Opinion

UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF TENNESSEE

NASHVILLE DIVISION

LIMESTONE TRAIL APARTMENTS GP,

LLC et al.,

Plaintiffs, Case No. 3:25-cv-00814 / 3:26-cv-00631

v. Judge Eli J. Richardson

Magistrate Judge Luke A. Evans

TAX CREDIT HOLDINGS - LIMESTONE

TRAIL, L.L.C. et al.,

Defendants.

MEMORANDUM ORDER

Familiarity with the background of this case is presumed. Pending before the Court is a

motion by non-party Limestone Trail Apartments, LP (the “Partnership”) under Rule 45(d)(3) of

the Federal Rules of Civil Procedure. The Partnership wants to quash a document subpoena served

on its accountants, Eisner Advisory Group LLC, EisnerAmper LLP, and The Tidwell Group (the

“Accountants” collectively), by plaintiffs in this case.1 The subpoena would have the Accountants

produce:

1 Three brief procedural points are worth noting. First, the motion to quash originally was

filed in the Southern District of Ohio and transferred here on the consent of the parties. The motion

to quash appears in Case No. 3:26-cv-00631 in this District (the “2026 Case”), which has been

consolidated with this case. Second, the Partnership has explained that a corporate merger is the

reason why three named entities can be considered one collective accountant entity. (2026 Case,

Doc. No. 1 at 2.) Third, the Partnership has asserted standing to challenge the subpoena through

its assertion of the accountant privilege. Cf. Mann v. Univ. of Cincinnati, 114 F.3d 1188, 1997 WL

280188, at *5 (6th Cir. 1997) (table case) (“Whether the privacy or privilege claim is valid is not

the question. When a colorable claim is asserted, it is the court which must resolve the issue not

the attorney seeking discovery.”).

All communications (and documents attached thereto or included therewith)

exchanged with any of the Defendants relating to the Partnership, including,

without limitation, all communications relating to: the Partnership’s financials, tax

returns, and K-1s; and requests by any of the Defendants to

recharacterize/reclassify TCH’s [Tax Credit Holdings – Limestone Trail, L.L.C.]

equity installments as loans.

(2026 Case, Doc. No. 1-3 at 10.) The Partnership argues that the documents covered by the

subpoena should not be produced because they fall within Tennessee’s statutory accountant

privilege, Tenn. Code Ann. § 62-1-116(a), and because it has not waived that privilege. The

Partnership argues further that “post-removal characterizations of the LP Loans are irrelevant to

the claims and defenses of the parties to the action.” (Doc. No. 80 at 6.) Plaintiffs respond that the

Accountants are based in Ohio, which means that Ohio law applies to any questions of privilege.

Whether Ohio or Tennessee law applies here is significant because Ohio does not recognize an

accountant privilege. Additionally, plaintiffs argue that “even if Tennessee privilege law applies,

the requested communications are not privileged or privilege has been waived.” (Doc. No. 75 at

11.)

Federal Rule of Evidence 501 sets forth that, in a federal diversity case like this one, “state

law governs privilege regarding a claim or defense for which state law supplies the rule of

decision.” Fed. R. Evid. 501; see also First Horizon Nat’l Corp. v. Houston Cas. Co., No. 2:15-

CV-2235, 2016 WL 5867268, at *8 (W.D. Tenn. Oct. 5, 2016) (“In diversity actions, such as the

instant case, Rule 501 of the Federal Rules of Evidence requires that the state law of privileges

applies.”) (citations omitted). As an important related point, Rule 501 requires the Court “to apply

the substantive law of the forum with respect to privileges when the questions presented in the

action involve state, rather than federal, law.” Wright v. Jeep Corp., 547 F. Supp. 871, 875 (E.D.

Mich. 1982); accord Cline v. Reliance Tr. Co., No. 1:04-CV-02079, 2005 U.S. Dist. LEXIS 26066,

at *6 (N.D. Ohio Oct. 31, 2005) (law of the state where a diversity court sits governs privilege);

see also Star Editorial v. United States Dist. Court, 7 F.3d 856, 859 (9th Cir. 1993) (same);

Samuelson v. Susen, 576 F.2d 546, 550 (3d Cir. 1978) (same); Dixon v. 80 Pine St. Corp., 516

F.2d 1278, 1280 (2d Cir. 1975) (“It is not contested that, in a diversity case, the issue of privilege

is to be governed by the substantive law of the forum state.”) (citation omitted). Consequently,

Tennessee law will apply to the privilege question.2

Although Tennessee law will address the privilege question that the Partnership has raised,

the Court is concerned that Tennessee’s accountant privilege does not apply for a different reason.

Tennessee never has recognized a common-law accountant privilege. See Fed. Ins. Co. v. Arthur

Anderson & Co., 816 S.W.2d 328, 330 (Tenn. 1991). Any accountant privilege is statutory and

comes from the Tennessee Accountancy Act of 1998 (the “Act”), Tenn. Code Ann. §§ 62-1-101

to 62-1-203. Under the Act, the statutory category of accountant licensees “shall not divulge, nor

shall they in any manner be required to divulge, any information that is communicated to them or

obtained by them by the reason of the confidential nature of their employment.” Tenn. Code Ann.

§ 62-1-116(a). “Licensee” means the holder of a “license,” id. § 62-1-103(8), which in turn means

“a certificate issued under § 62-1-107, a permit issued under § 62-1-108 or a registration under

§ 62-1-109, or, in each case, a certificate, license or permit issued under corresponding prior law.”

