ZVI CONSTRUCTION COMPANY, LLC vs. FRANKLIN LEVY & another

Except where indicated, the following facts are not in dispute. Brendan Higgins, Joshua Huggard, and

Jordan Tobins were members and managers of numerous limited liability companies operating a small chain of pizzerias known as The Upper Crust. On April 5, 2012, Higgins, Huggard, and The Upper Crust, all of whom were represented by Levy and his firm, L & W, filed a civil lawsuit against Tobins. In or around July,

2012, a settlement was reached in that action and documented in a memorandum of understanding (Tobins MOU). The Tobins MOU provided, inter alia, as follows:

"Tobins will pay or cause to be paid, by cash, bank check or wired funds $250,000 to the Upper Crust, said payment to be made no later than October 1, 2012 (the 'Closing Payment') and shall be made to an account or payee as designated by the Upper Crust in writing" (emphasis supplied).



Meanwhile, on April 6, 2012, ZVI had filed its own lawsuit

against The Upper Crust, Higgins, Huggard, and Tobins, alleging

that they had failed to pay ZVI for construction work performed

on The Upper Crest restaurants (collection action). In the

collection action, Higgins, Huggard, and The Upper Crust again

were represented by Levy and L & W.

The parties to the collection action subsequently agreed to

mediate their dispute. The mediation took place on September 6,

2012, at which time all parties to the collection action, their

respective legal counsel, and the mediator executed a mediation

agreement that provided, in pertinent part:

"The parties further agree that the mediation, including all communications, documents and other materials, used during said mediation, including all communications between and among the parties and their counsel, shall be confidential and shall not be used for any purpose other than for said mediation" (emphasis supplied).



Prior to the mediation, ZVI was aware that The Upper Crust

had limited assets and significant debt, was under government

4

investigation for unfair labor practices, and was dealing with

significant internal management issues. ZVI also had been

informed by The Upper Crust's legal counsel that The Upper Crust

might file for bankruptcy. At the mediation, the parties to the

collection action reached a settlement that was memorialized in

a written agreement (ZVI settlement), which provided, among

other things, that:

"On or before October 3, 2012, Upper Crust LLC shall pay to the plaintiff [ZVI] the sum of $250,000, which funds are being paid by Jordan S. Tobins to Upper Crust LLC in satisfaction of his obligation under his separate memorandum of understanding with Huggard, Higgins and the Upper Crust LLC. In the event that said Tobins fails to make the $250,000 payment, this agreement shall be null and void." (Emphasis supplied.)



The ZVI settlement did not contain an escrow provision or

otherwise call for or obligate Levy or L & W to act as escrow

agents. Levy and L & W were never specifically asked, nor did

they expressly agree, to act as an escrow agent for ZVI's

benefit. They also were not parties or signatories to the ZVI

settlement.

In the present case, the central dispute concerns what

occurred at the mediation. ZVI alleges that prior to the

execution of the ZVI settlement, both Tobins and ZVI proposed

that the $250,000 due under the Tobins MOU be paid directly by

Tobins to ZVI; however, according to ZVI, Levy insisted that the

money be paid to The Upper Crust first and then delivered to

5

ZVI. ZVI further alleges that, in order to induce both Tobins

and ZVI to execute the settlement, Levy "represented that he

would pay the funds to ZVI." ZVI claims to have executed the

settlement in reliance upon this representation. Levy and L & W

deny all of the above allegations.

Approximately ten days after the mediation, on September

17, 2012, Tobins's legal counsel sent Levy an electronic mail

message (e-mail), in which he set forth "a list of issues that

we'll need to address," including the following regarding the

payment due under the Tobins MOU: "Payment ($250k on or before

October 1 -- to you to pay ZVI)." The following day, Levy

responded by e-mail and, regarding that specific issue, wrote,

"I will send you my firm's escrow wire info."

