State of Maine v. Warren

• Court: Superior Court of Maine
• Decided: April 7, 2010
• Docket: CUMcr-09-9716
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss. CRIMINAL ACTION DOCKET NO: CR-09-9716 ~ A y,.' , , v' y, C- C LJ. i 1- l{ !7 j:;~1)! J I

I I

STATE OF MAINE ~._' .... ,

ORDER v.

KAILE R. WARREN, JR. et al.,

Defendants

Attorney Timothy J. Bryant and Preti, Flaherty, Beliveau & Pachios, LLP

motion to quash two subpoenas issued on February 26,2010.

BACKGROUND Defendant Kaile R. Warren has been charged with theft by deception,

securities fraud, and selling unregistered securities. Assistant Attorney General

Michael Colleran is leading the State's investigation into Mr. Warren's activities.

On February 26, 2010, attorney Colleran issued subpoenas to Timothy J. Bryant,

Esquire, and Preti, Flaherty, Beliveau & Pachios, LLP (the Firm). Mr. Bryant is a

member of the Firm and had provided legal services to Mr. Warren and his

business entities, KW Enterprises, Inc., and Rent-A-Husband, LLC. On March 12,

2010, Mr. Bryant and the Firm filed this Motion to Quash the subpoenas.

The subpoenas are identical in form and command Mr. Bryant and the

Firm to appear and testify before a grand jury. They also seek the following

records: "[A]ll documents constituting or summarizing communications" with

Mr. Warren during 2007 and 2008; "[A]ll minutes of Board of Directors

meetings" for Mr. Warren's business entities; "[A]ll versions of convertible

1 promissory notes and subscription agreements prepared" for Mr. Warren's

business entities; "[A]ll billing records for services provided" to Mr. Warren's

business entities; and All communications with Mr. Warren "during 2002 or 2005

regarding the form of promissory notes to be issued ... or the form of

subscription agreement related to the notes, including any revisions to the form."

The State did not file a motion in limine under Rule 17(d) before serving the

subpoenas.

Mr. Bryant has already testified before the Grand Jury in this case. In 2009

the State subpoenaed Mr. Bryant to have him testify about his communications

with Mr. Warren regarding:

1. [V]aluation figures contained within convertible promissory notes allegedl y drafted by you or those working wi th you, including the source and basis for the figures and any communications you had with Warren regarding the figures; and 2. Disclosures in subscription agreements allegedly drafted by you or those working with you regarding the issuer's prospect for future losses, including any communications ... with Warren regarding the disclosures."

Order on Defendant's Motion to Quash, State v. Warren, CR-09-9716 (Me. U.

Crim. Ct., Cum. Cty., Jan. 29, 2010) (Moskowitz, J.). The subpoena also

commanded Mr. Bryant to produce "any and all documents dated after your

attorney-client relationship with \!\Tarren ended that expressly waive or appear to

expressly waive Warren's attorney-client privilege, including any documents

that you or your counsel received in response to your counsel's letter ...." Id.

Mr. 'vVarren filed a motion to quash on the grounds that the subpoena sought

information protected by attorney-client privilege.

A hearing was held on January 28, 2010. After taking evidence and

hearing arguments by counsel, the presiding judge ruled that Mr. Warren had

waived his attorney-client privilege with Mr. Bryant in regard to the sought-after

2 information. This ruling was based on two findings. First, the judge found that

Mr. Warren had already knowingly and expressly disclosed privileged

information about the specific issues identified in the subpoena. While doing so,

Mr. Warren had raised his reliance on Mr. Bryant's counsel as a defense.

Second, Mr. Warren had signed a written waiver authorizing Mr. Bryant

to speak freely with Attorney Colleran "without regard to rules or principles

governing an attorney's obligations to clients and former clients with respect to

confidences and secrets and privileged communications." Id. (internal quotations

omitted). This waiver was intentionally, knowingly, and voluntarily executed,

and by its terms is "general, unconditional and irrevocable." From this evidence,

the presiding judge found that Mr. Warren had "waived his attorney-client

privilege regarding the specific issues delineated in he [sic] State's subpoena ...

