Objectants bring this motion for an order pursuant to CPLR Section 3124 to compel the production of a legal opinion prepared by the Bank's in-house counsel in December, 1997. Objectants argue that the opinion is not protected by the attorney-client privilege and thus subject to disclosure. They further argue that the opinion was not prepared for litigation, but rather for advice for the fiduciary for the benefit of the beneficiaries. Lastly, it is suggested that any privilege was waived by "selective disclosure".

Petitioner counters that the memorandum in question is not material and necessary; is protected by the attorney-client privilege; and that the privilege has not been waived.

The dispute herein revolves around the Petitioner Bank's management as Trustee of a testamentary trust established by Charles G. Dumont. Specifically, the main issue herein will be the import of the language in the Last Will and Testament which provides:

"The foregoing provisions shall not prevent my said Executors or my said Trustee from disposing of all or part of the stock of Eastman Kodak Company in case there shall be some compelling reason other than diversification of investment for doing so."

All parties appear to suggest that the litigation may be determined upon the definition and meaning of "compelling reason" within the instrument.

The Petitioner has indicated its position that there was no "compelling reason" within the context of the Last Will and Testament to sell the Kodak stock until some time between 1998 and 2002. The objectants have asserted that the stock should have been sold in 1973.

It should be noted that the Bank's counsel, on its own initiative has submitted the memo in question for the Court's in camera review.

OPINION

The Petitioner acknowledges that it sought and obtained an opinion of counsel in late 1997. Petitioner further alleges that it sought the opinion after letters were received from the attorney representing objectant Hunter. The bank's position is that the advice was sought for its [*2]benefit regarding its rights and duties in light o the above referenced investment clause language. The bank further points out that the opinion was prepared by in-house counsel who was employed by the bank and worked as counsel for the bank alone. None of the expenses in obtaining the legal advice were charged against the Dumont trust assets.

Richard L. Smith, Esq., draftsman of the memorandum, states in his affidavit that he was asked, as in-house counsel, to provide the Bank with legal advice "regarding its rights and duties as Trustee relating to the investment clause contained in paragraph 'Lastly' of Mr. Dumont's Will." (Smith's affidavit dated January 13, 2004, paragraph "3"). He goes on to allege that it was done with the expectation of privilege, and with the threat of litigation. In that same affidavit at paragraph "8" he states: "My December 1, 1997 memo was a confidential communication conveying legal advice to the Bank in the context of anticipated litigation." No action was pending, nor had a judicial settlement proceeding been commenced. The motion to compel judicial settlement was not filed until 1998. The sole basis for alleging "anticipated litigation" is the reference in letters from then counsel for objectants, Mr. Holderman, of the "Matter of Janes".

Although the letters from the Objectants' attorney in 1997 cite case law, there is no language which would constitute the threat of litigation. The letters from Mr. Holderman, dated July 3, 1997 and October 31, 1997, attached as exhibits 2 and 3 to the affidavit of Richard L. Smith, Esq., appear to this Court to be merely normal communications between counsel and the Trustee representing the beneficiaries, though in different capacities. In fact, the letters address different topics to be covered by the Bank's personnel when meeting with the beneficiaries (now the objectants). Such meetings would not normally occur had litigation been commenced or anticipated.

The Court has reviewed in camera the memo prepared by Mr. Smith and finds no indicia within the memo that it was prepared for the purpose of litigation.

The opinion was only sought after the a request from Holderman in his July 3, 1997 letter which reads: "As discussed, we also would appreciate your review, together with your Legal Department, of Paragraph EIGHTH of the Will of Charles Dumont, which set forth a standard for the Trustee as to retention and disposal of Eastman Kodak stock.". The Bank nevertheless insists it was only requested to assist the Bank in performing its function as Trustee. Undeniably, the main function of any Trustee is to act for the benefit of the beneficiaries.

At the time the opinion was solicited, an exception to the attorney-client privilege was recognized and set forth in Hoopes v. Carota, 74 NY2d 716 (1989) dealing with communication between a fiduciary and counsel. The exception is based upon the fact that the fiduciary acts for the benefit of the beneficiary. Matter of Baker, 139 Misc.2d 573 (Nassau County, 1988). "The privilege should not be asserted against those for whose benefit the legal advice is sought." (Matter of Baker, supra at 577). The "faithful fiduciary has nothing to hide from his beneficiary." Quintel Corp, NV v Citibank, NA, 567 F Supp 1357, 1363 (SDNY 1983).

CPLR Section 3101(b) provides that privileged material shall not be obtainable through discovery. "CPLR Section 4503 prevents disclosure of any confidential communication between a client and her/his attorney. This is the strongest of all privileges and has a purpose of protecting the free flow of information from a client to her/his attorney." Groppe et al., Harris 5th Ed. New York Estates: Probate, Administration and Litigation, Section 19:67, 1996. [*3]

Though Objectant's urge that the Bank may not argue for application of the 2002 amendment to CPLR Section 4503, the Bank itself has not asserted the same. The statute's amendment was not retroactive.

Even were the Court to find that the attorney-client privilege existed as it relates to this written opinion, that privilege has been waived. It is undisputed that in his December 5, 1997 letter, Russell J. Mandrino, Vice President, disclosed advice contained in the opinion. This letter was written to Mr. Holderman. It references the request of Mandrino for an opinion of counsel from the Bank's Legal Department, and then goes on to disclose some of the content of the opinion received. In addition, Mandrino and John Fitzpatrick, the Bank's investment officer, both testified at depositions that the Bank had obtained the legal opinion in question.

It is clear that the privilege may be waived by the client disclosing a portion of the advice from counsel, and by placing such advice in issue. Orco Bank, N.V. v. Proteinas Del Pacifico, S.A., 179 AD2d 390, 577 NYS2d 841 (1st Dept 1992); Village Bd. v. Rattner, 130 AD2d 654, 515 NYS2d 585 (2nd Dept 1987); Paruch v. Paruch, 140 AD2d 418, 528 NYS2d 119 (2nd Dept 1988). Selective disclosure of the legal advice will lead to a waiver of the privilege. Stenovich v. Wachtell, Lipton, Rosen & Katz, 195 Misc2d 99, 756 NYS2d 367, 2003 N.Y. Slip Op. 23406.

Though Petitioner argues that there has been no waiver, this is unsupported by the case law, and no case in support of that position is proffered by Petitioner.

The Petitioner Bank has submitted a copy of the memo for the Court's in camera review. As indicated, the Court has reviewed the same, and can neither sustain the privilege asserted nor find that it is immaterial and outside the purview of CPLR Section 3101.

DECISION

Based upon all of the above, Petitioner is directed to provide the opinion of counsel Richard L. Smith, Esq. To object ants by 5:00 pm on January 15, 2004. Any and all depositions or discovery necessitated by this decision must be completed by 10:00 am, January 20, 2004.

This constitutes the decision and order of the Court.

Dated:January 15, 2004
Hon. Edmund A. Calvaruso, Surrogate
Decision Date: January 15, 2004