ABN Corporation v. Groupe Pelm International Corporation

Background

At a September 16, 2025 hearing, the court and the parties discussed whether Plaintiffs might seek default judgment against Christian Pellegrini and Groupe PELM International Corporation, which the order collectively calls the “GP Defendants.” The discussion arose while the court was considering Plaintiffs’ motion to compel discovery from non-defaulted Defendants Victoria Brieant and her law office, collectively called “Brieant.” Plaintiffs seek to rely on the crime-fraud exception to attorney-client privilege, but the court had not yet decided whether that exception applied.

Plaintiffs’ counsel stated that his research suggested it might not be proper to seek default judgment against only some defendants while other defendants remained active. The court noted that the parties had not fully briefed that issue. The court also observed that deciding whether Plaintiffs had sufficiently alleged fraud by the GP Defendants could effectively decide an important merits question outside the scope of the discovery referral to the magistrate judge.

Questions for Supplemental Briefing

The court directed the parties to address three questions:

1. Whether an early default-judgment motion is proper and advisable. The court discussed Ninth Circuit authority stating that, when defendants are jointly liable, judgment generally should not be entered against a defaulting defendant until the case has been adjudicated against the other defendants. The court noted uncertainty about whether that principle always prevents consideration of a default-judgment motion before the claims against active defendants are resolved.

2. What effect the GP Defendants’ default has on privilege. Plaintiffs argued that allegations against defaulting defendants are treated as admitted, including allegations that the GP Defendants committed fraud. Brieant argued that one party should not lose the ability to defend itself merely because another party defaulted. The court noted that Brieant asserts the GP Defendants’ privilege on their behalf and asked whether the GP Defendants’ admissions could properly be used to establish an exception to that privilege.

3. Whether attorney-client privilege applies in the first place. Under the court’s discussion of California law, the party claiming privilege must first make a preliminary showing that the communications were confidential communications made during an attorney-client relationship and for legal consultation. The court emphasized that privilege generally does not protect communications made when an attorney acts only as a negotiator, business adviser, business agent, or conduit for conveying a client’s position.

Brieant described her involvement as limited to verifying proof of funds and facilitating communications concerning inspection of the product. Based on that description, the court stated that her primary role appeared to have been that of a business agent or “mere conduit,” rather than a provider of legal services. The court therefore stated that it was difficult to see how most communications with the GP Defendants regarding the transaction would be privileged, while recognizing that individual communications seeking or providing legal advice might still be protected.

Other Discovery Guidance

The court criticized the parties’ briefing as containing hundreds of pages of largely duplicated legal argument and insufficient citations to supporting evidence. It stated that the parties had misunderstood the local rule governing motions to compel further discovery responses and that the rule did not authorize separate statements or excuse compliance with page limits.

The court also identified a dispute about whether Brieant or her law office possessed, had custody or control of, or had a legal right to obtain the requested documents. Brieant contended that the requested materials were within the GP Defendants’ possession and that she had already produced all non-privileged documents in her possession, custody, or control. The court directed Brieant to provide a declaration specifically describing her efforts to review materials in her possession for responsive records and, if none remained, to attest to that fact under penalty of perjury. The court did not set a deadline for that declaration because the privilege issue remained unresolved. The court likewise stated that Plaintiffs would need to provide further factual support if they continued to argue that Brieant or her law office possessed or controlled additional non-privileged records.

Disposition

This order did not grant or deny the motion to compel and did not decide whether default judgment should be entered. Instead, Judge A. J. Cisneros ordered the parties to file simultaneous supplemental briefs by September 24, 2025. Each side was limited to one brief of no more than six pages addressing the three questions identified in the order. The court also ordered Brieant and her law office to preserve potentially responsive documents in their custody or control while the discovery dispute and litigation continued.