| Art Capital Group LLC v Rose |
| 2008 NY Slip Op 06622 [54 AD3d 276] |
| August 19, 2008 |
| Appellate Division, First Department |
| Art Capital Group LLC et al., Appellants, v Andrew C.Rose et al., Respondents. |
—[*1] Todtman, Nachamie, Spizz & Johns, P.C., New York (Matthew E. Hoffman of counsel), forrespondents.
Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered October 20,2006, that, insofar as appealed from as limited by the briefs, in an action for unfair competitionagainst former employees, denied so much of plaintiffs' motion to compel production of certainattorney-client communications between defendant Rose and his attorneys, unanimouslyaffirmed, with costs. Order, same court and Justice, entered August 14, 2007, that, insofar asappealable, upon renewal, adhered to the October 20, 2006 order, unanimously affirmed, withcosts.
Defendants Christopher Krecke and Andrew Rose were employees of plaintiffs and are nowplaintiffs' competitors. Rose's departure from plaintiffs preceded Krecke's. Apparently, Krecke,while still in plaintiffs' employ, assisted Rose, who had left plaintiffs, in establishing Rose'scompeting business. Krecke may have, inter alia, helped to obtain financing, offered businessadvice and participated in certain transactions. In this capacity, Krecke was copied on somee-mails and was an active correspondent on other e-mails that also involved communicationswith Rose's law firm Todtman, Nachamie, Spizz & Johns, P.C. (Todtman). The motion courtordered the production of all e-mails that included Krecke as a correspondent, holding thatdefendants had waived the privilege that otherwise existed between Rose and Todtman withrespect to these documents by sending them to Krecke.
Plaintiffs had also sought production of documents between Rose and Todtman that did notcopy Krecke under the crime/fraud exception to the attorney-client privilege on the theory thatKrecke and Rose were engaged in a conspiracy to usurp plaintiffs' business opportunities and thedocuments solely between Rose and Todtman were in furtherance of that scheme. However, thecourt ruled that the crime/fraud exception was not available to pierce the privilege.
Discovery proceeded accordingly with defendants producing the documents the court hadordered them to produce, including the e-mails between Todtman and Rose that copied Krecke.Thereafter, plaintiffs used these documents to move to reargue and renew their prior motion tocompel. Plaintiffs claimed that the new documents indicated that the privileged communications[*2]between Rose and Todtman furthered Rose and Krecke'sfraudulent scheme to compete unfairly with plaintiffs. The court once again rejected plaintiffs'attempt to pierce the privilege. Plaintiffs argue that the court erred by rejecting their request toinvoke the crime/fraud exception to the attorney-client privilege.
A party may not invoke the attorney-client privilege where "it involves clientcommunications that may have been in furtherance of a fraudulent scheme, an alleged breach offiduciary duty or an accusation of some other wrongful conduct" (Ulico Cas. Co. v Wilson, Elser,Moskowitz, Edelman & Dicker, 1 AD3d 223, 224 [2003]).
Regardless of whether Krecke breached his duty of loyalty to his employer, defendants havealready produced the e-mails between Rose and Todtman that involve Krecke. Nothingdefendants have shown regarding Krecke would lead to claims involving Rose or Todtman, asneither of these defendants owed plaintiffs a fiduciary duty. Nor is there a showing that thee-mails between Rose and Todtman were in furtherance of the alleged breach of Krecke's duty ofloyalty to his employer. Thus, refusing to allow plaintiffs to invade the privilege between Roseand Todtman constituted a proper exercise of the court's broad discretion in the supervision ofpretrial disclosure.
We have considered plaintiffs' remaining arguments and find them unavailing.Concur—Gonzalez, J.P., Catterson, McGuire and Moskowitz, JJ.