“The attorney client privilege, the oldest among common-law evidentiary privileges, fosters the open dialogue between lawyer and client that is deemed essential to effective representation” (Spectrum Sys. Intern. Corp. v Chem. Bank, 78 NY2d 371, 377  [quotation marks and citations omitted]). While an otherwise privileged communication can lose the protections of the privilege by reason of waiver, either intentionally or inadvertently, two principles complicate application of the rules governing waiver in Surrogate’s Court proceedings. The first such principle is that the attorney client privilege belongs to the client and, generally speaking, only the client can waive the privilege (see generally Manufacturers and Traders Tr. Co. v Servotronics, Inc., 132 AD2d 392, 400 [4th Dept 1987] [“the attorney-client privilege belongs to the client and can be waived only by the client”]). The second such principle is that, in New York State, the privilege survives the death of the client (see Matter of Riconda, 90 NY2d 733, 740 ). While it is well established that the right to waive the privilege also survives the death of the client, case law is still developing concerning who can effectuate a post-death waiver and in what circumstances.
Recently, in Matter of Thomas, 2019 NY Slip Op 08293 (4th Dept Nov. 15, 2019), the Appellate Division, Fourth Department, addressed whether the executor of an estate is authorized to waive a decedent’s attorney client privilege, an issue of first impression in that Department. Agreeing with the Second and Third Departments, the Fourth Department answered the question in the affirmative. Perhaps more significantly, the Court held that the executor in that case could waive the privilege regardless of his self-interest in the testimony of the decedent’s former counsel, and over the petitioner’s objection that the executor’s success in the proceeding would result in the exclusion of an asset from the estate and, thus, would not benefit the estate.
Thomas involved a dispute among the decedent’s children (and the issue of a post-deceased child) over the ownership of a closely held company, New York State Fence Company (“NYSFC”), previously owned by the decedent. The respondent in the proceeding was one of the decedent’s sons, the executor of his estate. He did not identify any shares of NYSFC as assets of the decedent’s estate. The petitioners, other issue of the decedent, commenced a proceeding challenging numerous real estate transactions between the respondent and the decedent, as well as the respondent’s failure to identify any shares of NYSFC as being assets of the estate. They sought to impose a constructive trust claim, based on the fact that the respondent failed to produce any records reflecting the transfer of the stock from the decedent to himself, or any records reflecting respondent’s payments for the stock.
The Surrogate dismissed the constructive trust claim, and, in a prior decision, the Fourth Department reinstated it (see 124 AD3d 1235 [4th Dept 2015]). Then, in another decision, the Fourth Department held that the Surrogate erred in directing a verdict in favor of the respondent at the close of the petitioners’ proof (see 148 AD3d 1764 [4th Dept 2017]). This decision was grounded in the Court’s determination that the Surrogate erred in determining that the petitioners had the burden of proof to establish that the stock had not been transferred to the respondent. The Fourth Department held that where an asset is not included in the inventory of the estate based upon a fiduciary’s assertion that he is the owner of the asset, it is the fiduciary’s burden to show a legal and sufficient reason for withholding it.
Which brings us to the third appeal. Upon remittal, the Surrogate held a nonjury trial during which the respondent, in his capacity as executor, waived the decedent and his deceased wife’s attorney-client privilege, and their former counsel thereafter testified that she did not include a specific bequest with respect to NYSFC in the Decedent’s most recent will because he had already transferred those shares to the respondent. The Surrogate accordingly determined that the respondent satisfied his burden and specifically established that the shares of NYSFC were sold and transferred to him prior to the Decedent’s death.
The petitioners appealed, arguing, inter alia, that existing case law, from the Second and Third Departments, permit waiver of the attorney-client privilege by an executor only if the waiver benefits the estate. They asserted that excluding an asset from the estate would only benefit the respondent, not the estate or its beneficiaries.
In affirming the Surrogate’s determination, the Court relied heavily on the Second Department’s decision in Mayorga v Tate, 302 AD2d 11 (2d Dept 2002). In that case, a legal malpractice action brought against the decedent’s attorneys, the court held that the assignee of the executor of the decedent’s estate could waive the decedent’s attorney client privilege and compel production of the attorney’s file concerning the decedent. The court provided a detailed discussion concerning New York’s attorney-client privilege statute, CPLR § 4503, noting that it merely codifies the common law. Further, the court noted that while the statute expressly permits the “client” to waive the privilege, the common law “has always provided that an executor may, in the interest of the estate, waive the attorney-client privilege of the deceased client.” The court stated that “it makes no sense to prohibit an executor from waiving the attorney-client privilege of his or her decedent, where such prohibition operates to the detriment of the decedent’s estate, and to the benefit of an alleged tortfeasor against whom the estate possesses a cause of action[.]” It concluded that, “under the terms of CPLR 4503, just as under the common law, an executor may waive the attorney-client privilege of his or her decedent[.]”
The Fourth Department also noted that the Third Department reached the same determination in Matter of Johnson, 7 AD3d 959 (3d Dept 2004), lv denied 3 NY3d 606 (2004).
Rejecting the petitioners’ argument that Mayorga and Johnson only support an executor’s waiver of the attorney-client privilege if the waiver benefits the estate, the Fourth Department noted that, subsequent to Mayorga, the Second Department permitted a waiver in Matter of Bassin, 28 AD3d 549 (2d Dept 2006). In Bassin, a proceeding in which the decedent’s daughter sought to recover for the estate certain real property the decedent had deeded to her son, the court permitted a waiver to allow the decedent’s attorney to testify regarding the decedent’s intent in executing the deed in favor of her son.
Nevertheless, it is quite possible to reconcile the determinations in Thomas and Bassin – where an executor was permitted to waive privilege even though the result was a determination that the estate had no interest in a valuable asset – with a general rule that an executor may waive a decedent’s attorney-client privilege only “in the interest of the estate.” In the universe of trust and estate law, the primary focus of most proceedings is giving effect to a decedent’s intent. One could well argue, therefore, that ascertaining a decedent’s intentions with respect to the descent, distribution, and ownership of his or her assets after death is both “in the interest of the estate” and “benefits the estate.” This is true even where, as in Thomas, the estate is deprived of an asset as a result.