CALDERWOOD & HARKNESS LLP Attorneys at Law 600 Lexington Avenue, 30th Floor New York, New York 10022
Telephone: (212) 944-7200 Facsimile: (212) 944-7201 www.calderwoodharkness.com
January 22, 2025
VIA EMAIL (thuang@kestrelvoss.com) AND FIRST CLASS MAIL
Theodore "Ted" Huang, Esq. Kestrel Voss & Huang LLP 780 Third Avenue, 24th Floor New York, New York 10017
Re: Belmont Ridge Bank NA v. Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel, Index No. 654871/2024, New York Supreme Court, New York County, Commercial Division (Hon. Althea Marchetti) — Clawback of Inadvertently Produced Privileged Document
Our File Reference: Calderwood & Harkness Matter No. 1022-00005
Dear Mr. Huang:
This firm represents plaintiff Belmont Ridge Bank NA ("BRB") in the above-captioned action. The purpose of this letter is to provide your firm with formal written notice of the inadvertent production of a document protected by the attorney-client privilege and to invoke the clawback provisions set forth in the Stipulated Confidentiality and Protective Order entered by Justice Althea Marchetti on December 20, 2024 (the "Protective Order"), as well as the protections afforded by CPLR § 3103 and applicable New York case law governing the inadvertent disclosure of privileged materials. By this letter, BRB demands the immediate return or destruction of the document identified below, together with all copies thereof in any form, and the immediate sequestration of the document and all copies pending full compliance with the demands set forth herein.
I. Identification of the Inadvertently Produced Document
The document that is the subject of this clawback notice is identified as follows:
Bates Number: BRB-012847
Document Type: Internal email communication
Date of Document: September 14, 2024
Author / From: Joanna Reeves, Vice President, Special Assets Group, Belmont Ridge Bank NA
Recipient / To: Margaret Linden, Senior Vice President & General Counsel, Belmont Ridge Bank NA
Subject Matter: The email constitutes a confidential communication from a BRB business officer (Ms. Reeves) to BRB's in-house General Counsel (Ms. Linden) in which Ms. Reeves seeks legal advice regarding BRB's litigation exposure arising from the Triton Harbor Industries, LLC lending relationship, and in which Ms. Linden provides her legal analysis and counsel regarding the anticipated claims by Triton Harbor Industries, LLC and the individual defendants in connection with the Triton Harbor workout. The communication was made for the express purpose of obtaining and rendering legal advice from in-house counsel concerning BRB's potential legal exposure, and it reflects Ms. Linden's legal analysis and professional judgment as an attorney advising her client. It is, in every respect, a classic attorney-client privileged communication between a corporate employee and the company's General Counsel made for the purpose of seeking and obtaining legal advice.
The document was not shared with any third parties outside BRB at any time prior to its inadvertent inclusion in BRB's document production and was at all times maintained in confidence within BRB. No individual or entity outside of BRB and its counsel of record had access to this document prior to the inadvertent production described below.
II. Circumstances of the Inadvertent Production
On January 15, 2025, in accordance with the discovery schedule established by Justice Marchetti, BRB produced its initial set of responsive documents to your firm. That production comprised approximately 34,000 documents, all of which were reviewed by attorneys at Calderwood & Harkness LLP for privilege, responsiveness, and confidentiality designations pursuant to a systematic, multi-tiered review protocol. The review protocol included initial attorney review, secondary quality-control review of documents flagged for potential privilege, and application of targeted search terms designed to capture communications with in-house and outside counsel.
Following completion of the initial production, Calderwood & Harkness LLP undertook a post-production quality-control review of the produced materials to verify the accuracy of privilege and confidentiality designations. During the course of that post-production review, Calderwood & Harkness LLP identified that document BRB-012847 had been inadvertently included in the production set and transmitted to your firm. The inadvertent production was discovered on or about January 21, 2025.
Upon discovery of the error, Calderwood & Harkness LLP immediately initiated the preparation of this formal clawback notice. This letter is being transmitted to your office within one (1) business day of discovery of the inadvertent production, consistent with the obligations imposed by the Protective Order and applicable law requiring prompt notification. The promptness of this notification underscores BRB's diligence in protecting the privileged nature of the communication and its intent to preserve all applicable privileges and protections.
