Hoopes v. Carota, 74 N.Y.2d 716 (1989)

The attorney-client privilege does not protect communications when a fiduciary relationship exists, or can be pierced by a showing of good cause when the client consults the attorney, at least in part, in their capacity as a fiduciary.

Summary

This case addresses the scope of the attorney-client privilege, particularly in the context of a fiduciary relationship. The New York Court of Appeals held that certain questions asked of the defendant during a pre-trial examination were not protected by the attorney-client privilege. The court reasoned that the questions regarding whether legal advice was obtained and how it was paid for were not confidential communications. Furthermore, because the defendant consulted the attorneys in his capacity as a trustee, the attorney-client privilege either did not attach or was overcome by a showing of good cause. Thus, disclosure was warranted.

Facts

The plaintiffs, beneficiaries of a trust, sought to compel the defendant, the trustee, to answer certain questions during a pre-trial examination. These questions concerned whether the defendant had obtained legal advice and how he paid for it. The defendant refused to answer, asserting the attorney-client privilege. It appeared the defendant consulted the attorneys, at least in part, as trustee of the trust.

Procedural History

The Supreme Court determined that the attorney-client privilege was not applicable. The Appellate Division affirmed the Supreme Court’s decision, finding that “good cause” existed to compel disclosure. The Court of Appeals granted leave to appeal and certified the question of whether the Appellate Division order was properly made.

Issue(s)

1. Whether questions regarding if legal advice was obtained, and how such advice was paid for, are protected by attorney-client privilege?
2. Whether the attorney-client privilege applies when a client consults an attorney, at least in part, in their capacity as a trustee of a trust for which the plaintiffs are beneficiaries?

Holding

1. No, because questions regarding whether legal advice was obtained and how such advice was paid for do not ordinarily constitute confidential communications.
2. No, because when a fiduciary relationship is present, the attorney-client privilege does not attach at all, or it may be set aside by a showing of good cause.

Court’s Reasoning

The Court of Appeals affirmed the Appellate Division’s order compelling the defendant to answer the questions. Regarding the payment of legal fees, the court stated, “The attorney-client privilege extends only to confidential communications made to an attorney for the purpose of obtaining legal advice (see, Matter of Priest v Hennessy, 51 NY2d 62, 69). Whether an attorney was consulted and who paid the legal fees do not ordinarily constitute such confidential communications (see, id.)”

The Court then addressed the fiduciary relationship, noting a split among jurisdictions: some hold that the privilege does not attach at all in such circumstances, while others hold that it attaches but can be overcome by a showing of good cause. The Court of Appeals agreed with the Appellate Division that “good cause” was present in this case. Thus, even if the attorney-client privilege initially applied, it was overcome by the plaintiffs’ need for disclosure as beneficiaries of the trust. This decision reflects a balancing of the attorney-client privilege against the duties of a fiduciary to the beneficiaries.