AMERESTATE HOLDINGS, LLC v. CBRE, INC.
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2416-17T3
AMERESTATE HOLDINGS, LLC,
BROADWAY WEST, LLC and
811 ASSOCIATES, LLC,
Plaintiffs-Appellants,
v.
CBRE, INC., CHARLES BERGER,
ELLI KLAPPER, BACA REAL ESTATE
INVESTMENT CORP., 1064 REALTY
CORP., WESLEY REALTY CORP.,
B'WAY REALTY CORP., DRESDNER
ROBIN ENVIRONMENTAL MANAGEMENT,
INC., and EDWARD V. KOLLING,
Defendants-Respondents,
and
GRID REAL ESTATE, LLC,
GRID COMMERCIAL REAL ESTATE,
LLC, and ROBERT ANTONICELLO,
Defendants.
_______________________________
DRESDNER ROBIN ENVIRONMENTAL
MANAGEMENT, INC. and EDWARD
V. KOLLING,
Third-Party Plaintiffs,
v.
FEINSTEIN, RAISS, KELIN &
BOOKER, LLC, and RICHARD S.
KLEIN, ESQ.,
Third-Party Defendants.
_______________________________
Argued April 30, 2018 – Decided September 4, 2018
Before Judges Accurso, O'Connor and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Hudson County, Docket No. L-
3012-15.
John R. Wenzke argued the cause for appellants
(Lasser Hochman, LLC, attorneys; John R.
Wenzke, of counsel and on the brief).
Kenneth L. Moskowitz argued the cause for
respondents CBRE, Inc., Charles Berger and
Elli Klapper (Brown Moskowitz & Kallen, PC,
attorneys; Kenneth L. Moskowitz and Steven R.
Rowland, of counsel and on the brief).
Charles F. Kellett argued the cause for
respondents Dresdner Robin Environmental
Management, Inc. and Edward V. Kolling
(Kaufman Dolowich & Voluck, LLP, attorneys;
Gino Zonghetti, of counsel and on the brief;
Charles F. Kellett, on the brief).
The Aboushi Law Firm, attorneys for
respondents Baca Real Estate Investment Corp.,
1064 Realty Corp., Wesley Realty Corp., and
B'Way Realty Corp., join in the briefs of
respondents CBRE, Inc. and Dresdner Robin
Environmental Management, Inc.
PER CURIAM
By leave granted, plaintiffs Amerestate Holdings, LLC,
Broadway West, LLC and 811 Associates, LLC, (collectively referred
2 A-2416-17T3
to as "plaintiffs") appeal from orders requiring disclosure of
certain attorney-client communications related to Amerestate's
February 5, 2015 purchase of a Jersey City real estate development
site. Because we are convinced the motion court correctly
determined plaintiffs waived the attorney-client privilege with
regard to the limited communications that are the subject of the
court's orders, we affirm with the modification that only
communications occurring prior to the February 5, 2015 purchase
shall be disclosed.
I.
A. The Complaint
We first summarize the allegations in plaintiffs' amended
complaint1 because they provide context for the dispute leading to
the orders challenged on appeal. Plaintiffs allege that in 2014
Amerestate's managing member, Jacob Salamon, received an email
from defendant Charles Berger, a vice president and real estate
agent at defendant CBRE, Inc., concerning a Jersey City real estate
development site being offered for sale by defendants Baca Real
Estate Investment Corp., 1064 Realty Corp., Wesley Realty Corp.
and B'Way Realty Corp. (collectively referred to as the "seller
defendants"). According to the complaint, Salamon thereafter
1
The operative complaint is the June 6, 2016 amended complaint.
The original complaint was filed in July 2015.
3 A-2416-17T3
received a prospectus prepared by CBRE representing that the site
consisted of seven adjoining lots comprised of 3.91 acres totaling
170,479 square feet, and the development could consist of
approximately 580 as-of-right apartment units.
The complaint alleges that in addition to Berger and CBRE,
defendants Grid Real Estate, LLC, its president, defendant Robert
Antonicello, and CBRE vice president Elli Klapper acted as the
seller defendants' agents, and were responsible for the
representations in the prospectus. Plaintiffs claim
representations concerning the number of as-of-right units were
material to the decision to purchase the site because as-of-right
units could be constructed without obtaining zoning approvals and
other variances. Plaintiffs further allege CBRE, Berger and
Klapper knew the right to construct that number of units was
material to the purchase decision.
