Estate of Barbano v White
Annotate this CaseDecided on October 19, 2004
Supreme Court, Chenango County
Estate of Frances Barbano, Plaintiff,
against
Cynthia White; ROBERT WHITE; LEONARD FOX; LYNN FOX; ONEIDA VALLEY BANK; and JOHN BARBANO, Defendants.
2002x410
Miller & Miller
By: Thomas H. Miller, Esq.
Attorneys for Plaintiff
P.O. Box 875
39 South Main Street
New Berlin, New York 13411
Peter Finocchiaro, ESQ.
Attorney for Defendants, Robert White and Cynthia White
Seneca Avenue
Box 90 Canastota, New York 13032
Chenango County Department
of Social Services
By: Sarah Fitzpatrick, Esq.
Court Street
Norwich, New York
Peter E. Smith, Esq.
Attorney for Defendant Richard Durant
P.O. Box 543
Wampsville, New York 13163
Phillip R. Rumsey, J.
In this action, plaintiff estate seeks to recover money allegedly stolen or converted by the defendants from plaintiff's decedent, Frances Barbano, during her lifetime. Presently before the court are motions by plaintiff, for, inter alia, a declaration as to the admissibility of two items of evidence, and by plaintiff's counsel, for permission to represent a trust established for the benefit of Barbano and her husband, who was formerly named as a defendant herein, as a plaintiff.
With respect to the evidentiary issue, plaintiff seeks a determination by the court as to whether (1) certain file memoranda, prepared by an attorney consulted by defendants (or the attorney's staff), and (2) testimony given by that attorney in a bankruptcy hearing, are protected by the attorney-client privilege. Plaintiff contends that the items in question fall within one or more of the exceptions to the privilege, and may therefore be utilized in this action, subject to other potential objections, such as hearsay or relevance.[FN1]
Having considered all of the evidence tendered by plaintiffs, with the exception of the actual content of the items allegedly protected by privilege, the court has concluded that those items would indeed come within the scope of either the "fiduciary" exception, or the "crime-fraud" exception, to the attorney-client privilege. The fiduciary exception (which was largely, but not completely, eliminated by the addition of subparagraph [a][2] to CPLR 4503, effective August 20, 2002 [FN2]) bars an individual who consults an attorney in a fiduciary capacity from later [*2]invoking the privilege to shield those communications from the beneficiary on whose behalf he or she was purportedly seeking advice or assistance, upon a showing of "good cause" for their disclosure (see, Hoopes v Carota, 142 AD2d 906, 910, affd 74 NY2d 716). Defendants testified in their bankruptcy hearing, and their former counsel averred in this action, that they conferred with the attorney in question (hereinafter J.B.) in connection with their management of funds for Barbano and her husband John, pursuant to a power of attorney that had been executed by John in favor of defendant Cynthia White, and also in furtherance of the Barbanos' estate planning goals (see, Affirmation of Peter J. McBride, Esq., dated August 5, 2002, ¶¶ 9-11). If this testimony is credited, and it is found that - as defendants contend - their only intention was to protect the interests of the Barbanos, the basic premise of the fiduciary exception would be satisfied, leaving only the issue of whether plaintiff has shown "good cause" for disclosure.
The record provides ample support for a finding of "good cause" to bar defendants from invoking the privilege to shield their communications from plaintiff. Here, as in Hoopes,
Plaintiff[] may have been directly affected by any decision defendant[s] made on [their] attorneys' advice. The information sought is highly relevant to and may be the only evidence available on whether defendant[s'] actions respecting the relevant transactions and proposals were in furtherance of the interests of the [Barbanos] or primarily for [their] own interests * * * . The communication apparently related to prospective actions by defendant[s], not advice on past actions. Plaintiffs' claims of defendant's self-dealing and conflict of interest are at least colorable * * * . On the other hand, defendant[s] made no showing * * *, of any factors which would militate in favor of applying the privilege to the information sought.
(Hoopes, at 910). Thus, the privilege must yield to plaintiff's greater interest in discovering what actions were taken on the Barbanos' behalf and in the guise of protecting their interests.
If, on the other hand, the factfinder were to reject defendants' testimony as to their reasons for seeking legal counsel, and find that they did not consult J.B. in a fiduciary capacity, the only remaining inference would be that they did so in pursuit of their own interests. In that case, the remainder of the evidence - including the facts surrounding the preparation and presentment of the $110,000 check (see, Barbano v Oneida Savings, [Chenango Co. Index No. 2002x783], Decision and Order dated August 13, 2003), and the uses to which some of the money acquired from the Barbanos was put by defendants - could, if credited, provide ample support for a finding of probable cause that defendants intended to commit a crime or engage in fraud or other wrongdoing, and that their communications with J.B. were "in furtherance of" that intention. This would, in turn, establish the applicability of the "crime-fraud" exception to the privilege (see, Nowlin v People, 1 AD3d 172, 173; Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 1 AD3d 223, 224).
Thus, while it might not be apparent, on the basis of the present record, which of the exceptions applies, it is clear that there is no reasonable view of the evidence that would support a finding that no exception applies, and therefore that the subject materials are covered by the [*3]privilege. This aspect of plaintiff's "omnibus" motion must therefore be granted.
