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Potter v. Holmes

United States District Court, W.D. Arkansas, Fort Smith Division

October 14, 2016




         Currently before the Court are Plaintiff Allen Potter's motion to compel (Doc. 19), Potter's motion to disqualify counsel (Doc. 20), Defendant Cassaundra Holmes's motion for protective order (Doc. 25), Holmes's motion to exclude (Doc. 29), Holmes's motion to compel (Doc. 34), and the parties' responses and supporting documents. The Court will address each of the motions in turn.

         I. Plaintiff's Motion to Compel

         Potter's motion[1] seeks “all information regarding the funds spent by [Holmes] individually and as Trustee for the Trust” to any attorney in representing the trust or Holmes, “including an itemization of the total billing, payments and source of payments…” (Doc. 19, ¶ 7). Holmes does not object to producing information about the amount of compensation paid, but does object on the grounds that “Plaintiff's counsel requested copies of all attorney fee statements, asked questions about legal services provided, and asked the Trustee what advice she had received from her attorney.” (Doc. 21, ¶ 2). Holmes considers this particular information to be subject to attorney-client privilege and work-product protection. (Id., ¶ 3). Potter contends that this information is not privileged because beneficiaries, including Potter, are entitled to such information, and because Holmes has filed a counterclaim for damages based on the intentional tort of improper interference with her contract with a third person. (Doc. 19, ¶¶ 4-5).

         Potter is not entitled to detailed invoices because such a request is not reasonable, but is instead disproportionate to the needs of the case. Fed. R. Civ. Pro. 26(b)(1). As a beneficiary, however, he is entitled to general billing information so that he can remain reasonably informed about the administration of the trust. The Court makes this determination based on a beneficiary's reasonable entitlement to records, and need not address the privilege claims made by Holmes.[2] A trust beneficiary “is always entitled to such information as is reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust.” Salem v. Lane Processing Trust, 37 S.W.3d 664, 666-67 (Ark. App. 2001) (quoting the Restatement (Second) of Trusts, § 173 cmt. c (1959)). However, “Arkansas law presumes a trustee has acted in good faith and places the burden of proof upon those who question his actions and seek to establish a breach of trust.” Salem, 37 S.W.3d at 667 (citing Gregory v. Moose, 590 S.W.2d 665 (Ark. App. 1979)). Thus, a beneficiary should be reasonably informed as to what the trustee is paying an attorney, but absent an articulated need, access to unlimited billing information is not reasonable. See Bell v. Bank of Am., N.A., 422 S.W.3d 138, 142 (Ark. App. 2012) (“Because the [beneficiaries] were reasonably informed as to what the [trustee] was paying [the attorney], we cannot say that the circuit court clearly erred in denying the [beneficiaries'] access to the detailed billing invoices.”); Salem, 37 S.W.3d at 666 (affirming the denial of a beneficiary's request for unlimited access to trust records, where the chancellor found the request to be unreasonable and “noted the [other beneficiaries'] history of vexatious lawsuits… against [the trustees] and said that she assumed that [the plaintiff beneficiary] might be acting in concert with them.”).

         Holmes has not objected to producing the total amount spent from trust assets for attorney's fees. Holmes must produce the total amounts billed by and paid to any attorney representing her as trustee or individually as it relates to this lawsuit and the related state court action. Holmes must also produce the source of payments made. However, it is not reasonable for Holmes to produce detailed billing statements because Potter has not articulated an adequate need for these comprehensive records, and such production is therefore disproportionate to the needs of the lawsuit. Potter's motion to compel will be granted in part.

         II. Plaintiff's Motion to Disqualify Counsel

         A party seeking to disqualify opposing counsel bears a heavy burden. Motions to disqualify counsel are subject to particularly strict judicial scrutiny given the potential for abuse by opposing counsel. Droste v. Julien, 477 F.3d 1030, 1035 (8th Cir. 2007). “A party's right to select its own counsel is an important public right and a vital freedom that should be preserved; the extreme measure of disqualifying a party's counsel of choice should be imposed only when absolutely necessary.” Macheca Transp. Co. v. Philadelphia Indem. Co., 463 F.3d 827, 833 (8th Cir. 2006) (internal quotation and citations omitted). Given its duty to subject these motions to particularly strict scrutiny, the Court finds Potter's argument to be insufficient, especially in light of Potter's failure to include a brief in support of the just-over-one-page motion.

         In his motion, Potter states that Jack Skinner, one of the attorneys for Holmes in this matter, is a necessary witness because “he can testify as to the advice that he gave to Cassaundra Holmes in her capacity as Trustee.” (Doc. 20, ¶3). Potter does not otherwise support this assertion in any way. Arkansas Rule of Professional Conduct 3.7 states that a “lawyer shall not act as an advocate at a trial in which the lawyer is likely to be a necessary witness” but if disqualification would cause a substantial hardship on the client, then the Rule does not apply. Holmes argues in her response- and the Court agrees-that there would be a substantial hardship if Skinner were disqualified because he has represented the Defendant in her actions as Trustee since 2013, when the state court case of Fredrick R. Potter v. Cassaundra Holmes v. Thomas Wright and Kevin Wright, 64 CV-2013-54 (II), was filed in Scott County Circuit Court. (Doc. 22, ¶ 7). That case, in which the court similarly denied a motion to disqualify Skinner, involves many of the same facts as are presented here.

         Potter additionally argues that there is a conflict of interest because Skinner represents Holmes both in her individual capacity and in her capacity as Trustee. Holmes is being sued in both capacities, and Potter has not produced any authority in support of the argument that this alone creates a conflict of interest.[3] The Court will deny this motion.

         III. Defendant's Motion for Protective Order

         Holmes's motion for protective order (Doc. 25) asks the Court to “enter a protective order to preserve her attorney-client privilege, and the work-product of her attorneys, whether it be in the form of conversations with her attorneys, other attorney-client communications, or in her billing statements which she receives from her attorneys.” Federal Rule of Civil Procedure 26(c)(1)(G) provides that “[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense” by “requiring that a trade secret or other confidential research, development or commercial information not be revealed or be revealed only in a specified way.” “The burden is therefore upon the movant to show the necessity of its issuance, which contemplates ‘a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements.'” Gen. Dynamics Corp. v. Selb Mfg. Co., 481 F.2d 1204, 1212 (8th Cir. 1973) (citing Wright & Miller, Federal Practice and Procedure: Civil § 2035 at 264-65).

         The Court does not believe that good cause has been shown as to why a protective order should be entered to preserve attorney-client privilege and work-product immunity. The Court has decided in this order to appropriately limit discovery on billing statements to total billing, payments, and source of payments. Any outstanding discovery disputes which may invoke the attorney-client privilege and work-product immunity have not been presented to the Court and the deadline for doing so has passed.[4] This motion will be denied.

         IV. Defendant's ...

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