Subsequently, on Friday, September 28, 2012, an entity

named Ditmars, Ltd., acting on Tobins's behalf, wired the

$250,000 due under the Tobins MOU to the Interest on Lawyers'

Trust Account (IOLTA account) maintained by L & W. Upon receipt

of the funds, Levy, who was in Hong Kong at the time, sent his

associate at L & W, Joshua Segal, an e-mail, directing him to

"make sure the money is held and we do not release it to anyone

until I give directions. Especially note the money is not to be

released to ZVI or [ZVI's legal counsel Richard] Briansky or

anyone. Very important. Thanks." Both Levy and Segal

testified that Levy was concerned about having clear written

6

instructions from his client before the funds were released to

anyone.

The same day, September 28, 2012, Dan Hurley, The Upper

Crust's chief financial officer (CFO) and accountant, sent Levy

an e-mail directing as follows:

"[H]ere is how I would like the 250,000 distributed from your IOLTA account.



"Murphy and King $64,644.00 "Lawson and Weitzen $21,447.28 "DiNicola, Seligson & Upton, LLP $9,246.26

"[T]hanks!! "I will make sure your office has all the wire information to make these transfers."



Later that day, Hurley sent Segal an e-mail directing him to

wire the balance of the $250,000, estimated to be $154,692.46,

to The Upper Crust's payroll account, entitled the JJB Hanson

Management Payroll Account. The next day, Saturday, September

29, 2012, Hurley forwarded yet another e-mail to Segal and Levy,

summarizing his instructions regarding disbursement of the

$250,000:

"Here is the . . . email I sent to Franklin [Levy] late yesterday afternoon with the amounts that need to go out. Please have John send these first thing Monday morning, if he can. I think Franklin may have confirmed this with you but if not, please verify with him. You will be leaving the $21,447.28 in the Lawson and Weitzen account for the August 31, 2012 invoice. On Monday John should send out 3 wires. Murphy and King, DiNicola, Seligson & Upton, LLP and JJB Manag[e]ment Hanson, Inc. which should be the remaining balance of the $250,000. [T]hat amount should be $154,662.46. Let me know if you [have] any questions. Thanks!!"

7



Two days later, on Monday, October 1, 2012, the $250,000 in

funds were disbursed from L & W's IOLTA account as follows:

$64,644.00 to Murphy and King $21,417.28 to Lawson & Weitzen $9,246.26 to DiNicola, Seligson & Upton, LLP $154,692.46 to JJB Hanson Management Payroll Account

The $21,417.28 sent to L & W was in payment of a bill for legal

services, dated September 14, 2012, that had been sent to The

Upper Crust.

Meanwhile, on September 20, 2012, Higgins, Huggard, and The

Upper Crust had met with a bankruptcy attorney, Harold Murphy,

and retained him and his law firm, Murphy & King, P.C. (Murphy &

King). On October 4, 2012, The Upper Crust and affiliated

entities, represented by Murphy & King, filed a petition for

bankruptcy under Chapter 11 of the United States Bankruptcy

Code. ZVI was never paid the $250,000 due under the ZVI

settlement.

On January 28, 2013, with The Upper Crust entities in

bankruptcy, ZVI initiated the present action, filing a verified

complaint against Levy and L & W. Subsequently, on March 12,

2013, ZVI filed an unverified amended complaint, which, among

other things, added Higgins and Huggard as defendants. Levy and

L & W responded by filing two motions: (1) a motion to strike

all allegations in the amended complaint concerning a statement

allegedly made by Levy at mediation, see Mass.R.Civ.P. 12(f),

8

365 Mass. 754 (1974); and (2) a motion to dismiss all counts

against them in the amended complaint, see Mass.R.Civ.P.

12(b)(6), 365 Mass. 754 (1974). ZVI opposed both motions.

After a hearing, a judge of the Superior Court (first

judge) issued a memorandum and order (1) allowing the motion to

strike the alleged statement made at mediation, because its use

was prohibited by the confidentiality provision in the mediation

agreement, and (2) dismissing most, but not all, of the claims

against Levy and L & W. Then, based on the allowance of the

motion to strike and, to a large extent, on other, independent

grounds detailed in the memorandum and order, the judge

dismissed in their entirety the claims against Levy and L & W

for aiding and abetting fraud (count V), misrepresentation

(count VI), breach of an alleged escrow agreement (count VII),

breach of fiduciary duty (count VIII), and conspiracy (count X).

