Duress Defense Put Party's Communications With Counsel at Issue, Waiving Privilege

On August 5, 2018, Justice Nowak of the Erie County Commercial Division issued a decision in Jones v. Biloh, 2018 NY Slip Op. 31949(U), holding that a party had waived privilege because its duress defense had put its communications with counsel at issue, explaining:

In paragraph 145 of the answer, defendants allege:

Soon after executing the Operating Agreement, Biloh sought legal advice regarding the enforceability of the Agreement he was coerced into signing. Using the advice he received, on or about August 5, 2014, Biloh contacted Jones by telephone and informed Jones that the Agreement was unenforceable and that Velocity Development, LLC was not an operational company.

In making this allegation, defendants have affirmatively placed the legal advice received by Biloh at issue with respect to the defense of duress. At issue' waiver occurs where the party asserting privilege performs an affirmative act that put(s) the protected information at issue by making it relevant to the case under circumstances where application of the privilege would have denied the opposing party access to information vital to his defense. Defendants are entitled to know whether the legal advice received by Biloh supports or potentially undermines the defense of coercion in this action.

Even without the express allegations in paragraph 145 of the answer regarding legal advice, Biloh would still have to offer testimony and other evidence as to whether he acted promptly to repudiate the operating agreement otherwise he will be deemed to have ratified it. Any evidence that Biloh remained silent or acquiesced in the agreement for a period time after he had the opportunity to repudiate it will undermine if not completely vitiate the defense of duress. Notably, at least one of the documents at issue would seem to be inconsistent with a claim that defendants promptly repudiated the agreement. What Biloh said and did, including who he spoke to, after he was allegedly coerced into signing the operating agreement, is highly relevant, if not essential to both defendants' ability to assert the defense of duress as well as plaintiffs' ability to counter that defense. This necessarily includes the nature and scope of the legal advice that Biloh requested and received with respect to the operating agreement. Thus, plaintiffs have established a substantial need for this information in order to contest defendants' claims of duress. With that said, if defendants withdrew the defense of duress, it seems likely that none of the documents at issue would be relevant to the issues remaining in this action.

(Internal quotations and citations omitted).

An issue that arises in almost all complex commercial litigation is identifying evidence that should be withheld from production because it is subject to the attorney-client or other privilege. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding the attorney-client, common interest, work product or other privileges or exemptions from production of evidence.