MERCO GROUP OF THE PALM BEACHES, INC., PETITIONER,
v.
JOHN G. MCGREGOR, DAVID GHYSELS, DAVID SARAGA, HARJAS CHATWAL, MARK BENNETT, KEVIN R. MACKEY, MICHAEL L. MACKEY, CYNTHIA RAFTIS, ANASTASIA RAFTIS, SPIRO RAFTIS, GREGORY PILL, RICHARD HOFFMAN, SHARON HOFFMAN, BRUCE PINCHERON, THOMAS FASSO, JR., DANIEL KOHN, BARBARA KOHN, DIANE MALHORTRA, VIKRANT MALHORTA, AND MARUICE BASSALI, RESPONDENTS
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The court held that a party asserting the crime-fraud exception to attorney-client privilege must afford the privilege holder an evidentiary hearing to explain their conduct or communications.
[1] Due process requires an evidentiary hearing when the crime-fraud exception to the attorney-client privilege is invoked.
[2] A party asserting the attorney-client privilege has the right to present a reasonable explanation for conduct or communications after a prima facie showing of the crime-f…
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Join FLexlaw to unlock all legal intelligencePlaintiffs sought discovery in aid of execution and served subpoenas on defendant's lawyers for documents related to fund treatment and location. The …
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Petitioner, Merco Group of the Palm Beaches, Inc., defendant below, seeks cer-tiorari review of the trial court’s order compelling production of various documents to respondent, John G. McGregor, David Ghysels, et al., plaintiffs below (“plaintiffs”). Petitioner claims that the court ordered production of attorney-client privileged documents based upon the crime-fraud exception without affording petitioner an evidentiary hearing to explain the prima facie case established by plaintiffs. We agree that the court departed from- the essential requirements of law by failing to conduct an evidentiary hearing on the issue.
Seeking discovery in aid of execution of plaintiffs’ judgment against Merco, plaintiffs served third-party subpoenas for production of documents on Merco’s lawyers. The subpoenas sought documents related to the treatment and the location of certain funds, which were deposited into Merco’s lawyers’ trust account.
Merco filed objections to the subpoenas, raising multiple grounds, including attorney-client privilege. In addressing the objections at a hearing, the court overruled them except for the attorney-client privilege. It ordered the production of the documents for an in camera inspection, directing Merco to provide a privilege log specifying the privilege claim as to each document. The court held an additional hearing to clarify the relevance of some documents. Thereafter, and without further hearing, the court entered an order requiring production of the documents on the grounds that the record showed prima facie evidence that Merco “used its attorney/client relationship with [its lawyers] to promote an intended or actual fraud on the Plaintiffs and upon the Court in an effort to conceal assets” which were otherwise *51discoverable. The court ordered production of the documents.
Merco petitions for certiorari to quash this order, claiming that the court departed from the essential requirements of law by failing to provide it with an evidentiary hearing to offer its reasonable explanation of its conduct or communications. We agree that due process requires an evidentiary hearing when the crime-fraud exception is invoked. See BNP Paribas v. Wynne, 967 So.2d 1065, 1068 (Fla. 4th DCA 2007) (“[AJpplying the crime-fraud exception without an evidentiary hearing is a departure from the essential requirements of law”).
In American Tobacco Co. v. State, 697 So.2d 1249 (Fla. 4th DCA 1997), we adopted a formal procedure for determining whether the crime-fraud exception applies. Significantly, we held that evaluating the exception requires an adversarial proceeding that would allow both parties to present evidence and argument on the issue. Id. at 1255-56. Following American Tobacco, in BNP Paribas we explained that:
The party invoking the crime-fraud exception has the initial burden of presenting prima facie evidence of the existence of the exception. [Am. Tobacco, 697 So.2d] at 1256. The burden then shifts to the party asserting the attorney-client privilege to show, by a preponderance of the evidence, that there is a reasonable explanation for the conduct or communication. Id.