As for the remaining claims against Levy and L & W, the judge

allowed the claims for tortious interference with contractual

relations (count III), conversion (count IX), and violation of

G. L. c. 93A, § 11 (count XII), to proceed, but only as to the

$21,417.28 that was disbursed to L & W, and not as to the rest

of the $250,000 that was disbursed to third parties from the

IOLTA account.3

3 On appeal, ZVI does not challenge the partial dismissal of counts III, IX, and XII.

9

Upon the completion of discovery, Levy and L & W filed a

motion for summary judgment as to what remained of those three

counts (III, IX, and XII). See Mass.R.Civ.P. 56(c), as amended,

436 Mass. 1404 (2002). ZVI opposed and filed a cross motion for

summary judgment on what remained of the claim for conversion

(count IX). After a hearing, another judge of the Superior

Court (second judge) issued a memorandum of decision and order

(1) allowing Levy and L & W's motion and dismissing all

remaining claims against them, and (2) denying ZVI's cross

motion. A judgment to that effect subsequently entered on

January 5, 2015, and, on January 26, 2015, ZVI filed a notice of

appeal.

2. Discussion. a. Premature notice of appeal. We first

confront a threshold procedural issue. Because there remained

unresolved claims against Higgins and Huggard, and there was no

final judgment, ZVI's notice of appeal was premature. At oral

argument, this procedural defect was called to the attention of

the parties, who then returned to the trial court where another

Superior Court judge (third judge) allowed their joint motion

for the entry of a separate and final judgment. See

Mass.R.Civ.P. 54(b), 365 Mass. 820 (1974). At that point,

however, in order to perfect its appeal, ZVI should have filed a

new notice of appeal. This it did not do.

10

We nevertheless exercise our discretion to treat the appeal

as properly before us. See, e.g., Lewis v. Emerson, 391 Mass.

517, 518-520 (1984); Lawrence v. Lawrence Patrolmen's Assn., 56

Mass. App. Ct. 704, 706 n.4 (2002); Scannell v. Attorney Gen.,

70 Mass. App. Ct. 46, 47 n.2 (2007). We do so because the

issues are of importance and have been fully briefed. In

addition, ZVI's claims against Higgins and Huggard have now been

resolved.4

b. Conversion. ZVI contends that the second judge erred

when, at the summary judgment stage, she dismissed what remained

of the claim for conversion, i.e., the transfer of $21,417.28

from the IOLTA account to L & W. Our review proceeds under

well-established summary judgment standards.5 We conclude that

4 We note that reaching the merits is consistent with decisions under the cognate Federal rule, which consider the subsequent entry of a separate and final judgment to cure a premature notice of appeal. See Clausen v. Sea-3, Inc., 21 F.3d 1181, 1184 (1st Cir. 1994). See also National Assn. of Bds. of Pharmacy v. Board of Regents of the Univ. Sys. of Ga., 633 F.3d 1297, 1306-1307 (11th Cir. 2011), and cases cited. However, we express no opinion as to whether the Federal approach is suitable for Massachusetts and should be adopted here.



5 "In considering a motion for summary judgment, we review the evidence and draw all reasonable inferences in the light most favorable to the nonmoving party. Because our review is de novo, we accord no deference to the decision of the motion judge. The defendants, as the moving parties, have the burden of establishing that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law. Once the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts establishing the existence of a material

11

Levy and L & W sustained their burden of establishing

entitlement to judgment as a matter of law.

"The elements of conversion require that a defendant be

proved to have 'intentionally or wrongfully exercise[d] acts of

ownership, control or dominion over personal property to which

he has no right of possession at the time.'" Grand Pac. Fin.

Corp. v. Brauer, 57 Mass. App. Ct. 407, 412 (2003), quoting from

Abington Natl. Bank v. Ashwood Homes, Inc., 19 Mass. App. Ct.