The inadvertent inclusion of BRB-012847 in the production was the result of an isolated processing error that occurred during the review workflow. Specifically, the document was misrouted during the automated processing phase and was not flagged for secondary privilege review as it should have been under Calderwood & Harkness's standard review protocol. The error was isolated to this single document and does not reflect any systemic failure in the privilege review process. The inadvertent production does not constitute a waiver of attorney-client privilege, work product protection, or any other applicable privilege or protection, for the reasons set forth in detail below.
III. Legal Basis for Clawback
A. Stipulated Confidentiality and Protective Order (December 20, 2024)
The Protective Order entered by Justice Marchetti on December 20, 2024, which was negotiated and stipulated to by the parties, contains express provisions governing the treatment of inadvertently produced privileged documents. Specifically, Paragraph 12 of the Protective Order provides that, in the event a producing party discovers that it has inadvertently produced a document or communication protected by the attorney-client privilege, the work product doctrine, or any other applicable privilege or protection, the producing party may serve written notice on the receiving party identifying the document and asserting the applicable privilege. Upon receipt of such notice, the receiving party is obligated to (a) immediately cease any review or use of the identified document, (b) promptly return or destroy all copies of the document in its possession, custody, or control, and (c) certify in writing to the producing party that it has complied with its obligations under the Protective Order.
Paragraph 12 of the Protective Order further provides, in no uncertain terms, that the inadvertent production of a privileged document shall not be deemed a waiver of any privilege or protection, whether under the attorney-client privilege, the work product doctrine, or otherwise. The Protective Order was entered specifically to address situations of this kind and to ensure that the parties' privilege rights are preserved notwithstanding the practical challenges inherent in large-scale document productions.
This letter constitutes the written notice contemplated by Paragraph 12 of the Protective Order. BRB hereby formally invokes the clawback provisions of the Protective Order with respect to document BRB-012847 and demands that Kestrel Voss & Huang LLP comply with all of its obligations under the Protective Order, as set forth in the specific demands below.
B. CPLR § 3103
Independent of the Protective Order, BRB invokes the protections of CPLR § 3103, which authorizes the court, upon motion, to issue protective orders "denying, limiting, conditioning or regulating the use of any disclosure device" to "prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts." CPLR § 3103(a). The statute specifically authorizes protective orders to prevent the disclosure of "privileged matter." CPLR § 3103(b). In the event your firm fails to comply with the demands set forth in this letter, BRB will promptly move before Justice Marchetti for an order under CPLR § 3103 compelling the return of BRB-012847 and prohibiting its use in this action or any other proceeding.
C. Attorney-Client Privilege Under New York Law
Document BRB-012847 is protected by the attorney-client privilege under New York law. It is well established that the attorney-client privilege protects confidential communications between a client and its attorney, or between a client's employee and its in-house legal counsel, made for the purpose of seeking or rendering legal advice. See Spectrum Sys. Int'l Corp. v. Granite Harbor Securities, 78 N.Y.2d 371, 377 (1991); Rossi v. Kestrel Insurance & Westvale Assurance of Greater N.Y., 73 N.Y.2d 588, 593 (1989). The privilege extends to communications between corporate employees and in-house counsel when those communications are made in the course of the attorney-client relationship and for the purpose of facilitating the rendition of legal advice. See Priest v. Hennessy, 51 N.Y.2d 62, 69 (1980).
BRB-012847 satisfies each element of the privilege. The document constitutes a confidential communication between Joanna Reeves, a BRB business officer in the Special Assets Group, and Margaret Linden, BRB's Senior Vice President and General Counsel. Ms. Linden is a licensed attorney who serves as BRB's chief legal officer. The communication was made for the express purpose of obtaining Ms. Linden's legal advice concerning BRB's potential litigation exposure in connection with the Triton Harbor workout and the claims anticipated to be asserted by the defendants and counterclaim plaintiffs. The email contains Ms. Linden's legal analysis, risk assessment, and professional judgment regarding BRB's litigation posture — precisely the type of communication that the attorney-client privilege is designed to protect.
