Good-Faith Defense to Fraudulent-Transfer Claims Results in At-Issue Waiver Reply

In a fraudulent-transfer lawsuit arising out of a bankruptcy action, a Florida bankruptcy court ruled that a defendant-bank’s assertion of a good-faith defense waived the attorney–client privilege over emails between bank employees and its counsel.  The court, however, limited the waiver to documents evidencing the bank’s state-of-mind during the period of the alleged improper transfers.  In re: Mongelluzzi, 2017 WL 1843049 (Bankr. M.D. Fla. May 8, 2017).  You may read the decision here.


Frank Mongelluzzi owned and operated several companies, and he and his business entities maintained 61 accounts at a regional bank.  After Mongelluzzi and his companies filed bankruptcy, the bankruptcy trustees filed various complaints against the bank seeking to avoid allegedly fraudulent transfers under 11 U.S.C. § 548.

The trustees claimed that Mongelluzzi and his companies had engaged in a check-kiting scheme, that the bank had knowledge of this scheme, and that the bank devised a controlled exit strategy to reduce its financial exposure from $25M to $3M.

Good-Faith Defense and At-Issue Waiver More…

NY Client. SC Atty. Which State’s Privilege Law Covers Their Calls & Emails? Reply

Let’s discuss conflicts-of-laws—privilege style.  I know you want to.

Here is the scenario—NY client emails her SC-based attorney—which state’s privilege law applies?  In Wellin v. Wellin, 211 F. Supp. 3d 793 (D.S.C. 2016), the USDC SC provided an informative analysis of the often-ignored conflict-of-privilege-law issue, and applied the Second Restatement’s paradigm in holding that SC privilege law applied.  You may read the opinion here.  Now, let’s break it down.

The Wellin case involves multiple lawsuits over the distribution of the substantial assets of Keith Wellin, a former Wall Street executive who died in 2014.  Read his obituary here.  Wellin’s eight grandchildren, non-parties to the litigation but contingent beneficiaries of one of Wellin’s Irrevocable Trusts, lawyered up with South Carolina counsel.

One of the grandchildren, Ann Plum, a New York-based otolaryngologist, sought a protective order to prevent deposition questions about communications she had with her South Carolina-based attorneys, her brother, cousins, and mother, and her mother’s attorney.

To determine the privilege issues, the court had to decide whether NY or SC law applied to the putatively privileged communications.  In this diversity action, the court looked to FRE 501, which provides that “state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”  FRE 501, however, does not answer which state’s privilege law applies—the forum state or some other state. More…

In-House Counsel Fails to Prove Privilege, Loses Quest to Seal Emails & Notes

Situations arise where a party files privileged communications to support a dispositive motion.  But filing privileged documents raises waiver concerns, so the filing party seeks to seal those documents to prevent third-party access.  The question arises whether policies underlying the attorney–client privilege overcome citizens’ common-law and First Amendment rights of access to publicly filed documents.

In Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 2017 WL 1653608 (NDNY Apr. 26, 2017), available here, the USDC NDNY indicated that the privilege is a “higher value” that may rebut the common-law and FA presumption of access.  So, the court sealed the privileged communications, right? More…