Opinion
19-14096
08-31-2021
In re: JAMES S. ALEXANDER Debtor
NOT INTENDED FOR PUBLICATION
Chapter 7
ORDER GRANTING TRUSTEE'S MOTION FOR ORDER REQUIRING PRODUCTION OF DOCUMENTS PURSUANT TO BANKRUPTCY RULE 2004
[DOCKET NUMBER 68]
Beth A. Buchanan United States Bankruptcy Judge
This matter is before this Court on the Trustee's Motion for Order Requiring Production of Documents Pursuant to Bankruptcy Rule 2004 [Docket Number 68] ("Motion"); the Response of Eric Goering to Trustee's Motion for an Order Requiring Production of Documents [Docket Number 71] ("Response"); and the Trustee's Response to Debtor's Objection to Trustee's Motion for Production of Documents [Docket Number 75] ("Reply").
The parties were asked whether they wanted an evidentiary hearing on the issues raised in the Motion and Response or, instead, whether they wanted the issues determined by this Court without a hearing based on the documents filed of record [Docket Number 72]. In a Joint Status Report [Docket Number 74] filed August 25, 2021, the parties agreed that the Motion and responsive filings cited herein provide this Court with sufficient facts and law "to allow the Court to issue a decision without further need for briefing or oral argument." Accordingly, this matter is ripe for determination.
In the Motion, Chapter 7 Trustee George Leicht ("Trustee") requests documents relating to attorney fee payments to Eric Goering ("Mr. Goering"), the bankruptcy attorney for Debtor James S. Alexander ("Debtor"). As a basis for this request, the Trustee asserts that, approximately fourteen days prior to his bankruptcy filing, the Debtor hid funds that had been held by the Lilkie Revocable Trust, a self-settled trust of which the Debtor was both sole beneficiary and trustee. The Trustee further asserts that the funds were proceeds of the sale of real estate and constitute property of the Debtor's bankruptcy estate. Accordingly, the Trustee is attempting to recover the funds to benefit creditors of the bankruptcy estate. The Trustee asserts that he has reason to believe that the funds were used by the Debtor to retain his bankruptcy attorney and that the documents requested, including copies of checks, money orders, electronic transfer memoranda of payments to Mr. Goering, and receipts of such payments, will aid the Trustee's investigation and recovery of these funds.
In response to the Motion, Mr. Goering makes two arguments. First, Mr. Goering appears to argue that his disclosure of the documents is protected by the Debtor's pleading of the Fifth Amendment. Second, Mr. Goering asserts that the documents are protected by the attorney-client privilege. Neither argument withstands a review of the law.
In addition to his two arguments, Mr. Goering refers to the Trustee's request for documents as a "fishing expedition" but makes no argument to support that the request is unlawfully broad or unlikely to result in information that will aid in the Trustee's investigation and recovery of assets to benefit the bankruptcy estate. See In re Underwood, 457 B.R. 635, 644 (Bankr. S.D. Ohio 2011) (noting that the scope of a Rule 2004 examination is broad and has been frequently compared to a lawful fishing expedition of matters relating to the financial condition of the debtor or matters that may affect the debtor's estate). Mr. Goering's bare assertion does not support denial of the Trustee's request.
The Fifth Amendment privilege against self-incrimination is a personal privilege which means "it adheres basically to the person, not to information that may incriminate him." United States v. Haddad, 527 F.2d 537, 539 (6th Cir. 1975) (noting that a party is privileged from producing the evidence, but not from its production). The Constitutional provision "explicitly prohibits compelling an accused to bear witness 'against himself'; it necessarily does not proscribe incriminating statements elicited from another." Id. Accordingly, the Sixth Circuit has held that a client's pleading of the Fifth Amendment does not protect from disclosure of attorney fee records held by the client's attorney. Id. at 539-40. See also In re Grand Jury Proceedings-Gordon, 722 F.2d 303, 308 (6th Cir. 1983) (noting that the Fifth Amendment privilege is a personal privilege that "does not permit an attorney to plead that his client might be incriminated by his testimony").
Mr. Goering cites two cases describing the negative consequences and adverse determinations a debtor may face when pleading the Fifth Amendment privilege and choosing "protection from prosecution over protection from his creditors." Banknorth, N.A. v. Vrusho (In re Vrusho), 321 B.R. 607, 613 (Bankr. D. N.H. 2005). See also Bertelt v. United States (In re Bertelt), 213 B.R. 173 (Bankr. M.D. Fla. 1997). Neither of these cases supports that the Debtor's pleading of the Fifth Amendment privilege protects the attorney fee information requested by the Trustee from Mr. Goering in this case.
With respect to the attorney-client privilege, an analysis of the attorney-client privilege reveals that the privilege "'does not envelope everything arising from the existence of an attorney-client relationship.'" Humphreys, Hutcheson and Moseley v. Donovan, 755 F.2d 1211, 1219 (6th Cir. 1985) (quoting United States v. Goldfarb, 328 F.2d 280, 282 (6th Cir. 1964)). Instead, "'the attorney-client privilege is an exception carved from the rule requiring full disclosure, and as an exception, should not be extended to accomplish more than its purpose.'" Humphreys, 755 F.2d at 1219 (quoting Goldfarb, 328 F.2d at 282).
The attorney-client privilege is narrowly construed to preclude disclosure of confidential communications between attorney and client related to the purpose for which legal advice is sought and not to protect against disclosure of the facts underlying the communication. Id. In most circumstances, information about fees paid to an attorney is not subject to the attorney client-privilege because payment of fees is not normally a matter involving a confidence or a communication. Id. ("In general, the fact of legal consultation or employment, clients' identities, attorney's fees, and the scope and nature of employment are not deemed privileged."); Haddad, 527 F.2d at 538-39. While special circumstances may exist to justify an exception, no such special circumstances have been argued in this case. See Haddad, 527 F.2d at 539 (describing the facts and special circumstances of In re Grand Jury Proceedings, 517 F.2d 666, 674 (5th Cir. 1975)).
Because neither the Fifth Amendment privilege nor the attorney-client privilege precludes disclosure of the documents requested by the Trustee, this Court GRANTS the Trustee's Motion. Mr. Goering is ordered to produce the documents requested in the Trustee's Motion within fourteen (14) days of the entry of this Order.
SO ORDERED.