The communication was maintained in confidence at all times. It was not shared with any third parties, was not disclosed to any person outside of BRB and its counsel of record, and was treated as a privileged and confidential communication within BRB's internal systems. There has been no voluntary disclosure of the communication to any third party that would result in a waiver of the privilege.
D. No Waiver of Privilege
BRB's inadvertent production of BRB-012847 does not constitute a waiver of the attorney-client privilege or any other applicable protection. Under New York law, the inadvertent disclosure of a privileged document does not automatically result in a waiver of the privilege, particularly where, as here, the producing party took reasonable precautions to prevent disclosure of privileged materials and acted promptly upon discovering the error. See New York Times Co. v. City of New York Fire Dep't, 4 N.Y.3d 477, 481 (2005); Manufacturers & Traders Trust Co. v. Servotronics, Inc., 132 A.D.2d 392, 397-98 (4th Dep't 1987).
New York courts apply a multi-factor analysis in assessing whether an inadvertent production results in a waiver of the privilege, considering, among other things: (1) the reasonableness of the precautions taken to prevent disclosure; (2) the time taken to rectify the error; (3) the scope of the discovery and the extent of the disclosure; and (4) the overriding issue of fairness. Application of these factors here overwhelmingly supports a finding of no waiver:
Reasonable Precautions. Calderwood & Harkness LLP conducted a systematic, multi-tiered privilege review of the approximately 34,000 documents in BRB's production universe. The review process included initial attorney review of all documents, secondary quality-control review of documents identified as potentially privileged, and the application of privilege-specific search terms designed to identify communications with in-house and outside counsel. The inadvertent inclusion of a single document out of approximately 34,000 reflects an isolated processing error — not a failure of reasonable diligence.
Prompt Rectification. The inadvertent production was discovered on January 21, 2025, during post-production quality assurance. This formal clawback notice is being served on January 22, 2025 — within one (1) business day of discovery. BRB has acted with the utmost promptness in notifying your firm and invoking the clawback provisions of the Protective Order.
Scope of Disclosure. The inadvertent production involved a single document out of a production comprising approximately 34,000 documents. The limited scope of the disclosure further weighs against any finding of waiver.
Fairness. Permitting a waiver based on the inadvertent production of a single document — where the producing party employed a rigorous privilege review process and acted promptly to rectify the error — would be fundamentally unfair and would undermine the purpose of both the attorney-client privilege and the Protective Order negotiated by the parties.
In addition, the Protective Order entered in this action expressly provides that inadvertent production shall not constitute a waiver of any privilege or protection. The parties stipulated to this provision precisely to address situations of this kind, and Kestrel Voss & Huang LLP is bound by its terms.
For all of the foregoing reasons, BRB's inadvertent production of BRB-012847 does not constitute a waiver of the attorney-client privilege, the work product doctrine, or any other applicable privilege or protection. BRB expressly reserves and preserves all such privileges and protections with respect to this document.
IV. Specific Demands
In accordance with the Protective Order, CPLR § 3103, and the applicable law governing the clawback of inadvertently produced privileged documents, BRB hereby makes the following demands:
1. Immediate Sequestration. BRB demands that Kestrel Voss & Huang LLP and all persons to whom document BRB-012847 (Bates No. BRB-012847) has been provided, forwarded, or disclosed immediately sequester the document and all copies thereof, whether in paper or electronic form, and immediately refrain from any further review, copying, distribution, dissemination, or use of the document or any information contained therein.
2. Return or Destruction. BRB demands that all copies of BRB-012847 in the possession, custody, or control of Kestrel Voss & Huang LLP, Triton Harbor Industries, LLC, Marcus J. Kappel, Elaine D. Kappel, and any agents, experts, consultants, litigation support vendors, or other persons or entities to whom the document was provided, forwarded, or disclosed be returned to Calderwood & Harkness LLP or permanently destroyed within five (5) business days of receipt of this letter. For purposes of this demand, "destruction" includes the permanent deletion of all electronic copies from all computers, servers, cloud storage systems, litigation databases, review platforms, email systems, and any other electronic media, as well as the destruction of all paper copies.
