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Jp Morgan Chase Bank, N.A v. Pt Indah Kiat Pulp and Paper Corporation

December 22, 2011

JP MORGAN CHASE BANK, N.A., PLAINTIFF,
v.
PT INDAH KIAT PULP AND PAPER CORPORATION TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; PT PABRIK KERTAS TJIWI KIMIA TBK, A CORPORATION DULY ORGANIZED UNDER THE LAWS OF THE REPUBLIC OF INDONESIA; AND ASIA PULP AND PAPER COMPANY, LTD., A CORPORATION DULY ORGANIZED UNDER THE LAWS OF SINGAPORE, DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Geraldine Soat Brown

Judge James F. Holderman

MEMORANDUM OPINION AND ORDER

Geraldine Soat Brown, United States Magistrate Judge

In an effort to collect the judgment entered in its favor in this case, plaintiff JP Morgan Chase Bank, N.A. ("JP Morgan") served a citation to discover assets upon the law firm Cassiday Schade LLP ("Cassiday") whose attorneys have represented the defendants in this case.*fn1 Currently before the court is Cassiday's Motion to Quash Citations to Discover Assets. [Dkt 358.] In the challenged citations, JP Morgan seeks information about the retainer defendants paid to Cassiday as well as other records about defendants' assets. Cassiday asserts that its retainer agreement with defendants is privileged, that the retainer belongs to Cassiday and not defendants, and that the citation requests are overly broad and unduly burdensome. As discussed further herein, the documents JP Morgan seeks are not privileged and JP Morgan is entitled to discover them in citation proceedings, and to that extent Cassiday's motion is denied. However, some of the citation requests are not properly directed to a third party, and to that extent Cassiday's motion is also granted in part as described below.

Background

This case is currently in the post-judgment collection phase. Summary judgment was previously granted against all defendants, and the District Judge entered judgment on September 13, 2010, awarding damages to JP Morgan in an amount of $32,156,331.55 against PT Indah Kiat Pulp and Paper Corporation, $21,340,006.22 against PT Pabrik Kertas Tjiwi Kimia, as well as the total $53,496,337.77 against Asia Pulp and Paper Company as a guarantor. (Orders, Oct. 14, 2009, Apr. 21, 2010, Sept. 13, 2010) [dkt 257, 265, 296]; (Judgm.) [dkt 297].)

As part of its ongoing efforts to collect the judgment against defendants, JP Morgan issued third-party citations to discover assets to Cassiday. [Dkt 357.] In those citations, JP Morgan seeks two categories of financial records: (1) information related to the retainer and other amounts defendants paid to Cassiday, including any retainer agreements, records of trust accounts Cassiday maintains for defendants, and payment records from defendants to Cassiday (requests 1 through 5); and (2) records Cassiday possesses pertaining to accounts, assets, and interests that defendants themselves hold (requests 6 through 14). (Pl.'s Resp., Ex. A.) [Dkt 365.]*fn2 The second category of requested documents is essentially the same documentation JP Morgan sought from defendants themselves in citations to discover assets directed to defendants. (See Defs.' Mot. to Stay, Ex. C.) [Dkt 330.] Defendants previously sought a stay on those citations, arguing that a 2008 Indonesian court order barred them from providing the requested information, but this court issued an order on November 16, 2011 denying that motion and ordering defendants to comply fully with the citations. (Order, Nov. 16, 2011.) [Dkt 377.] Defendants' motion to amend or alter that order (essentially, a motion for reconsideration) has likewise been denied. (Order, Dec. 19, 2011.) [Dkt 386.]

Before the court denied defendants' motion to stay, Cassiday brought the present motion to quash the citations directed to the firm. The District Judge referred defendants' motion to this court. [Dkt 361.] In accordance with this court's order, Cassiday thereafter provided a privilege log and copies of its retainer agreements with defendants for in camera examination. [See dkt 371.]*fn3

Discussion

I. Information about the retainer and other amounts paid by defendants to Cassiday.

A The question of whether the retainer is subject to turnover is not before the court on the present motion.

As a initial matter, Cassiday asserts that any monies it is holding as a retainer belong to it and not defendants and cannot be reached to satisfy the judgment against defendants. Therefore, according to Cassiday, the retainer is not the proper subject of a citation to discover assets. (Cassiday Mot. at 2-4.) However, Cassiday's argument is premature. Whether the retainer belongs to Cassiday or defendants will depend on the structure of the retainer agreement. See Dowling v. Chicago Options Assocs., Inc., 875 N.E.2d 1012 (Ill. 2007). At this stage, JP Morgan is only seeking documents related to the retainer, not the turnover of any funds. JP Morgan has not yet had the opportunity to review the relevant documents and determine whether it will seek a turnover order for the retainer. See 735 ILCS 5/2-1402(c). The court agrees that JP Morgan need not "take Cassiday's word" that the retainer is the property of Cassiday. (Pl.'s Resp. at 4.) Without having seen the retainer agreements, JP Morgan cannot respond to Cassiday's argument that the retainer belongs to the firm. If and when JP Morgan seeks a turnover order, the issue will be properly raised at that time, along with Cassiday's argument that it has a priority interest in any funds remaining in the retainer. (See Cassiday Mot. at 2-4.)

B. The documents relating to the retainer and payments to Cassiday are not privileged or work-product protected.

The first two entries on Cassiday's privilege log list the retainer agreements between Cassiday and Asia Pulp and Paper Ltd. ("Asia Pulp") dated respectively October 15, 2002 and February 1, 2005. The agreements are virtually identical except for the billing rates and some additional terms in the second agreement. Cassiday claims that the agreements are attorney-client privileged and reflect "[s]ensitive, [c]onfidential and [p]roprietary [b]usiness [i]nformation." (Priv. Log.) [Dkt 387.] Cassiday's privilege log contains two other entries for categories of documents: "copies of any and all checks, certified funds, and/or wire transfers," and "any and all other documents evidencing funds paid to Cassiday Schade LLP drawn on a PT ...


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