Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased, et al. - Page 11




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          prior to claiming the privilege; and (3) the crime-fraud                    
          exception, applicable due to participation by Mr. O’Keefe in Mr.            
          Johnston’s scheme to defraud Mr. Fitzsimon of his interest in the           
          Shorecliffs golf course.                                                    
               A.  Applicable Law                                                     
               As a threshold matter, we address the question of governing            
          law.  In general, section 7453 and Rule 143(a) provide that Tax             
          Court proceedings are to be conducted in accordance with the                
          rules of evidence applicable in trials without a jury in the                
          United States District Court for the District of Columbia.                  
          Consistent with this directive, we observe the Federal Rules of             
          Evidence.  Rule 501 of the Federal Rules of Evidence controls               
          issues of privilege and specifies as follows:                               
                    Except as otherwise required by the Constitution                  
               of the United States or provided by Act of Congress or                 
               in rules prescribed by the Supreme Court pursuant to                   
               statutory authority, the privilege of a witness,                       
               person, government, State, or political subdivision                    
               thereof shall be governed by the principles of the                     
               common law as they may be interpreted by the courts of                 
               the United States in the light of reason and                           
               experience.  However, in civil actions and proceedings,                
               with respect to an element of a claim or defense as to                 
               which State law supplies the rule of decision, the                     
               privilege of a witness, person, government, State, or                  
               political subdivision thereof shall be determined in                   
               accordance with State law.                                             
               The foregoing rule establishes a structure where “Issues               
          concerning application of the attorney-client privilege in the              
          adjudication of federal law are governed by federal common law.”            
          Clarke v. Am. Commerce Natl. Bank, 974 F.2d 127, 129 (9th Cir.              





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