503, 507 (1985). Here, the premise of ZVI's argument is that

the $250,000 was its property. As the second judge reasoned,

however, even though the $250,000 was owed to ZVI under the ZVI

settlement, the money was not held by the defendants for the

benefit of ZVI; nor was it placed in an escrow account. Rather,

it was held as client funds in an IOLTA account, where it

belonged to and was under the exclusive dominion and control of

The Upper Crust. See Mass.R.Prof.C. 1.15, as appearing in 440

Mass. 1338 (2004); Matter of Sharif, 459 Mass. 558, 564 (2011).

See also Phillips v. Washington Legal Foundation, 524 U.S. 156,

164 (1998) ("[T]he principal held in IOLTA trust accounts is the

'private property' of the client"); Washington Legal Foundation

v. Legal Foundation of Wash., 236 F.3d 1097, 1106 (9th Cir.

2001) ("[T]he money [in IOLTA accounts] belongs to the

fact in order to defeat the motion." Drakopoulos v. U.S. Bank Natl. Assn., 465 Mass. 775, 777-778 (2013) (quotations and citations omitted).

12

clients"); Kimble Mixer Co. vs. Hall, No. 2003 AP 01 0003, at 34

(Ohio Ct. App. Feb. 22, 2005) ("[F]unds deposited in an IOLTA

account remain the property of the client"). That being the

case, where the funds were distributed in accordance with the

client's instructions,6 the defendants cannot be found to have

converted the funds, even insofar as they were used by the

client to pay L & W's invoice.

Nor can the defendants be faulted for having Tobins's

attorney transmit the funds to L & W's IOLTA account in the

first place. There was nothing in the ZVI settlement, or, for

that matter, in the Tobins settlement, that required the money

to be paid to The Upper Crust's attorneys for the benefit of ZVI

or to be held by them in an escrow account.7 The Tobins

settlement provided that the $250,000 was to be paid to The

Upper Crust, and that it would be transmitted to an account to

be designated by The Upper Crust. The ZVI settlement, in turn,

simply provided that The Upper Crust pay the $250,000 to ZVI.

While ZVI may have come to regret not having structured the

6 Despite ZVI's argument to the contrary, it is evident from the record that there is no genuine dispute that The Upper Crust's CFO, Hurley, had the authority to provide direction as to the distribution of the $250,000.



7 As the first judge remarked, there is nothing that "plausibly supports a meeting of the minds on an escrow agreement, and a promise to send a 'firm's wire info[rmation]' cannot reasonably be read otherwise."

13

mechanics of settlement differently, those were the terms to

which the parties had agreed.8

c. Motion to strike alleged mediation statement. ZVI next

argues that the first judge erred when, due to the provision in

the mediation agreement barring the use of mediation

communications for any purpose other than the mediation, she

struck any reference in the amended complaint to Levy's alleged

misrepresentation to the effect that he would pay the $250,000

to ZVI after it was received from Tobins. More particularly,

ZVI argues that the judge erred in failing to recognize a fraud

exception to the contractual provision.

Whether a fraud exception should be recognized in such

circumstances is an undecided question in Massachusetts. We

note, however, that our Legislature has recognized the

importance of preserving the confidentiality of communications

made during mediation, where those communications have been made

in the presence of a qualified mediator.9 See G. L. c. 233,

8 As we conclude that the judge did not err in dismissing ZVI's claim for conversion, it follows that the judge did not err in dismissing ZVI's G. L. c. 93A claim insofar as it rests on the conversion claim.



9 General Laws c. 233, § 23C, inserted by St. 1985, c. 325, provides in pertinent part: "Any communication made in the course of and relating to the subject matter of any mediation and which is made in the presence of such mediator by any participant, mediator or other person shall be a confidential communication and not subject to disclosure in any judicial or administrative proceeding; provided, however, that the

14

§ 23C. While the first judge did not explicitly so state in her

decision on the motion to strike, it is implicit in her

discussion of § 23C that she believed the statute did not apply,

because, in addition to alleging that Levy's statement was made

at mediation, ZVI also alleged that the statement was not made

in the presence of the mediator.10 Given the plain language of

the statute, we are constrained to agree.

