Matter of Sosnow

[*1] Matter of Sosnow 2007 NY Slip Op 51316(U) [16 Misc 3d 1106(A)] Decided on June 21, 2007 Sur Ct, Nassau County Riordan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 21, 2007
Sur Ct, Nassau County

In the Matter of the Petition of Mindy Horowitz and Robert Beer for a Decree Determining the Validity and enforceability of a Claim Against the Estate of Morris Sosnow, Deceased.



312365



Farrell, Fritz, P.C.

1320 Reckson Plaza, West Tower

Uniondale, NY 11556-0120

(for Petitioners)

Debevoise & Plimpton

919 Third Avenue

New York, NY 10022

(for Respondent)

Moses & Singer

405 Lexington Avenue

New York, NY 10174-1299

(for Co-executor/Co-Trustee)

Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas

New York, NY 10036

(for Beneficiaries of the estate)

John B. Riordan, J.

In this proceeding to determine the validity of a claim, petitioners move for an order directing the executors of the estate to produce documents, recordings and transcripts of telephone calls. The executors contend that all of the items sought are protected by the attorney-client privilege (CPLR 4503) and thus, are not discoverable. The executors also move for an order striking part of petitioners' reply memorandum of law.

Petitioners Mindy Horowitz and Robert Beer are grandchildren of decedent. Respondents are co-executors Sheila Sosnow and Seth Lieberman (the third executor, Ron Horowitz, has not taken part in this proceeding based upon a conflict of interest). The issue in this proceeding is the alleged breach of an agreement dated June 7, 1972 between the decedent and Morton Beer. The dispute concerns the obligation of the decedent to transfer property as a bequest in his last will and testament. The issue on the motion to compel is the effect of the participation of a third party in transactions between the executors and their attorneys.

Claimants allege that the presence of Sheila Sosnow's husband, Richard Nagler, at conferences, his participation in telephone conversations and receipt of correspondence from the attorneys, deprived the estate of the protection of the attorney-client privilege. The executors contend that Richard Nagler was an agent of the executrix and therefore the confidentiality of communications between the executrix and attorneys was not impaired.

The common law attorney-client privilege has been codified in CPLR 4503. The privilege enables one seeking legal advice to communicate with counsel, secure in the knowledge that the contents of the exchange will not be revealed against the client's wishes (People v Osorio, 75 NY2d 80 [1989]). An amendment to the statute provides that the attorney-client privilege attaches to confidential communications between an executor and an attorney, to the exclusion of third persons, including beneficiaries of the estate (CPLR 4503[a][2]).Generally, conversations between attorney and client made in the presence of third parties are not privileged (Roe v Poe, 92 NY2d 864 [1998]). In some states, the presence of a spouse does not negate the confidentiality of an attorney-client communication, on the theory that the marital communications privilege is incorporated into the transaction (The New Wigmore: Evidentiary Privileges, §6.8.1 [2002]). This is not the law in New York (9 Weinstein-Korn-Miller, NY Civ Prac CPLR ¶4503.16).

In New York, confidential communications between spouses are protected from disclosure by CPLR 4502(b). Where a client discloses a prior attorney-client communication to a spouse, the disclosure is protected by CPLR 4502 (Matter of Pretino, 150 Misc 2d 371 [Sur Ct, Nassau County 1991]; see also Solomon v Scientific American, Inc., 125 F.R.D. 34 [SDNY [*2]1998]). Nevertheless, communications between an attorney and client are generally not privileged in New York if the client's spouse is present at the time of the transaction (9 Weinstein-Korn-Miller, NY Civ Prac CPLR ¶4503.16). The exception would be where the spouse is an agent of the client (Doe v Poe, 92 NY2d 864 [1998]).

A principal and agent relationship may be established by evidence of consent by one person to allow another to act on his or her behalf and subject to his or her control (Time Warner City Cable v Adelphi University, 27 AD3d 551 [2d Dept 2006]). There are restrictions on executors in connection with the retention of agents. Discretionary powers granted to an executor are personal and cannot be delegated (Whitlock v Washburn, 62 Hun 369 [1891]). However, executors routinely retain attorneys, accountants (Matter of Kramer, 78 Misc 2d 662 [Surr Ct, New York County 1974]; Matter of Jadwin, 58 Misc 2d 809 [Surr Ct, New York County 1969]) and other agents (see Matter of Badenhausen, 38 Misc 2d 698 [Sur Ct, Richmond County 1963] to assist in the administration of an estate.

Petitioners allege that Richard Nagler was familiar with the decedent's business enterprises and was thus able to provide information and advice to the executrix with respect to the instant claim. "Although an agency between a husband wife is not to be implied from the mere fact of marriage, actual agency may be implied from the conduct of the parties or established by proof of subsequent ratification" (Kozecke v Humble Oil & Refining Company, 46 AD2d 986, 987 [3d Dept 1974][internal citations omitted]). Thus, in Matter of Weinberg (133 Misc 2d 950 [Sur Ct, New York County 1986]), the court held that the attorney-client privilege between a trustee and his counsel was not destroyed by the fact that the trustee's daughter was present during the privileged communications between the trustee and his attorney. The court found that the daughter clearly communicated with counsel in a representative capacity on behalf of her father, was involved in his various business enterprises, enjoyed his complete confidence, and acted as his alter ego. On those facts, the court held that the daughter was the agent of her father and the attorney-client privilege extended to cover communications between the trustee and his attorney in her presence.

