Motion to compel; attorney-client privilege; work-product privilege; confidentiality; Kovel agreement.
By Andrea Bonilla | Staff Writer
Plaintiff was a member of defendant Clermont York Associates, LLC (“Clermont”), a real estate holding company. Defendant Jeffrey J. Feil (“Feil”) was Managing Member of Clermont and owner of Broadwall Management Corporation (“Broadwall”), a property manager/brokerage firm that operates and brokers the residential portion of properties owned by Clermont. In 2008, plaintiff suspected that Feil was improperly withholding distributions from several real estate holding companies in which plaintiff had an interest, including Clermont. As a result, plaintiff hired a litigation boutique to represent him in any upcoming litigation. In anticipation of litigation, plaintiff requested an inspection of books and records relating to Clermont and several other entities. Plaintiff then retained an accounting firm to provide forensic accounting services in connection with the contemplated litigation. The agreement setting forth the scope of the accounting firm’s services stated that all professional services would be directed by the litigation boutique and that all reports, communications, and work product would be submitted to the litigation boutique. An accountant at the firm communicated by email, phone, and in-person with several employees of Broadwall. He requested information pertaining to Clermont’s books, records, and construction project files. On June 10, 2010, the litigation boutique ceased representing plaintiff. Subsequently, in 2010, 2011, & 2012, the accountant continued to obtain financial information on plaintiff’s behalf from Clermont by email or letter request. After plaintiff terminated the litigation boutique, plaintiff obtained subsequent counsel. There was no agreement on record to retain the accounting firm to assist subsequent counsel. Plaintiff brought an action to obtain access to Clermont’s books and records as well as for an accounting of all monies received and disbursed by Clermont in connection with any of its assets. Plaintiff alleged that defendants refused to provide him with access to Clermont’s books and records except on limited terms contrary to Clermont’s Operating Agreement. Subsequently, plaintiff filed a motion to compel production of documents on defendants’ privilege log, including communications with Broadwall’s employees and emails that did not involve attorneys. Defendants opposed plaintiff’s motion and moved to compel production of documents on plaintiff’s privilege log regarding his communications with the accounting firm. Each party withheld production claiming attorney-client and work-product privileges. The court referred the issues raised by the motions to a Judicial Hearing Officer (“JHO”) who reviewed the parties’ documents in-camera to determine whether the attorney-client or work-product privileges applied. The JHO recommended upholding plaintiff’s assertion of privilege for all communications with the accounting firm. He further recommended the court uphold the assertions of privilege for most documents, including those between Feil’s counsel and Broadwall employees, and compel production of defendants’ emails which contained “colorful language.” Plaintiff and defendants moved to confirm in part and reject in part the report of the JHO. The court found that the privilege protected only documents containing the accounting firm’s communications from October 16, 2008 through June 10, 2010, when plaintiff was represented by the litigation boutique. Since there was no proof of a Kovel agreement, or a separate agreement that would extend the attorney-client privilege to a third party hired as an agent of an attorney or client, for communications with the accounting firm after June 10, 2010, those communications were not privileged and had to be disclosed. The court determined that log entries that were derivative comments or that contained “colorful language” were not communications for the purpose of obtaining legal advice and, therefore, were not protected by the privilege. The court found that certain communications were privileged since Feil could share advice from litigation counsel with his trust and estate attorneys. The court denied defendants’ motion to the extent that it sought to compel production of documents between plaintiff and the accounting firm during the period from October 16, 2008 through June 10, 2010, but granted it insofar as it sought production of documents subsequent to June 11, 2010. The court granted plaintiff’s motion to the extent of compelling defendants to produce certain privilege log entries.
Barry v. Clermont York Assoc., LLC, Index No. 650838/2012, 12/19/14 (Komreich, J.).