Ambac Assurance Corp. v. Country Wide Home Loans, Inc.

• Citation: 2013 NY Slip Op 32568
• Decision Date: 24 June 2013
• Docket Number: Index No. 651612/2010
• Parties: AMBAC ASSURANCE CORPORATION and THE SEGREGATED ACCOUNT OF AMBAC CORPORATION, Plaintiffs, v. COUNTRY WIDE HOME LOANS, INC., COUNTRYWIDE SECURITIES CORP., COUNTRYWIDE FINANCIAL CORP., and BANK OF AMERICA CORP., Defendants.
• Court: New York Supreme Court

2013 NY Slip Op 32568

AMBAC ASSURANCE CORPORATION
and THE SEGREGATED ACCOUNT OF AMBAC CORPORATION, Plaintiffs,
v.
COUNTRY WIDE HOME LOANS, INC., COUNTRYWIDE SECURITIES CORP.,
COUNTRYWIDE FINANCIAL CORP., and BANK OF AMERICA CORP., Defendants.

Index No. 651612/2010

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

DATED: June 24, 2013

DECISION and ORDER

JOHN A. K. BRADLEY, REFEREE:

By a letter, dated May 1, 2013, Ambac requests "that [I] review BAC's improper assertion of privilege as to communications and other exchanges involving both BAC and Countrywide ("CW") personnel that took place before BAC acquired CW on July 1, 2008. The letter attached a list of 483 "challenged communications." (The list has subsequently been reduced to 445 challenged communications.)

In support of its application, in the letter, Ambac asserts that BAC had provided a privilege log that contained 85,000 entries. Reviewing this log Ambac observed that BAC had asserted privilege over more than 3500 communications dated prior to July 1, 2008, the date of the merger between CW and a BAC subsidiary, Red Oak Merger Corp. Ambac believes that the transmission of communications among these two corporations at a time when they were unaffiliated, separate entities that shared only a putative and

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prospective commercial interest destroyed any privilege that might have otherwise attached to those communications.

In support of its position, Ambac mentions that BAC has claimed that the common interest doctrine provides a basis for protecting the documents from disclosure. Ambac rejects what it asserts is BAC's claim that the common interest doctrine covers communications shared between separate companies merely because they were parties to an agreement regarding a business transaction.

In a letter, dated June 3, 2013, BAC opposes Ambac's May 1, 2013, letter challenging BAC's reliance on the common interest doctrine. BAC argues that the common interest doctrine protects communications between parties to a proposed merger. Signing the merger agreement, BAC contends, committed BAC and Countrywide to the merger's "successful completion." BAC urges that in the initial stages of becoming parent and subsidiary BAC and Countrywide shared a common legal interest in closing the merger and the many intermediate steps for two heavily regulated entities. BAC contends that BAC and Countrywide needed to obtain joint legal advice on all these issues to close the merger. For this reason, BAC urges, the merger agreement required BAC and Countrywide to share privileged information and expressly protected that information so as not to jeopardize the attorney-client privilege.

In a reply letter, dated June 11, 2013, Ambac argues that BAC does not allege in its privilege log or in the June 3, 2013, letter that the challenged communications were made in the context of actual or expected litigation in which BAC and Countrywide shared a common legal interest; therefore, the letter continues, BAC has failed to carry its

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burden of establishing that New York's common-interest doctrine protects the challenged communications from disclosure. ¹

As an initial matter, Ambac asserts that BAC's claim of privilege over the challenged communications should be rejected because BAC never cited the common-interest privilege on its privilege logs. BAC, in turn, asserts that "BAC has not waived privilege by not explicitly using the phrase 'common-interest doctrine' in its privilege log. This is because the common-interest doctrine is not an independent basis for withholding documents, but rather prevents waiver of otherwise applicable privileges when the privileged communication is disclosed to a third party that shares a common legal interest.

CPLR 3122 (b) requires that the following information be included in a privilege log: (1) the type of document; (2) the general subject matter of the document; (3) the date of the document; and (4) such other information as is sufficient to identify the document for a subpoena duces tecum.

Instructive...