Kora & Williams Corp.

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Entered: January 13,2008 Case 88-41402 Doc 713 Filed 01/13/06 Page1of4

Date signed J anuary 12, 2006

Cul Manne—

PAUL MANNES
U. 8. BANKRUPTCY JUDGE
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt

Kora & Williams Corp. : Case no. 88-41402-PM
Chapter 7

MEMORANDUM OF DECISION

Insurance Company of North America (“INA”) filed a Motion to Compel Production of
Documents from Chapter 7 Trustee William B. Sullivan and Equity Holder Ira Steinberg on
November 11, 2005 (the “Motion”). In the Motion, INA sought to compel the production of
approximately 120 documents from the Trustee and Steinberg in connection with an objection to
claim proceeding. ‘The documents were withheld by the Trustee and Steinberg based upon an
assertion of a “joint defense/common interest privilege.” Both the Trustee and Steinberg
opposed INA’s Motion. Upon consideration of the Motion and the opposition thereto, and.
having held a hearing on the Motion on December 21, 2005, the Court will deny the Motion.

The “common interest” or “joint defense” privilege asserted by the Trustee and Steinberg

is an extension of the attomey-client privilege and “presupposes the existence of an otherwise

1 	One commentator argues that the “allied lawyer doctrine” applies when parties with separate
lawyers consult, as appears to have been the situation in the case at bar, whereas the “joint client doctrine”
or “joint defense privilege” applies when two clients share the same lawyer. 	24 Charles Alan Wright &
Kenneth W. Graham, Federal Practice and Procedure, sec. 5943 (1986 Supp.2005). The commentator further
states: “To make matters even worse, some courts have combined the work product doctrine, the allied lawyer
doctrine, and the joint client exception into something that resembles a separate privilege called “the common
interest privilege.” Id.
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valid privilege.” 1 See In re Grand Jury Subpoenas, 89-3 & 89-4, 902 F.2d 244, 249 (4th Cir.
1990) . In Grand Jury Subpoenas, the Fourth Circuit recognized that “persons who share a
common interest in litigation should be able to communicate with their respective attorneys and
with each other to more effectively prosecute or defend their claims” without waiving privileged
attorney-client communications. Id. For the privilege to apply, the common interest must be
legal in nature. See Sheet Metal Workers Inten. Ass’n. v. Sweeney, 29 F.3d 120, 124 (4th Cir.
1994); In re Asia Global Crossings, Ltd., 322 B.R. 247, 264 (Bankr. S.D.N.Y. 2005) (“The
doctrine is limited to situations where multiple parties are represented by separate counsel but
share a common interest about a legal matter.”). In addition, as with any claim of attorney-client
privilege, the party asserting the claim must establish that the communication was made in
confidence, and under circumstances that made it objectively reasonable for the client to believe
that the communication was confidential. Asia Global, 322 B.R. at 264 (citing United States v.
Schwimmer, 892 F.2d 237 (2nd Cir. 1989).
Despite the concept that privileges, including the attorney-client privilege, are not
favored, In re Allen, 106 F.3d 582, 600 (4th Cir. 1997) (citing United States v. Aramony, 88 F.3d
1369, 1389 (4th Cir. 1996), the Court has determined to deny the motion to compel the
documents. In their oppositions to the Motion, the Trustee and Steinberg state that they
communicated with each other and their respective attorneys for the purpose of pursuing their
Case 88-41402 Doc 713 Filed 01/13/06 Page 2 of 4

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individual objections to INA’s claim. The Trustee and Steinberg argue that they share a
common legal interest in pursuing the objections to INA’s claim in that they both seek to reduce
INA’s claim. In addition, the Trustee and Steinberg entered into a “Common Interest
Agreement” at approximately the same time the objections to INA’s claim were filed, and the
Agreement reflects the parties’ intention to act cooperatively in pursuing their objections to
INA’s claim.
INA argues that the Trustee cannot share a common interest with Steinberg given
Steinberg’s position as the sole equity holder of the Debtor and the Trustee’s obligation to
represent the entire estate. The parties did not cite case law on point in support of, or in
opposition to, this argument. Because of the possibility of the creation of a precedent dealing
with arrangements between trustees and creditors affecting other similarly-situated creditors, the
Office of the United States Trustee was invited to participate in the argument of this issue but
declined the invitation.
Here, the Trustee determined that cooperating with Steinberg will assist in the Trustee’s
prosecution of his objection to INA’s claim, and the potential reduction of INA’s claim benefits
the estate as a whole, and, incidentally, Steinberg as the sole equity holder.
The Trustee and Steinberg properly asserted a joint defense/common interest privilege.
An appropriate order will be entered.
cc: 	Debtor
Debtor’s counsel
Chapter 7 Trustee
Chapter 7 Trustee’s counsel
United States Trustee
Case 88-41402 Doc 713 Filed 01/13/06 Page 3 of 4

Case 88-41402 Doc 713 Filed 01/13/06 Page 4 of 4
End of Memorandum Decision
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