Madden v. Creative Services, Inc.

• Decision Date: 12 January 1995
• Parties: , 646 N.E.2d 780 George MADDEN et al., Plaintiffs, v. CREATIVE SERVICES, INC., et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

Page 478

622 N.Y.S.2d 478

84 N.Y.2d 738, 646 N.E.2d 780

George MADDEN et al., Plaintiffs, v. CREATIVE SERVICES, INC., et al., Defendants.

Court of Appeals of New York.

Jan. 12, 1995.

[84 N.Y.2d 739] [646 N.E.2d 781] A. Vincent Buzard and Adele M. Fine, Rochester, for plaintiffs.

Fix, Spindelman, Brovitz, Turk, Himelein & Shukoff, P.C., Rochester (Norman M. Spindelman, Karl S. Essler and Francis C. Affronti, of counsel), for Creative Services, Inc., and others, defendants.

[84 N.Y.2d 740] Harter, Secrest & Emery, Rochester (Kenneth A. Payment and Carol L. O'Keefe, of counsel), for National Amusements, Inc., and another, defendants.

[84 N.Y.2d 741] Jeffrey Robert White, James E. Rooks, Jr., Larry S. Stewart, Washington, DC, of the District of Columbia Bar, admitted pro hac vice, and Cheryl Flax-Davidson, New York City, of the New York Bar, for Ass'n of Trial Lawyers of America, amicus curiae.

OPINION OF THE COURT

KAYE, Chief Judge.

Does an intruder's unauthorized inspection of a client's documents in a lawyer's office give rise to a cause of action by the client against the intruder for violation of the attorney-client privilege? On the facts presented, we answer this question, certified to us by the United States Court of Appeals for the Second Circuit, in the negative.

As set forth in the parties' submissions, plaintiff George Madden founded a neighborhood coalition to oppose construction of a 12-screen movie theater complex by defendant National Amusements, Inc., a movie theater chain, in a residential area of the Town of Pittsford. Madden enlisted Francis E. Kenny, a partner in the Rochester firm of Nixon, Hargrave, Devans & Doyle, to provide pro bono legal services to the coalition, which included petitioning the Town Board to deny the rezoning application filed by National. National in turn retained defendant Creative Services, Inc., a private investigative firm. According to plaintiffs, the purpose was to intimidate and discredit them; according to defendants, the purpose was to uncover any possible connection between Madden and National's competitor Loews Theaters, Inc., also a Nixon, Hargrave client.

On November 14, 1991, Creative dispatched Ralph Douglas Howe, Jr. and Michael Sean Cole--Massachusetts-based investigators not licensed in New York--to place Madden and his wife, plaintiff Roseanne Cohen, under surveillance. The investigators allegedly followed and photographed plaintiffs without their knowledge. Posing as prospective homebuyers, Howe and Cole also made an appointment with a real estate agent to visit plaintiffs' residence.

After business hours the next day--Friday, November 15--Howe and Cole entered the Nixon, Hargrave offices claiming to have lost a ring. They gained access to Kenny's office, where building personnel found them photographing purportedly privileged documents about the zoning dispute. ¹ When briefly left alone in the offices, Howe and Cole fled but were spotted at a local motel and arrested the following morning. The arrest preempted the scheduled visit to plaintiffs' residence. Defendants never developed the photographs, and no disclosure of documents or information is alleged by plaintiffs. Defendant employers deny authorizing or knowing of the investigators' conduct.

Charged with third degree burglary (Penal Law § 140.20) and petit larceny (Penal Law § 155.25), Howe and Cole each pleaded guilty to trespass (Penal Law § 140.05). Additionally, an action was instituted by Attorney Kenny against the investigators and their employers (Kenny v. Creative Servs., U.S.Dist.Ct., W.D.N.Y., 92 Civ 6301T).

Plaintiffs commenced the present action in the United States District Court for the Western District of New York against Creative, its president (Alan T. Sklar), Howe, Cole, National and its president (Sumner Redstone), alleging the following causes of action: intentional interference with the attorney-client privilege; intentional infliction of emotional distress; conversion of documents; unlawful search and seizure; intentional interference with the right to petition governmental agencies; negligent retention, instruction and supervision against the employer defendants; and loss of consortium on behalf of each plaintiff. Plaintiffs sought $3.3 million in damages--$1 million in compensatory damages for their feelings of personal insecurity, fear of being followed, emotional distress, increased anxiety and nightmares; $300,000 for loss of consortium; and $2 million in punitive damages. Defendants moved to dismiss the complaint for failure to state a claim or for summary judgment (which elicited affidavits from both sides supplementing their pleadings), and defendants National and Redstone additionally sought sanctions against plaintiffs and their counsel for groundless litigation.