Based on CBRE's representations concerning the acreage and
number of as-of-right units, in June 2014, plaintiffs submitted a
$19.5 million offer to purchase the site, and requested that Berger
and CBRE confirm that "approximately 580 as-of-right units could
be built on the . . . site." Berger later advised Amerestate that
CBRE had retained a professional planner, defendant Edward V.
Kolling, who was the director of planning services at defendant
Dresdner Robin Environmental Management, Inc., (Dresdner Robin),
4 A-2416-17T3
and that Kolling confirmed approximately 565 as-of-right units
could be constructed on the site.
As negotiations for the purchase contract continued,
plaintiffs required confirmation from Berger and CBRE that they
would be able to build 565 as-of-right units on the site. The
complaint alleges the confirmation was required because the
purchase agreement would not provide for due diligence or physical
inspection of the property, other than for environmental issues.
In August 2014, Berger sent Amerestate an analysis from
Dresdner Robin representing that 567 as-of-right units could be
built on the site, and explaining its methodology for the
calculation. According to the complaint, in direct reliance on
the representations concerning the as-of-right units, Amerestate
entered into an Agreement of Purchase and Sale for the site on
September 3, 2014. The closing of title took place almost five
months later on February 5, 2015, for the agreed-upon $19.5 million
sale price.
It was not until after the closing that Amerestate obtained
a survey of the consolidated seven lots and learned for the first
time that the site consisted of only 146,085 square feet, or
3.35365 acres, and, as a result, only permitted construction of
486 as-of-right apartment units. Plaintiffs allege they then
learned that prior to CBRE's distribution of the prospectus and
5 A-2416-17T3
the subsequent negotiations surrounding Amerestate's execution of
the purchase agreement, CBRE, Grid, Berger, Klapper and
Antonicello (collectively referred to as the "broker defendants")
met with representatives from the Jersey City Planning Staff and
were advised the site permitted "no greater than 510 as-of-right
units." Plaintiffs allege the broker defendants failed to disclose
this information.
Plaintiffs further claim Kolling advised the broker
defendants in May 2014 that the number of as-of-right units might
be no greater than 498, but that information was never conveyed
to plaintiffs. In addition, plaintiffs aver that in August 2014,
at the broker defendants' request, Dresdner Robin and Kolling
deleted a discussion of its calculation of the 498 as-of-right
units from a letter it prepared, knowing CBRE would provide the
revised letter to plaintiffs without disclosure of the
calculation.
The causes of action asserted in the complaint are founded
on the claim that defendants purposefully or negligently
misrepresented the site's size and number of as-of-right apartment
units. Plaintiffs claim they relied on these misrepresentations
and assert causes of action for legal fraud, negligent
misrepresentation, breach of contract, breach of the covenant of
good faith and fair dealing, unjust enrichment, civil conspiracy,
6 A-2416-17T3
professional malpractice and reformation of contract. Defendants
filed answers to the complaint denying plaintiffs' claims.
B. Plaintiffs' Assertion of the Attorney-Client Privilege
During discovery, plaintiffs objected to defendants' requests
for information and documents, and deposition questions that
required disclosure of attorney-client communications related to
their alleged reliance on misrepresentations as to the site's size
and the number of as-of-right units. Plaintiffs asserted the
communications constituted privileged attorney-client
communications. See N.J.R.E. 504. Defendants argued plaintiffs
waived the attorney-client privilege with regard to the
communications by putting in issue its purported reliance on the
alleged misrepresentations.
Defendants asserted the communications related to an issue
raised by plaintiffs in their complaint – whether they reasonably
relied on the alleged misrepresentations concerning the site's
size and the number of as-of-right units in making their decision
to purchase and close title on the site. Defendants also claimed
plaintiffs waived the attorney-client privilege by otherwise
disclosing attorney-client communications to third parties.
C. The Motions to Compel Disclosure
CBRE, Berger and Klapper and Dresdner Robin and Kolling
separately moved for orders compelling plaintiffs to disclose
7 A-2416-17T3
attorney-client communications related to their alleged reasonable
reliance on the alleged misrepresentations. In May 2017, the
court entered orders denying the motions, finding that under our
Supreme Court's decision in State v. Mauti, 208 N.J. 519 (2012),
the attorney-client privilege could not be pierced because there
were no "constitutional rights . . . at stake."
