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Bennett v. CIT Bank, N.A.

United States District Court, N.D. Alabama, Southern Division

January 9, 2020

JEANETTE BENNETT, et al., Plaintiffs,
v.
CIT BANK, N.A., et al., Defendants.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         This dispute over insurance proceeds comes before the court on Plaintiffs Jeanette Bennett's and Maggie Bell's motion to compel Defendants CIT Bank, N.A. and CIT Group, Inc. to produce documents and the supplement to that motion. (Docs. 82 and 100).

         CIT and the other Defendant in this case, Federal National Mortgage Association, shared with each other emails containing legal advice from their respective counsel. CIT withheld those emails from discovery on asserted grounds of attorney-client privilege. Plaintiffs move the court to compel CIT to produce the emails because, according to Plaintiffs, CIT and Fannie Mae waived the attorney-client privilege over the emails by sharing the emails with each other.

         As explained below, the court will deny the motion to compel because an exception to the rule that a party waives the attorney-client privilege by disclosing privileged communications with a third party-Alabama's so-called “common interest doctrine”-applies to the facts of this case. Under the common interest doctrine, CIT and Fannie Mae did not waive the attorney-client privilege over the emails from their counsel by sharing the emails with each other because CIT and Fannie Mae shared a common legal interest in the matters discussed in those emails.

         I. STANDARD OF REVIEW

         State law governs the attorney-client privilege in this case. Federal Rule of Evidence 501 provides that “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” The party asserting the attorney-client privilege bears the burden of establishing “the existence of an attorney-client relationship as well as other facts demonstrating the claim of privileged information.” Lynch v. Hamrick, 968 So.2d 11, 14 (Ala. 2007). And the court looks at all of the evidence presented to determine whether communications are privileged. Exxon Corp. v. Dep't of Conservation & Nat. Res., 859 So.2d 1096, 1103 (Ala. 2002).

         II. BACKGROUND

         A. Facts

         Plaintiffs inherited a house from their mother, Catherine Getaw, after she passed away in 2015. CIT, who serviced a reverse mortgage loan secured by a mortgage recorded against the house, foreclosed on the mortgage and scheduled a foreclosure sale for November 2, 2015.

         A few days before the foreclosure sale, a fire damaged the house. Plaintiffs filed a claim for the fire damage against an insurance policy issued by Foremost Insurance Company that covered the house.

         Subsequently, Fannie Mae purchased the house at the foreclosure sale. Fannie Mae, through the law firm of Rutledge & Associates, also filed a claim for the fire damage against the Foremost policy. So both Plaintiffs and Fannie Mae submitted claims for the same damage to the same property under the same insurance policy.

         On February 22, 2016, Foremost sent attorney Rutledge a check for $62, 262.13 made payable to “Financial Freedom, a Division of Onew [sic] Estate of Catherine Getaw.” Rutledge sent the check to CIT, which was then doing business as Financial Freedom. CIT then deposited the check into its bank and sent all of the $62, 262.13 to Fannie Mae.

         Plaintiffs assert that CIT had no right to unilaterally deposit the check. After the court granted in part CIT's motion to dismiss and granted in full former defendant Foremost's motion to dismiss, two of Plaintiffs' claims in their amended complaint remain pending in this case: (1) declaratory judgment that only Plaintiffs are entitled to the insurance proceeds; and (2) conversion against Fannie Mae for allegedly wrongfully retaining the insurance proceeds.

         B. The Two Documents at Issue in the Motion to Compel

         In discovery, CIT withheld several documents from production and redacted information from produced materials on grounds of various privileges. CIT identified those withheld documents and redacted information on a privilege log and a supplemental privilege log. Plaintiffs originally moved to compel CIT to produce a large number of those withheld documents and redacted materials. But, following a hearing and several discussions between the parties, Plaintiffs narrowed their motion to compel down to two documents that the court reviewed in camera. The court describes these two documents below.

         1. The May 15, 2016 email sent by Fannie Mae's counsel to Fannie Mae that Fannie Mae then shared with CIT

         The first document at issue in Plaintiffs' motion to compel is an email sent to Fannie Mae by its counsel that Fannie Mae later forwarded to CIT.

         An attorney at Rutledge, Eric Vester, sent an email to a Fannie Mae employee, Ikenna Akotaobi, on May 15, 2016. The email addressed a phone call from one of the Plaintiffs and an insurance adjuster, and Mr. Vester also discussed relevant Alabama law.

         Two months later, on July 13, 2016, Plaintiffs' attorney reached out to Fannie Mae's counsel for the first time. Plaintiffs' attorney sent an email to a Rutledge attorney that stated, “I represent Jeanette Bennett and Maggie Bell for the Estate of Catherine Getaw. We are in the process of establishing Ms. Getaw's estate (if necessary) in order to obtain the excess of the sale of Ms. Getaw's property. Ms. Getaw left a Will appointing Jeanette Bennett and Maggie Bell as co-executrixes of the estate. ...


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