The District Court dismissed the complaint in its entirety for failure to state a claim, declining to impose sanctions, and plaintiffs appealed to the United States Court of Appeals for the Second Circuit. The Second Circuit certified two questions to us--whether a cause of action for invasion of the attorney-client privilege was stated and, if so, whether economic loss was an element of such a cause of action--indicating that it was "inclined to agree" with the District Court's disposition as to all other causes of action, 24 F.3d 394, 396. Agreeing that the proposed cause of action for invasion of the attorney-client privilege presents a State law issue of interest, we accepted the certified questions 83 N.Y.2d 934, 615 N.Y.S.2d 867, 639 N.E.2d 406, to which we now turn.

The asserted legal basis, or theory, of plaintiffs' damage claim for invasion of the attorney-client privilege is contained in three paragraphs of the amended complaint:

"32. All documents and information provided by Plaintiffs to Francis E. Kenny, Esq. were provided in the course of the attorney-client relationship and are thus protected under the attorney-client privilege set forth in § 4503 of the New York Civil Practice Law and Rules.

"33. Defendants wilfully and intentionally invaded and interfered with Plaintiffs' professional relationship with their attorney in violation of the attorney-client privilege.

"34. As a result of Defendants' intentional interference and invasion in violation of the attorney-client privilege, Plaintiffs have suffered compensatory damages in the sum of One Million Dollars ($1,000,000.00) and punitive damages in the sum of Two Million Dollars ($2,000,000.00)."

In assessing the viability of plaintiffs' claim, the District Court measured the allegations against the words of CPLR 4503. The statute by its terms bars only the disclosure of confidential communications in enumerated proceedings. In that no such disclosure is alleged by plaintiffs, the court struck the claim, adding that "other than mental distress, plaintiffs have not alleged that they have suffered an injury as a result of the unauthorized examination of the documents in Kenny's office." 872 F.Supp. 1205, 1210. Defendants' motions to dismiss, which would close the courthouse doors to plaintiffs before full discovery and trial, oblige us to look beyond the precise theory asserted in the pleading and to dismiss only if no cause of action is revealed by the facts. Even on this broader review, however, we agree with the District Court that these plaintiffs fail to state a cause of action.

While the subject of remedies for breach of confidence has generated scholarly interest (see, e.g., Note, Confidentiality: A Measured Response to the Failure of Privacy, 140 U.Pa.L.Rev. 2385 [1992], no New York court--or apparently any other--has considered whether a client can recover damages solely for a third party's intrusion on the attorney-client privilege. ² Some New York courts have recognized a cause of action by patients against physicians (see, e.g., Oringer v. Rotkin, 162 A.D.2d 113, 114, 556 N.Y.S.2d 67 [psychologist]; MacDonald v. Clinger, 84 A.D.2d 482, 486-489, 446 N.Y.S.2d 801 [psychiatrist]; Doe v. Roe, 93 Misc.2d 201, 209-214, 400 N.Y.S.2d 668, supra [psychiatrist] and by client against social worker (see, Harley v. Druzba, 169 A.D.2d 1001, 1002, 565 N.Y.S.2d 278). These claims have been premised on violation of a fiduciary or contractual relationship, which is not the theory of the present case.

That a proposed cause of action has not previously been recognized by us, or indeed by any other court in the Nation, is itself inconclusive, for it is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of commonsense justice in an evolving society.

Analysis begins by defining the interest plaintiffs would, by the cause of action they urge be added to the law of New York, seek to protect: the confidentiality of attorney-client communications.

At common law, communications made in confidence between attorney and client were held confidential as a matter of the attorney's code of honor (see, Richardson, Evidence § 410 [Prince 10th ed.]. That precept is embodied in the Code of Professional Responsibility binding attorneys to keep private the confidential communications and secrets of their clients on pain of professional discipline, including loss of their license to practice law (see, DR 4-101 [22 NYCRR 1200.19]; see also, EC 4-4). The motivating force behind insistence on confidentiality is that it promotes effective representation; clients should be encouraged to speak fully and freely to counsel, secure in the knowledge that the attorney will not expose their confidences (Spectrum Sys. Intl. Corp. v. Chemical Bank, 78 N.Y.2d 371, 377, 575 N.Y.S.2d 809, 581 N.E.2d 1055). As we noted in Matter of Priest v. Hennessy (51 N.Y.2d 62, 72, 431 N.Y.S.2d 511, 409 N.E.2d 983): "The adversarial nature of our legal system puts a premium on free and unconstrained access to legal advice and, in so doing, re-emphasizes how essential it is that we do not slacken in our support for the strong...