[and] waived his attorney-client privilege generally as to communications he had

with Attorney Bryant .... The defendant intentionally and voluntarily waived

his attorney-client privilege, and he cannot revive it."l Id.

The State asserts that this prior order conclusively established that no

attorney-client privilege exists between Mr. Warren and Mr. Bryant or the Firm.

Absent such protection, the State believes it was entitled to subpoena Mr. Bryant

and the Firm without prior court approval. Mr. Bryant and the Firm disagree.

They contend that the privilege has not been clearly and absolutely waived, and

that Maine Rule of Criminal Procedure 17(d) requires the State to obtain court

I When the holder of a privilege intentionally and voluntarily discloses

information protected by the privilege, the reason for the privilege disappears and it cannot be revived. In re Whiting, 110 ME 232, 234, 85 A. 791, 792 (Me. 1913); see Field & Murray, Maine Evidence §§ 502.5, 510 (2000 ed.). Similarly, where a person bases a claim or defense on reliance on the advice of counsel, the person cannot assert attorney-client privilege to prevent investigation of that advice. Jensen v. S.D. Wnrren Co., 2009 ME 35, crrcrr 31-34, 968 A.2d 528,536-37; Field & Murray, Maine Evidence § 510.1 (2000 ed.). 3 approval before subpoenaing Mr. Warren's former attorney.2 They argue that the

information sought by the State could still be protected under the Fourth or Fifth

Amendments of the Constitution, the Rules of Professional Responsibility, or

Maine Rule of Evidence 502.

DISCUSSION

Rule 17(d) requires a party issuing a subpoena that it knows

seeks the production of documentary evidence that may be protected from disclosure by a privilege, confidentiality protection or privacy protection under federal law, Maine law or the Maine Rules of Evidence ... [to] file a motion in limine, pursuant to Rule 12, prior to serving the subpoena. The motion shall contain a statement of the basis for seeking production of the documentary evidence that may be privileged or protected and shall be accompanied by a copy of the yet unserved subpoena.

M.R. Crim. P. 17(d).

"The existence of a privilege is a preliminary question for the court." Rich

v. Fuller, 666 A.2d 71, 74 (Me. 1995) (citing M.R. Evid. 104(a)). Whether a privilege

applies to specific disclosures or has been waived is a question of fact to be

determined by the presiding justice. See In re Motioll to Quasll Bar Coullsel

Subpoella, 2009 ME 104,

trial justice's ruling to ensure that the correct legal test was applied, and that the

evidence supports the determination of a privilege's applicability).

One basis for Mr. Bryant and the Firm's Motion to Quash are Maine's

Rules of Professional Conduct. They contend that Rules 1.6 and 1.9 require them

to maintain former client confidences on penalty of professional discipline, and

this in turn requires any subpoena for potentially protected information to be

vetted under M.R. Crim. P. 17(d). A similar argument was rejected in the prior

2 Mr. Warren has attempted to revoke his written waiver, and currently takes the position that the attorney-client privilege \vith Mr. Bryant and the Firm is intact. 4 order, and it continues to be without merit. Rule 17(d) does not refer to the Rules

of Professional Conduct by name. The only way the Rules of Professional

Conduct could come within the scope of Rule 17(d) is if they are "Maine law."

The Rules of Professional Conduct are by their own terms "not designed

to be a basis for civil liability" or "invoked by opposing parties as procedural

weapons." M.R. Prof. Conduct Preamble(20). The Rules of Professional Conduct

are only guides for professional behavior. Id. Consequences for their violation are

personal to the attorney, and have no bearing on questions of evidence or

procedure. See State v. McCarthy, 2003 ME 40, crrcrr 16-17, 819 A.2d 335, 341

(holding that the consequences for a possible violation of a Maine Bar Rule were

personal to the prosecutor and would not result in the suppression of evidence)