Nevertheless, the statute is instructive. It gives broad

confidentiality protection to mediation communications, barring

disclosure in any judicial or administrative proceeding, and

creating only one express exception for the mediation of labor

disputes. Significantly, the statute does not include an

exception for fraud.11 In light of that omission, we would be

hard pressed to find that such an exception exists in the

circumstances of this case, where there is a confidentiality

provisions of this section shall not apply to the mediation of labor disputes."



10 As the first judge noted, "[t]his distinction is of more than passing interest because of the pleadings in this case. The original complaint . . . was verified, and did not identify whether the alleged representation by Levy with respect to handling the settlement funds was made within or without the presence of the mediator. . . . The Amended Complaint, which is not verified, adds the sentence . . . , 'Levy's representation occurred outside the presence of the mediator.'"



11 It has been held, however, that, under some circumstances, there can be an at-issue waiver. See Bobick v. United States Fid. & Guar. Co., 439 Mass. 652, 658 n.11 (2003).

15

agreement,12 negotiated between sophisticated business people

with the assistance of legal counsel, that is even broader than

§ 23C. Indeed, were there to be a fraud exception to the

parties' mediation confidentiality agreement when no such

exception exists under the confidentiality provisions of § 23C,

it could lead to the incongruous situation where two identical

claims of fraud at mediation are alleged, but only one can go

forward because the mediator was not within earshot at the

moment when one of the communications was uttered.

We also note that, like § 23C, the most recent version of

the Uniform Mediation Act (UMA), which has been adopted by

eleven States and the District of Columbia,13 does not include

fraud among the recognized exceptions to the "privilege"

protecting against the disclosure of "mediation communications."

See Uniform Mediation Act (amended 2003), 7A (Part III) U.L.A.

§ 6 (2006). In fact, the comments accompanying the UMA reveal

that a fraud exception was specifically considered and rejected.

See id. at § 6 comment 5. Furthermore, while we have not been

12 The parties' agreement provides that "all communications between and among the parties and their counsel, shall be confidential and shall not be used for any purpose other than for said mediation."



13 See S.D. Codified Laws §§ 19-13A-1 to 19-13A-15 (2016) (UMA). See also Uniform Mediation Act (amended 2003), 7A (Part III) U.L.A. 73 (Supp. 2016) (noting Hawaii, Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, Utah, Vermont, Washington, and District of Columbia have adopted UMA).

16

asked to do so here, we are not aware of any case where a court

has created a fraud exception to a mediation confidentiality

statute. We also are not aware of any case where a court has

created such an exception to a mediation confidentiality

agreement.

The closest case we have located is Facebook, Inc. v.

Pacific N.W. Software, Inc., 640 F.3d 1034 (9th Cir. 2011),

involving the highly-publicized dispute between Facebook

founder, Mark Zuckerberg, and Cameron and Tyler Winklevoss. At

issue in that case was whether the Winklevosses could rescind a

mediated settlement on the ground that the plaintiffs had

committed securities fraud by overstating the value of Facebook

shares that would be transferred to the Winklevosses as part of

the settlement. See id. at 1038. Because the parties had

signed a mediation confidentiality agreement, providing that

"[n]o aspect of the mediation shall be relied upon or introduced

as evidence in any arbitral, judicial, or other proceeding," the

court refused to allow the Winklevosses to support their

securities fraud claims with evidence of what transpired at

mediation. Id. at 1041. Of significance to the court was that

the Winklevosses were sophisticated parties, who had been

represented by counsel, and who had acquired enough information

during the course of the litigation to know that the valuation

17

representations made by their opponents should be received with

caution. See id. at 1039.

The same factors are operative here. The parties to the

mediation agreement and the ZVI settlement were all business

people, represented by counsel. ZVI also had obtained

sufficient information to know that any assurances of payment

should be viewed cautiously. ZVI knew of The Upper Crust's

significant financial difficulties and that it was contemplating

bankruptcy. Moreover, in the collection action, ZVI had

asserted claims of fraud and unfair and deceptive acts against

The Upper Crust.

Furthermore, the mediation agreement merely precluded the

parties from disclosing mediation communications; it did not bar

the assertion of claims for fraud, based upon independent

support. There also is no suggestion that the mediation

agreement itself was procured by fraud. Under these

circumstances, we agree with the first judge that the mediation

agreement, and the confidentiality provision therein, are

enforceable. The judge did not abuse her discretion in striking

from the amended complaint the statement Levy allegedly made

during the mediation.

