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Keywords

plaintiffattorneydiscoverymotiongrand juryattorney-client privilege
plaintiffattorneydiscoverymotionattorney-client privilege

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Amusement Industry, Inc. v. Stern, 293 F.R.D. 420

Facts

The plaintiffs, Amusement Industry, Inc. and Practical Finance Co., Inc., alleged that they lost $13 million in a fraudulent scheme orchestrated by the broker, Moses Stern, in connection with the purchase of a portfolio of shopping centers from Colonial Realty Limited Partners in 2007. They claimed that Stern submitted false documents and misrepresentations to secure financing from J.P. Morgan and Citigroup, including inflated brokerage fees and forged agreements. The plaintiffs sought to compel the discovery of communications between Stern and his attorneys, arguing that the crime-fraud exception to attorney-client privilege applied due to the fraudulent nature of the transactions.

The plaintiffs, Amusement Industry, Inc. and Practical Finance Co., Inc., alleged that they lost $13 million in a fraudulent scheme orchestrated by the broker, Moses Stern, in connection with the purchase of a portfolio of shopping centers from Colonial Realty Limited Partners in 2007.

Issue

Did the crime-fraud exception to attorney-client privilege apply, allowing the plaintiffs to compel discovery of communications between the broker and his attorneys?

Did the crime-fraud exception to attorney-client privilege apply, allowing the plaintiffs to compel discovery of communications between the broker and his attorneys?

Rule

The crime-fraud exception to the attorney-client privilege applies when there is probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of that fraud or crime.

The crime-fraud exception to the attorney-client privilege applies when there is probable cause to believe that a fraud or crime has been committed and that the communications in question were in furtherance of that fraud or crime.

Analysis

The court analyzed the evidence presented by the plaintiffs, which included numerous instances of false documents and misrepresentations made by Stern in the loan application process. The court found that there was overwhelming evidence supporting the claim that Stern engaged in a scheme to defraud, particularly in light of the grand jury indictment against one of his associates for similar conduct. The court concluded that the communications sought by the plaintiffs were likely in furtherance of the fraudulent scheme, thus justifying the application of the crime-fraud exception.

The court analyzed the evidence presented by the plaintiffs, which included numerous instances of false documents and misrepresentations made by Stern in the loan application process.

Conclusion

The court granted the plaintiffs' motion to compel discovery of certain communications between the broker and his attorneys, finding that the crime-fraud exception applied due to the probable cause of fraudulent conduct.

The court granted the plaintiffs' motion to compel discovery of certain communications between the broker and his attorneys, finding that the crime-fraud exception applied due to the probable cause of fraudulent conduct.

Who won?

The plaintiffs, Amusement Industry, Inc. and Practical Finance Co., Inc., prevailed in their motion to compel discovery based on the court's finding of probable cause for fraud.

The plaintiffs, Amusement Industry, Inc. and Practical Finance Co., Inc., prevailed in their motion to compel discovery based on the court's finding of probable cause for fraud.

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