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Norma KNOPF, Plaintiff, v. Frank ESPOSITO, Dorsey & Whitney, LLP, Nathaniel Akerman, Edward Feldman, Michael Sanford, and SP Voyager Fund, LLC, Defendants.
This action arises from the long litigation between Norma Knopf (plaintiff here) and Michael H. Sanford over loans Knopf and her late husband made to Sanford in 2006 and which Sanford failed to repay.
In this action, Knopf has sued not only Sanford but also his former attorneys. Knopf asserts that these defendants conspired with Sanford—and a then-special master in the Appellate Division, First Department, Melissa Ringel—to help Sanford evade an October 2015 First Department escrow order. Doing so assertedly allowed Sanford to dissipate millions in proceeds from the sale of a penthouse apartment owned by one of Sanford's companies (nonparty Pursuit Holdings, LLC), instead of satisfying Sanford's obligations to the Knopfs.
This court denied in part defendants’ motions to dismiss in March 2021. (See Knopf v Esposito, 2021 NY Slip Op 50250[U] [Sup Ct, NY County Mar. 4, 2021].) Defendants appealed to the First Department, and Knopf cross-appealed, from different aspects of this court's order on the motions to dismiss. (See NYSCEF Nos. 315, 318, 321, 327 [notices of appeal].) In November 2021, the First Department granted Knopf's sealed motion to transfer the perfected appeals and cross-appeal to the Appellate Division, Second Department, where the appeals and cross-appeal remain pending.1 (See Knopf v Esposito, 2021 NY Slip Op 74689[U] [1st Dept Nov. 18, 2021].)
Knopf now moves in this court to compel defendants (i) to produce to her communications between defendant Nathaniel (Nick) Akerman and Sanford concerning Pursuit and its penthouse apartment between October 2015 and July 2017; and (ii) to produce to this court for in camera review communications among defendants and Sanford between June and August 2017.2 (See NYSCEF No. 390 [notice of motion].) Only Akerman and his former law firm, defendant Dorsey & Whitney, LLP, have opposed the motion. (See NYSCEF No. 417 [attorney affirmation].) The motion is granted.
I. The Branch of Knopf's Motion Seeking to Compel Production of Communications Between Akerman and Sanford About Pursuit and Pursuit's Penthouse Apartment
Knopf seeks communications between Akerman and Sanford that (i) were sent between October 21, 2015, and July 10, 2017, inclusive; and (ii) “concern Pursuit, Pursuit's 67th Street apartment and/or any of the orders issued by the First Department on October 22, 2015, November 12, 2015 and December 29, 2015 in Knopf v. Sanford, New York County Index No. 113227/2009.” (NYSCEF No. 390 at 1-2 [notice of motion].) Akerman/Dorsey declined to produce responsive communications on the ground that the request was overbroad and was seeking materials shielded by the attorney-client privilege.
As an initial matter, Knopf contends on reply that Akerman/Dorsey should be deemed to have waived any privilege claim because they failed to provide a privilege log as required by CPLR 3122. (See NYSCEF No. 429 at 5-6, citing Anonymous v High Sch. for Envtl. Studies, 32 AD3d 353 [1st Dept 2006].) This court disagrees.
It is undisputed that Akerman/Dorsey offered to produce a privilege log that grouped documents by category, based on their argument that certain categories of responsive Akerman-Sanford communications were irrelevant to this action; and that Knopf declined to accept this kind of “categorical” privilege log. (See NYSCEF Nos. 417 at ¶ 8, 429 at ¶ 10.) Knopf argues that CPLR 3122 (b) requires document-by-document itemization, not merely a categorical log. (See NYSCEF No. 429 at ¶ 10.) But whether a privilege log satisfies the CPLR is distinct from whether a noncompliant log is so inadequate as to constitute a waiver. Serving a categorical privilege log is materially different from relying on “boilerplate objections” that are “ ‘purely conclusory and devoid of reason,’ ” and thus effectively no objections at all. (High Sch. for Envtl. Studies, 32 AD3d at 356.) Indeed, the Appellate Division has previously rejected the argument that a party's relying on a privilege log that groups documents into different categories and asserts privilege on a category-by-category basis, rather than document-by-document, will be deemed a waiver of privilege. (See Stephen v State, 117 AD3d 820, 821 [2d Dept 2014].)
This court therefore declines to deem Akerman/Dorsey to have waived any claims of privilege. The court instead considers those claims on their merits.