In any event, even if we were to assume that the first

judge should not have allowed the motion to strike, we agree

with her assessment that Levy's alleged statement, to the effect

18

that he would make sure that ZVI would be paid from the funds

received from Tobins, does not amount to actionable fraud. Even

if Levy had made such a statement, he was not personally

guaranteeing payment; nor does ZVI suggest he was. Indeed, Levy

cannot reasonably be understood as having taken on any personal

legal obligations to ZVI. As previously discussed, he was not

asked, and did not agree, to act as an escrow agent, and no such

obligation was included in the settlement agreement.

Furthermore, Levy was not a party to, and did not sign, the

settlement agreement.

Finally, in light of the plain language of the ZVI

settlement that The Upper Crust "shall pay to [ZVI] the sum of

$250,000," ZVI cannot reasonably suggest that it relied on any

assurance that it would be paid the Tobins funds.14 See

Masingill v. EMC Corp., 449 Mass. 532, 541 (2007). Thus, to the

extent that ZVI's claims based on that alleged statement remain

at issue,15 they would fail as a matter of law even if the

alleged statement should not have been struck.16

14 An action for fraud or deceit requires proof of a "misrepresentation of a material fact, made to induce action, and reasonable reliance on the false statement to the detriment of the person relying." Hogan v. Riemer, 35 Mass. App. Ct. 360, 365 (1993).



15 Six counts rested, in whole or in part, on the alleged mediation statement: aiding and abetting fraud (count V); misrepresentation (count VI); breach of alleged escrow agreement (count VII); breach of fiduciary duty (count VIII); conspiracy

19

d. Motion to compel. Lastly, ZVI challenges the first

judge's denial of a motion to compel the production of various

communications between the defendants and the clients they

represented in the collection action, i.e., The Upper Crust and

its principals. The judge found and ruled that the defendants

had established that the communications were privileged under

the "common interest/joint defense doctrine," see Hanover Ins.

Co. v. Rapo & Jepsen Ins. Servs., Inc., 449 Mass. 609, 612-617

(2007), and that ZVI had not demonstrated a waiver exception

within the scope recognized by Massachusetts law. Apparently,

Higgins and Huggard agreed to waive any arguable personal

privilege they had in the subject communications as part of the

settlement of their own disputes with ZVI. Citing those

waivers, as well as the alleged failure of The Upper Crust's

(count X); and violations of G. L. c. 93A, § 11 (count XII). Four of those counts also were dismissed by the first judge for reasons independent of the alleged mediation statement, and ZVI has not challenged those reasons on appeal. As a result, the only counts at issue on appeal are what remained of the counts for misrepresentation (count VI) and violations of G. L. c. 93A, § 11 (count XII).



16 The defendants also argue summarily that all of ZVI's claims fail because ZVI suffered no damages. Specifically, the defendants contend that the transfer of funds to ZVI was barred by an injunction in another Superior Court case. The defendants further contend that any payment would have been a voidable preference payment made within ninety days of The Upper Crust's bankruptcy filing, in violation of 11 U.S.C. § 547(b) (2012). We have been informed by the parties that these arguments are the subject of a separate contempt action. Because they are not factually developed in the record before us, we do not consider them.

20

bankruptcy trustee to take affirmative steps to maintain the

confidentiality of the subject communications, ZVI claims that

the judge's denial of its motion was in error. We disagree.

As an initial matter, it is important to note what is not

at issue in this appeal. First, ZVI does not dispute that

Higgins, Huggard, and The Upper Crust had jointly engaged Levy

and L & W to represent them at the time of the subject

communications. Second, ZVI does not contest that, absent

waiver, the subject communications are protected by the

attorney-client privilege. Third, ZVI does not claim that,

again, absent waiver, The Upper Crust, acting through the

trustee, has no legitimate right to assert the attorney-client

privilege as to those communications. Finally, ZVI acknowledges

that the trustee has not expressly waived the attorney-client

privilege as to the subject communications. With these

limitations in mind, we address ZVI's arguments.

