Clients loan money to corporation, and eventually, the corporation stops paying it back. From there, the UCC-1, Security Agreements and Transfers are simply too complicated for a blog entry such as this. Suffice it to say, there are multiple law firms, making multiple claims against the parties and eachother, and a huge question of attorney-client privilege. Justice O’Neill Levy sorts it all out in a primer on attorney -client privilege in Priestley v Panmedix Inc.
2017 NY Slip Op 30054(U) January 12, 2017 Supreme Court, New York County, Docket Number: 114874/10. On Monday, we will highlight the question of work-product privilege, which is different.
“In April 2001, Priestley loaned $750,000 to Panmedix, pursuant to a senior security promissory note and a patent security agreement, which granted plaintiff a security interest in, respectively~ Panmedix’s personal property and patents. Plaintiff recorded her security interests by filing a UCC financing statement (UCC-1). The loan was to mature in a year. By March 2005, Panmedix had stopped making payments to plaintiff on the loan. In 2007, plaintiff sued in federal court to recover the amount owed, and, in 2008, obtained a judgment against Panmedix and others in the amount of approximately $1.million. Priestley v Comrie, 2007 WL 4208592, 2007 US Dist LEXIS 87386 (SD NY 2007). Because Panmedix was financially unable to pay the judgment, plaintiff and Panmedix entered into a payment agreement, providing that payment to plaintiff would be made from the sale of the company and other possible transactions. When no sale or other transactions occurred, and plaintiff was not paid, she contacted the federal court, in or around June 2009, seeking an order of attachment, and was advised that it would be faster to take her judgment to the marshal. and levy on the assets. See generally Priestley v Panmedix.Inc., 18 F Supp 3d 486, 490-491 (SD NY 2014). Plaintiff asserts that she and Comrie, President and CEO of Panmedix; subsequently began negotiating another payment agreement. (see the case for much, much more detail)
“”The attorney-client privilege shields from disclosure any confidential communications between an attorney and his or her client made for the purpose of obtaining or facilitating legal advice in the course of a professional relationship.” Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27 NY3d 616, 623-24 (2016); see Madden -v Creative Servs., Inc., 84 NY2d 738, 745 ( 1995) . Recognized at common law and codified in CPLR 4503 (a), the attorney-client privilege “fosters the· open dialogue between lawyer and client that is deemed essential.to effective representation” (Spectrum Sys. Intl. Corp. v Chemical Bank, 78 NY2d 371, 377 ), and “exists to ensure that one seeking legal advice will be able to confide, fully and freely in his [or her] attorney, secure in the knowledge that his [or her] confidences will not later be exposed to public view to his [or her] embarrassment or legal detriment.” Matter of Priest v Hennessy, 51 NY2d 62, 67-681 (1980). “The privilege belongs to the client” (People v Osorio, 75 NY2d at 84) and “is intended to protect the client., Matter of Tartakoff v. New York State Educ. Dept., 130 AD3d 1331, 1333 (3d Dept 2015); see Arkin Kaplan Rice LLP v Kaplan, 107 AD3d 502, 503 (Pt Dept 2013).
“The privilege, however, is not limitless.” Matter of Priest, 51 NY2d at 68. It “must be narrowly construed because it is at odds with the general policy of this State favoring liberal ‘ discovery, and the party asserting the privilege bears the burden of establishing that it applies.” ACE Sec. Corp. v DB Structured Prods., Inc., 40 NYS3d 723, 732, 2Q16 NY Siip Op 26337 (Sup Ct, NY County 2016), citing Ambac Assur. Corp., 27 NY3d at 624, citing Spectrum Sys. Intl. Corp., 78 NY2d at 377; see Matter of Priest, 51 NY2d at 68-69; NAMA Holdings, LLC v Greenberg Traurig LLP, 133 AD3d 46, 52 (Pt Dept 2015). The privilege also “is subject to exceptions, both legislative and Judge-made.” Madden, 84 NY2d at 745 (citations omitted) . Such an exception, for example, at issue in this case, is the “crime fraud exception.” Also at issue here, while the privilege generally is waived where confidential communications are shared with third parties, an exception may apply to communications between and among jointly represented clients and their attorney. 27 NY3d at 624-625. “