Akerman/Dorsey oppose this branch of Knopf's motion to compel on two grounds. First, they argue that the document request at issue sweeps in a substantial increment of irrelevant communications relating to other, earlier litigation in which Akerman had represented Sanford and Sanford's communications. This argument is without merit.
All the litigation involving the Knopfs in which Akerman represented Sanford ultimately related to the disposition of proceeds from sale of the penthouse apartment owned by Pursuit. The time frame of the communications that Knopf now seeks to compel begins on October 21, 2015, amid intense appellate motion practice between the Knopfs and Sanford over the handling of those sale proceeds. (See generally Knopf v Sanford, 65 Misc 3d 463, 474-478 [Sup Ct, NY County 2019].) And the January 12, 2016, call that is the subject of this action dealt with the various First Department orders resolving that motion practice.
This court is skeptical that one can cleanly distinguish Akerman-Sanford emails about the January 12 call and related subjects from Akerman-Sanford emails sent within the period at issue that discuss pre-period litigation with the Knopfs involving the penthouse apartment, as Akerman/Dorsey would now have it. (See NYSCEF No. 417 at ¶¶ 4-5.) The court's skepticism on this point is bolstered by New York's liberal standard for discovery. (See Mann v Cooper Tire Co., 33 AD3d 24, 29 [1st Dept 2006].) The court therefore declines to deny the motion to compel.
Akerman/Dorsey's second ground for opposing the motion to compel is that Knopf is seeking documents shielded by the attorney-client privilege. This court disagrees.
With respect to the issue of privilege, the starting point for this court's inquiry is that Pursuit's bankruptcy trustee in its federal bankruptcy proceeding has expressly waived Pursuit's attorney-client privilege as against Knopf. (See Sanford, 65 Misc 3d at 512.) Further, during discovery in the federal proceeding, the U.S. Bankruptcy Court for the Southern District of New York held that the scope of this waiver encompassed attorney-client communications between Sanford (Pursuit's sole member) and his counsel about Pursuit's property, legal matters, and general affairs. (See Matter of Pursuit Holdings (NY), LLC, No. 18-12738, 2021 WL 163083, at *8 [Bankr SD NY Jan. 15, 2021] [Martin Glenn, J.].) The bankruptcy court therefore rejected Sanford's argument that emails he sent to defendant Frank Esposito about developments in the litigation between Sanford and the Knopfs (and the implications for real property owned by Pursuit) were sent solely in Sanford's personal capacity and not on behalf of Pursuit. (See id. at *8-*9.) This court sees no reason—and Akerman/Dorsey have not offered any reason—to depart from the bankruptcy court's holding on the scope of a privilege waiver made in the bankruptcy proceeding by a party before the bankruptcy court.3
On this motion, Knopf seeks to compel only communications during the specified time period that “concern Pursuit, Pursuit's 67th Street apartment and/or any of the orders issued by the First Department on October 22, 2015, November 12, 2015 and December 29, 2015” in the litigation between Knopf and Sanford. (NYSCEF No. 390 at 1.) Those three orders dealt with issues relating to the sale of the penthouse apartment owned by Pursuit and the disposition of the sale proceeds—again, matters concerning Pursuit and its property. Thus, on its face, this branch of Knopf's motion to compel appears to seek only materials within the scope of the Pursuit bankruptcy trustee's privilege waiver, as construed by the bankruptcy court.
Akerman/Dorsey emphasize that before the time frame at issue here they represented not only Pursuit but also “Sanford, M.H. Sanford & Co., LLC, and Sanford Partners, L.P.” (NYSCEF No. 417 at ¶ 6.) Later responsive communications within the time frame at issue, they contend, addressed their “former representation of [Sanford] and his other companies in litigation against the Knopfs, as well as the Meister Seelig litigation.” (Id.) In other words, Akerman/Dorsey argue, some of the communications now sought by Knopf pertained only to the interests of Sanford individually or his other, non-Pursuit companies. But Knopf's discovery request seeks only attorney-client communications relating to Pursuit. Communications that sought or provided legal advice pertaining only to Sanford in his individual capacity, or only to the legal affairs and interests of Sanford's non-Pursuit companies, might be outside the scope of the Pursuit privilege waiver—but by that same token, they would be outside the scope of Knopf's discovery request.
