Last Thursday, the New York Court of Appeals issued a stark reminder to transactional lawyers: no matter how much “common interest” two parties may have with respect to a transaction, the common interest doctrine may not protect their communications.In Ambac Assurance Corp. v. Countrywide Home Loans, Inc., New York’s highest court held, in a 4-2 decision, that a party waives its attorney-client privilege if it shares privileged information with another party unless (i) those two parties share a common legal interest, (ii) the communication between the parties was made in furtherance of that legal interest, and (iii) the communication relates to pending or anticipated litigation. Plaintiff Ambac insured residential mortgage-backed securities issued by defendant Countrywide. When those securities failed during the financial crisis, Ambac sued Countrywide under various breach of contract and fraud theories. Ambac also sued Bank of America, which acquired the assets of Countrywide in a merger in 2008. At issue in the decision were approximately 400 documents Bank of America withheld from production during discovery. The documents comprised attorney-client privileged communications that the bank and Countrywide shared with each other during the period between entering into the merger agreement and the closing of the merger six months later. The bank… Read full this story
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