(citing People v. Green, 274 N.W.2d 448, 454 (Mich. 1979) ("The admissibility of

evidence in a court of law ... is normally determined by reference to relevant

constitutional and statutory provisions, applicable court rules and pertinent

common-law doctrines. Codes of professional conduct play no part in such

decisions ...."); State v. Morgan, 646 P.2d 1064, 1070 (Kan. 1982) ("The function

of the Code of Professional Responsibility is to prescribe the standards of

conduct for members of the bar. The provisions of the Code are unrelated to the

admission of evidence."); State v. Decker, 641 A.2d 226, 230 (N.H. 1994) ("The

New Hampshire Rules of Professional Conduct are aimed at policing the conduct

of attorneys, not at creating substantive rights on behalf of third parties.")). The

Rules of Professional Conduct are not "Maine law" as the term is used in M.R.

Crim. P. 17(d). Whether Mr. Bryant or the Firm could be sanctioned under them

for complying with the State's requests has no bearing on whether the State was

required to file a motion in limine before serving the subpoenas.

5 Mr. Bryant and the Firm also raise Mr. Warren's Fourth and Fifth

Amendment rights as possible bases for quashing the State's subpoenas. The

privileges granted under the Fourth and Fifth Amendments are personal and

cannot be asserted on another's behalf. Mimi, v. Carter, 525 U.s. 83, 88 (1998)

(fourth amendment); George Campbell Painting Corp. v. Reid, 392 U.s. 286, 288-89

(1968) (fifth amendment). Mr. Warren has not joined the current Motion to

Quash, and Mr. Bryant and the Firm lack standing to assert his constitutional

rights.

They do, however, have standing to raise the final identified basis for the

Motion to Quash. Maine Rule of Evidence 502 protects confidential

communications between an attorney and his or her client. Clients hold the

privilege, but attorneys may assert it on their clients' behalf. M.R. Evid. 502(c). A

client can intentionally and voluntarily waive the privilege by disclosing "any

significant part of the privileged matter." M.R. Evid. 510; Corey v. Norl1lan,

Hanson E:" DeTroy, 1999 ME 196, CJrcrr 19-20, 742 A.2d 933,941. There is no question

that the sort of information sought in the subpoenas is the sort that would come

within Rule 502(b)'s privilege absent waiver or one of the exceptions outlined in

Rule 502(d),

The question before this Court is not whether Mr. Warren waived his

attorney-client privilege. This Court is instead asked to determine whether a

Rule 17(d) evidentiary hearing was required to determine whether the privilege

applied to the subpoenaed information. To answer this question, the Court must

determine whether the issue was resolved by the prior order of January 29, 2010,

The State urges the Court to find that this prior order established the law of the

6 case and precludes any further inquiry into the existence of attorney-client

privilege.

The law of the case doctrine "is an articulation of the wise policy that a

judge should not in the same case overrule or reconsider the decision of another

judge of coordinate jurisdiction.... It relates only to questions of law, and it

operates only in subsequent proceedings in the same case." Blance v. Alley, 404

A.2d 587, 589 (Me. 1979). The State's position has considerable appeal on its

surface. Another judge recently ruled on the same issue of privilege now before

this Court. There, the State had subpoenaed information about attorney-client

communications from Mr. Bryant. Mr. Warren, the client, opposed the subpoena

by asserting attorney-client privilege. After an evidentiary hearing, the presiding

judge used broad language to find that Mr. Warren had waived all privilege in

regard to his communications with Mr. Bryant. A cursory reviewer would be

excused for believing this a "classic occasion" for application of the law of the

case doctrine. Sprague v. Washburn, 447 A.2d 784, 786-87 (Me. 1982).

However, the existence of a privilege is technically a question of fact, and

the doctrine only applies to questions of law. [d. Furthermore, trial courts have

been cautioned against applying the doctrine to preliminary evidentiary

questions. See Maille v. Brackett, 2000 ME 54, 9I 7, 754 A.2d 337, 339 ("[A]ctual

facts may influence and change the trial justice's determination of the relevance,

probative value or prejudicial effect of the subject evidence.") In any event, the

doctrine is not binding. Sprague, 447 A.2d at 787.

