Nupson v. Schnader Harrison Segal & Lewis LLP
| Decision Date | 07 April 2021 |
| Docket Number | CIVIL ACTION No.: 18-cv-2505 |
| Court | U.S. District Court — Eastern District of Pennsylvania |
| Parties | ANNA K. NUPSON, Plaintiff, v. SCHNADER HARRISON SEGAL & LEWIS LLP, et al. Defendants. |
SITARSKI, M.J.
Presently pending before the Court is Plaintiff's Motion to Compel Discovery Responses from Defendants (Pl.'s Mot. to Compel, ECF No. 102), Intervenors' and Defendants' responses thereto (Intervenors' Resp., ECF No 121-4; Defs.' Resp., ECF No. 123), Plaintiff's reply in support of her motion (Pl.'s Reply, ECF No. 132), Intervenors' and Defendants' sur-replies thereto (Intervenors' Sur-reply, ECF No. 139; Defs.' Sur-reply, ECF No. 140), and Plaintiff's supplemental reply in support of her motion. (Pl.'s Supp. Reply, ECF No. 153).1 For the reasons that follow, Plaintiff's motion shall be GRANTED IN PART and DENIED IN PART.
Plaintiff Anna Nupson ("Plaintiff"), Intervenor John Middleton ("John") and Lucia Middleton Hughes ("Lucia") are the adult children of Herbert Middleton, Jr. ("Herbert") and Frances Middleton ("Frances" or, collectively with the other family members, "theMiddletons").2 (Pl.'s Third Am. Compl., ECF No. 119, at ¶ 10). The Middletons owned a successful tobacco products company, Intervenor Bradford Holdings, Inc. ("Bradford"). (Id. at ¶ 11). Defendant Bruce Rosenfield ("Rosenfield") is a partner at the law firm of Defendant Schnader Harrison Segal & Lewis LLP ("Schnader" or, together with Rosenfield, "Defendants"). (Pl.'s Third Am. Compl., ECF No. 119, at ¶ 2). Defendants have represented Middleton family members, Bradford and related entities on a variety of matters over the last four decades. (Id. at ¶¶ 13, 16).
In the 1980s and 1990s, Defendants3 represented the Middletons in Shareholders' and Restriction Agreements designed to ensure that the Middleton children retained equal ownership in Bradford or received fair compensation for relinquishing that ownership. (Id. at ¶¶ 15-25). In 1999, Defendants began representing Frances, as settlor, and John, as trustee, in the establishment of a grantor retained annuity trust, with Frances's Bradford shares as the trust corpus and John and his family members as the sole beneficiaries ("GRAT I"). (Id. at ¶¶ 26, 28, 30; Defs.' Answer, ECF No. 131, at ¶ 26). On February 1, 2001, Frances signed stock powers and directed the transfer of her shares to fund the GRAT I. (Pl.'s Third Am. Compl., ECF No. 119, at ¶ 33; Defs.' Answer, ECF No. 131, at ¶ 33). Over the next several months, Defendants drafted trust documents for the oral trust. (Pl.'s Third Am. Compl., ECF NO. 119, at ¶ 33). On November 19, 2001, Frances executed the GRAT I trust documents bearing a date of February 1, 2001. (Id. at ¶ 34).
Lucia learned of the GRAT I in 2002 and accused John of procuring it through undue influence. (Pl.'s Third Am. Compl, ECF No. 119, at ¶¶ 39-40). Plaintiff contends that Defendants failed to divulge the existence of the oral GRAT I, the related stock transfer and Lucia's allegation of undue influence from her until October of 2016. (Id. at ¶¶ 35, 41). Defendants point to Plaintiff's handwritten notes allegedly showing her knowledge of the trust in 2002. (Defs.' Answer, ECF No. 131, at ¶ 35). Plaintiff claims that the GRAT I violated the Middleton family's written agreements, although Defendants deny this claim as well. (Pl.'s Third Am. Compl, ECF No. 119, at ¶ 38; Defs.' Answer, ECF No. 131, at ¶ 38).
In late 2002 and early 2003, Defendants represented Plaintiff and Frances in negotiations involving Middleton family members, their shares in Bradford and various trusts related to the family members. (Pl.'s Third Am. Compl, ECF No. 119, at ¶¶ 44, 59, 91). Defendants obtained a conflict waiver for the joint representation, but Plaintiff asserts various deficiencies with it.4 (Id. at ¶¶ 48-53). Multiple transactions and agreements resulted from these negotiations. Plaintiff, Frances and Lucia transferred all Bradford shares not held by John to him ("Bradford Stock Transfer"). (Pl.'s Third Am. Compl, ECF No. 119, at ¶ 44). The shares transferred at Plaintiff's direction were held in trust by the 1994 Anna Trust, a self-settled irrevocable trust established in 1994. (Id. at ¶¶ 75, 77). She claims that at the time of the Bradford Stock Transfer, the shares in the 1994 Anna Trust had a value of nearly 335 million dollars, but it only received 19.5 million dollars. (Id. at ¶¶ 79-80). The Middletons also entered the 2003 Master Settlement Agreement ("MSA"), including the 2003 Family Settlement Agreement, whichterminated the 1994 Anna Trust and split its corpus into two trusts for the benefit of Lucia's and John's children, FBO Hughes and FBO Middleton, even though Plaintiff contends that she had intended to receive the proceeds from the shares outright.5 (Id. at ¶¶ 78, 82).
