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Note: St. Clair Mobile Home Parks (Borrower) applied for a loan from Nationwide Life Insurance (Lender) to finance development of an apartment building. Triad Capital Advisors (Broker) acted as Borrower's broker, but, unknown to Borrower during the loan negotiations, was also receiving compensation as an agent of Lender. The terms of the loan required Borrower to apply for an LC as collateral.

When Borrower failed to provide the LC as agreed and was unable to close the loan, Lender brought this action against Borrower for damages incurred as a result of Borrower's failure to close on the loan. Borrower filed a counterclaim for rescission, and filed a third party complaint against Broker for failure to disclose its conflict of interest. Borrower also alleged that during negotiations between Broker, Borrower's attorney, and Lender's attorney, Broker negligently misrepresented the dollar amount of the LC that Borrower would need in order to acquire a loan from Lender.

In the discovery phase, Broker sought to employ U.S. procedural rules (Federal Rule of Civil Procedure 45) to subpoena from Borrow's counsel all documents relating to this transaction. Borrower objected on the grounds that the documents were protected by attorney-client privilege. The court required that the documents be submitted to it for an in camera ruling.

Prior to issuing a ruling, Broker filed a supplemental memorandum indicating that Borrower's principal owner had testified at a deposition regarding details of communications with her attorney. Broker contended that this testimony constituted a waiver of attorney-client work product privilege.

At a hearing on Broker's motion to compel discovery, the United States District Court for the Eastern District of Missouri, Eastern Division, Fleissig, J., granted Broker's motion to compel with the exception of the notes of Borrower's counsel.

[JEB/dgd]

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