CBRE, Berger and Klapper and Dresdner Robin and Kolling moved
for reconsideration, arguing the motion court erred in its
application of Mauti. They claimed the Court in Mauti expressly
recognized the attorney-client privilege is subject to explicit
and implicit waivers, and that plaintiffs implicitly waived the
privilege by placing in issue their attorney-client communications
concerning the size of the site, the number of as-of-right units
and their due diligence in considering those issues by asserting
they reasonably relied on the alleged misrepresentations. They
also claimed plaintiffs expressly waived the privilege by
disclosing attorney-client privileged communications to third
parties.
After hearing argument, the court determined plaintiffs had
placed in issue the communications with their counsel concerning
the site's size, the as-of-right units and plaintiffs' due
diligence by asserting they reasonably relied on the broker
defendants' alleged misrepresentations. The court also determined
8 A-2416-17T3
plaintiffs waived the privilege by disclosing to third parties
certain communications with its counsel. The motion court
expressed concern about the scope of the permitted discovery,
noting it was incorrect to assume all communications between
plaintiffs and their counsel should be disclosed.
The court explained that the inquiries in those limited areas
should "be narrowly tailored," and its orders requiring disclosure
of the communications covered both questions posed during
depositions as well as requests for documents. The court further
advised that it would immediately review any objections to any
questions posed during depositions, and would review in camera any
documents, where objections based on the attorney-client privilege
were interposed.
D. The October 27, 2017 Orders Directing Disclosure
The court entered an October 27, 2017 order granting CBRE's
motion, and directing that plaintiffs, and their counsel and
agents, disclose communications concerning "all matters that
plaintiff[s] [have] put in [] issue concerning the subject matter
of the size/acreage and development potential of the . . . [s]ite,
and communications and advice concerning diligence and
investigation that had been or should be conducted to assess the
development potential of the [s]ite . . . ." The court's order
9 A-2416-17T3
limited the disclosure to six defined topics related to the
investigation and negotiation of the as-of-right units.2
2
The court ordered disclosure of communications concerning:
(i) . . . the advisability and/or consequences
of submitting offers that waived the right to
terminate the transaction in the event that
the minimum number of "as-of-right" units
could not be confirmed by Amerestate in
conducting its diligence;
(ii) . . . the need, advisability and/or
possibility of negotiating for the inclusion
in the Purchase Agreement of representations
and/or warranties concerning the area of the
consolidated [site] and/or the number of units
that could . . . constructed on the Site;
(iii) . . . the need, advisability and/or
possibility of negotiating or renegotiating
the right to terminate the . . . [agreement]
in the event that the minimum number of "as-
of-right" units could not be confirmed by
Amerestate in conducting its diligence;
(iv) . . . the need, advisability and/or
possibility of negotiation or renegotiating a
provision making the purchase contingent on
the Jersey City Planning Board approval of a
minimum number of as-of-right units and/or
making the purchase price dependent on the
number of units ultimately approved by the
Planning Board;
(v) . . . the need and/or advisability of
obtaining an updated survey so that the area
of the consolidated Site could be verified
and, derivatively, Amerestate could obtain an
accurate projection of the number of "as-of-
right" units from its architect; and
10 A-2416-17T3
The court entered a separate October 27, 2017 order granting
Dresdner Robin and Kolling's motion, and ordering that plaintiffs
and their counsel disclose communications and information
exchanged related to the "size/acreage and development potential
of the property at issue . . . [and] regarding steps and measures
to be taken by [p]laintiff[s] to evaluate the . . . transaction."
E. Plaintiffs' Motion for Clarification or Reconsideration
Plaintiffs subsequently moved for clarification or
reconsideration of the court's October 27, 2017 orders permitting
discovery of the attorney-client communications. CBRE filed a
motion to enforce the orders.
In its January 10, 2018 decision on the motions, the court
noted that plaintiffs sought a temporal limitation on the
communications covered by the court's October 27, 2017 orders.
The court recognized the orders did not include "a temporal
limitation on the permitted disclosure," and that CBRE and Dresdner
Robin argued "at the very least" plaintiffs put at issue its
attorney-client communications in substantive areas covered by the
court's orders "at the very least as of the date of the closing
(vi) . . . the need to obtain an independent
projection concerning the number of "as-of-
right" units that potentially could be
constructed on the Site including, without
limitation, the review of existing surveys and
deeds . . . .
11 A-2416-17T3
of its purchase of the . . . site on February 5, 2015, if not
through the date that . . . plaintiff[s] commenced this action."
The court then discussed the disclosures it ordered on October 27,
2017, and stated they "shall include the time period through the
date of the closing of the transaction as of February 5, 2015."
