Federal Deposit Insurance v. Kerr

112 F.R.D. 131, 1986 U.S. Dist. LEXIS 20593
Procedural entryThis page is a short order in Federal Deposit Insurance v. Kerr. Read the opinion of the Court — 111 F.R.D. 476
District Court, W.D. North Carolina·Decided September 10, 1986·No. No. C-C-85-0074-P·Published

Opinion

ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court upon Motion of Plaintiff, Federal Deposit Insurance Corporation (“FDIC”), to compel deposition answers of Robert Griffin and Defendants Preston Kerr and Ray Adams.

The Motion relates to certain telephone conversations which occurred in early 1985 in connection with the sale of Presco Industries, Inc.’s (“Presco”) assets, the underlying transaction of which the FDIC complains.

The conversations relevant to this matter involve the following individuals:

(1) Defendant Preston Kerr (“Kerr”);
(2) Robert Griffin (“Griffin”), Kerr’s attorney with respect to the transactions complained of;
(3) Richard Smolev (“Smolev”), attorney for BancAmerica Commercial Corporation (“BACC”) with respect to the transactions complained of; and
(4) Michael Horvitz (“Horvitz”), attorney for Kirland Capital Corporation (“KCC”), a corporation which had expressed an interest in the possible acquisition of Presco assets.

It appears that the FDIC’s Motion involves four different conversations. First, in his Affidavit submitted in support of the FDIC’s Motion, Horvitz contends that in a conversation between himself and Smolev, Smolev stated that any sale of Presco assets would have to be negotiated directly with Kerr. Apparently, this conversation took place after Horvitz learned that Pres-co’s stock may have been pledged to BACC. Kerr contends that the FDIC had the opportunity to inquire of Smolev into this matter, but has not done so.

Second, Horvitz and Kerr had a conversation on January 19, 1985, in which Hor-vitz alleges that Kerr stated that Smolev had reported the substance of the Horvitz-Smolev conversation to him, Kerr; that Kerr stated that neither Horvitz nor his client should make any further efforts to contact Kerr’s creditors, including the FDIC; and that if they did, Kerr would file a lawsuit against KCC. At the deposition, Kerr stated that he did not recall telling Horvitz not to contact his, Kerr’s, personal creditors.

Third, Griffin and Kerr had a conversation prior to Griffin’s conversation with Horvitz. Griffin and Kerr refuse to disclose the substance of this conversation on the grounds of attorney-client privilege.

Fourth, Horvitz’ Affidavits states that he and Griffin had a conversation on January 20, 1985 at Kerr’s request in which Horvitz was reminded that a lawsuit would be filed if Horvitz or his client tried to contact Kerr’s personal creditors.

MOTION TO COMPEL TESTIMONY OF GRIFFIN AND KERR

The questions which the FDIC seeks to compel Griffin to answer and which he previously refused are as follows:

(1) “Q. In your telephone conversation with Mr. Kerr, did he say to you that he had received a telephone call from Mr. Smolev regarding a previous conversation?” [Griffin Deposition, p. 32, line 10.]
(2) “Q. Did Mr. Kerr in his telephone conversation with you tell you that he had told Mr. Horvitz that neither Mr. Horvitz nor his client had any business contacting Mr. Kerr’s personal creditors?” [Id. at p. 32.]
(3) “Q. Did Mr. Kerr in his conversation with you tell you that he had told Horvitz that only he, Mr. Kerr, had the right to transfer his Presco shares and that any transaction involving the purchase of such shares was to be negotiated with him and him only?” [Id. at p. 33.]
(4) “Q. Did Mr. Kerr say to you that he told Mr. Horvitz that his, Kerr’s, lawyers had advised him that Horvitz’ conduct had given rise to a right of action by Mr. Kerr against KCC and [133]*133he said that any further efforts to contact his creditors, including the FDIC, would result in his filing a lawsuit?” [Id. at p. 33.]
(5) “Q. Did Mr. Kerr in his telephone conversation with you say anything to you about telling anyone not to contact Federal Deposit Insurance Corporation?” [Id. at p. 34.]

The question which the FDIC seeks to compel Kerr to answer and which Kerr previously refused is as follows:

(1) “Q. Did you at any time in January 1985 ask Robert Griffin to tell anyone not ‘to contact your personal creditors?” [Kerr Deposition at p. 62.]

The relevant portions of the Horvitz Affidavit with respect to both of these inquiries are as follows:

11. On Saturday morning, January 19, 1985, Ms. Shea-Stonum and I telephoned Mr. Smolev. In that conversation, Mr. Smolev said that his client was not in a position to control the disposition of Presco’s assets or Mr. Kerr’s Presco stock. He said that any sale would have to be negotiated directly with Mr. Kerr, and he offered to telephone Mr. Kerr to see if Mr. Kerr would be willing to discuss a possible sale with us.
12. On Saturday afternoon, January 19, 1985, I received a telephone call at my home from a man who identified himself as Preston Kerr. Mr. Kerr told me he had received a telephone call from Mr. Smolev regarding our conversation of that morning. Mr. Kerr said that neither I nor my client had any business contacting his personal creditors. He said that only he (Mr. Kerr) had the right to transfer his Presco shares and that any transaction involving the purchase of such shares was to be negotiated with him and him only. He said that his lawyers had advised him that our conduct had given rise to a right of action by Mr. Kerr against KCC, and he said that any further efforts to contact his creditors, including the FDIC, would result in his filing a lawsuit. I told Mr. Kerr that my client’s only interest was in acquiring the Ellett Brothers business and that I could not understand why he apparently wished to consummate a transaction which seemed less favorable than the KCC proposal. Mr. Kerr responded that he was obligated under his agreement with Tuscarora until January 22, 1985, but that his lawyers would contact us if the Tuscarora transaction did not close by January 22, 1985.
14. On Sunday, January 20, 1985, I received a telephone call at my home from Mr. Robert Griffin, who identified himself as Mr. Kerr’s attorney. Mr. Griffin said he was calling at Preston Kerr’s request to reiterate the substance of my conversation with Mr. Kerr. He said any attempt by KCC or me to contact Mr. Kerr’s creditors would result in litigation. I told Mr. Griffin that I understood he would be contacting me if the Tuscarora transaction did not close on January 22, 1985, and he said he would.

The attorney-client privilege extends only to confidential communications and a communication is not confidential if it is intended to be disclosed to third parties. United States v. Gordon-Nikkar, 518 F.2d 972 (5th Cir.1975).

The subject matter of the first four questions asked of Griffin which he refused to answer and the question asked of Kerr which he refused to answer is referred to specifically by Horvitz in his Affidavit. There is nothing to suggest that the veracity of Horvitz’ Affidavit should be regarded with question or doubt. Further, neither Kerr nor Griffin have affirmatively repudiated Horvitz’ statements.

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Federal Deposit Insurance v. Kerr, 112 F.R.D. 131, 1986 U.S. Dist. LEXIS 20593 (W.D.N.C. 1986).

112 F.R.D. 131 (Federal Deposit Insurance v. Kerr) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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