Alpert v. Riley

267 F.R.D. 202, 76 Fed. R. Serv. 3d 542, 82 Fed. R. Serv. 484, 2010 U.S. Dist. LEXIS 38331, 2010 WL 1558588
CourtDistrict Court, S.D. Texas
DecidedApril 19, 2010
DocketCivil Action No. H-04-3774
StatusPublished
Cited by4 cases

This text of 267 F.R.D. 202 (Alpert v. Riley) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alpert v. Riley, 267 F.R.D. 202, 76 Fed. R. Serv. 3d 542, 82 Fed. R. Serv. 484, 2010 U.S. Dist. LEXIS 38331, 2010 WL 1558588 (S.D. Tex. 2010).

Opinion

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

This case involves allegations that Mark Riley improperly exercised the authority of a trustee over trusts created by Robert Alpert and improperly exercised the authority of an attorney and agent over other aspects of Alpert’s business and financial affairs. Riley, Alpert, and the trust beneficiaries are also' litigants in a probate court suit involving some of the same trusts at issue in this case. Riley is represented by counsel in this case and by separate counsel in the probate court litigation. Riley objected to some of the discovery requests in this case on the ground that the documents sought are subject to attorney-client privilege and work-product protection. Alpert and the trust beneficiaries responded that Riley waived the privilege and protection as to documents he placed on a computer belonging to a third party—who was adverse to Riley in separate litigation—and left in the possession of that third party even after that litigation ended in a settlement. On February 9, 2010, this court held an evidentiary hearing to determine whether Riley had waived attorney-client privilege and work-product protection as to those documents. After the evidentiary hearing, the parties filed briefs on the issue.

Based on the evidence, the record, the parties’ submissions, the arguments of counsel, and the applicable law, this court holds that Riley waived any attorney-client privilege and work-product protection in the materials he had placed and left on Robert Hux’s computer. The reasons are explained below.

I. The Record

Mark Riley and Robert Hux testified at the February 9, 2010 hearing. In October 1998, Mark Riley moved into offices leased by Robert Hux on St. James Place in Houston. Hux, a certified public accountant, and Riley, an attorney and businessperson, knew each other through attending sporting events. In the fall of 1998, they were partners in a company called RRAM Investments LLC. According to Hux, Riley and his legal assistant, Dixie Meynier, arrived at Hux’s offices uninvited, but Hux allowed them to use the offices because he was involved in a partnership with Riley. According to Riley, the move had been arranged. It is undisputed that Riley did not pay rent at the St. James location and the lease was in Hux’s name. Riley and Hux used the offices for matters relating to their joint business in RRAM Investments LLC. Both also used the offices for other, separate business activities.

In early 2000, Riley and Hux moved to offices in the nearby Marathon office building. The rent on the Marathon office space was split between RRAM and several trusts for which Hux served as trustee. Riley signed the lease on behalf of RRAM but Hux paid all the rent and office expenses. When Hux and Riley moved to the Marathon office space, Hux brought a new computer for his own use at the office. Riley brought his own laptop and a computer he owned that Meynier used, as well as a network drive he owned. Riley set up all of the computers in the Marathon office on a network. The network included Riley’s personal laptop and Meynier’s computer, as well as the new computer Hux had purchased, another computer owned by Hux and used by his assistant, Ginger Parks, and an old computer that Hux owned and that was used for a period by RRAM staff members.1

Around the same time, Riley made a copy of a directory on his laptop named “Legal.” Riley placed the copy of this directory on the C:/ drive of Hux’s old computer that was then being used by RRAM staff members. Riley did not advise anyone that he had done this. The directory, unrelated to RRAM, contains the documents at issue in this case.

[206]*206Riley made himself the network administrator for the computers in the Marathon office suite. Riley set up custom login names with passwords for each user on the network. Riley also regulated which drives and directories could be accessed by which users. Riley had a personal user login that enabled him to view his and Meynier’s drives. He also had an administrator login that gave him access to all the computers on the network. There is no evidence that Riley shared this login with anyone. Meynier’s login gave her access to her own computer only. Hux’s and Parks’s logins did not allow them to access Riley’s or Meynier’s computers or Hux’s old computer. Two or three RRAM employees worked at Hux’s old computer and were given logins that allowed them to do so. No one but Riley knew about or could access Riley’s “Legal” directory on Hux’s old computer. Only Riley had access to that directory, although it is unclear* whether he had this access through his personal login or through his administrator login.

Riley also installed an application called “Driveway” on Hux’s old computer. This application was used to backup RRAM files on the network drive to an online storage space that in turn enabled remote access to the stored information. The Driveway software was not used to backup the “Legal” directory.

In May 2001, Riley and Hux were involved in forming a new limited liability company called Hospital Systems Solutions (“HSS”). The company was run out of the Marathon office suite. Sometime later that year, a dispute arose between Riley and Hux about HSS’s ownership. On advice of counsel, Hux locked Riley out of the Marathon office suite. A short time later, Riley and Hux met with Hux’s attorneys. They agreed that Riley would leave the office suite and that Hux would return to Riley all the computers and computer equipment that Riley owned, with his paper files and other belongings.

Riley’s computers and related equipment were returned two weeks after that meeting. During those two weeks, Hux arranged to have the data stored on Riley’s laptop copied. The data copied did not include the Legal directory stored on Hux’s computer; no one but Riley knew that he had files stored on that computer and no one but Riley had access to that directory. Hux later gave the copies of data from Riley’s laptop to his attorneys at Gibbs & Bruns LLP. When the computers Riley owned—his laptop, Meynier’s computer, and the network drive—were returned to him, the logins and passwords had been either been disabled or changed. Riley reset them, using new logins and passwords that allowed him to access the data he had stored on those computers. Riley did not ask about the directory he had placed on Hux’s old computer or tell anyone involved with Hux about that directory. At that time, Riley was not aware that Hux had copied the data from Riley’s laptop before returning it.

Within three weeks of the lockout, Riley sued Hux, alleging that he had improperly transferred customer lists and other information Riley had developed for HSS to another company Hux owned and with which Riley was not involved. Hux countersued. The parties asked for and the state court entered a protective order in that litigation. (Evi-dentiary Hearing Ex. 1). Under the protective order, documents and information that the parties exchanged in discovery that they designated as confidential could not be disclosed to third parties except under limited circumstances. {Id. at 3-4). On June 1, 2002, Hux and Riley reached an agreement to settle the lawsuit. (Evidentiary Hearing Ex. 2). The Settlement Agreement contained the following provisions:

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Cite This Page — Counsel Stack

Bluebook (online)
267 F.R.D. 202, 76 Fed. R. Serv. 3d 542, 82 Fed. R. Serv. 484, 2010 U.S. Dist. LEXIS 38331, 2010 WL 1558588, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alpert-v-riley-txsd-2010.