Also unresolved are several requests by plaintiff that defendants be restrained and prohibited from disposing of assets, during the pendency of this action. Upon due deliberation, the court has determined that those portions of the motion denominated (IV)(a), (c), and (e) should be, and hereby are, granted, and the remainder of the relief outlined in paragraph (IV) is denied.[FN3]
Turning to the second motion, in which plaintiff's counsel seeks court permission to represent the interests of a trust established for the benefit of plaintiff's decedent and her husband, John Barbano (or the estate of John Barbano, if one must be established for this purpose), the court finds no reason to deny such "permission" (insofar as the same is even required). Counsel has obtained the permission of the trustee, all beneficiaries of the trust, and all apparent beneficiaries of John Barbano's estate, as well as that of plaintiff's executor, and all of its beneficiaries, to the joint representation (Affidavit of Theresa Baker, dated September 29, 2004; Affidavit of John A. Barbano, dated September 30, 2004). Although defendants object, they have not come forth with proof of any facts that might give them standing to do so, or that might establish a legitimate basis for denying counsel's request.
It is unclear, at this juncture, whether the trust would be a "proper party" (CPLR 1015) to pursue any interest that John Barbano may have had in this action, prior to his death, or whether that may only be done by his estate. Although the trust calls for the distribution of its corpus, and hence apparently terminates, upon the death of both of the Barbanos (which has already occurred) (Affirmation of Thomas H. Miller, Esq., dated September 30, 2004, Exhibit A [Trust]), it has been held, under some circumstances, that in the course of "winding up" such a trust, the trustee may "acquire additions to the trust," as well as "sell and distribute trust assets" (see, Cerbone v Cerbone, 104 Misc 2d 472, 474). That issue is not before the court at this time, and nothing herein should be viewed as expressing any opinion as to its proper resolution. It appears, however, that the distinction may be of little practical import in any event, for the trust document and wills proffered by plaintiff show the beneficiaries of all three entities to be identical (Miller Affirmation of September 30, 2004, Exhibits A [Trust], C [Last Will and Testament of Frances Barbano], D [Last Will and Testament of John Barbano]).
Counsel's motion for permission to represent the interests of the Irrevocable Living Trust for the benefit of John Barbano and Frances Barbano, and/or the Estate of John Barbano, is hereby granted.
This decision shall constitute the order of the court.
Dated: October 19, 2004
Cortland, New York
____________________________
HON. PHILLIP R. RUMSEY [*4]
Supreme Court Justice
ENTER
The following papers were filed with the Clerk of the County of Chenango:
-Notice of Motion Seeking Multiple Grounds of Relief Including Request to Amend Complaint; Demand for Accounting; Restraint on Assets; Resolution on Issue of Admissibility and Request for Conference and Trial Preference dated February 14, 2004;
-Affirmation of Counsel in Support of (Omnibus) Order to Show Cause of Thomas H. Miller, Esq. dated February 13, 2004 with attached Exhibits A-B:
-Proof (Affidavit) of Service of Notice of Motion and Supporting Papers (Omnibus Motion) of Yvonne Nicholson sworn to February 17, 2004;
-Defendant, Barbano's, Counsel's Affidavit in Reply to Plaintiff's Order to Show Cause of Michael D. Ferrarese, Esq., sworn to March 10, 2004; Affidavit of [*5]Mailing of Defendant's Affidavit in Reply to Show Cause Order of Judy B. Cosens sworn to March 10, 2004;
-Defendant, Whites', Counsel's Affidavit in Reply to Plaintiff's Order to Show Cause of Peter M. Finocchiaro, Esq. sworn to May 17, 2004; Affidavit of Mailing of Defendant's Affidavit in Reply to Show Cause Order of Tammy Learned sworn to May 17, 2004;
-Affirmation in Support of Motion (Attorney-Client Privilege) of Thomas H. Miller, Esq. dated June 17, 2004 with attached Exhibits A-I;
-Proof (Affidavit) of Service of Yvonne Nicholson sworn to June 23, 2004;
-Affirmation in Opposition to Plaintiff's Motion to Allow Attorney-Client Privilege of Peter M. Finocchiaro, Esq. dated August 17, 2004;
-Notice of Motion to Permit Counsel to Represent Theresa M. Baker as Trustee of the Trust f/b/o John Barbano as an Additional Plaintiff dated August 6, 2004; Affirmation of Counsel in Support of Motion of Thomas H. Miller, Esq. dated August 6, 2004; Proof (Affidavit) of Service of Thomas H. Miller, Esq. dated August 6, 2004;
-Supplemental Affirmation of Counsel in Support of Motion dated August 25, 2004; Proof (Affidavit) of Service of Yvonne Nicholson sworn to August 27, 2004;
-Affirmation In Support of Plaintiff's Motion to Allow Counsel to Represent Trust of the Late John Barbano of Thomas H. Miller, Esq. dated September 30, 2004 with attached Exhibits A-E;
-Affirmation in Opposition to Plaintiff's Motion to Permit Counsel to Represent Theresa M. Banker as Trustee of the Trust f/b/o John Barbano as an Additional Plaintiff of Peter M. Finocchiaro, Esq. dated September 23, 2004;
-Original Decision and Order dated October 19, 2004.
Footnotes
Footnote 1:Inasmuch as plaintiffs have framed their motion in this way, and seek only a determination as to the applicability of the attorney-client privilege, the court shall not consider, or make any findings as to, whether the items in question may in fact be inadmissible on such other grounds.
Footnote 2:By its terms, the amendment does not apply to the instant case, inasmuch as neither of the defendants was, at the time they conferred with counsel, a "personal representative" of either
of the Barbanos, as that term is defined in the statute (CPLR 4503 [a][2][b]).
Footnote 3:All other issues raised on that motion have been resolved by prior order of the court, dated July 15, 2004.
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