If the court accepts the explanation as sufficient to rebut the evidence presented by the party opposing the privilege, then the privilege remains. However, if after considering and weighing the explanation the court does not accept it, then a prima facie case exists as to the exception, and the privilege is lost. Thus, the trial court must consider the evidence and argument rebutting the existence of the crime-fraud exception and must weigh its sufficiency against the case made by the proponent of the exception.
Id. What is apparent from American Tobacco is that an evidentiary hearing is necessary before the court can find the crime-fraud exception to the attorney-client privilege.
Id. at 1067-68.
This evidentiary hearing should occur after the court determines that the prima facie showing of the crime-fraud exception has been established. In Butler, Pappas, Weihmuller, Katz, Craig, LLP v. Coral Reef of Key Biscayne Developers, Inc., 873 So.2d 339, 342 (Fla. 3d DCA 2003), the Third District explained that the court can review attorney-client communications in camera to determine the applicability of the crime-fraud exception, and its decision to conduct such a review lies entirely within its sound discretion. It added that “[i]f the trial court determines that the crime-fraud exception applies, the client is entitled to provide a reasonable explanation for the communication or its conduct at an evidentiary hearing[.]” Id. (citing First Union Nat’l Bank v. Turney, 824 So.2d 172, 183 (Fla. 1st DCA 2001)). Thus, Merco was entitled to an evidentiary hearing after the court conducted its in camera review and determined that the exception applied.
Because the trial court failed to afford Merco an opportunity through an eviden-tiary hearing to explain the documents and why the fraud exception should not apply, it departed from the essential requirements of law. We thus quash the order and direct that the trial court conduct a *52hearing pursuant to American Tobacco Co., BNP Paribas, and Butler Pappas.
DAMOORGIAN, C.J., and KLINGENSMITH, J., concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Fla. Power & Light Co. v. Hicks, 162 So. 3d 1074 (Fla. 4th DCA 2015)…circuit court sustained the privilege objections and did not make a finding that the crime-fraud exception applied; to do so would have required an evidentiary hearing after the in camera review. See Merco Grp. of the Palm Beaches, Inc. v. McGregor, 162 So. 3d 49, 39 Fla. L. Weekly D1594, 2014 WL 3729906 (Fla. 4th DCA July 30, 2014). TAYLOR and CONNER, JJ., concur.…
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Michael Brannon, Psy.D., & Amlong & Amlong, P.A. v. Palcu, 177 So. 3d 693 (Fla. 4th DCA 2015)…he trial court was required to conduct an evidentiary hearing before ordering the production. • We grant the petition, quash the order, and direct the trial court to conduct an evidentiary hearing. Merco Grp. of the Palm Beaches, Inc. v. McGregor, 162 So. 3d 49 (Fla. 4th DCA 2014); BNP Pari-bas v. Wynne, 967 So. 2d 1065, 1068 (Fla. 4th DCA 2007); Am. Tobacco Co. v. State, 697 So. 2d 1249 (Fla. 4th DCA 1997). As we explained in the above cited cases, the failure to afford petitioners an evidentiary hearing…
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Douberley v. Perlmutter, 219 So. 3d 854 (Fla. 4th DCA 2017)…on his due process argument and quash the order on that basis. Florida courts have held that due process requires an evidentiary hearing to determine applicability of the crime-fraud exception. See Merco Group of the Palm Beaches, Inc. v. McGregor, 162 So. 3d 49, 51 (Fla. 4th DCA 2014). Here, the attorney was denied due process when the court found that his conduct was fraudulent without offering him an opportunity to be heard. See Carmona v. Wal-Mart Stores, East, LP, 81 So. 3d 461 (Fla. 2d DCA 2011); Clar…
Authorities Cited
- Howard v. State, 697 So. 2d 1249 (Fla. 2d DCA 1997)
- First Union Nat'l Bank v. Turney, 824 So. 2d 172 (Fla. 1st DCA 2001)
- Butler v. Coral Reef OF KEY Biscayne Developers, Inc., 873 So. 2d 339 (Fla. 3d DCA 2003)
- BNP Paribas v. Wynne, 967 So. 2d 1065 (Fla. 4th DCA 2007)