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Malbco Holdings, LLC v. Patel

United States District Court, District of Oregon

May 13, 2015

MALBCO HOLDINGS, LLC, a Washington limited liability company, Plaintiff,
v.
BHUPENDRA PATEL and NILA PATEL; HEETAN PATEL and HEETAL PATEL-MANANI; and MUKESH PATEL, Defendants.

OPINION AND ORDER

PAUL PAPAK UNITED STATES MAGISTRATE JUDGE

Plaintiff Malbco Holdings, LLC ("Malbco") brings this diversity action against defendants alleging fraudulent transfer in violation of Oregon law. Now before the court is Maibco's Motion to Compel (#67) pursuant to Federal Rule of Civil Procedure ("Rule") 37. For the reasons that follow, Maibco's motion is granted in part and denied in part.

BACKGROUND

I adopt the facts set forth in my previous Opinion and Order (#41) in this case, Additionally, for the purposes of this motion, I adopt in part the facts set forth by Malbco in its Motion to Compel (#67).

LEGAL STANDARD

I. Motions to Compel

A motion to compel discovery may be appropriate if a party "fails to answer an interrogatory submitted under Rule 33" or, alternatively, "fails to permit inspection" of records requested pursuant to Federal Rule of Civil Procedure ("Rule") 34. Fed.R.Civ.P. 37(a)(3), Federal courts sitting in diversity are charged with applying the law of the forum state when determining whether a holder has waived the right to claim the attorney-client privilege. Tennenbaum v. Deloitee & Touche, 77 F.3d 337, 340 (9th Cir. 1996).

II. The Attorney-Client Privilege

The Oregon Supreme Court has explained that the purpose of the attorney-client privilege "is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice." State ex rel OHSU v. Haas, 325 Or. 492, 500, 942 P.2d 261 (1997) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981)). However, the privilege is not absolute, as a client may waive it voluntarily, OEC 511 Haas, 325 Or. at 498, 942 P.2d 261, and OEC 503 creates exceptions to it.

DISCUSSION

Malbco moves to compel there broad categories of evidence: (1) communications between Defendants Bhupendra and/or Nila Patel and their attorneys that Defendants argue are protected by the attorney-client privilege; (2) communications between Bhupendra and/or Nila Patel and their attorneys in which Heetan and/or Heetal Patel were included; and (3) communications between Sundhara Linton, accountant for Defendants, and Defedants Bhupendra and Nila Patel's attorney. Malbco's arguments supporting their motion are that those categories of evidence are exempted from their various privileges for the following reasons: (1) the first category of communications is exempted from the attorney-client privilege based on the crime-fraud exception; (2) the second category of communications is exempted from the attorney-client privilege due to the inclusion of Heetan and/or Heetal Patel, who were not technically clients of the attorneys included therein; and (3) the third category of communications is exempted from the attorney-client privilege because no client was included in the communications. Additionally, Malbco moves to compel several miscellaneous categories of communications on the basis that Defendants' assertion of the attorney-client privilege is too broad. I address each category and each argument below.

I. Crime-Fraud Exception

The party seeking to invoke the crime-fraud exception to the attorney-client privilege must affirmatively show "that the client, when consulting the attorney, knew or should have known that the intended conduct was unlawful, " State ex rel. ...


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