The court, however, further stated that plaintiffs and their
counsel shall produce documents and electronically stored data,
and answer deposition questions, concerning attorney-client
communications occurring "prior to the commencement of this
action" concerning the matters plaintiffs "has placed in issue as
set forth in the [court's] prior orders . . . ."
The court entered a January 10, 2018 order denying plaintiffs'
motion, but directed that "defendants are permitted to make inquiry
into attorney[-]client communications" limited to "the period
prior to September 3, 2014," concerning three issues: 1.
communications "regarding the site's projected unit count"; 2.
"the advice that . . . plaintiff[s] received from counsel
concerning the diligence necessary to make an accurate projection
of [the] unit count; and 3. "the contractual protections necessary
to manage the risks related to the unit count."
The court entered a separate January 10, 2018 order granting
CBRE's motion, and directing that plaintiffs and their counsel
disclose communications "exchanged between Amerestate and its
12 A-2416-17T3
attorneys prior to the commencement of this action which pertain
to those matters that Amerestate itself has put 'in-issue' as set
forth in" the court's October 27, 2017 orders.
We subsequently granted plaintiffs' motion for leave to
appeal the court's October 27, 2017 and January 10, 2018 orders.
Plaintiffs present the following arguments for our
consideration:
POINT I
THE TRIAL COURT PROPERLY APPLIED MAUTI IN ITS
MAY 26, 2017 DECISION AND FOUND NO IMPLICIT
OR EXPLICIT WAIVER AND THEN ERRED IN ITS
OCTOBER 27, 2 017 AND JANUARY 10, 2018
RECONSIDERATION CONCLUSIONS THAT CERTAIN
EMAILS TO THIRD PARTIES SOMEHOW CONSTITUTED A
WAIVER ALLOWING FOR AN EXTENSIVE AND OVERBROAD
PIERCING OF THE PRIVILEGE.
A. The Standard Of Appellate Review Is De
Novo.
B. The Attorney Client Privilege.
C. The May 26, 2017 Trial Court Decision
Properly Rejected The Defendants' "Legitimate
Need" Arguments And Their Effort To Apply The
Kozlov Three-Part Balancing Test And Instead
Properly Applied The Holding In Mauti.
D. For An Implied Waiver To Be Found The Law
Requires That The Defendants Establish That
Plaintiffs Put a "Communication" With Their
Attorneys "At Issue" By Attempting To Use The
Communication As A Sword And the Privilege As
A Shield.
1. The Plaintiffs Must Put A Privileged
Communication At Issue In The Litigation In
13 A-2416-17T3
Order To Begin The Implied [W]aiver Analysis
– the Mere Assertion Of A Claim Is
Insufficient.
2. There Are Different Tests Applied To
A Piercing Of A Privilege And An Implicit
Waiver Of A Privilege And the Implied Waiver
Test Requires The Use Of A Privileged
Communication As a Sword And The Privilege As
a Shield.
3. The Case Law Finding An Implicit
Waiver Relied Upon By Defendants Requires The
Use Of A Privileged Communication As a Sword
[A]nd The Privilege As a Shield.
E. The Trial Court Erred In Its
Reconsideration Decisions And Piercing Orders
Because The Documents Relied Upon To Conclude
That The Privilege Was Waived Either Do Not
Disclose Attorney Client Communications, Were
After The Contract Was Executed Or Are Not
Related To the Areas That The Court Permitted
The Privilege To Be Pierced.
F. The Very Relief Granted By The Piercing
Orders Demonstrates That The Purpose Of
Defendants Inquiry Is Unrelated To An
Otherwise Privileged Communication Put At
Issue And, Instead, Is Related To The Improper
Purpose Of Fishing To Prove That Plaintiffs
Did Not Take Advise Of Their Attorneys Which,
As A Matter Of Law, Is A Baseless Defense.
II.
"[W]e 'normally defer to a trial court's disposition of
discovery matters . . . unless the court has abused its
discretion[,]' or the decision is based on 'a mistaken
understanding of the applicable law.'" Hedden v. Kean Univ., 434 N.J. Super. 1, 10 (App. Div. 2013) (alteration in original). Here,
14 A-2416-17T3
we review the court's determination concerning the application and
waiver of the attorney-client privilege de novo, "[b]ecause '[a]
trial court's interpretation of the law and the legal consequences
that flow from established facts are not entitled to any special
deference.'" Ibid. (quoting Manalapan Realty, LP v. Manalapan
Twp. Comm., 140 N.J. 366, 378 (1995)).
