Spirit Master Funding, LLC v. Pike Nurseries Acquisition, LLC
2012 U.S. Dist. LEXIS 165334, 287 F.R.D. 680, 2012 WL 5866218 (2012)
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Rule of Law:
Documents created because of the prospect of litigation are protected by the work-product doctrine, even if they also serve a business purpose. To overcome this protection for materials prepared by a non-testifying expert, the requesting party must show exceptional circumstances, meaning it has a substantial need and cannot obtain the substantial equivalent of the information by other means.
Facts:
- Spirit Master Funding, LLC ('Spirit') leased commercial property to Pike Nursery Holding, LLC ('Pike').
- In June 2011, Pike notified Spirit that the property's roof had collapsed in a storm six months prior and sought rent concessions.
- Pike's own engineer, Jack Bell, inspected the property in July 2011 and reported that the building's structural integrity had been compromised.
- On August 20, 2011, after Spirit denied the rent concessions, a Pike representative sent an email to Spirit stating, 'Too bad You just inherited a mess and lost millions... The federal bankruptcy judge will decide the issue separately from the other leases. So told by our attorney I can’t stop it now.'
- On August 24, 2011, Gwinnett County 'red tagged' the building as unsafe for occupancy.
- That same day, Spirit retained legal counsel, who, anticipating litigation, hired roofing engineer Ray Ramos in late August and structural engineer Khris Hercules in October to inspect the property and report their findings.
- On August 29, 2011, counsel for Pike provided formal notice of its intention to terminate the lease, asserting the property had suffered a 'Total Condemnation or Casualty.'
Procedural Posture:
- Spirit Master Funding, LLC sued Pike Nursery Holding, LLC in the U.S. District Court for the Northern District of Georgia, a federal trial court.
- During the discovery phase of the litigation, Pike served Spirit with a request for production of documents.
- Pike requested all communications and documents related to inspections of the disputed property, including those involving Spirit's consulting experts, Ramos and Hercules.
- Spirit objected to the request, asserting that the documents were protected from discovery under the work-product privilege.
- The parties brought their discovery dispute before the district court for resolution.
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Issue:
Does the work-product privilege protect from discovery documents prepared by and communications with a party's non-testifying consulting experts who were retained in anticipation of litigation?
Opinions:
Majority - Judge Amy Totenberg
Yes. The work-product privilege protects from discovery the documents prepared by and communications with Spirit's non-testifying consulting experts. The court found that Spirit met its burden of establishing that the materials were prepared in anticipation of litigation, as its belief that litigation would ensue was objectively reasonable following Pike's email referencing its attorneys and a potential bankruptcy proceeding. The court applied the 'because of' test, holding that even if the expert reports served a dual purpose of informing a business decision, they were created 'because of' the prospect of litigation and are therefore protected. Pike failed to meet its heavy burden of demonstrating 'exceptional circumstances' to overcome the privilege, as it did not show it was unable to obtain the underlying factual information through other discovery methods, such as interrogatories or depositions of Spirit's representatives.
Analysis:
This case reinforces the strength and scope of the work-product doctrine as it applies to non-testifying, consulting experts under Federal Rule of Civil Procedure 26(b)(4)(D). The decision clarifies that the 'because of' test for dual-purpose documents provides robust protection, shielding materials from discovery so long as the anticipation of litigation was a motivating purpose for their creation. It solidifies the high bar of 'exceptional circumstances' required to overcome the privilege, emphasizing that the inability to access an attorney's prepared documents does not equate to an inability to discover the underlying facts through other means. This holding guides litigants that they cannot easily access an opponent's trial preparation materials simply by claiming the information is relevant; they must prove the factual equivalent is truly unobtainable elsewhere.
