Seibel v. Eighth Judicial Dist. Court of Nev.
| Decision Date | 23 November 2022 |
| Docket Number | 83723 |
| Citation | 520 P.3d 350 |
| Parties | Rowen A. SEIBEL; Moti Partners, LLC; Moti Partners 16, LLC; LLTQ Enterprises, LLC; LLTQ Enterprises 16, LLC; TPOV Enterprises, LLC; TPOV 16 Enterprises, LLC; Ferg, LLC; Ferg 16, LLC; R Squared Global Solutions, LLC; DNT Acquisition, LLC; GR Burgr, LLC; and Craig Green, Petitioners, v. The EIGHTH JUDICIAL DISTRICT COURT of the State of Nevada, IN AND FOR the COUNTY OF CLARK; and the Honorable Timothy C. Williams, District Judge, Respondents, and Desert Palace, Inc.; Paris Las Vegas Operating Company, LLC; PHWLV, LLC ; and Boardwalk Regency Corporation, Real Parties in Interest. |
| Court | Nevada Supreme Court |
Bailey Kennedy and Joshua P. Gilmore, John R. Bailey, Dennis L. Kennedy, and Paul C. Williams, Las Vegas, for Petitioners.
Pisanelli Bice PLLC and Jordan T. Smith, James J. Pisanelli, Debra L. Spinelli, and M. Magali Mercera, Las Vegas, for Real Parties in Interest.
BEFORE THE SUPREME COURT, HARDESTY, STIGLICH, and HERNDON, JJ.
We elect to hear this petition to address a matter of first impression before this court regarding the procedures and burden of proof required to establish the crime-fraud exception to the attorney-client privilege. Because the district court did not err in ordering an in camera review of the privileged communications at issue here, and because it did not abuse its discretion in ultimately ordering the disclosure of those communications, we deny this petition for extraordinary relief.
Petitioner Rowen Seibel, through his limited liability companies, entered into development agreements with Caesars to operate restaurants for various Caesars properties.1 When Caesars discovered that Seibel had been convicted of tax fraud, it terminated the agreements, citing a term that appeared in all the parties’ contracts that allowed Caesars to terminate if its relationship with Seibel could jeopardize Caesars’ gaming licenses. Seibel sued one of the Caesars properties, Planet Hollywood in Las Vegas, for breach of contract and related claims. Seibel claimed that he had cured any potential risk by creating an irrevocable family trust and assigning his contractual rights and interests under the development agreements to newly formed business entities owned and managed by independent trustees. He asserted that he was neither a trustee nor a beneficiary of the trust and was no longer affiliated with the business entities that were assigned the development agreements. Planet Hollywood counterclaimed that Seibel had fraudulently attempted to hide his unsuitability to conduct business with a gaming licensee, causing it damages. Other Caesars properties later sued Seibel, seeking declaratory relief and damages, and these actions were consolidated.
During litigation, Caesars obtained through discovery a copy of a prenuptial agreement between Seibel and his wife, which had been executed contemporaneously to Seibel's trust and allowed Seibel to benefit from the trust. Caesars concluded that Seibel had used legal counsel to create both the trust and the prenuptial agreement so that he could secretly retain the benefits of the development agreements while tricking Caesars into thinking that he had dissociated from them. On this suspicion, Caesars moved to compel discovery of over 100 documents from Seibel's attorney-client privilege log under Nevada's crime-fraud exception. The district court granted this motion in two orders. The first granted in camera review of the documents after determining that Caesars had met its burden of showing that Seibel was engaged in an attempt to deceive Caesars when he sought the advice of legal counsel for the creation of his trust and prenuptial agreement. The second order granted the motion to compel disclosure of all the documents after finding, through in camera review, that the documents were sufficiently related to and made in furtherance of Seibel's attempted fraudulent scheme.
Seibel petitions this court for a writ of prohibition or mandamus preventing the district court from compelling disclosure of the documents and ordering the district court to find the documents undiscoverable. Seibel argues primarily that the district court erred in finding that Caesars had met its initial burden of demonstrating that Seibel was engaged in a fraudulent scheme when he sought legal advice regarding his trust and prenuptial agreement, and that the district court erred in further concluding that all of Seibel's privileged communications regarding the trust and prenuptial agreement were sufficiently related to and made in furtherance of that fraud.