Mr. Bryant and the Firm have the better argument in favoring another

evidentiary hearing. While the prior order speaks in broad language, the

presiding justice was faced with a subpoena requesting information on three

7 well-defined topics. The ruling was also based in part on the fact that Mr. Warren

had specifically waived his privilege by giving testimony on those topics. The

current subpoenas constitute a much broader and open-ended inquiry into

"[a]ny and all documents constituting or summarizing communications ...

during 2007 and 2008 ...."

Given this expanded scope of inquiry and the prior ruling's lack of

binding precedential weight, Mr. Bryant and the Firm correctly argue that the

January 29, 2010 order does not dispose of the current Motion to Quash. That

order should not be read to definitively dispose of Mr. Warren's attorney-client

privilege writ large. It follows that the State had reason to know it sought "the

production of documentary evidence that may be protected from disclosure by a

privilege," and was thus obligated to file a Rule 17(d) motion in limine before

serving the subpoenas.

Under the circumstances, the State knew that the sought-after information

might be protected by attorney-client privilege. It's failure to determine the non­

existence of that privilege by filing a motion in limine under M.R. Crim. P. 17(d)

before serving the subpoenas renders those subpoenas deficient.

The entry is:

Timothy J. Bryant and Preti, Flaherty, Beliveau & Pachios, LLP's Motion is

granted and the subpoenas issued on February 26, are quashed without

prejudice.

8 STATE OF MAINE vs KAILE R WARREN, JR Docket No CUMCD-CR-2009-09716 16 GIN MILL LANE WINDHAM ME 04062 DOCKET RECORD

DOB: 07/26/1959 Attorney: DANIEL LILLEY State's Attorney: MICHAEL COLLERAN DANIEL G LILLEY LAW OFFICE 39 PORTLAND PIER PO BOX 4803 PORTLAND ME 04112 LIMITED 01/21/2010 Attorney: LEE BALS MARCUS CLEGG & MISTRETTA PA ONE CANAL PLAZA SUITE 600 PORTLAND ME 04101-4035 WITHDRAWN 01/15/2010

Filing Document: INDICTMENT Major Case Type: FELONY (CLASS A,B,C) Filing Date: 12/11/2009

Charge(s)

1 THEFT BY DECEPTION 12/17/2003 PORTLAND Seq 8431 17-A 354 (1) (B) (1) Class B

2 MAINE REVENUE SECURITIES ACT VIOLATION 12/17/2003 PORTLAND Seq 3526 32 10604(1) Class C

3 SELL OR OFFER UNREGISTERED SECURITY 12/17/2003 PORTLAND Seq 761232 10401 Class F

Docket Events:

12/17/2009 FILING DOCUMENT - INDICTMENT FILED ON 12/11/2009

12/17/2009 Charge{s): 1,2,3 HEARING - ARRAIGNMENT SCHEDULED FOR 01/21/2010 @ 8:30 in Room No. 1

12/17/2009 Charge(s): 1,2,3 HEARING - ARRAIGNMENT NOTICE SENT ON 12/17/2009

01/06/2010 MOTION - MOTION TO QUASH SUBPOENA FILED BY THIRD PRTY ON 12/31/2009

Attorney: LEE BALS FILED TO QUASH SUBPEONA SERVED ON TIMOTHY J. BRYANT, ESQ 01/06/2010 OTHER FILING - OTHER DOCUMENT FILED ON 01/05/2010

DA: MICHAEL COLLERAN WITH ATTACHED EXHIBITS 01/06/2010 HEARING - MOTION TO QUASH SUBPOENA SCHEDULED FOR 01/05/2010 @ 3:00 in Room No. 10 Page 1 of 4 Printed on: 04/08/2010 KAILE R WARREN, JR CUMCD-CR-2009-09716 DOCKET RECORD