To be sure, it is theoretically conceivable that an attorney-client communication could exist between Akerman/Dorsey and Sanford that dealt in part with legal matters relating to Pursuit and in part with legal matters relating solely to Sanford's non-Pursuit interests. And in that event, Akerman/Dorsey could properly redact the non-Pursuit material before producing the communication to Knopf. But taking that possibility into account does not warrant denying Knopf's motion to compel altogether, as Akerman/Dorsey advocate.
This branch of the motion is granted.
II. The Branch of Knopf's Motion Seeking to Compel In Camera Production of Communications Among Defendants between June and August 2017
Knopf also seeks production to the court for in camera review of communications among defendants and Sanford sent between June 22, 2017, and August 11, 2017, inclusive. Defendants declined to produce these communications in response to Knopf's requests, contending that the communications are shielded by the joint-defense/common-interest branch of the attorney-client privilege. (See NYSCEF Nos. 395 at 3, 396 at 3, 397 at 3; see also Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 NY3d 616, 625-627  [discussing the joint-defense/common-interest doctrine].)
Both this court and the bankruptcy court have already held that communications among defendants and Sanford in the period immediately preceding and following the January 12, 2016, telephone call to the First Department special master fell within the wrongful-act exception to the attorney-client privilege. (See Sanford, 65 Misc 3d at 514-522; Matter of Pursuit Holdings, 2021 WL 163083, at *11-*12.) Knopf now contends that some or all of the June-August 2017 communications were also in furtherance of a crime or wrongful act—namely, covering up the asserted wrongdoing related to the January 12 call. (See NYSCEF No. 391 at ¶¶ 27-33.) And she argues that a sufficient basis exists to support this conclusion to warrant requiring production of the June-August 2017 communications to this court for in camera review. (See id. at ¶ 34.)
Defendants do not meaningfully oppose this branch of Knopf's motion to compel. Akerman/Dorsey, the only defendants to have filed opposition papers, state that although they “disagree with both the factual and legal arguments about the crime/fraud exception detailed” in Knopf's motion papers, the “communications among defendants” during the period at issue “are too insignificant to debate further,” such that Akerman/Dorsey do not object to producing the communications to the court for in camera review. (NYSCEF No. 417 at ¶ 9.)
This branch of the motion is granted as well.
Accordingly, for the foregoing reasons, it is hereby
ORDERED that the branch of Knopf's motion seeking to compel Akerman and Dorsey to produce communications between Akerman and Sanford (limited as described above) is granted; and it is further
ORDERED that Akerman and Dorsey shall within 30 days produce all responsive communications to Knopf; and it is further
ORDERED that to the extent Akerman and Dorsey believe that one or more responsive communications also contains material that is seeking or providing legal advice to Sanford solely in his individual capacity on matters that do not relate to or involve Pursuit, Akerman and Dorsey may redact that material (subject to potential in camera review by this court); and it is further
ORDERED that the branch of Knopf's motion seeking to compel defendants to produce for in camera review all communications amongst themselves and Sanford sent between June 22, 2017, and August 11, 2017, is granted; and it is further
ORDERED that each defendant shall separately, within 30 days, provide to this court (by email to email@example.com) a PDF document compiling chronologically all emails that the defendant sent to or received from the other defendants and Sanford within the specified period; and it is further
ORDERED that Knopf serve a copy of this order with notice of its entry on all parties and on Sanford.
1. The First Department also transferred sua sponte a fourth perfected appeal, taken by Akerman/Dorsey from this court's order denying their motion to disqualify Knopf's counsel. (See Knopf v Esposito, 2021 NY Slip Op 74690[U] [1st Dept Nov. 18, 2021] [transfer order]; NYSCEF No. 566 [notice of entry attaching order and transcript of decision delivered on the record]; NYSCEF No. 567 [notice of appeal].)
2. The motion to compel as initially filed also sought Dorsey's unredacted outgoing call records for January 12, 2016. (See NYSCEF No. 390 at 2.) That aspect of the motion has since been resolved by the parties.
3. Indeed, this court previously held that the relationship between Sanford and Pursuit was so close that Sanford could be held liable as Pursuit's alter ego for Knopf's judgment against Pursuit. (See Knopf v Sanford, 2019 NY Slip Op 30269[U], at *4-*5 [Sup Ct, NY County Feb. 4, 2019].)
Gerald Lebovits, J.
Response sent, thank you
Docket No: Index No. 150315/2019
Decided: January 14, 2022
Court: Supreme Court, New York County, New York.
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