Blitz v. 970 Realty Associates

• Decision Date: 04 May 1989
• Citation: 233 N.J.Super. 29,557 A.2d 1386
• Parties: Jeanette BLITZ, Plaintiff-Appellant, v. 970 REALTY ASSOCIATES, A New York Partnership, and Stuart Eisenberger, Defendants-Third Party Plaintiffs-Respondents, v. PUROLATOR PRODUCTS, INC., Purolator Courier Corporation, Emery Air Freight Corp., and Facet Enterprises, Third Party Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 29

233 N.J.Super. 29

557 A.2d 1386

Jeanette BLITZ, Plaintiff-Appellant, v. 970 REALTY ASSOCIATES, A New York Partnership, and Stuart

Eisenberger, Defendants-Third Party Plaintiffs-Respondents, v. PUROLATOR PRODUCTS, INC., Purolator Courier Corporation, Emery Air Freight Corp., and Facet Enterprises,

Third Party Defendants.

Superior Court of New Jersey,

Appellate Division.

Argued March 21, 1989.

Decided May 4, 1989.

Leo Kaplowitz, for plaintiff-appellant (Kaplowitz and Wise, attorneys; Leo Kaplowitz, of counsel and on the brief; Warren L. Fink, Linden, on the brief; Greenstone, Sokol, Behot & Fiorenzo, Hackensack, attorneys).

Beth D. Pollack, for defendants-third party plaintiffs-respondents (Porzio, Bromberg & Newman, attorneys; John M. Newman, Morristown, on the brief).

Before Judges MICHELS and LONG.

The opinion of the Court was delivered by LONG, J.A.D.

On July 26, 1987, plaintiff Jeanette Blitz (Blitz) entered into an agreement of sale with defendant 970 Realty Associates (970 Realty) pursuant to which Blitz agreed to purchase from 970 Realty a parcel of property located in the City of Rahway, consisting of approximately twelve acres of land and containing approximately 295,000 square feet of buildings zoned for industrial, commercial and office purposes. Upon entering into the agreement, Blitz tendered a deposit of $650,000. The closing which was scheduled for August 31, 1987, was postponed until September 29, 1987.

On September 22, 1987, Blitz filed a complaint against 970 Realty and defendant Stuart Eisenberger (Eisenberger), a partner at 970 Realty (collectively defendants), alleging that there was widespread environmental contamination of the property (which had previously housed Purolator Products, Inc.) and that Eisenberger fraudulently induced Blitz to enter into the agreement to purchase the property. The complaint charged that Eisenberger told Blitz, who was only "vaguely aware" of the Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et seq. (ECRA), that the property was generally ECRA clean and that the cost of the cleanup for the "one or two places of pollution or contamination" would be covered by a $200,000 letter of credit that had been posted in response to an administrative consent order entered into with the Department of Environmental Protection in February 1985. On the basis of these allegations, Blitz sought a number of different remedies including a restraint on the sale of the property pending a determination of its environmental status; a postponement of the closing; the posting of security by Eisenberger to cover cleanup; rescission; return of Blitz' deposit; and damages, both punitive and compensatory.

During the course of discovery, defendants claimed that Blitz had consulted with various attorneys with regard to ECRA and the advisability of entering into the agreement to purchase the property. Blitz denied that she had consulted with any attorney other than Leo Kaplowitz, her present attorney, prior to signing the agreement. In any event, there was a factual issue presented as to whether plaintiff sought and received counsel from any other attorney in connection with the environmental issue prior to the signing. On June 24, 1988, defendants filed a notice of motion whereby they sought to compel Blitz to waive the attorney-client privilege "with respect to communications between herself and attorneys regarding ECRA or the advisibility of entering into the subject transaction," or alternatively to dismiss the fraud allegations of plaintiff's complaint. The trial judge granted defendants' motion to waive plaintiff's attorney-client privilege. He stated:

Furthermore, communications which the defendant requests in my judgment are relevant to the matter. What communications or knowledge did the plaintiff have at the time she contends she relied solely on defendant's statements? Also, this information should be obtained from the plaintiff, the attorney involved. To do otherwise would raise questions of hearsay.

Based on all of the foregoing I will grant the motion of defendant and permit the attorney-client privilege to be deemed waived, and I will order the depositions be taken of those individuals which are the subject of this motion.

Defendants submitted a proposed order which contained the following language:

HEREBY ORDERED that the plaintiff, Jeanette Blitz, her agents and representatives, are hereby deemed to have waived the attorney/client privilege with respect to all communications and conversations of every kind between the plaintiff, Jeanette Blitz, her agents and attorneys, and all attorneys concerning ECRA ("Environmental Clean-up Responsibility Act") or other environmental matters relating to any real property in the state of New Jersey or with respect to the advisability or lack thereof of entering into or concluding the real property transaction commonly referred to as the Purolator Property in Rahway, New Jersey.