Id. § 62-1-103(7). Section 62-1-109 concerns accountants licensed under prior state law and is not

applicable here, but Section 62-1-107 concerns applications for certificates from individuals while

Section 62-1-108 addresses applications for permits from accounting firms. Nothing in the record

indicates that any individual member of the Accountants applied for a Tennessee accountancy

certificate and showed “that the applicant holds a license in good standing in another jurisdiction

2 Incidentally, the application of diversity principles eliminates any need to address whether

any retainer agreement between the Partnership and the Accountants might contain a choice-of-

law provision specific enough to govern privileges. (See Doc. No. 75 at 12.)

in the United States and at the time the individual was licensed in another state, the individual

showed evidence of having successfully completed the uniform Certified Public Accountant

Examination.” Id. § 62-1-107(c). Similarly, nothing in the record indicates that the Accountants

have sought a permit to practice under Section 62-1-108. The Act does include a reciprocity

provision for accountants practicing in Tennessee who do not have a principal place of business in

Tennessee. Id. § 62-1-117. The reciprocity provision requires Tennessee to grant “practice

privileges” in the state “if at the time the individual was licensed, the individual showed evidence

of having successfully completed the Uniform Certified Public Accountant Examination.” Id.

§ 62-1-117(a); see also id. § 62-1-117(b)(2) (beneficiaries of reciprocity must “comply with this

chapter and the board’s rules”). The reciprocity provision, however, presupposes an out-of-state

accountant who wants to provide accountancy services within Tennessee. Here, nothing in the

record suggests that the Accountants are located in Tennessee or are trying to provide accountancy

services within Tennessee. The parties have not disputed the assertion that “the Partnership sought

out EisnerAmper’s services and engaged it in Ohio, not vice versa, and Ohio is where EisnerAmper

was then communicated with and furnished its services.” (Doc. No. 75 at 14.) The cases that the

Court found addressing Tennessee’s accountant privilege all concerned accountants or

accountancy firms located and operating within Tennessee. See First Horizon Nat’l Corp. v. Hous.

Cas. Co., No. 2:15-cv-2235, 2016 U.S. Dist. LEXIS 142332 (W.D. Tenn. Oct. 5, 2016) (accountant

located in state); Bowman v. Interstate Realty Corp., No. 2:15-MC-00024-STA, 2015 WL 5797748

(W.D. Tenn. Oct. 1, 2015) (same); Etheredge v. Etheredge, No. CIV.A. 1:12-0165, 2013 WL

4084642 (M.D. Tenn. Aug. 12, 2013) (same); Fed. Ins. Co. v. Arthur Anderson & Co., 816 S.W.2d

328 (Tenn. 1991) (same); Beckwith v. LBMC, P.C., No. M2017-00972-COA-R3-CV, 2019 Tenn.

App. LEXIS 138 (Ct. App. Mar. 21, 2019) (same); Dove v. Pharmerica Corp., 2017 Tenn. Bus.

LEXIS 5 (Davidson Cty. Chancery Crt. June 27, 2017) (same).

Under these circumstances, the Court does not agree that Tennessee’s accountant privilege

is so expansive that it reaches any accountants anywhere in the country who have no interest in

availing themselves of the state’s regulatory scheme, as long as the clients bring the work product

back to Tennessee. Cf. Dees v. Scott, 347 So. 2d 475, 477 (Fla. Dist. Ct. App. 1977) (statutory

accountant privilege did not apply to an accountant who did not meet the statutory criteria for

status as a “certified public accountant” or “public accountant”). The Court must be mindful that

the accountant privilege is a statutory derogation of Tennessee common law, and “statutes in

derogation of the common law are to be strictly construed and confined to their express terms.”

Ezell v. Cockrell, 902 S.W.2d 394, 399 (Tenn. 1995) (citation omitted).

If Tennessee’s accountant privilege does not apply then the Partnership lacks standing to

quash the subpoena unless it can demonstrate some other privilege or personal interest that would

confer standing. See, e.g., Sys. Prods. & Sols., Inc. v. Scramlin, No. 13-CV-14947, 2014 WL

3894385, at *7 (E.D. Mich. Aug. 8, 2014) (standing to challenge a subpoena generally is limited

to the party served with it, but “[p]ersonal rights or interests sufficient to confer standing to quash

a subpoena can arise in a variety of contexts”). To the extent that the Partnership argued in its reply

papers that “post-removal characterizations of the LP Loans are irrelevant to the claims and

defenses of the parties to the action” (Doc. No. 80 at 6), “the law is clear that only the entity

responding to the subpoena has standing to argue undue burden or relevance.” Covert Mfg., Inc. v.

Covert Innovations, LLC., No. 1:21-CV-1682, 2024 WL 904404, at *3 (N.D. Ohio Mar. 1, 2024)

(internal quotation and editorial marks and citations omitted); United States v. Carpenter, No. 1:05

CV 0586, 2007 WL 9719059, at *2 (N.D. Ohio June 7, 2007) (the person served with a subpoena

is in the best position to argue undue burden).

Conclusion

For all the foregoing reasons, the Court DENIES the Partnership’s motion to quash (2026

Case, Doc. No. 1), but without prejudice to a more detailed assertion of a privilege or a proprietary

interest that would confer standing.

Per the consolidation of the 2026 Case and this case, any further proceedings related to the

subpoena will be filed in the docket of this case. For the limited purpose of closing out the motion

where it was docketed, the Clerk of the Court is directed to docket a copy of this order in both

cases and to perform an administrative closing of the 20

It is so ORDERED.

LUKE A. EVANS

United States Magistrate Judge