Bigham v. R&S Heating and Air Conditioning, Inc.

Background

On April 21, 2017, the court entered a default judgment against R & S Heating and Air Conditioning, Inc. in favor of the Sheet Metal Local #10 Control Board Trust Fund and the listed trustees. The judgment totaled $2,058,871.10, including delinquent benefit contributions, liquidated damages, interest, and attorney’s fees and costs. The opinion states that R&S had made no payments toward the judgment.

To collect the judgment, plaintiffs served discovery on R&S and deposed its owner, Brett Thielen. Plaintiffs then sought discovery from Agape Mechanical LLC and Philos Mechanical LLC, which the opinion states were owned and controlled by Brett’s brother, Scott Thielen. The discovery concerned transactions involving R&S, including R&S’s May 2016 sale of vehicles and trailers to Philos, payments under a promissory note, work involving Agape, and judgments Agape obtained against R&S. Plaintiffs also sought documents from the law firm representing Agape and Philos.

Plaintiffs moved to compel responses to several discovery requests and challenged claims of attorney-client privilege and work-product protection. They also sought permission to conduct additional depositions of Philos and Agape.

Post-judgment discovery

Federal Rule of Civil Procedure 69(a)(2) allows a judgment creditor to obtain discovery from the judgment debtor or another person. The court held that plaintiffs were entitled to reasonable discovery into R&S’s assets. It relied on evidence showing close relationships and transactions among R&S, Brett, Philos, Agape, and Scott. The court described the transactions and garnishments as raising questions about whether R&S’s assets had been transferred into the related companies’ sphere of control and held that plaintiffs could investigate where those assets went.

Privilege and work product

Attorney-client privilege protects confidential communications between a lawyer and client, but it does not protect the underlying facts. The work-product doctrine generally protects materials prepared because of anticipated litigation; ordinary work product may be discoverable on a showing of substantial need and inability to obtain an equivalent by other means. Opinion work product, such as legal theories and mental impressions, receives stronger protection.

The court found the privilege log inadequate under Federal Rule of Civil Procedure 26(b)(5)(A)(ii). The log generally identified the withheld items only as emails and did not provide enough information for plaintiffs or the court to evaluate the privilege claims. It also did not clarify whether the lawyers were representing Agape, Philos, or both, or identify authors for certain draft documents and deposition notes.

The court ordered an in-camera review—that is, a private review by the judge—of documents withheld under attorney-client privilege or the work-product doctrine, except for the notes concerning Brett Thielen’s deposition. Respondents were ordered to reconsider their privilege claims and, within 10 days, submit an updated privilege log and the withheld documents to the court ex parte, meaning without immediate disclosure to plaintiffs. The court stated that it would later issue a summary order addressing whether documents had to be produced.

The court separately held that the draft bill of sale and draft resolution for the purchase agreement had to be disclosed. It reasoned that the documents had been exchanged during negotiations between attorneys representing adverse parties, so any attorney-client protection had been waived by disclosure to third parties. The court also rejected work-product protection because the documents concerned an ordinary business transaction rather than materials prepared because of litigation. The court did not compel production of the deposition notes because plaintiffs had not argued for that document in their briefing.

Additional depositions

The court reviewed the deposition transcripts and found that Scott, while testifying as Philos’s representative, refused to answer questions about Philos’s assets, business plan, formation, employees, and customers. The court held that the refusals were not based on privilege or another permissible ground under Rule 30(c)(2). It also found that attorney William Topka improperly encouraged the refusals while denying that he instructed Scott not to answer.

The court authorized six additional hours of deposition time for each of Philos and Agape. It warned that failure to comply with the order could be treated as contempt under Rule 37.

Disposition

Judge Donovan W. Frank ordered that plaintiffs’ motion to compel, Doc. No. 96, was GRANTED as discussed herein. The order required additional post-judgment discovery, directed the privilege-log and in-camera-review process, required disclosure of the draft purchase documents, and allowed additional deposition time for Philos and Agape.