Court Sanctions Estate for Discovery Leaks

     CHICAGO (CN) – The 7th Circuit remarked on an estate battle’s Dickensian overtones as it affirmed sanctions against a party that violated a protective order governing discovery.
     The dispute stems from Ruth and Milton Kiver’s retention of Chuhak & Tecson in 1973 to plan and represent their estate, which they established to benefit their two daughters, Diane and Maureen.
     Milton died in 2005, but Chuhak & Tecson allegedly never provided Maureen or her husband, Minor Scott, with a copy of Milton’s trust.
     Maureen died unexpectedly two years later, and the Internal Revenue Service accepted Milton’s final estate tax returns a couple of months later, at which point Milton’s estate became eligible to split into separate trusts.
     Maureen’s estate, represented by her husband, sued Chuhak & Tecson in federal court, and her sister Diane in state court, for failing to disclose terms of the family trusts to Maureen and failing to make distributions to her estate.
     Because Diane was also a Chuhak & Tecson client, the District Court entered a protective order intended to protect each litigant’s attorney-client privilege. Attorneys for the Maureen’s estate later admitted, however, to sharing confidential documents entered only in the federal action.
     The District Court then closed the discovery period four days early as a sanction for the willful violation of the protective order. It later ruled against the estate on its malpractice claims.
     Maureen’s estate called the sanctions “draconian” and said they gave Chuhak & Tecson (C&T) an “unconscionable advantage.”
     A three-judge panel of the 7th Circuit affirmed on all issues Monday.
     “We do not think that there is anything unconscionable about ending discovery four business days early, following an approximately six-month window for discovery, based on the estate’s violation of the express terms of the protective order,” Judge John Tinder wrote for the court.
     The panel also questioned whether Maureen could have suffered damages given her untimely death before her father’s estate could be distributed to his heirs.
     “It is undisputed that Maureen died two months before Milton’s federal tax liability was finally determined,” Tinder added. “Thus, according to the terms of the MGT [Milton Kiver Grantor Trust] instrument, C&T was not required to create a separate trust for Maureen during Maureen’s lifetime. Thus, we fail to see how Maureen could have benefited from possessing the information concerning the MGT that C&T allegedly withheld from her.”
     The 24-page opinion concludes with Tinder comparing the case to a Charles Dickens novel.
     “The complexity of the multiple trusts that the parents created, the untimely death of Maureen, the pursuit of concurrent state and federal suits against Diane and C&T, the length of this litigation, and the disorderly nature of the estate’s presentation to our court, taken together, evoke a middle installment of Bleak House,” Tinder wrote. “This opinion, however, may push the federal chapter of the story to a close.”

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