N.J.S.A. 2A:84A-20, which is codified in N.J.R.E. 504, sets
forth the parameters of the attorney-client privilege, providing
in part that "communications between [a] lawyer and his [or her]
client in the course of that relationship and in professional
confidence, are privileged . . . ." The attorney-client privilege
"rests on the need to 'encourage full and frank communications
between attorneys and their clients,'" Hedden, 434 N.J. Super. at
10 (quoting United Jersey Bank v. Wolosoff, 196 N.J. Super. 553,
561 (App. Div. 1984)), "[p]reserv[es] the sanctity of
confidentiality of a client's disclosures to his [or her]
attorney," ibid. (quoting United Jersey Bank, 196 N.J. Super. at
561), and "constitutes an indispensable ingredient of our legal
system," id. at 11 (quoting In re Grand Jury Subpoenas Duces Tecum,
241 N.J. Super. 18, 27-28 (App. Div. 1989)). "[T]here is a
presumption that a communication made in a lawyer-client
relationship has been made in professional confidence[,]" and
where "applicable, '[the privilege] must be given as broad a scope
15 A-2416-17T3
as its rationale requires.'" Id. at 12 (quoting United Jersey
Bank, 196 N.J. Super. at 561).
"[T]he attorney-client privilege is 'clearly extremely
important,' [but] it is neither absolute nor sacrosanct." Id. at
11-12 (quoting Biunno, Current N.J. Rules of Evidence, cmt. 1 on
N.J.R.E. 504(3) (2013)). "[P]rivileges stand in what we have
declared to be a 'disfavored status' because they have an effect
on the truth-seeking function." Mauti, 208 N.J. at 531 (quoting
Payton v. N.J. Tpk. Auth., 148 N.J. 524, 539 (1997)). Thus, "we
construe testimonial privileges narrowly because they prevent the
trier of fact from hearing relevant evidence and thereby undermine
the search for truth[,] . . . [and] sensibly accommodate privileges
to the aim of a just result, and accept them to the extent they
outweigh the public interest in full disclosure." Id. at 531-32
(quoting State v. J.G., 201 N.J. 369, 383 (2010)).
Where a privilege applies, it may be pierced in certain
limited circumstances. Our Supreme Court established a three-part
standard that must be satisfied by a party seeking to pierce a
privilege: (1) there must be "a legitimate need . . . to reach the
evidence sought to be shielded"; (2) the evidence must be relevant
and material to an issue in the case; and (3) there must be a
finding, "by a fair preponderance of the evidence," that the
information sought cannot be obtained from a "less intrusive
16 A-2416-17T3
source." In re Kozlov, 79 N.J. 232, 243-44 (1979) (quoting In re
Farber, 78 N.J. 259, 276-77 (1978)).
In Mauti, the Court "severely curtailed" application of the
Kozlov standard. Hedden, 434 N.J. Super. at 17. The Court
explained,
Kozlov did not propound a broad equitable
balancing test pursuant to which any privilege
is subject to piercing if the adversary
"needs" relevant evidence that cannot be
obtained from another source. Such an
approach would eviscerate the privileges and
trench on the legislative judgments informing
them. To the contrary, in Kozlov, . . . we
recognized that only in the most narrow of
circumstances, such as where a privilege is
in conflict with a defendant's right to a
constitutionally guaranteed fair trial, would
the need prong of its test be satisfied.
[Mauti, 208 N.J. at 537-38.]
The Court added that, in the context of a statutory privilege,
"the privilege could not be overborne, except where specifically
so provided by the Legislature or where the need arose out of a
constitutionally based command." Id. at 538.
The Court, however, also recognized that "any party is free
to waive a privilege." Id. at 532. Under N.J.R.E. 530, a privilege
may be explicitly waived by contract, or by making or consenting
to disclosure of privileged communications, "without coercion and
with knowledge of [the client's] right or privilege." Ibid.
(quoting N.J.R.E. 530). "[O]ur courts have also recognized that
17 A-2416-17T3
a privilege may be waived 'implicitly' where a party puts a
confidential communication 'in issue' in a litigation." Ibid.
(quoting Kinsella v. Kinsella, 150 N.J. 276, 300 (1997)).
Here, the court ordered disclosure of plaintiffs'
communications with their counsel based on its determination
plaintiffs implicitly waived the privilege by placing the
communications in issue. The court also relied on plaintiffs'
explicit waiver of the privilege by their disclosure of certain
communications with their counsel related to the purchase and
development of the site. We first address the court's
determination that plaintiffs implicitly waived the privilege by
placing communications with their counsel in issue.