Writ relief
Extraordinary writ relief is available only where there is no "plain, speedy and adequate remedy in the ordinary course of law." NRS 34.330. Although writ relief is generally not available to review discovery orders, this court will consider writ petitions challenging orders that compel the disclosure of privileged information because in such cases "a later appeal would not remedy any improper disclosure of the information." Wynn Resorts, Ltd. v. Eighth Judicial Dist. Court , 133 Nev. 369, 374, 399 P.3d 334, 341 (2017).
Writ relief is also appropriate to clarify an important issue of law, such as the parameters of a privilege. See Canarelli v. Eighth Judicial Dist. Court , 136 Nev. 247, 250-51, 464 P.3d 114, 119 (2020) (). We elect to entertain this petition, treating it as one for prohibition, because Seibel challenges a discovery order compelling disclosure of privileged information, and prohibition, not mandamus, is the "appropriate remedy to correct an order that compels disclosure of privileged information." Las Vegas Dev. Assocs., LLC v. Eighth Judicial Dist. Court , 130 Nev. 334, 338, 325 P.3d 1259, 1262 (2014).
Standard of review
We review the district court's legal determinations regarding the crime-fraud exception de novo. See Humboldt Gen. Hosp. v. Sixth Judicial Dist. Court , 132 Nev. 544, 547, 376 P.3d 167, 170 (2016) (). "Discovery matters are within the district court's sound discretion," and factual findings "are given deference and will not be set aside unless they are clearly erroneous or not supported by substantial evidence." Canarelli , 136 Nev. at 251, 464 P.3d at 119 (internal quotation marks omitted).
Application of Nevada's crime-fraud exception to the attorney-client privilege
Nevada's attorney-client privilege and crime-fraud exception are statutory. Under NRS 49.095, the attorney-client privilege grants clients "a privilege to refuse to disclose, and to prevent any other person from disclosing, confidential communications" between the client (or representative) and his or her lawyer (or representative), and between the client's lawyer and the lawyer's representative. But per NRS 49.115(1), Nevada's crime-fraud exception allows documents otherwise privileged under NRS 49.095 to be disclosed when "the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud."
Neither NRS 49.095 nor NRS 49.115(1) establishes the procedure or burden of proof that courts are to use when determining whether the crime-fraud exception should apply, however, and this court has not clarified those issues before. Both statutes "are taken without substantive change from" Rule 5-03 of the Preliminary Draft of Proposed Rules of Evidence for the United States District Courts and Magistrates, submitted by the Advisory Committee on Rules of Evidence, reprinted in 46 F.R.D. 161, 249-51 (1969), which is widely considered federal common law.2 Therefore, this court finds federal caselaw interpreting the federal common-law attorney-client privilege and crime-fraud exception persuasive in interpreting NRS 49.095 and NRS 49.115(1). See, e.g., In re 2015-2016 Jefferson Cty. Grand Jury , 410 P.3d 53, 59 (Colo. 2018) (); People v. Radojcic, 376 Ill.Dec. 279, 998 N.E.2d 1212, 1221-23 (Ill. 2013) (same).
Federal courts "have recognized the attorney-client privilege under federal law as ‘the oldest of the privileges for confidential communications known to the common law.’ " Zolin, 491 U.S. at 562, 109 S.Ct. 2619 (quoting Upjohn, 449 U.S. at 389, 101 S.Ct. 677 ). The privilege exists to ensure that clients can freely and confidentially communicate with their legal counsel, which is central "to the proper functioning of our adversary system of justice." Id. However, "[s]ince the privilege has the effect of withholding relevant information from the factfinder, it applies only where necessary to achieve its purpose" and is therefore subject to limited exceptions such as the crime-fraud exception. Id. at 562-63, 109 S.Ct. 2619 (internal quotation marks omitted); see also NRS 49.115(1).
In determining whether the crime-fraud exception should apply, the United States Court of Appeals for the Ninth Circuit utilizes a two-part test, which reflects the prevailing approach among federal circuits. E.g., United States v. Boender , 649 F.3d 650, 655-56 (7th Cir. 2011) ; In re Richard Roe, Inc., 168 F.3d 69, 71 (2d Cir. 1999). Under this approach, a party seeking to invoke "the crime-fraud exception must satisfy a two-part test":
First, the party must show that "the client was engaged in or planning a criminal or fraudulent scheme when it sought the advice of counsel to further the scheme." Second, it must demonstrate that the attorney-client communications for which...
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