Odyssey Reinsurance Company (“Odyssey”) has obtained an order compelling John Scannell to produce subpoenaed documents related to Odyssey’s efforts to collect a $3.2 million judgment rendered against Richard and Diane Nagby. The judgment stems from a reinsurance contract between Odyssey and Cal-Regent Insurance Services. We previously wrote about this dispute .
Scannell objected that the documents were protected by California’s taxpayer privilege. California courts have determined the state’s taxation statutes provide the privilege “to encourage the voluntary filing of tax returns and truthful reporting of income,” thereby facilitating tax collection. The privilege may be overcome where it is intentionally waived, the gravamen of the lawsuit is inconsistent with the privilege, or by a public policy “greater than that of the confidentiality of tax returns.”
The court found the privilege was overcome in this matter, which it described as an effort by Odyssey “to recover that money from sources that it contends have actively endeavored to thwart collection efforts.” As such, the Nagby’s privacy concerns “shrink in the shadow of the public policy subversion” that would result if their effort to hide behind the privilege were successful.
In addition, the court determined that Scannell had waived any objection to the subpoena under Federal Rule of Civil Procedure 45 by failing to raise it within 14 days of service of the subpoena. The waiver may be overcome by demonstrating that the failure to assert the objection was due to unusual circumstances and a good cause, but Scannell could not meet either requirement. , Case No. 16-CV-3038-BTM (USDC S.D. Cal. March 29, 2018).