A.
In Mauti, the Court provided examples of circumstances where
it was determined that a party implicitly waived a privilege by
putting confidential communications in issue. Ibid. The Court
cited Arena v. Saphier, 201 N.J. Super. 79, 90 (App. Div. 1985),
where we determined a plaintiff claiming emotional distress
damages in a malpractice action waived the psychologist-patient
privilege, N.J.S.A. 45:14B-28 and N.J.R.E. 505, as to her
communications with her treating psychologist. Ibid.; Saphier,
201 N.J. Super. at 90. There, we recognized the privilege's
purpose was to facilitate the free flow of information between a
18 A-2416-17T3
patient seeking treatment and his or her psychologist, but
determined that "a patient should not be permitted to establish a
claim while simultaneously foreclosing inquiry into relevant
matters," and ordered limited disclosure of communications between
the plaintiff and her psychologist to the extent they pertained
to the issue in the malpractice case – "her present mental and
emotional condition." Saphier, 201 N.J. Super. at 89-90.
The Court also cited Blitz v. 970 Realty Assoc., 233 N.J.
Super. 29 (App. Div. 1989), as a further example of an implicit
waiver of a privilege by a party's placing privileged
communications in issue. Mauti, 208 N.J. at 532. In Blitz, the
plaintiff alleged the defendants fraudulently induced her into
signing a real estate purchase contract by misrepresenting the
environmental conditions and clean-up costs for the property. 233 N.J. Super. at 30-31. The defendants sought disclosure of the
plaintiff's communications with her counsel concerning the
environmental issues that occurred prior to her execution of the
purchase contract. Id. at 31.
Like plaintiffs here, the plaintiff in Blitz asserted a cause
of action for legal fraud, which requires proof establishing the
essential element of reasonable reliance. Id. at 36. We observed
that
19 A-2416-17T3
[a]lthough '[o]ne who engages in fraud . . .
may not urge that one's victim should have
been more circumspect or astute, . . . 'if
a party to whom representations are made
nevertheless chooses to investigate the
relevant state of facts for himself, he will
be deemed to have relied on his own
investigation and will be charged with
knowledge of whatever he could have discovered
by a reasonable investigation.'
[Id. at 36-37 (second and third alterations
in original) (citations omitted)].
We concluded the motion court correctly determined the
plaintiff waived the attorney-client privilege as to her
communications with her counsel prior to entering into the contract
because she "placed in issue what she knew prior to" executing the
contract. Id. at 37. We also determined that the plaintiff did
not waive the privilege with regard to her post-contract
communications with her attorney because any information obtained
following her entry into the contract was "irrelevant to the
reliance issue." Ibid.
Lastly, in Mauti the Court cited Wolosoff, 196 N.J. Super.
at 564-65, as a further example of an implicit waiver of the
attorney-client privilege. 208 N.J. at 532. In Wolosoff, the
plaintiff sought rescission of a settlement agreement based on a
claim the defendant made misrepresentations during settlement
negotiations. 196 N.J. Super. at 558-59. The defendant sought
access to communications between the plaintiff and its attorneys
20 A-2416-17T3
to challenge the plaintiff's claim it relied on the defendant's
alleged misrepresentations. Id. at 559-60. Noting that permitting
the plaintiff to rely on the privilege would inequitably allow the
plaintiff to "divulge whatever information is favorable to its
position and assert the privilege to preclude disclosure of . . .
detrimental facts," we concluded that "when confidential
communications are made a material issue in a judicial proceeding,
fairness demands waiver of the privilege," ibid. (quoting United
States v. Mierzwicki, 500 F. Supp. 1331, 1335 (D. Md. 1980)).
Relying on Arena, Blitz and Wolosoff, the Court in Mauti
concluded that "in each of those circumstances, the party who
places a confidential communication in issue voluntarily creates
the 'need' for disclosure of those confidences to the adversary."
