Subpoenas to non-parties OK in real estate dispute

Where a company sued for allegedly breaching an agreement sell a 26-acre parcel of land moved to quash subpoenas sent to non-parties, its motion was largely denied. The subpoenas were sent for a good reason, were non-cumulative and sought relevant information.

Background

The Reserve at Winchester I LLC and Robert Cathcart allege that R 150 SPE LLC breached an agreement in which defendant agreed to sell Cathcart a roughly 26-acre portion of a 150-acre parcel. This matter is before the court on R 150 SPE LLC’s motion to quash subpoenas duces tecum served on nonparties The Bank of Clarke County; Cushman & Wakefield of Virginia Inc; Fundamental Advisors L.P.; Marsh & Legge Land Surveyors P.L.C.; MMA Capital Corporation and Hunt Companies Inc.

Good reason

Plaintiffs explain they issued the subpoenas in part because of defendant’s widespread objections to their discovery requests. Although defendant has produced some documents, and has recently been ordered to produce more, defendant has not identified any documents, other than one plaintiffs attached to their filings, that fall under plaintiffs’ subpoenas and are supposedly duplicative of defendant’s production.

But even if some of plaintiffs’ discovery requests were properly objected to, it is indisputable that at least some of the documents sought are relevant and non-privileged. Yet, defendant neither explained what documents were being withheld based on its objections, nor did it turn over any documentation that clearly would not be encompassed by its objections. I find that plaintiffs had a “good reason” to issue the subpoenas.

Privilege

Defendant has not properly supported its privilege and confidentiality objections. Defendant makes only two specific arguments: one, that the bank necessarily “would receive and hold confidential information pertaining to its borrower,” and two, that “the subpoena to Fundamental, which holds ownership interest in R 150, improperly requests communications discussing the ongoing litigation.”

The bank likely has confidential financial information about the defendant, but that information is not “privileged” in the sense that it is protected from compelled disclosure under Rule 26. Instead, such information may be subject to certain limitations on its use, and, indeed, a protective order entered in this case, provides those limitations.

Additionally, communications about the litigation are not protected from disclosure as privileged unless they are attorney work product or attorney-client communications. Defendant has not made an adequate showing that any specific document or category of documents falls within those categories of privileged materials. Accordingly, defendant’s general assertions of privilege must be rejected.

Relevance

Defendant also contends that the subpoenas request irrelevant information and are not tailored to the claims and defenses in this action. Regarding the subpoena to the bank, plaintiffs allege that by obtaining the loan, defendant encumbered the sale property without notice to or consent from plaintiffs, thereby willfully breaching the agreement. As a result, information about defendant’s reasons for obtaining the loan and information about the project property that was shared with the bank are relevant to the claims, including potential damages, and defenses in the case.

Regarding the subpoena to Cushman & Wakefield of Virginia Inc, defendant’s efforts to market, advertise or sell the project property may provide information about the alleged sale property. Additionally, expressions of interest, proposals, offers or agreements related to the sale property could reflect defendant’s willingness to fulfill its obligations under the agreement.

Regarding the subpoena to Fundamental, defendant objects only that the subpoena is duplicative of discovery requests plaintiffs propounded on defendant and its general assertion that the information sought is privileged, As discussed above, these arguments are without merit.

Defendant’s only arguments with respect to the Marsh & Legge subpoena are that it is repetitive of discovery requests plaintiffs have propounded on defendant and that it seeks irrelevant information. The court rejects these arguments, other that the subpoena shall be modified to remove survey or other information about portions of the project property that do not relate to the sale property.

The only specific arguments defendant makes about the subpoenas to MMA and Hunt concern the protection of purportedly privileged materials and the burden on non-parties. Those arguments were addressed above. Moreover, MMA and Hunt are alleged to have been closely involved in the negotiation and performance of the agreement.

Defendant’s motion to quash subpoenas duces tecum granted in part, denied in part.

The Reserve at Winchester I LLC v. R 150 SPE LLC, Case No. 3:21-cv-00008, Sept. 30, 2022. WDVA at Charlottesville (Hoppe). VLW 022-3-450. 16 pp.