Coan v. Dunne

602 B.R. 429
CourtDistrict Court, D. Connecticut
DecidedApril 16, 2019
DocketNo. 3:15-cv-00050 (JAM); Adv. Proc. No. 15-5019 (JAM) (consol.)
StatusPublished
Cited by16 cases

This text of 602 B.R. 429 (Coan v. Dunne) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coan v. Dunne, 602 B.R. 429 (D. Conn. 2019).

Opinion

Jeffrey Alker Meyer, United States District Judge

Plaintiff-Trustee Richard M. Coan has moved for contempt and discovery sanctions against debtor-defendant Sean Dunne. Doc. #70. In essence, the Trustee accuses Dunne of willful failure to preserve and produce emails from certain email accounts as well as other discovery misconduct.

I referred the Trustee's motion to U.S. Magistrate Judge Robert M. Spector, who pursuant to 28 U.S.C. § 636(e)(6)(B) entered an order certifying facts to support a finding of contempt and recommended a range of sanctions including an award of attorney's fees and costs, an adverse inference instruction, and a finding of waiver of privilege. See Doc. #225. Now before me are Dunne's objections to the Magistrate Judge's ruling, as well as objections from the remaining defendants. For the reasons I explain below, I will deny the Trustee's motion for contempt but I will impose sanctions on Dunne for his discovery misconduct pursuant to Federal Rule of Civil Procedure 37 and the Court's inherent authority.

BACKGROUND

This is a financial fraud case that is related to bankruptcy proceedings in Connecticut and the Republic of Ireland involving real estate developer Sean Dunne. See Coan v. Dunne , 2019 WL 302674, at *1-*2 (D. Conn. 2019) (generally describing the history of this case). The facts and posture of this case are well-known to the *433parties. The pertinent facts laid out here are generally taken from those certified by Judge Spector to which the parties have not objected but as supplemented by consideration of additional factual submissions that have been filed subsequent to Judge Spector's ruling.

Since 2010, Dunne has maintained several email accounts. Dunne claims that in 2011 or 2012 he stopped using two of these accounts: seanpa@mountbrook.ie and seanbb@mountbrook.ie. Doc. #225 at 17. Dunne swears that he stopped using the seanpa@mountbrook.ie account because his personal assistant had stopped working for him, and that he closed the seanbb@mountbrook.ie account because the Mountbrook server had been functioning poorly while he was in the United States, consequently frustrating his email use. Doc. #274-1 at 36 (¶¶ 8-9).

Dunne and his agent James Ryan both swear that the Mountbrook server did not provide for cloud-based email access; these emails were stored on a private server, and Ryan abandoned the server in a Dublin building that Dunne gave up to a creditor in June 2013. Doc. #274-1 at 37 (¶¶ 9-11), 86-87 (¶¶ 1-3). Dunne does not possess the server and does not have access to the two Mountbrook email accounts that were stored on the server. Id. at 37 (¶ 10).

Dunne transitioned from the private-server Mountbrook email service to Google email. Id. at 36-37 (¶ 9). Google's "Gmail" service is a web-based email service that does not involve storage of emails exclusively on private servers. The first Gmail account that Dunne opened, in approximately May 2011, was seandunnebb@gmail.com. Id. at 37 (¶ 9). According to documents obtained by the Trustee from third party sources, Dunne used the seandunnnebb@gmail.com account to communicate with Seamus Reddan, his agent for the sale of Walford, a large property in Ireland that the Trustee alleges Dunne fraudulently transferred. Doc. #225 at 19; see Doc. #189 at 32 (¶¶ 145-50) to Coan v. Killilea , No. 15-05019 (Bankr. D. Conn. 2016).

In June 2013, Google informed Dunne that there had been an attempt to hack the account, and so Dunne closed this account and created a second Gmail account: seandunne365@gmail.com. Id. at 37 (¶ 11). According to Dunne, concerns and notifications about hacking continued, which caused him to close this second account in approximately December 2013 and then to open a third Gmail account that he continues to use to this day. Ibid.

To corroborate his claim about hacking concerns, Dunne has produced a copy of a Google notification that was sent to him in June 2013 advising him that his seandunnebb@gmail.com account had been locked because of too many log-in attempts and his contemporaneous forwarding of this advisory to a colleague stating: "Vinny, call me later as somebody trying to hack my email account. May need to close it down:" Doc. #274-1 at 89. Similarly, he received another warning from Google to the seandunne365@gmail.com account on December 16, 2013. Id. at 91.

In short, Dunne had four email accounts that were either discarded or closed by Dunne by the end of 2013. By that point in time, Dunne had been sued in 2012 in Connecticut state court by NALM and had also filed for bankruptcy in Connecticut in March 2013. In June 2013, Dunne was subject to formal, on-the-record interrogation by the Trustee at which time he was asked and answered questions about his email accounts. Doc. #274-1 at 17-27. He was questioned again in December 2013 at which time he expressed concern that "somebody was hacking my e-mail account." Id. at 31.

*434Despite the pendency of the NALM state court action, the federal bankruptcy, and formal questioning in 2013 about the emails by the Trustee, neither the Trustee nor any other creditor made any request to Dunne in 2012 or 2013 to preserve his emails. It was not until several years later in 2016 that the Trustee first served a discovery demand for Dunne's emails.

On July 25, 2016, the Trustee subpoenaed Dunne for a wide range of documents including his emails. Doc. #225 at 14. In addition, this was the first discovery request for documents related to Walford. Id. at 20. When Dunne did not comply with the July 2016 subpoena, the Trustee moved to compel production of documents that the July 2016 subpoena requested, and by February 2017, the Bankruptcy Court had ordered Dunne to produce responsive documents and file an affidavit certifying that all responsive documents in Dunne's possession and control had been produced to the Trustee. Id. at 14-15. Dunne then certified in February 2017 that he had conducted a good faith search to find all responsive documents, and that he had provided them for production. Id. at 15. It stands to reason that, because the email accounts at issue here were either closed or unavailable to Dunne by the end of 2013, it was not false as to these email accounts for Dunne to have certified in February 2017 that he had conducted a good faith search to locate and produce documents responsive to the subpoena but without producing these emails.

The Trustee renewed his motion to compel and for contempt in July 2017, and in August 2017, the Bankruptcy Court found Dunne in contempt and ordered him to produce all documents responsive to the July 2016 subpoena, including a list of all email accounts he had used since the start of 2010. Ibid. The Bankruptcy Court also ordered the Trustee to serve a copy of the order on Google and AT&T so that those companies could produce emails from two of Dunne's email accounts with Dunne's cooperation. Ibid.

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602 B.R. 429, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coan-v-dunne-ctd-2019.