| Oakwood Realty Corp. v HRH Constr. Corp. |
| 2008 NY Slip Op 04483 [51 AD3d 747] |
| May 13, 2008 |
| Appellate Division, Second Department |
| Oakwood Realty Corp., Plaintiff, v HRH ConstructionCorporation, Respondent, and Liberty Mutual Insurance Company, Defendant and Third-PartyDefendant-Respondent. Koehler Masonry Corp., Additional Defendant on the Counterclaim andThird-Party Plaintiff-Appellant, et al., Additional Defendants on the Counterclaim; OakwoodRealty Corp., et al., Third-Party Defendants-Respondents. |
—[*1] Charles R. Pierce, Jr., P.C., Huntington, N.Y., for respondents.
In an action to recover damages for breach of contract, the additional defendant on thecounterclaim/third-party plaintiff, Koehler Masonry Corp., appeals, as limited by its notice ofappeal and brief, from so much of an order of the Supreme Court, Suffolk County (Pines, J.),dated March 27, 2007, as granted those branches of the motion of the defendant HRHConstruction Corporation, the defendant and third-party defendant Liberty Mutual InsuranceCompany, and the third-party defendants Oakwood Realty Corp. and Fairchild Realty Groupwhich were for summary judgment dismissing its fourth cross claim to recover interest pursuantto General Business Law § 756-b, for the return of a certain document turned over duringdiscovery, and pursuant to CPLR 3103 (c) for a protective order with respect to such document.
Ordered that the order is affirmed insofar as appealed from, with costs.
Oakwood Realty Corp. (hereinafter Oakwood) entered into a contract with HRHConstruction Corporation (hereinafter HRH) for HRH to act as general contractor in theconstruction of a nursing home in Oakdale, New York. HRH subcontracted with KoehlerMasonry Corp. (hereinafter [*2]Koehler), for Koehler to act as theconcrete subcontractor on the job.
According to Koehler, it performed its work and was paid the sum of $3,378,626.55, whichwas $175,442.31 less than the amount called for in the subcontract. Koehler filed a mechanic'slien for the shortfall and requested payment on a performance bond issued by Liberty MutualInsurance Company (hereinafter Liberty Mutual). In February 2002, Oakwood commenced thisaction against HRH and Liberty Mutual to recover damages for breach of contract. HRH andLiberty Mutual answered and asserted several counterclaims including one against Koehler.Koehler filed cross claims against, among others, HRH, and filed a third-party complaint againstOakwood, Liberty Mutual, and Fairchild Realty Group (hereinafter Fairchild), an alleged ownerof the property on which the nursing home was constructed. In November 2006, HRH, LibertyMutual, Oakwood, and Fairchild moved, inter alia, for summary judgment dismissing Koehler'sfourth cross claim against HRH to recover interest pursuant to General Business Law §756-b, for the return of a report prepared by HRH's consultant, Lovett Silverman ConstructionConsultants, Inc. (hereinafter Lovett), which was inadvertently provided to Koehler duringdiscovery, and pursuant to CPLR 3103 (c) for a protective order with respect to such report. In anorder dated March 27, 2007, the Supreme Court, among other things, granted the aformentionedbranches of the motion. Koehler appeals, arguing that the report prepared by Lovett was subjectto discovery and that it was entitled to recover interest under General Business Law §756-b.
Contrary to Koehler's contention, the Supreme Court correctly determined that it was notentitled to recover interest pursuant to General Business Law § 756-b. The subcontract atissue between Koehler and HRH was entered into in March 2000 and work pursuant to it wascompleted in August 2000, two years prior to the effective date of the statute. Therefore, thestatute was not applicable (see L 2002, ch 127, § 3).
Furthermore, the court correctly determined that HRH was entitled to the return of the reportprepared by Lovett. Lovett was retained as a consultant by counsel for HRH and its report wasprepared in anticipation of litigation. The report was "an adjunct to the lawyer's strategic thoughtprocesses, thus qualifying for complete exemption from disclosure" under the attorneywork-product doctrine as well as CPLR 3101 (d) (2) (Santariga v McCann, 161 AD2d320 [1990]; see Delta Fin. Corp. vMorrison, 14 Misc 3d 428 [2006]). The report was exempt from disclosure (seeSantariga v McCann, 161 AD2d 320 [1990]) based upon attorney-client privilege. Further,Koehler has failed to demonstrate a substantial need for the report or that it could not obtain thesubstantial equivalent of the report by other means (see Daniels v Armstrong, 42 AD3d 558 [2007]; Heimanson vFarkas, 292 AD2d 421 [2002]; Martinez v KSM Holding, 294 AD2d 111 [2002]).
Moreover, the court correctly determined that the attorney-client privilege was not waivedwhen the report was produced as part of HRH's pretrial discovery. Disclosure of a privilegeddocument generally operates as a waiver of the privilege unless it is shown that the clientintended to maintain the confidentiality of the document, reasonable steps were taken to preventdisclosure, the party asserting the privilege acted promptly after discovering the disclosure toremedy the situation, and the parties who received the documents will not suffer undue prejudiceif a protective order against use of the document is issued (see New York Times NewspaperDiv. of N.Y. Times Co. v Lehrer McGovern Bovis, 300 AD2d 169 [2002];Manufacturers & Traders Trust Co. v Servotronics, Inc., 132 AD2d 392, 398-400 [1987];accord John Blair Communications v Reliance Capital Group, 182 AD2d 578, 579[1992]). The burden is on the proponent of the privilege to prove that the privilege was notwaived (see John Blair Communications v Reliance Capital Group, 182 AD2d at 579).[*3]
The production of the report was inadvertent. HRH at alltimes intended the Lovett report to remain confidential, subject to the protections of both theattorney-client privilege and the attorney work-product doctrine. The record is clear that thefactors barring a finding of waiver, as outlined above, were present (see New York TimesNewspaper Div. of N.Y. Times Co. v Lehrer McGovern Bovis, 300 AD2d 169 [2002]).Spolzino, J.P., Balkin, Dickerson and Belen, JJ., concur. [See 2007 NY Slip Op30681(U) (2007).]