208 N.J. at 532. Measured against that standard, we are convinced
the motion court correctly determined plaintiffs' communications
pertaining to the as-of-right units, size of the site and any due
diligence or investigation concerning those matters were placed
in issue by plaintiffs' allegation they reasonably relied on the
alleged misrepresentations. See Weingarten v. Weingarten, 234 N.J. Super. 318, 327 (App. Div. 1989) (finding that by claiming
she reasonably relied on the defendant's representations in
entering into a settlement agreement, the plaintiff waived the
attorney-client privilege regarding communications related to the
21 A-2416-17T3
settlement negotiations because the defendant was "entitled to
explore the existence of such evidence as may enable him to
demonstrate" that the plaintiff did not actually rely on his
representations). Indeed, the fulcrum upon which the validity of
plaintiffs' causes of action pivots is their assertion that
Amerestate entered into the purchase agreement in September 2014,
and proceeded to close title and purchase the property on February
5, 2015, based on its reasonable reliance on the broker defendants'
representations concerning the site's size and the number of as-
of-right units. See, e.g., Blitz, 233 N.J. Super. at 36 (noting
that reasonable reliance on an alleged false representation is an
essential element of a cause of action for legal or equitable
fraud); Kaufman v. i-Stat Corp., 165 N.J. 94, 109 (2000)
(explaining the cause of action for negligent misrepresentation
also requires proof of reasonable reliance).
Moreover, Amerestate represented in the September 2014
purchase agreement that it agreed to purchase the site
in its existing condition AS IS, WHERE IS, AND
WITH ALL FAULTS with respect to all facts,
circumstances, conditions and defects, and,
Seller has no obligation to determine or
correct any such facts, circumstances,
conditions or defects or to compensate
[Amerestate] for same. [Amerestate] is and
will be relying strictly and solely upon such
inspections and examinations and the advice
22 A-2416-17T3
and counsel of its own consultants, agents,
counsel and officers.
[(emphasis added).]
Thus, Amerestate also placed in issue its reliance on its counsel's
advice concerning the "facts" and "circumstances" regarding the
site, including its size and the number of as-of-right units, by
affirmatively representing in the purchase agreement that it
relied solely upon its counsel and other consultants and agents,
and not on any of the broker defendants' advice, when it agreed
to purchase the property.
Like the plaintiff in Blitz, plaintiffs placed in issue what
they "knew" about the site size and the as-of-right units. 233 N.J. Super. at 37. Under the circumstances presented here,
however, their relevant knowledge and communications with counsel
are not limited to those extant when the purchase agreement was
signed. Plaintiffs' complaint expressly alleges they relied on
the purported misrepresentations when Amerestate executed the
purchase agreement on September 3, 2014, and also when Amerestate
closed title on February 5, 2015. We are therefore convinced
plaintiffs implicitly waived the attorney-client privilege as to
all communications with their counsel prior to the closing of
title pertaining to the site's size, the number of as-of-right
units and plaintiffs' due diligence in investigating and assessing
23 A-2416-17T3
that information. Plaintiffs could not have relied on attorney-
client communications subsequent to the closing of title in making
the decision to purchase the site and, for that reason, plaintiffs
have not placed those communications in issue. See ibid. As the
motion court correctly observed, denying defendants the
opportunity to "probe [the] information" would be to
"fundamentally deprive [defendants] of the ability to defend
[themselves] against these charges properly."
We therefore affirm the court's October 27, 2017 and January
10, 2018 orders but, for the reasons stated, modify the orders to
require disclosure only of the designated attorney-client
communications which occurred prior to the February 5, 2015
closing.
B.
Plaintiffs further argue the court erred by finding they
expressly waived the attorney-client privilege through their
disclosure of otherwise privileged communications. More
particularly, they contend the court erroneously concluded that
plaintiffs expressly waived the privilege based on six separate
emails, four of which were sent by plaintiffs' counsel and two of
which were sent by Salamon.
We first note that our determination the court correctly
concluded plaintiffs implicitly waived the attorney-client
24 A-2416-17T3
privilege renders it unnecessary to address the court's
alternative basis for compelling disclosure of the communications
– plaintiffs' purported explicit waiver of the privilege. That
is, even if the motion court erred in finding plaintiffs explicitly
waived the privilege, plaintiffs' implicit waiver of the privilege
requires disclosure of the communications encompassed by the
court's orders for the time period up to the February 5, 2015
closing of title. For purposes of completeness, however, we
nevertheless address the court's determination that plaintiffs
explicitly waived the attorney-client privilege.
A party expressly waives the attorney-client privilege by
making "disclosure of any part of the privileged matter or
consented to such a disclosure made by anyone." N.J.R.E. 530.
"Generally, once privileged material is disclosed, the privilege
of non-disclosure is waived as to that matter." Hedden, 434 N.J.
Super. at 15. "The waiver of the attorney-client privilege[,]"
however, "rests solely with the client." In re Grand Jury Subpoena
Issued to Galasso, 389 N.J. Super. 281, 298 (App. Div. 2006).
