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Attorneys and Litigants Beware – Making Assumptions Can Ruin Your Case and Get You Held in Contempt

by | Breach of Contract, Insights

The old adage “when you assume…” has particular significance for attorneys during litigation.  In the recent decision in Iacovacci v. Brevet Holdings LLC, (Suffolk Supreme Index No. 158735/2016), assumptions and poor communications between an attorney and clients nearly cost the clients the case, and may still lead to them being held in civil and criminal contempt. 

Iacovacci involved a partnership retirement negotiation that broke down and resulted in a lawsuit for breach of contract and related claims.  After initiation of the suit, the defendants, who are what remain of the partnership, remotely and secretly accessed the plaintiff’s computer, and fully backed up everything on it.  Defendants tipped their hand, however, when they used some of that information to form their counterclaims for misappropriation, breach of contract and related claims.

Unfortunately for all concerned, in addition to company information, the plaintiff’s computer also contained privileged communications with his attorney and attorney work-product.  Defendants argued that despite their surreptitious manner of accessing the computer, the plaintiff had no expectation of privacy on that computer and that they had the right to do what they did. 

Motion practice followed, and a neutral third party was engaged to segregate the privileged information.  Subsequently, a court order was issued that directed, inter alia, that if a party was in possession of privileged information that was returned to the other side, the returning party would certify in writing that it had returned all such information including all copies.

This is where assumptions began. The defendants had uploaded the entire backup onto their servers and two external hard drives and gave one to their attorney. The attorney assumed that he had the only copy due to the client suggesting the attorney hire a vendor to work on some corrupted files, but also did not ask if he had the only copy. Defendants’ attorney, based on these incorrect assumptions and failures to communicate, then handed over to the plaintiff a CD-ROM containing the privileged information and a certification that read, in relevant part, that “I certify that all other copies of the material contained in the CD-ROM have been permanently deleted or are no longer in our possession.”  Again,  the attorney did not confirm with his clients and did not show them the certification.

Years passed with the privileged information still in the possession of the defendants in violation of the order.  During that time, the defendants changed attorneys.  Then, during discussions about a side issue, it came out that the defendants had not deleted the prior privileged information. 

The subsequent contempt motion involved all parties scrambling to explain this clear violation of a court order. Defendants claimed they were never informed of the order or the requirement to delete the privileged documents and found themselves at the mercy of whether the court believed that assertion.

The Court did find the defendants’ former attorney in civil contempt, but civil contempt against defendants and criminal contempt against defendants and their old attorney is still to be determined at a forthcoming hearing. However, the Court stated that most of the factors for contempt were present, and only scheduled a hearing on matters it could not affirmatively decide absent a hearing.  

While the contempt issue is still pending, the Court did deny plaintiff his request to strike the defendants’ answer and order them to pay for the initial third-party review. The reason for the Court’s denial was that the plaintiff did not submit any evidence to show that the defendants’ retention of the privileged information, caused the plaintiff not just prejudice – but actual harm or substantial prejudice.

The Court noted that the plaintiff did not produce the privileged material for its review so that the Court could see if its retention gave the defendants an unfair advantage.  This fact along with the plaintiff’s failure to show any other evidence of an impact on the litigation from defendants’ retention of the material, meant that plaintiff could not seek the ultimate relief behind the motion. He could only recover the costs and fees of the motion itself.  

Although this case is not over, litigants and their attorneys should pay attention to several important points:

  1. Any communications with an attorney, or anything personal, should always be kept to segregated personal equipment and devices and never on company equipment. This would have avoided the problem completely. 
  2. Attorneys should inform clients about any court orders and double-check information with their clients before making any certifications to the court. The former attorney made an error in assuming he had the only copy of the computer files and not verifying it with his clients.
  3. In contempt motions, the party must show that the other party’s actions caused actual harm or substantial prejudice. Absent this, they will be limited in the relief the court will grant as occurred in this case.

Good communication between clients and attorneys is crucial to a successful representation. Make sure you share information consistently to avoid problems with your case.


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