United States District Court, D. New Hampshire
Arthur Berndt, Individually, as Trustee of the Lloyd Charitable Lead Trust No. 2 and as Trustee of the Maverick Lloyd Foundation
Opinion No. 2014 DNH 256
For Arthur Berndt, as Trustee of Lloyd Charitable Lead Trust No. 2 and Maverick Lloyd Foundation other, Lloyd Charitable Lead No. 2, other, Maverick Lloyd Foundation, Plaintiff: Arielle B Kristan, Nicholas B. Carter, PRO HAC VICE, Todd & Weld, Boston, MA; James F. Ogorchock, Sheehan Phinney Bass & Green PA (Manchester), Manchester, NH.
For Gordon Snyder, Defendant, Counter Claimant: Ralph F. Holmes, LEAD ATTORNEY, Adam M. Hamel, Cameron G. Shilling, McLane Graf Raulerson & Middleton PA (Manchester), Manchester, NH.
For Joseph F. McDonald, McDonald & Kanyuk, PLLC, Interested Parties: David W. Rayment, LEAD ATTORNEY, Mark Sutherland Derby, Cleveland Waters & Bass PA, Concord, NH.
For Arthur Berndt, as Trustee of Lloyd Charitable Lead Trust No. 2 and Maverick Lloyd Foundation, Counter Defendant: Arielle B Kristan, Nicholas B. Carter, PRO HAC VICE, Todd & Weld, Boston, MA; James F. Ogorchock, Sheehan Phinney Bass & Green PA (Manchester), Manchester, NH.
Andrea K. Johnstone, United States Magistrate Judge.
Arthur Berndt brought suit against Gordon Snyder, alleging state law claims arising out of a transaction in which Berndt, in his capacity as Trustee of the Lloyd Charitable Lead Trust No. 2 (" CLAT"), sold the CLAT's shares in AgraQuest, Inc. to Snyder. Snyder moves to compel Berndt and third parties, Joseph F. McDonald, III, and McDonald & Kanyuk, PLLC, to produce certain documents that they have withheld. Berndt, McDonald, and McDonald & Kanyuk object. Snyder, Berndt, McDonald, and McDonald & Kanyuk have also filed a joint assented to motion for in camera review.
Arthur Berndt was at all times relevant to this case a trustee of the CLAT and the Maverick Lloyd Foundation (" Foundation"). Pursuant to its terms, the CLAT was obligated to provide funds on an annual basis to the Foundation so that the Foundation would have the resources to pursue charitable purposes (the " annuity obligation"). The CLAT's annuity obligation to the Foundation was approximately $336, 000.
In 2009, in order to meet its annuity obligation to the Foundation, Berndt, as trustee of the CLAT, sold $500, 000 of AgraQuest stock to Berndt's cousin, Chris Lloyd (the " 2009 transaction"). Lloyd paid for the stock with money he had borrowed from two trusts that Berndt had established for his daughters in exchange for a promissory note to them, which was secured by the AgraQuest stock. Berndt's longtime attorney and financial advisor, Gordon Snyder, provided legal and financial advice in connection with the transaction.
In addition to providing legal and financial advice to Berndt, Snyder acted as the trustee of the daughters' trusts and served as the escrow agent for the 2009 transaction. The law firm of McDonald & Kanyuk, PLLC also provided legal advice to the CLAT and the daughters' trusts in the transaction.
Several years later, Lloyd defaulted on the promissory note and transferred the AgraQuest stock to Berndt's daughters' trusts. McDonald & Kanyuk represented Snyder as trustee of the daughters' trusts and as escrow agent in connection with the default and repossession of the stock.
In 2010, in order to meet its annuity obligation to the Foundation, Berndt sold the CLAT's remaining stock in AgraQuest to Snyder in exchange for two non-recourse promissory notes worth $379, 672 (the " 2010 transaction"). Berndt subsequently assigned both notes to the Foundation in order to satisfy the CLAT's annuity obligation. Berndt alleges that around the time of the transaction, he was distracted by his daughter's illness and relied heavily on Snyder's legal and financial advice concerning how to satisfy the CLAT's 2010 annuity obligation.
Unlike the 2009 transaction, the 2010 transaction was not handled by McDonald & Kanyuk. Instead, Geoffrey Ransom, a former associate of McDonald & Kanyuk who had performed work on the 2009 transaction, provided legal advice for the 2010 transaction.
In August of 2012, more than a year and a half after the transaction between Berndt and Snyder, Bayer CropScience (" Bayer") acquired AgraQuest. The stock that had been sold to Snyder was transferred to Bayer in exchange for $2, 761, 515.59. Snyder used the proceeds of the sale to pay off his obligation on the promissory notes, and he kept the additional proceeds.
Berndt subsequently contacted Joseph F. McDonald, III of McDonald & Kanyuk to assist in working out a way to unwind the 2010 transaction so that the CLAT, and not Snyder, would be entitled to the approximately $2.7 million Snyder had received from the sale of the AgraQuest stock. Berndt and Snyder were unable to resolve their dispute. Berndt initiated this action against Snyder, bringing claims for breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duties, negligence, misrepresentation, fraudulent inducement, and violation of the New Hampshire Consumer Protection Act, RSA 358-A.
In June of 2014, Snyder subpoenaed McDonald to testify at a deposition and to produce prior to the deposition documents pertaining to the 2009 and 2010 transactions, including documents related to Lloyd's return of the AgraQuest stock to Berndt's daughter's trust in connection with the 2009 transaction. Through Berndt's counsel,  McDonald produced responsive documents to Snyder on June 19, 2014. McDonald did not raise any objections to the subpoena or produce a privilege log at that time.
On September 4, 2014, Snyder took McDonald's deposition. During the deposition, McDonald testified about several categories of documents that he had provided to Berndt's counsel, but which Snyder believed Berndt's counsel had not produced to Snyder. McDonald also testified that he jointly represented both Berndt and Snyder in late 2012 in an attempt to resolve the dispute over the 2010 transaction without resorting to litigation. Berndt's counsel represented McDonald at the deposition for the limited purpose of " preserv[ing] some privilege issues."  Ex. A to Def.'s Mot. (doc. no. 35-2) at 5. After the deposition, Snyder's counsel sent letters to McDonald and to Berndt's counsel seeking production of the materials that McDonald had testified he had provided to Berndt's counsel, but which had not been produced to Snyder during discovery.
On September 22, 2014, McDonald, through his counsel,  produced a privilege log listing documents that he provided to Berndt's counsel for purposes of Snyder's subpoena and which Berndt's counsel had withheld from production. In the accompanying cover letter, McDonald's counsel indicated that McDonald planned " to correct his deposition testimony to the extent he testified that he ...