NOTICE TO PARTIES/COUNSEL 01/06/2010 HEARING - MOTION TO QUASH SUBPOENA CONTINUED ON 01/05/2010 JEFF MOSKOWITZ, JUDGE Reporter: TIMOTHY THOMPSON 01/06/2010 HEARING - MOTION TO QUASH SUBPOENA SCHEDULED FOR 01/28/2010 @ 1:00 in Room No. 8 JEFF MOSKOWITZ , JUDGE NOTICE TO PARTIES/COUNSEL 01/06/2010 HEARING - MOTION TO QUASH SUBPOENA NOTICE SENT ON 01/06/2010

01/06/2010 ORDER - COURT ORDER ENTERED ON 01/05/2010 JEFF MOSKOWITZ, JUDGE ORAL ORDER ISSUES THAT ANY MEMORANDA OR BRIEF TO BE FILED ON THE MOTION TO QUASH ISSUE SHALL BE FILED WITH THE COURT BY 1/25/2010 01/15/2010 Charge (s): 1,2,3 MOTION - MOTION FOR WITHDRAWAL OF CNSL FILED BY COUNSEL ON 01/15/2010

01/15/2010 Party (5) : KAILE R WARREN JR ATTORNEY - RETAINED ENTERED ON 01/15/2010

Attorney: LEE BALS 01/15/2010 Charge (5) : 1,2,3 MOTION - MOTION FOR WITHDRAWAL OF CNSL GRANTED ON 01/15/2010 ROLAND A COLE , JUSTICE COPY TO PARTIES/COUNSEL 01/15/2010 Party(s): KAILE R WARREN JR ATTORNEY - WITHDRAWN ORDERED ON 01/15/2010

Attorney: LEE BALS 01/21/2010 BAIL BOND - PR BAIL BOND FILED ON 01/21/2010

Date Bailed: 01/21/2010 988 01/21/2010 BAIL BOND - PR BAIL BOND COND RELEASE ISSUED ON 01/21/2010 PAUL E EGGERT , JUDGE Date Bailed: 01/21/2010 988 01/22/2010 Party (5) : KAILE R WARREN JR ATTORNEY - LIMITED ENTERED ON 01/21/2010

Attorney: DANIEL LILLEY 01/22/2010 Charge (5): 1,2,3 HEARING - ARRAIGNMENT HELD ON 01/21/2010 PAUL E EGGERT , JUDGE Attorney: DANIEL LILLEY DA: MICHAEL COLLERAN Defendant Present in Court

DEFENDANT INFORMED OF CHARGES. 21 DAYS TO FILE MOTIONS TAPE 3619 01/22/2010 Charge(s): 1,2,3 PLEA - NOT GUILTY ENTERED BY DEFENDANT ON 01/21/2010 PAUL E EGGERT , JUDGE 01/22/2010 HEARING - DISPOSITIONAL CONFERENCE SCHEDULED FOR 04/14/2010 @ 1:00 in Room No. 7 Page 2 of 4 Printed on: 04/08/2010 KAILE R WARREN, JR CUMCD-CR-2009-09716 DOCKET RECORD

01/22/2010 Charge(s): 1,2,3 TRIAL - JURY TRIAL SCHEDULED FOR 05/10/2010 @ 8:30 in Room No. 11

NOTICE TO PARTIES/COUNSEL 01/26/2010 OTHER FILING - OTHER DOCUMENT FILED ON 01/25/2010

STATE'S SUPPLEMENTAL RESPONSE IN OPPOSITION TO MOTION TO QUASH SUBPOENA 01/28/2010 HEARING - MOTION TO QUASH SUBPOENA HELD ON 01/28/2010 JEFF MOSKOWITZ, JUDGE TAPE 3631 INDEX 1446 TO 4502 01/28/2010 MOTION - MOTION TO QUASH SUBPOENA UNDER ADVISEMENT ON 01/28/2010 JEFF MOSKOWITZ, JUDGE 02/01/2010 OTHER FILING - OTHER DOCUMENT FILED ON 01/29/2010

