Court Finds Subject Matter Waiver of Attorney-Client Privilege

On June 5, 2017, Justice Oing of the New York County Commercial Division issued a decision in Siras Partners LLC v. Activity Kuafu Hudson Yards LLC, 2017 NY Slip Op. 31216(U), holding that a party had waived the attorney-client privilege, explaining:

[The plaintiff] proffers an email dated March 24, 2016 from Dai to a third-party investor, Lou Ceruzzi, concerning the UBS loan:

I was about to write to you this email last Friday but I decided to wait until we all sit down with attorneys this morning. It is concluded by legal counsels that we have no choice but buying the note from UBS immediately to cleanup the mess at Hudson Rise. Otherwise, all the equity we invested is at risk to be wiped out.

[The plaintiff] contends that this communication is a waiver of the attorney-client privilege regarding 462-470's acquisition of the UBS loan.

The principle is well settled that communications between an attorney and a client that are subsequently disclosed to third parties are not protected by the attorney-client privilege. I find that Dai waived the attorney-client privilege as to any communications and documents dealing with his counsel's advice that "we have no choice but buying the note from UBS immediately to clean up the mess at Hudson Rise. Otherwise, all the equity we invested is at risk to be wiped out." Contrary to the cases defendants' rely upon, Dai's communication to Ceruzzi goes beyond a client conveying to a third-party the decision to settle an action or withdraw a claim based on advice of counsel. Dai's communication provided a detailed description of specific legal advice and the course of action given to him by his attorneys, which he voluntarily divulged to a third party. Accordingly, defendants are directed to produce any communications and documents pertaining to the subject matter of the email.

(Internal quotations and citations omitted).