3. No Use in Proceedings. BRB demands that neither Kestrel Voss & Huang LLP nor any counterclaim plaintiff (including Triton Harbor Industries, LLC, Marcus J. Kappel, and Elaine D. Kappel) use document BRB-012847, or any information derived therefrom, in any filing, motion, brief, memorandum of law, deposition, interrogatory response, hearing, trial, or other proceeding in this action or in any other action, proceeding, or matter. Any such use would constitute a violation of the Protective Order and an improper intrusion into BRB's attorney-client privilege.
4. Written Confirmation of Compliance. BRB requests that Kestrel Voss & Huang LLP provide written confirmation to Calderwood & Harkness LLP within five (5) business days of receipt of this letter certifying that: (a) all copies of BRB-012847, in both paper and electronic form, have been returned to Calderwood & Harkness LLP or permanently destroyed; (b) no copies of the document have been retained in any form; (c) the document and the information contained therein have not been used in the preparation of any filing, motion, or other work product in this action; and (d) the document has not been disseminated to any person or entity beyond those identified in response to Demand No. 5 below.
5. Identification of Recipients. BRB requests that Kestrel Voss & Huang LLP identify, in writing and within five (5) business days of receipt of this letter, all persons and entities to whom BRB-012847 was provided, forwarded, disclosed, or made available in any manner prior to receipt of this notice, including without limitation any attorneys, paralegals, legal assistants, litigation support staff, experts, consultants, clients, or other persons who reviewed, received, or had access to the document or any information contained therein.
V. Reservation of Rights
BRB expressly reserves all rights and remedies available to it at law and in equity in connection with the inadvertent production of BRB-012847, including without limitation:
(a) The right to seek relief from Justice Marchetti, including an order under CPLR § 3103 compelling the return of the document, prohibiting its use in this action or any other proceeding, and imposing any other appropriate sanctions or relief, in the event Kestrel Voss & Huang LLP does not comply fully and timely with the demands set forth herein;
(b) The right to assert that any use of BRB-012847 or any information derived therefrom by Kestrel Voss & Huang LLP, the counterclaim plaintiffs, or any other person or entity constitutes a violation of the Protective Order and is improper, and to seek appropriate sanctions and relief on that basis;
(c) The right to seek an order striking or precluding any filing, motion, deposition testimony, or other submission that relies upon, references, or is derived from BRB-012847 or the information contained therein; and
(d) The right to assert any and all other privileges, protections, and rights available to BRB under the Protective Order, the CPLR, and applicable law.
Nothing in this letter shall be construed as a waiver of any privilege, protection, objection, or right of BRB, whether or not specifically referenced herein. BRB's assertion of its clawback rights with respect to BRB-012847 is without prejudice to BRB's right to assert additional clawback rights with respect to any other documents that may be identified in the future as having been inadvertently produced.
VI. Supplemental Privilege Log
Calderwood & Harkness LLP will supplement BRB's privilege log, which was initially produced on January 15, 2025 in connection with BRB's initial document production, to ensure that document BRB-012847 is properly reflected therein with the correct privilege designation and all required descriptive information, to the extent it is not already included. The supplemental privilege log entry will be provided to your firm within a reasonable time.
VII. Conclusion
We trust that Kestrel Voss & Huang LLP will comply promptly and in good faith with the demands set forth in this letter, consistent with the obligations imposed by the Protective Order and applicable law. Should you have any questions or wish to discuss any aspect of this notice, please do not hesitate to contact me or my colleague Linda Osei at (212) 944-7215.
We respectfully request prompt acknowledgment of receipt of this letter. If Calderwood & Harkness LLP does not receive written confirmation of compliance with the demands set forth herein within five (5) business days of your receipt of this letter, BRB will seek appropriate relief from Justice Marchetti by motion, without further notice to your firm.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Carlos Espinoza, Associate Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, New York 10022 Telephone: (212) 944-7238
Email: cespinoza@calderwoodharkness.com
cc: (via email)
Linda Osei, Esq. — Calderwood & Harkness LLP Priya Anand, Esq. — Calderwood & Harkness LLP Hannah Brinkley, Esq. — Calderwood & Harkness LLP Margaret Linden, Esq. — SVP & General Counsel, Belmont Ridge Bank NA Thomas Hargreaves, Esq. — VP & Associate General Counsel, Belmont Ridge Bank NA Natasha Orlov, Esq. — Kestrel Voss & Huang LLP