Attorney: DARRICK BANDA DEF'S MENORANDUM IN SUPPORT OF MOTION TO QUASH SUBPEONA 02/01/2010 MOTION - MOTION TO QUASH SUBPOENA DENIED ON 01/29/2010 JEFF MOSKOWITZ, JUDGE COPY TO PARTIES/COUNSEL IT IS ORDERED: THE DEFENDANT'S MOTION TO QUASH SUBPEONA IS DENIED. THE COURT WILL NOT STAY THE PROCEEDINGS FOR PURPOSES OF APPEAL AS REQUESTED BY THE DEFENDANT. 02/03/2010 Charge(s}: 1,2,3 MOTION - OTHER MOTION FILED BY DEFENDANT ON 02/03/2010

MOTION TO RECORD GRAND JURY PROCEEDING 02/03/2010 Charge(s): 1,2,3 MOTION - OTHER MOTION GRANTED ON 02/03/2010 ROLAND A COLE , JUSTICE MOTION TO RECORD GRAND JURY PROCEEDING TAPE IN SAFE 02/25/2010 Charge (s): 1,2,3 MOTION - OTHER MOTION FILED BY DEFENDANT ON 02/24/2010

DEFENDANTS MOTION TO CLARIFY COURTS RULING REGARDING DEFENDANTS MOTION TO RECORD AND PRESERVE GRAND JURY TESTIMONY 03/01/2010 Charge(s}: 1,2,3 MOTION - OTHER MOTION GRANTED ON 02/25/2010 ROLAND A COLE I JUSTICE DEFENDANTS MOTION TO CLARIFY COURTS RULING REGARDING DEFENDANTS MOTION TO RECORD AND PRESERVE GRAND JURY TESTIMONY ALL FUTURE GRAND JURY PROCEEDINGS ARE TO BE RECORDED. 03/01/2010 Charge(s): 1,2,3 MOTION - MOTION TO QUASH SUBPOENA FILED BY THIRD PRTY ON 03/01/2010

03/01/2010 Charge(s): 1,2,3 MOTION - MOTION TO QUASH SUBPOENA GRANTED ON 03/01/2010 ROLAND A COLE , JUSTICE COpy TO PARTIES/COUNSEL 03/12/2010 MOTION - MOTION TO QUASH SUBPOENA FILED BY THIRD PRTY ON 03/12/2010

JH 03/16/2010 Charge (s): 1,2,3 Page 3 of 4 printed on: 04/08/2010 KAILE R WARREN, JR CUMCD-CR-2009-09716 DOCKET RECORD HEARING - MOTION TO QUASH SUBPOENA SCHEDULED FOR 03/17/2010 @ 11:00 in Room No. 11 ROLAND A COLE , JUSTICE NOTICE TO PARTIES/COUNSEL 03/16/2010 Charge(s): 1,2,3 HEARING - MOTION TO QUASH SUBPOENA NOTICE SENT ON 03/15/2010

03/18/2010 HEARING - DISPOSITIONAL CONFERENCE NOTICE SENT ON 03/18/2010

04/08/2010 Charge (s): 1,2,3 HEARING - MOTION TO QUASH SUBPOENA HELD ON 03/17/2010 ROLAND A COLE , JUSTICE Attorney: DANIEL LILLEY DA: MICHAEL COLLERAN ATTY. PETRECELLI 04/08/2010 MOTION - MOTION TO QUASH SUBPOENA UNDER ADVISEMENT ON 03/17/2010

04/08/2010 MOTION - MOTION TO QUASH SUBPOENA GRANTED ON 04/07/2010

COPY TO PARTIES/COUNSEL 04/08/2010 ORDER - COURT ORDER ENTERED ON 04/07/2010 ROLAND A COLE , JUSTICE TIMOTHY J BRYANT AND PRETI, FLAHERTY, BELIVEAU & PACHIOS, LLP'S MOTION IS GRANTED AND THE SUBPOENAS ISSUED ON FRBRUARY 26, 2010 ARE QUASHED WITHOUT PREJUDICE

A TRUE COPY ATTEST: Clerk

Page 4 of 4 Printed on: 04/08/2010