Blitz objected to the scope of the proposed waiver order. Specifically, Blitz claimed that the order was "overbroad in that it [went] ... beyond the signing of the Agreement and [spoke] of concluding the transaction." Defendants argued that the order had to encompass Blitz' communications with her counsel following the signing of the agreement of sale on July 26, 1987 because these communications could show the extent of plaintiff's "prior knowledge of ECRA expecially as it existed at or prior to signing" the agreement of sale.

On September 16, 1988, a second hearing was held before the trial judge. The purpose of this hearing was to address Blitz' objection to the form of the order as submitted by defendants' attorney on the issue of the attorney-client privilege. At the conclusion of this hearing, the judge ruled that the order waiving Blitz' attorney-client privilege would encompass not only communications made prior to the agreement but also communications made after the agreement was signed but prior to the institution of the suit. The trial judge noted, however, that the order would not encompass "work product" or communications with respect to "trial strategy."

Blitz appeals claiming that:

THE ORDER OF THE COURT IN WAIVING THE ATTORNEY/CLIENT PRIVILEGE WENT FAR BEYOND THE RELIEF ASKED FOR IN THE NOTICE OF MOTION AND DEMONSTRATES CLEAR ERROR IN THAT THE WAIVER EXTENDED BEYOND THE DATE OF THE INDUCEMENT OF THE FRAUD WHICH OCCURRED WHEN THE PARTIES SIGNED THE AGREEMENT ON JULY 26, 1987.

A. The scope of the waiver constitutes clear error and is without a basis in law.

B. The manner in which the defendants seduced the trial court into extending the waiver of the attorney/client privilege beyond the date of the inducement of the fraud, which was the signing of the Agreement on July 26, 1987, and to include the time period up to the filing of the Verified Complaint on September 22, 1987, mocks the concept of justice.

We have carefully reviewed this record in light of the claims advanced and have determined that the trial judge erred in extending the waiver beyond the date of the signing of the agreement.

"The attorney-client privilege, which is the oldest of the privileges for confidential communications, is firmly embedded in our common law." Macey v. Rollins Environmental Services (N.J.), 179 N.J.Super. 535, 538, 432 A.2d 960 (App.Div.1981); see Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 684, 66 L.Ed.2d 584, 591 (1981); Fellerman v. Bradley, 99 N.J. 493, 498, 493 A.2d 1239 (1985); United Jersey Bank v. Wolosoff, 196 N.J.Super. 553, 561, 483 A.2d 821 (App.Div.1984). Although the privilege was not originally set forth in either constitutional or statutory form it is presently codified in N.J.S.A. 2A:84A-20 and embodied in Evid.R. 26. See Fellerman, supra, 99 N.J. at 498, 493 A.2d 1239; United Jersey Bank, supra, 196 N.J.Super. at 561, 483 A.2d 821; Macey, supra, 179 N.J.Super. at 538-539, 432 A.2d 960.

"The privilege recognizes that sound legal advice or advocacy serves public ends and rests on the need to 'encourage full and frank communication between attorneys and their clients.' " United Jersey Bank, supra, 196 N.J.Super. at 561, 483 A.2d 821 (quoting Upjohn Co., supra, 449 U.S. at 389, 101 S.Ct. at 677, 66 L.Ed.2d at 591); see Fellerman, supra, 99 N.J. at 498, 493 A.2d 1239; Macey, supra, 179 N.J.Super. at 539, 432 A.2d 960. Thus, "[w]here the privilege is applicable, 'it must be given as broad a scope as its rationale requires.' " United Jersey Bank, supra, 196 N.J.Super. at 561, 483 A.2d 821 (quoting Ervesun v. Bank of N.Y., 99 N.J.Super. 162, 168, 239 A.2d 10 (App.Div.1968), certif. den. 51 N.J. 394, 241 A.2d 11 (1968)).

The attorney-client privilege, however, is not absolute. See Fellerman, supra, 99 N.J. at 502, 493 A.2d 1239; In re Selser, 15 N.J. 393, 405-406, 105 A.2d 395 (1954). It advances secrecy and therefore " 'runs counter to the fundamental theory of our judicial system that the fullest disclosure of the facts will best lead to the truth.' " United Jersey Bank, supra, 196 N.J.Super. at 560, 483 A.2d 821 (quoting In re Selser, supra, 15 N.J. at 405, 105 A.2d 395); see Fellerman, supra, 99 N.J. at 502, 493 A.2d 1239. "[C]onsiderations of public policy and concern for proper judicial administration have led the legislature and the courts to fashion limited exceptions to the privilege." Fellerman supra, 99 N.J. at 502, 493 A.2d 1239; see Clark v. United States, 289 U.S. 1, 13, 53 S.Ct. 465, 469, 77 L.Ed. 993, 999 (1933); In re Selser, supra, 15 N.J. at 405, 105 A.2d 395; United Jersey Bank, supra, 196 N.J.Super. at 560-561, 483 A.2d 821.

The New Jersey Supreme Court in In re Kozlov, 79 N.J. 232, 398 A.2d 882 (1979) adopted a three part test for determining whether the attorney-client privilege must yield to other important societal concerns. The court stated:

[T]here are necessary foundations to the valid piercing of any such privilege, one of which is absent here. There...