In a striking reversal, a federal court judge now says lawyers representing Marsh Supermarkets Inc. can depose David A. Marsh in the company’s lawsuit against his father, Don Marsh.

Marsh Supermarkets' lawsuit alleges that its former CEO, Don Marsh, misused funds by treating the business “like his personal checkbook” to bankroll extravagant trips, maintain vacation homes and hide relationships with female employees.

The grocery chain is represented by Indianapolis-based Baker & Daniels LLP, which once did estate planning for David Marsh.

U.S. Magistrate Tim A. Baker last month sided with David Marsh in his argument that the law firm’s previous work it did for him presented a conflict of interest.

But, in a June 3 order, Baker said David Marsh since has admitted he waited until three days before the March deposition was to occur before raising the conflict argument even though he previously said he raised the issue in August—when an investigation by the Internal Revenue Service first came to light.

Court filings in April raised the possibility for the first time that the IRS inquiry into the expenses of David Marsh submitted for reimbursement may lead to federal charges.

“It now turns out, contrary to his prior assertion, that David did not raise the conflict in August 2010 when the IRS came into the picture,” Baker wrote in his reversal. “Instead, he waited until March 2011. This new factual scenario provides a proper basis for this court to depart from its prior conclusion.”

Baker said Marsh Supermarkets’ reply to his original ruling “sets forth a compelling litany of undisputed facts that depict an unreasonably delayed response by David.”

Among the facts are invoices Baker & Daniels produced to David Marsh and his lawyer showing that the firm had provided him estate planning services, of which David Marsh and his counsel had been aware for years without ever making an objection, Baker & Daniels’ lawyer David Herzog argued.

David Marsh’s lawyer countered that she was not aware of the conflict until three days before the March deposition after a “refreshed review of the B&D invoices.”

“However, counsel’s failure to adequately review the invoices for a conflict when she received them does not provide a sufficient justification for the delay,” Baker wrote.

David Marsh’s lawyer, Linda Cooley, declined to comment on the reversal.

Herzog would only say that “we’re pleased.”

Local lawyer Alan Brown, chairman of Cincinnati-based Frost Brown Todd LLC’s business litigation practice, said reversals do occur from time to time.

"Pretrial discovery disputes like this are dynamic matters," he said, "so it's not all that unusual for a federal magistrate to reassess a position when new information comes to light."

Like his father, David Marsh has battled the grocery store chain’s new owner, Florida-based private-equity firm Sun Capital Partners, over expenses the firm deemed improper.

David Marsh served as president of Marsh Supermarkets until February 2006. Don Marsh was CEO until September that year, when Sun completed its acquisition of the company. David Marsh now is president of the Crystal Flash convenience store chain.

Baker & Daniels represented Marsh Supermarkets in David Marsh’s suit filed in 2006 charging that Sun Capital Partners shorted him about $102,000 on a $2.1 million severance package. Both sides agreed to a confidential settlement in 2007.

Baker & Daniels helped David Marsh complete estate-planning documents before he sued his former employer in 2006. That legal work presents enough of a conflict that should prevent the firm from deposing him, he had argued in court documents.

Don Marsh got the ax as CEO just after Sun Capital bought the then-publicly owned grocery chain for $88 million in cash, plus the assumption of $237 million in debt.

The issue of what is considered reimbursable expenses is at the crux of Don Marsh’s defense, as well.

The IRS on May 17 reached a settlement with Marsh Supermarkets regarding nearly $5.3 million in personal travel and entertainment expenses reimbursed by the company to Don Marsh.