As noted, the motion court found an explicit waiver of the
attorney-client privilege based in part on four emails sent from
plaintiffs' counsel and two emails sent by Salamon. The court
first determined plaintiffs expressly waived the attorney-client
privilege when their counsel handling the purchase transaction
25 A-2416-17T3
sent an August 11, 2014 email to Salamon expressing his concern
about the legal description of the site in the deed. Counsel sent
a copy of the email to Klapper and Berger and, thus, defendants
claim and the court determined Amerestate waived the attorney-
client privilege with respect to all communications between
plaintiffs and their counsel regarding the site size, as-of-right
units, and plaintiffs' exercise of due diligence and reliance on
the broker defendants' alleged misrepresentations.
The email says little more than counsel has a concern
regarding the legal description in the deed and that he would
address the issue when he returned from vacation. The email does
not disclose any privileged communications between Salamon and
Amerestate's transaction counsel concerning the site size, as-of-
right units or plaintiffs' due diligence and therefore does not
constitute a waiver of the attorney-client communications as to
those matters. See In re Grand Jury Subpoena, 389 N.J. Super. at
298 (noting that when attorney-client privileged communications
are disclosed there is a waiver of the privilege with respect to
"information pertaining to the same subject matter"). Moreover,
since only plaintiffs could waive the privilege by disclosing the
communications, and the record is devoid of any evidence plaintiffs
authorized their counsel to waive their privilege, any disclosure
made by their counsel was insufficient to constitute a waiver of
26 A-2416-17T3
the privilege by plaintiffs. See Hedden, 434 N.J. Super. at 15
(finding that only the client can authorize disclosure of
privileged information and therefore waive the attorney-client
privilege). The court erred by finding otherwise.
Similarly, the court erred by finding a November 4, 2014
email from Amerestate's transaction counsel to a title officer,
that sought clarification concerning the existence of easements
on the site, constituted a waiver of the attorney-client privilege.
The email did not constitute an express waiver of the privilege
because it contains no attorney-client communications.
We are also convinced the court erred by finding a February
3, 2015 email from Amerestate's transaction counsel to
Amerestate's representatives describing an attached deed and
detailing suggested corrections supported its determination that
plaintiffs expressly waived the attorney-client privilege
concerning the site's size, the as-of-right units and plaintiffs'
due diligence. Defendants claimed, and the court found, plaintiffs
expressly waived the attorney-client privilege because a copy of
the email was also sent to a third-party title officer. Again,
the email was not sent by plaintiffs and the record is bereft of
any evidence their counsel was authorized to waive the privilege
on their behalf. Thus, there is no basis to conclude counsel's
27 A-2416-17T3
disclosure of his communication with his clients constituted an
explicit waiver of the privilege by plaintiffs.
The record also does not support the court's conclusion a
September 15, 2015 email from plaintiffs' counsel to Salamon and
third-party architects about the necessity of a variance
constituted a waiver of the privilege. There is no evidence
plaintiffs authorized the counsel's disclosure to the third party
and, thus, no basis to conclude the disclosure constituted an
express waiver of the privilege by plaintiffs. See ibid.
The motion court, however, correctly determined that two
emails sent by Salamon constituted an explicit waiver of the
attorney-client privilege. The record shows Salamon was
plaintiffs' authorized representative for purposes of consulting
with their counsel, and therefore his communications with counsel
on plaintiffs' behalf were protected by the attorney-client
privilege. See Hedden, 434 N.J. Super. at 11 (citing Upjohn Co.
v. United States, 449 U.S. 383, 391 (1981)). It therefore follows
that Salamon, acting as plaintiffs' authorized representative,
possessed the capacity to waive the attorney-client privilege on
plaintiffs' behalf. Id. at 17.
In a September 7, 2014 email, Salamon disclosed to a third-
party potential investor attorney-client communications concerning
the number of units at the site and counsel's strategy to increase
28 A-2416-17T3
the unit total. Similarly, in a November 4, 2014 email, Salamon
informed third-parties about counsel's advice concerning the unit
count and square footage of the site plan design. In his emails,
Salamon voluntarily disclosed on plaintiffs' behalf otherwise
privileged attorney-client communications to third parties. We
are therefore satisfied Salamon's emails constituted an explicit
waiver of the privilege by plaintiff that in part further support
the court's disclosure orders.
Affirmed as modified.
29 A-2416-17T3
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