On April 27, 2023, the First Department issued a decision in Talos Capital Designated Activity Co. v. 257 Church Holdings LLC, 2023 NY Slip Op. 02196, holding that a privileged communication may contain information relevant to the issues being litigated, does not, without more, place the contents of the privileged communication itself at issue, explaining:
The motion court improperly found at issue waiver of the attorney-client privilege. That a privileged communication may contain information relevant to the issues being litigated, does not, without more, place the contents of the privileged communication itself at issue.
The motion court articulated a definition of at issue waiver so broad as to vitiate the attorney-client privilege any time a party argues that their interpretation of a contract differs from their adversary’s. Moreover, the court found that Ashkenazy had injected his understanding of the documents into this litigation yet cited no instance where he had done so. To the contrary, Ashkenazy’s arguments concerning the timing of his payment obligation have, at least to date, consistently been based on the text of the documents themselves. Even if Ashkenazy’s position as to the timing of his payment obligation can impliedly be read to reflect or stem from his understanding of the loan documents, he has argued such understanding derives from the documents’ text, and not from communications with counsel. Furthermore, unlike the cases Talos cites to, this is not a situation where Ashkenazy relies on his good faith belief in the lawfulness of his conduct or his having thought his interpretations here were legal based on communications with counsel.
Talos’s other arguments in support of this prong of the order are unavailing. For example, its articulation of at issue waiver is at least as overbroad as that of the motion court. Talos argues that the motion court correctly found at issue waiver because Ashkenazy, by arguing that his obligation is due at maturity of the senior loan placed the matter at issue,’ thus waiving the attorney-client privilege over communications with his attorney on this issue. Thus, according to Talos, once a litigant makes an argument in a litigation, they waive the privilege that would otherwise attach to communications with their counsel concerning that argument. Talos cites no authority for this drastic formulation. Talos’s remaining arguments are equally unavailing or premised on matters outside the record.
(Internal quotations and citations omitted).