Charbern Management Group LLC v. Borah

Background

Charbern Management Group LLC sued Borah, Goldstein, Altschuler, Nahins & Goidel, P.C. for legal malpractice arising from Borah’s representation of Charbern in the sale of a mixed-use New York City property. Charbern alleged that it had told Borah it lacked records needed to establish that several residential units had been deregulated under New York rent-regulation laws.

Charbern selected BMSK LLC as the buyer. BMSK’s proposed contract required Charbern to provide original written and notarized records for prior occupancies of the residential units. Charbern alleged that Borah advised that the contract presented no problem even though Charbern lacked the records. After delays and a later contract, Charbern sold the property to BMSK for $4,300,000 instead of the original proposed price of $5,350,000. Charbern alleged that Borah’s negligence caused the reduced price and other damages. Borah also asserted a counterclaim alleging that Charbern failed to pay outstanding invoices.

Charbern later retained Ira Nesenoff as new counsel. During discovery, Charbern produced emails and other communications with Nesenoff that were redacted or withheld as protected by attorney-client privilege. Borah moved to compel communications between Charbern and Nesenoff from May through November 2020, or alternatively asked the court to review the documents privately to determine whether the privilege claims were proper.

Legal standards

The attorney-client privilege protects confidential communications between a lawyer and client made to obtain or provide legal advice. The privilege does not automatically protect a communication merely because a lawyer participated; the communication must concern legal advice rather than business advice.

Federal law also protects attorney work product, meaning documents prepared in anticipation of litigation. The court separately considered the “at-issue” waiver doctrine. Under that doctrine, a party may waive privilege when it affirmatively places its own privileged communications at issue and intends to rely on those communications to prove a claim or defense. Relevance alone is not enough; the opposing party must show reliance on the privileged advice.

Court’s analysis

Borah argued that Charbern’s communications with Nesenoff were not privileged because Borah and Nesenoff had simultaneously represented Charbern during part of the relevant period. Charbern disputed that there had been simultaneous representation. The court assumed, without deciding, that simultaneous representation had occurred because the issue did not determine the outcome.

The court rejected Borah’s argument that a legal-malpractice plaintiff automatically waives privilege over communications with a successor law firm whenever the two firms represented the client at the same time. The court held that reliance on the privileged advice remains the key question, even in that situation.

The court found that Charbern’s knowledge when it signed the BMSK contract was relevant to whether Borah had committed malpractice, but it saw no possibility that Charbern would rely on statements made to Nesenoff months later to prove what Borah knew or should have known when advising Charbern about the contract. The court also found that communications with BMSK about why BMSK would not close at the original price could be relevant and would not necessarily be privileged, while Charbern’s communications with its own lawyer about how to respond to the closing problems were not shown to be at issue.

Borah relied on an inadvertently produced email in which Charbern asked Nesenoff whether BMSK had confirmed that the buyout agreements were sufficient. The court reasoned that, if BMSK’s view of those agreements mattered, the best evidence would be communications with BMSK or other nonprivileged communications—not Charbern’s privileged request for legal advice.

Disposition

The court concluded that Borah had not shown that Charbern would rely on its communications with Nesenoff to prove malpractice, causation, or damages. It therefore held that private review of the withheld documents was not warranted and denied without prejudice Borah’s motion to compel. The clerk was directed to close the motion at docket entry 22.

The court did not decide whether Charbern could take back the particular inadvertently produced email. It stated that the opinion addressed only Borah’s broad request for categories of redacted documents and that the record did not provide enough information to decide the privilege status of any individual document or email.