States Department of Defense, including the Army, “to enter into agreements with private developers to modernize housing for military families on bases around the country.” (ECF No. 210-3 ¶ 1). Plaintiffs[4] are the MHPI project entities dedicated to individual military bases (the “Projects”). (Id.) With respect to Army MHPI Projects, the Army partnered with a private developer, which managed the Projects. (Id. ¶ 2). For each Army MHPI Project, the Army contributed housing and equity in exchange for a “significant equity participation[,]” and possessed “consent rights to major decisions regarding the Projects, including the terms of the initial financing at issue and whether to pursue litigation such as” this action. (Id.) The Army is not, however, a party to this action. (See generally id.)
In July 1999, Mr. Connor joined the Army's Office of General Counsel. (ECF No. 684-1 at 12). In 2000, after the attorney working on the MHPI Projects was transferred to another assignment, Mr. Connor stepped into the role of providing advice concerning with which developers the Army would partner. (Id. at 13). Mr. Connor first met Mr. Ray, who was then employed by GMAC,[5]in connection with the Fort Meade Project in 2002 or 2003. (ECF No. 684-1 at 43, 72-73; see ECF No. 210-3 ¶ 4). Mr. Connor described Mr. Ray as having “act[ed] like” a “financial advisor” to the Projects, although he could not recall any written communication describing Mr. Ray as a “financial advisor.” (ECF No. 684-1 at 62, 69, 70-71).
On January 4, 2016, Mr. Connor sent an email to attorneys at Kirkland & Ellis LLP (“K&E”), former counsel to Plaintiffs in this action, concerning the Army's position as to motions to dismiss in the DSRF Litigation.[6] (ECF No. 669-2 at 25 (the “Jan. 4 Email”); see ECF No. 693 at 22 ()). The Court has reviewed in camera the Jan. 4 Email, which Plaintiffs have withheld as privileged, and observes that it does not reference Jefferies, either explicitly or implicitly.[7]
During early February 2016, Mr. Connor was copied on correspondence, which Plaintiffs have withheld as privileged and some of which do mention Jefferies, concerning discovery in the DSRF Litigation. (See ECF No. 669-2 35-37 (the “Feb. 2016 Emails”)). On February 12, 2016, Mr. Connor called Mr. Ray, who was then represented by Jefferies' in-house counsel, and they spoke for approximately 40 minutes (the “Feb. 12 Call”). (ECF Nos. 669-3 at 2; 684-1 at 102; 688-1 at 2). Approximately 20 minutes later, Mr. Connor sent the following email to Mr. Ray:
Lead K&E Counsel for the Projects in the AMBAC litigation are Donna Welch and Jeff Willian.... I will alert them to expect a call from Jefferies' Counsel to discuss your availability for an interview.
(ECF No. 669-3 (the “Feb. 12 Email”)). Mr. Ray informed Jefferies' counsel of the Feb. 12 Call. (ECF No. 693 at 18). Mr. Ray, accompanied by Jefferies' counsel, subsequently attended an “interview” with K&E (the “Interview”), which Jefferies' counsel “stopped” after 30-45 minutes.
(Id. at 19). At some point after the Interview, Jefferies and Mr. Ray received subpoenas in the DSRF Action. (ECF No. 210-3 ¶ 32). Jefferies and Mr. Ray contend that Mr. Connor's call to Mr. Ray was improper and had Mr. Ray “known that they were planning a civil RICO action against him . . . he would have hung up the phone on Mr. Connor, and he never would have gone to that interview.” (ECF No. 693 at 20-21). The voluminous discovery in this action does not reveal any further information about what Mr. Connor and Mr. Ray discussed during the Feb. 12 Call. (Id. at 11).
On November 10, 2022, Mr. Ray served on Mr. Connor a subpoena to testify at a deposition on December 20, 2022. (ECF No. 682-1 (the “Subpoena”)). The Subpoena did not specify on which topics Mr. Connor was being asked to testify. (Id.) On November 21, 2022, Major Doyle responded to the Subpoena, stating:
Your request is denied because the timeline is unreasonable, your request does not comply with federal regulations, and Mr. Connor's testimony would likely be prohibited by attorney-client privilege. Accordingly, the Army requests that you withdraw your [S]ubpoena and submit a proper Touhy request for Mr. Connor's testimony.
(ECF No. 682-2 at 1). On December 2, 2022, Mr. Ray submitted a request for Mr. Connor to participate in a deposition (the “Army Touhy Request”), proposing five topics:
(ECF No. 669-4 at 2 (the “Topics”)). On December 19, 2022, Major Doyle notified Mr. Ray that the Army Touhy Request had been approved, and authorized Mr. Connor to testify regarding the Topics “to the extent of his personal knowledge, but he may not purport to testify on behalf of the Department of the Army, or announce what is or was the policy position of the Department of the Army on any issue within the Army's jurisdiction.” (ECF No. 669-4 at 2). Major Doyle added that because “Mr. Connor is an attorney employed by the Army's Office of General Counsel[,] any question with an answer that invokes the attorney-client privilege will be objectionable.” (Id. at 3).
Jefferies has not made its own Touhy request to the Army but has served a Touhy request on the United States Department of the Air Force (the “Air Force”), seeking testimony concerning, inter alia, Defendants' “alleged wrongful acts,” GMAC's and Mr. Ray's role with respect to Air Force MHPI Projects, and preservation of relevant documents. (ECF No. 675-2 (the “Air Force Touhy Request”)).
Mr Connor's Deposition occurred on April 24, 2023. (ECF No. 684-1). Following questioning by counsel for Ambac and Mr. Ray, Jefferies' counsel also questioned Mr. Connor. (ECF No. 684-1 at 101). Mr. Connor did not remember the Feb. 12 Call but acknowledged that Jefferies was represented by counsel at that time. (ECF No. 684-1 at 101-02). When Jefferies' counsel asked whether Mr. Ray had “reach[ed] out to” Mr. Connor, Major Doyle instructed Mr. Connor not to answer on the ground that the question was outside the Topics. (ECF No. 684-1 at 103). Major Doyle similarly instructed Mr. Connor as to a series of related questions from Jefferies' counsel...
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