Scope of "At Issue" Waiver of Attorney-Client Privilege is Limited

Nomura Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 62 A.D.3d 581, 880 N.Y.S.2d 617 (2009)

Brief Summary
A client put the advice of its former law firm at issue in litigation, thus waiving the attorney-client privilege. The client then sued the former law firm (second litigation), and the former firm was denied discovery of attorney-client communications from the first litigation because such communications were never at issue.

Complete Summary
Law firm Cadwalader, Wickersham & Taft LLP (“Cadwalader”) represented Nomura Asset Capital Corporation (“Nomura”) in creating a trust that was to comply with the IRS Real Estate Mortgage Investment Conduit (“REMIC”) regulations. The trustee later sued Nomura, alleging that one of the assets transferred to the trust, a mortgage, did not comply with REMIC standards. After Nomura settled with the trustee, Nomura sued Cadwalader, alleging in part that Nomura relied on Cadwalader’s erroneous advice regarding the non-compliant asset.

Cadwalader moved to compel production of Nomura’s attorney-client communications relating to the trustee litigation. Cadwalader cited the rule that a client waives attorney-client privilege when the client places the attorney’s advice at issue in litigation.

The Appellate Division, First Department, upheld the lower court’s denial of Cadwalader’s motion. The court noted that although Cadwalader’s legal advice was “at issue” in both the trustee litigation and the present litigation, the communications between Nomura and its counsel during the trustee litigation were never “at issue.”

Significance of Opinion
This opinion marks a limit to the scope of “at issue” waiver of the attorney-client privilege.