In Matter of Nigro (NYLJ, Oct. 5, 2004 at 20, col 1[Sur Ct Nassau County]), this court held that the presence of the decedent's daughter at meetings between her mother and her mother's attorney did not result in waiver of the privilege where the daughter drove her mother to the meetings and was clearly present to provide moral support to her mother, the court finding that, on these facts, there was an obvious expectation of confidentiality on the client's part.

A similar result was reached in Stroh v General Motors Corporation (213 AD2d 267 [1st Dept 1995]), where the client's daughter was present during discussions with her attorney and the court found that the privilege was not waived. There, the daughter was clearly there to provide moral support for her mother and the court found that the daughter's presence put her mother sufficiently at ease to communicate effectively with counsel. Concerning the question of the reasonable expectation of confidentiality on the part of the client, the court noted that "we think it unreasonable to discern any other expectation by either [the client] or her attorneys, because [the client's daughter] was clearly acting as her mother's agent in this setting" (Stroh v General Motors Corporation , 213 AD2d 267, 268 [1st Dept 1995]).

Finally, as the Court of Appeals noted in People v Osorio (74 NY2d 80, at 84 [1989]), "the scope of the privilege is not defined by the third parties' employment or function...it depends on whether the client had a reasonable expectation of confidentiality under the circumstances." [*3]

Here, it is clear to the court that Richard Nagler's presence at the meetings and during conference calls was in his capacity as agent for his wife with regard to this estate valued at approximately $130,000,000. Under the facts presented here, the court concludes, as the Court did in Matter of Stroh that it would be unreasonable to discern any expectation on the part of Sheila Sosnow or her attorneys other than that their conversations in the presence of Richard Nagler would remain strictly confidential. The branch of the motion which sought disclosure of conversations or written communication which were either written by, written to, or copied to, Richard Nagler is therefore denied.

The movants also contend that the attorney-client privilege should not attach to communications between the executors and their attorneys in the known presence of Michael Zivotovsky, an accountant retained by the executors' attorneys. Communications between an attorney and client in the presence of an accountant and independent communications between the client and the accountant are protected by the attorney-client privilege under certain circumstances (U.S. v Kovel, 296 F2d 219 [2d Cir. 1961]). While the executors have made a plausible argument that the communications in the presence of the accountant should be privileged under the circumstances in this case, movants' counsel correctly argues that the explanation given by the executors, contained in a footnote in their memorandum of law, is procedurally deficient. Given the sums at stake in this proceeding, the executors will be given an opportunity to present their position in proper form, that is, in the form of an affidavit by a person with knowledge of the facts. That affidavit shall be submitted to the court within 14 days of the entry of the order herein. Opposing papers, if any, shall be submitted within 14 days thereafter.

The court is satisfied that the executors have established that the documents prepared by accountants John P. Ryan and David O'Toole, forensic accountants, are material prepared in anticipation of litigation (CPLR 3101[d][2]; Carrafiello v Massachusetts Mut. Life Ins Co., 266 AD2d 117 [1st Dept 1999]) and are thus privileged. Also, the executors seek to strike claimants' reply memorandum of law. The executors contend that the reply memorandum attempts, for the first time, to challenge the executors' assertion of the work product privilege.

The privilege log prepared by the executors asserted the work product privilege. The motion to compel disclosure alleged that the participation of Richard Nagler precluded a claim of privilege but it did not specify the privilege. In the absence of any limitation, the motion should be read to encompass all of the privileges in the log. The failure of the claimants to include an argument concerning the work product privilege, in their first memorandum of law, did not eliminate waiver of the work product privilege as a ground for relief.

Nevertheless, the claimants failed to establish the right to disclosure. Disclosure of a communication protected by the work product privilege, to a third person, waives the privilege only where there is a likelihood that the material will be revealed to an adversary (Bluebird Partners, L.P. v First Fidelity Bank, N.A., 248 AD2d 219 [1st Dept 1998], lv dismissed 92 NY2d 946 [1998]). The disclosures to Richard Nagler did not increase the possibility that further disclosure would be made to the claimants.

The claimants' reply memorandum of law asserted for the first time that the communications between the executrix and the attorneys were not of a "legal character." An argument cannot be raised for the first time in a reply (Bailey v Brookdale University Hosp., 27 AD3d 677 [2d Dept 2006]). [*4]

The motion for an order striking the reply memorandum of law, is granted, in part, as set forth above. A final determination on the motion to compel disclosure is held in abeyance pending the filing of additional affidavits as aforesaid.

Settle order.

Dated: June 21, 2007JOHN B. RIORDAN

Judge of theSurrogate's Court

The appearances of counsel are as follows:

Farrell, Fritz, P.C.

1320 Reckson Plaza, West Tower

Uniondale, NY 11556-0120

(for Petitioners)

Debevoise & Plimpton

919 Third Avenue

New York, NY 10022

(for Respondent)

Moses & Singer

405 Lexington Avenue

New York, NY 10174-1299

(for Co-executor/Co-Trustee)

Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas

New York, NY 10036

(for Beneficiaries of the estate)