United States District Court, D. South Carolina, Charleston Division
LARRY S. MCDEVITT, as Trustee of the Wellin Family 2009 Irrevocable Trust, Plaintiff,
PETER J. WELLIN, CYNTHIA W. PLUM, and MARJORIE W. KING, Individually and as Co-Trustees, Distribution Committee Members, Investment Committee Members, and Beneficiaries of the Wellin Family 2009 Irrevocable Trust; FRIENDSHIP MANAGEMENT LLC; and CYNTHIA W. PLUM, as Manager of Friendship Management LLC, Defendants. PETER J. WELLIN, CYNTHIA W. PLUM, and MARJORIE W. KING, as Co-Trustees of the Wellin Family 2009 Irrevocable Trust, Counterclaim Plaintiffs,
LESTER S. SCHWARTZ, as Trust Protector of the Wellin Family 2009 Irrevocable Trust u/a/d/ November 2, 2009; and WENDY C.H. WELLIN, as Special Administrator of the Estate of Keith S. Wellin, Counterclaim Defendants.
C. NORTON UNITED STATES DISTRICT JUDGE
matter is before the court on the Report and Recommendation
("R&R") of Special Master William L. Howard
recommending that plaintiff Larry S. McDevitt's
("McDevitt") motion to compel be denied, ECF No.
348. For the reasons set forth below, the court adopts the
R&R with modifications and denies the motion to compel.
the parties are well-acquainted with this case, the court
will dispense with a recitation of facts and include only a
procedural history of the matters at hand.
7, 2014, Lester S. Schwartz ("Schwartz") filed a
motion compel seeking the production of certain information
and documents from defendants Peter J. Wellin, Cynthia W.
Plum, and Marjorie W. King (collectively, "the Wellin
Children"). ECF No. 83. The motion was ratified by
McDevitt upon his substitution as party-plaintiff in this
action. The Special Master held a hearing on April 21, 2015
and heard arguments on several motions, including
McDevitt's motion to compel. At that hearing, the Special
Master instructed the parties to submit supplemental briefing
on the privilege issue that is the subject of this order.
meantime, on July 2, 2015, the Special Master issued his
Report & Recommendation ("R&R") on the
matters argued at the April 21, 2015 hearing, with the
exception of the privilege issue on which the parties
submitted supplemental briefing. ECF No. 316. The Special
Master subsequently issued an amended R&R on July 31,
2015, ECF No. 329, but this amended R&R still did not
address the privilege issue in the supplemental briefing. The
parties filed objections to the amended R&R, and the
court issued on order on the objections on September 30,
2015. ECF No. 360.
parties submitted their supplemental briefings in May and
June of 2015, and the Special Master held a hearing on the
briefings on August 5, 2015. On August 28, 2015, the Special
Master issued an R&R on the supplemental briefing. ECF
No. 345. The R&R considered whether communications
between the Wellin Children and their current legal counsel,
Nelson Mullins Riley and Scarborough ("Nelson
Mullins"), should be produced pursuant to the fiduciary
exception to the attorney-client privilege in the context of
a co-trustee. The R&R aptly summarized the arguments
before the Special Master, stating:
In this motion, Plaintiff McDevitt argues that he is entitled
to the privileged communications between the Defendant Wellin
Children, serving as trustees under the Wellin Family 2009
Irrevocable Trust, and their current legal counsel, Nelson
Mullins, based upon his status as a co-trustee.
Defendants acknowledged in their answer to interrogatories
that they received advice from their current counsel in
making the decision to sell the BRK stock and distribute the
proceeds, and in the handling of the transaction following
the events of November 20, 2013. Plaintiff McDevitt asserts
that these transactions involve matters of trust
administration, and as a co-trustee, he is entitled to have
access to the attorney-client communications between Nelson
Mullins and his co-trustees, the Defendant Wellin children.
345 at 3. The R&R began its consideration of this issue
by first determining that South Dakota privilege law applied
to the privilege analysis. The R&R then explained that
South Dakota has not adopted or rejected a fiduciary
exception to attorney-client privilege, but that even if
South Dakota did recognize the exception, it would not apply
here. The R&R determined that the exception only applied
to attorney-client communication related to trust
administration and not to advice sought by in a trustee in a
personal capacity that is unrelated to trust administration.
The R&R also determined that the exception does not apply
once a trustee has become clearly adverse to a co-trustee.
The R&R found that the Wellin Children obtained advice
from Nelson Mullins "regarding their defense in the
adversarial legal proceedings commenced by Keith Wellin, and
specifically, in relation to their sale of trust assets and
distribution of those assets from the trust, " and that
advice was "procured for the benefit of the Defendants,
and not for the benefit of their adversary."
Id. at 13. The R&R then explained that the
advice that the Wellin Children received from Nelson Mullins
after Keith Wellin filed suit against them is
"inextricably intertwined with the actions [the Wellin
Children] took regarding the assets of the trust, " and
as such any advice regarding the trust assets is not
separable for disclosure. Id. In conclusion, the
R&R concluded that a fiduciary exception did not apply
and recommended that the court deny McDevitt's motion to
and Schwartz filed objections to the R&R on September 17,
2015. ECF No. 348. The Wellin Children filed their response
to the objections on October 15, 2015, ECF No. 375, and
McDevitt and Schwartz filed a reply on October 30, 2015. ECF
No. 389. The court has not yet issued an order on these
objections and takes the opportunity to do so now.
reviewing a special master's order, report, or
recommendation, the court may "adopt or affirm, modify,
wholly or partly reject or reverse, or resubmit to the master
with instructions." Fed.R.Civ.P. 53(f)(1). The court is
required to review all objections to any findings of fact or
conclusions of law made or recommended by a special master
de novo. Fed.R.Civ.P. 53(f)(3), (4). However, the
special master's rulings on procedural matters will only
be set aside for abuse of discretion. Fed.R.Civ.P. 53(f)(5).
Federal Rules of Civil Procedure provide that a party may
"obtain discovery regarding any non-privileged matter
that is relevant to any party's claim or defense,
including the existence, description, nature, custody,
condition and location of any books, documents or other
tangible things and the identity and location of persons who
know of any discoverable matters." Fed.R.Civ.P.
26(b)(1). "The court may, for good cause, issue an order
to protect a party or person from annoyance, embarrassment,
oppression, or undue burden or expense" by forbidding or
limiting the scope of discovery. Fed.R.Civ.P. 26(c)(1).
"The scope and conduct of discovery are within the sound
discretion of the district court." Columbus-Am.
Discovery Grp. v. Atl. Mut. Ins. Co., 56 F.3d 556, 568
n.16 (4th Cir. 1995) (citing Erdmann v. Preferred
Research, Inc. of Ga.,852 F.2d 788, 792 (4th Cir.