Greenfield Prop Owner II, LLC v. Bouldin & Lawson, LLC And Bouldin Corporation

Background

This discovery order concerns Greenfield Prop Owner II, LLC’s negligence lawsuit arising from a fire at its property, described as a cannabis-production facility. The plaintiff alleges that defendant Andrew Crawford failed to extinguish a cigarette that started the fire. The plaintiff asserted a lost-income claim.

Crawford requested the plaintiff’s tax returns for 2017 through 2020. He served the requests on September 9, 2022, and the response deadline was October 10, 2022. The plaintiff responded on March 5, 2023, and asserted that California law protected the tax records from disclosure.

Parties’ Positions

Crawford did not argue that the tax returns were not privileged or that the plaintiff’s lost-income claim independently made them discoverable. Instead, he argued that the plaintiff’s failure to respond on time waived all objections, including privilege.

The plaintiff argued that California law protects tax returns and that it had produced financial records relevant to its lost-rent claim. It also argued that the late response caused no prejudice because the relevant financial information had been disclosed.

Court’s Analysis

Because this is a diversity case, the court applied state law to the privilege question. It concluded that, under California law, the tax returns were privileged. The court noted that the privilege is not absolute and may be waived through intentional relinquishment, through a lawsuit fundamentally inconsistent with continuing to claim the privilege, or when a stronger public policy requires disclosure. Crawford relied only on alleged waiver from the late discovery response and did not assert the latter two grounds.

The court found no indication that the plaintiff intentionally relinquished the privilege. It also assumed, without deciding that the order says the assumption was necessary, that a good-cause standard applied to the late objection. The court found good cause based on the privileged and unusual nature of the request, the absence of bad faith, the lack of prejudice, the plaintiff’s production of relevant financial information, and the absence of a showing that the tax returns’ relevance outweighed the privilege.

Disposition

The court concluded that the plaintiff had not waived the tax-return privilege and denied Crawford’s motion to compel. The order states that this resolved ECF No. 105.