As consideration for the Bradford Stock Transfer and the MSA, the GRAT I was modified to the GRAT II. (Id. at ¶ 70). Unlike the GRAT I, the GRAT II benefited Plaintiff, John and Lucia equally. (Id. at ¶¶ 59, 62). John served as trustee of the GRAT II, as he had with the GRAT I. (Id. at ¶ 96). Upon the termination of the GRAT II in February of 2003, Plaintiff's one-third share of the trust remainder was used to form a separate sub-trust for her benefit, the Trust Under Agreement of Frances S. Middleton FBO Anna K. Nupson dated February 1, 2001 (Anna Nupson 2001 Trust).6 (Id. at ¶¶ 60, 95; Defs.' Answer, ECF No. 131, at ¶ 95). Frances served as trustee of the Anna Nupson 2001 Trust until 2005. (Pl.'s Third Am. Compl., ECF No. 119, at ¶ 96). Rosenfield has served as trustee since then. (Id. at ¶¶ 96-97).
In 2015, John initiated multiple proceedings in the Montgomery County Orphans' Court seeking declaratory judgments regarding the validity of his family members' transfers of Bradford shares to him. (Id. at ¶¶ 54-55). In the course of the litigation, in October 2016, John disclosed, allegedly for the first time, the existence of the GRAT I. (Id. at ¶ 56). On October 5, 2016, Rosenfield, as trustee of the Anna Nupson 2001 Trust, filed a Petition for Adjudication recounting the origination of the GRAT I but not referencing its modification. (Id. at ¶ 108). Schnader attorney Roy Ross subsequently filed an affidavit dated December 23, 2016, in support of the Petition and attaching an unsigned and undated copy of the GRAT I. (Id. at ¶ 110). OnFebruary 23, 2017, "a separate party"7 submitted a signed copy of the GRAT I to the Orphans' Court. (Id. at ¶ 112). Plaintiff alleges that she had not seen a complete copy of the GRAT I until this submission. (Id.)
On March 16, 2017, the Orphans' Court admonished Rosenfield for not noting the amendment of the GRAT I in the Petition for Adjudication and ordered him to file an amended pleading. (Id. at ¶¶ 113-14). On May 1, 2017, he filed an Amended Petition for Adjudication disclosing, also allegedly for the first time, that Frances had originally formed the GRAT I as an oral trust on February 1, 2001, before executing trust documents bearing that date on November 19, 2001. (Id. at ¶¶ 60, 115). The Amended Petition attached an executed copy of the GRAT I. (Id. at ¶ 115). The parties dispute whether the GRAT I was validly formed as an oral trust. (Id. at ¶ 67; Defs.' Answer, ECF No. 131, at ¶ 67).
Schnader, a non-party in the Orphans' Court matter, nonetheless provided Plaintiff with substantial documents in that matter.8 On February 19, 2016, the Orphans' Court parties and Schnader, via its General Counsel, Wilbur Kipnes, Esquire, held a conference to discuss production of Plaintiff's and John's client files. (Pl.'s Mot. to Compel, ECF No. 102, at 6-7; Kipnes Decl., ECF No. 123-1, at ¶ 1). At the conference, it was agreed that Schnader would search for hard copies and electronically stored information ("ESI") and distribute them to the client or clients who appeared to hold any applicable privilege. (Pl.'s Mot. to Compel, ECF No. 102, at 7; Kipnes Decl., ECF No. 123-1, at ¶ 8). Schnader provided documents regarding the Anna Nupson 2001 Trust for the period since Rosenfield had taken over as trustee to Anna.(Kipnes Decl., ECF No. 123-1, at ¶ 11). It provided documents regarding that trust for the period that Frances served as trustee, and documents regarding the GRAT I, to John, as executor of the estate of Frances. (See Pl.'s Mot. to Compel, ECF No. 102, at 7). It provided documents regarding the GRAT II to both Plaintiff and John, in his capacity as executor of Frances's estate. (Kipnes Decl., ECF No. 123-1, at ¶ 30).
Plaintiff initiated this action on June 15, 2018. (Pl.'s Compl., ECF No. 1). On August 26, 2020, she filed her Third Amended Complaint, the operative complaint in this matter. (Pl.'s Third Am. Compl., ECF No. 119). Her complaint includes claims against Defendants for legal malpractice and breach of fiduciary duty.9 (Id. at ¶¶ 85-120). Defendants assert counterclaims for breach of contract, promissory estoppel and unjust enrichment due to Plaintiff's alleged nonpayment of her half of Schnader's costs in making the Orphans' Court ESI production. (Defs.' Answer, Aff. Defenses and Counterclaim, ECF No. 67, at 15-21, ¶¶ 1-39; see also Defs.' Answer Aff. Defenses, ECF No. 131, at 1 n.1).
Plaintiff filed the instant motion to compel discovery responses on August 5, 2020. (Pl.'s Mot. to Compel, ECF No. 102). On September 2, 2020, Defendants filed a response in opposition. (Defs.' Resp., ECF No. 123). On September 9, 2020, the Honorable Nitza I. Quiñones Alejandro entered the parties' stipulated order permitting Intervenors to intervene for the limited purpose of opposing Plaintiff's motion and deeming their response thereto filed. (Stip. Order, ECF No. 129; see also Intervenors' Resp., ECF No. 121-4). Plaintiff filed her joint reply in support of her motion on October 2, 2020. (Pl.'s Reply, ECF No. 132). Defendants and Intervenors filed sur-replies on October 16, 2020. (Defs.' Sur-reply, ECF No. 139; Intervenors'Sur-reply, ECF No. 140)....
To continue reading
Request your trial