On October 18, 2013, Mr. Waterman filed brief on the “crime-fraud exception” to claims of attorney-client and work product privilege in a 3-car crash case in Circuit Court for Gloucester County, Virginia. The lawsuit is Landon L. Lyles v. Fredrick J. Calloway, Illinois National Insurance Co., and American Home Assurance Company, No. CL 000070-00.
Claimed “privilege does not permit a litigant to commit fraud upon a court”.Owens-Corning Fiberglas Corp. v. Watson, 243 Va. 128, 141 (1992)(misleading defense discovery response constituted fraud on the court). “[A] controlling factor is ‘whether the misconduct tampers with the judicial machinery and subverts the integrity of the court itself’.” Id. at 142.
“[T]here is a wide difference between doing, conspiring and contriving a wrong and in seeking counsel after the wrong is done. The protection which the law affords to communications between attorney and client has reference to those which are legitimately and properly within the scope of a lawful employment and does not extend to communications made in…perpetration of a fraud.” Seventh District Committee of The Virginia State Bar v. Gunter, 212 Va. 278, 287 (1971)(claim of privilege re attorney-client communications vis-à-vis “intended fraud” rejected)
“If the communication between attorney and client relates to unlawful or fraudulent accomplishment, higher public policy, and the duty of an attorney to society as a whole, abrogates the privilege,” pronounced the Virginia Supreme Court in Gunter. “The perpetration of a fraud is outside the scope of the professional duty of an attorney and no privilege attaches to a communication and transaction between an attorney and client with respect to transactions constituting the making of a false claim or the perpetration of a fraud.” Id. (emphasis added)
In 1982 in National Airlines v. Shea, 223 Va. 578 (1982)(default judgment set aside), the Virginia Supreme Court again found fraud on the court because of “half-truth” by an attorney. The court is “entitled to a full, fair, and truthful answer,” not “disingenuous half-truth. He had a duty to be above board with the court and fair with opposing counsel.” Id. at 582-583. Cf., State Farm Mut Auto Ins. Co. v. Remley, 270 Va. 209, 218 (2005)(no fraud on the court where defense counsel’s acts “did not hinder, affect, or impair the ability” of the opposition)(emphasis added).
In 1993, in Peterson v. Fairfax Hosp. Sys., Inc., 32 Va. Cir. 294 (Fairfax Dec. 21, 1993), Circuit Court for Fairfax County found the defense withholding investigative materials and asserting contrary to them could constitute attempted fraud.Peterson implicated the crime-fraud exception and in camera review. Id. at 294-297.
In 2000, Circuit Court for the City of Virginia Beach found fraud on the court where the defense “deliberately and knowingly concealed from the Court the true party in interest”. City of Virginia Beach v. Nala Corp., 53 Va. Cir. 309, 321 (Virginia Beach Sep. 29, 2000)(prior court order vacated). Similarly Defendants, American Home and Illinois National, are apparently concealing from this Court and undersigned counsel the true UIM insurer(s).
The following month in 2000, another judge in Virginia Beach found that the “crime-fraud exception” eviscerated a defendant’s claim that his attorney-client communications were privileged. Patel v. Allison, 54 Va. Cir. 155 (Virginia Beach Oct. 30, 2000). In Patel, the defense attorney’s “false, misleading, and incomplete discovery responses” were “actual or attempted perpetration of fraud”. Id. at 156-158.
In 2004, the Eastern District of Virginia found a party that “took legal advice respecting a patent-licensing and litigation strategy,” thereby implementing a facially lawful yet substantively inappropriate “spoliation scheme,” triggered the crime-fraud exception and lacked attorney-client privilege. Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280 (E.D. Va. 2004). In 2011, the Eastern District again invoked the crime-fraud exception and found attorney-client privilege “waived” where defendants used their law firm’s dubious report attempting to convince the opposition not to prosecute. Frascella v. Oracle Corp., 2011 U.S. Dist. LEXIS 72377 (E.D. Va. Jul. 6, 2011). Cf., In re Grand Jury Proceedings #5, 401 F.3d 247 (4th Cir. 2005).