ZVI first argues that the waivers by Higgins and Huggard

preclude the application of the attorney-client privilege,

because waiver by one or more, but not all jointly represented

clients destroys the privilege for all of them. As our

appellate courts have yet to confront this issue, we must look

elsewhere for guidance. Notably, ZVI has not directed us to any

authority holding that one client in a co-client relationship

can waive the privilege for all clients as to third parties.

21

Meanwhile, there is a wealth of authority holding otherwise.

As ZVI acknowledges, there are many cases holding that, in

circumstances where multiple clients are jointly represented by

the same counsel, or in the analogous situation where multiple

clients represented by separate counsel join together pursuant

to a so-called "common interest" or "joint defense" agreement,

all of the clients must waive the attorney-client privilege for

a waiver to occur. See In re Teleglobe Communications Corp. v.

BCE Inc., 493 F.3d 345, 363 (3d Cir. 2007) ("[W]aiving the

joint-client privilege requires the consent of all joint

clients"); United States v. BDO Seidman, LLP, 492 F.3d 806, 817

(7th Cir. 2007) ("[T]he privileged status of communications

falling within the common interest doctrine cannot be waived

without the consent of all of the parties"); John Morrell & Co.

v. Local Union 304A of the United Food & Commercial Workers,

AFL-CIO, 913 F.2d 544, 556 (8th Cir. 1990), cert. denied, 500

U.S. 905 (1991), quoting from Ohio-Sealy Mattress Mfg. Co. v.

Kaplan, 90 F.R.D. 21, 29 (N.D. Ill. 1980) ("It is fundamental

that 'the joint defense privilege cannot be waived without the

consent of all parties to the defense'"); State v. Maxwell, Kan.

App. 2d 62, 65 (1984) ("[W]here several persons employ an

attorney and a third party seeks to have communications made

22

therein disclosed, none of the several persons -- not even a

majority -- can waive this privilege").17

ZVI claims that these cases ignore the fact that when a

client chooses to disclose a communication, the confidentiality

that forms the "foundation" of the attorney-client privilege is

destroyed, and, hence, the right to assert the privilege

thereafter is lost. However, while this argument may have merit

when there is only one client, it is not apt when a client who

has agreed to be jointly represented by the same attorney(s)

acts unilaterally and discloses a communication arising out of

the joint attorney-client relationship. To the contrary, the

concept of confidentiality would be undermined if such

unilateral acts were condoned. As one Federal court has

explained, requiring all clients to waive the privilege "is

necessary to assure joint defense efforts are not inhibited or

even precluded by the fear that a party to joint defense

17 See also the Restatement (Third) of the Law: The Law Governing Lawyers § 75 (2000), which provides:



"(1) If two or more persons are jointly represented by the same lawyer in a matter, a communication of either coclient that otherwise qualifies as privileged under §§ 6872 and relates to matters of common interest is privileged as against third persons, and any co-client may invoke the privilege, unless it has been waived by the client who made the communication.



"(2) Unless the co-clients have agreed otherwise, a communication described in Subsection (1) is not privileged as between the co-clients in a subsequent adverse proceeding between them."

23

communications may subsequently unilaterally waive the

privileges of all participants, either purposefully in an effort

to exonerate himself, or inadvert[e]ntly." Western Fuels Assn.,

Inc. v. Burlington N. R.R. Co., 102 F.R.D. 201, 203 (D. Wyo.

1984).

We agree with the prevailing authority, and discern no

error in its application here by the first judge. Absent a

waiver by the trustee on behalf of The Upper Crust, it is

irrelevant whether Higgins and Huggard waived any personal

privilege they may have held.

While acknowledging that the trustee did not expressly

waive the attorney-client privilege, ZVI next argues that a

waiver can be implied from what it suggests was the trustee's

failure to react after ZVI induced Higgins and Huggard to

disclose the communications. Again, however, the argument lacks

merit. The record reflects that Levy and L & W acted repeatedly

and successfully to protect the privilege of the subject

communications throughout this action.18 According to the

trustee's affidavit submitted in support of those efforts, ZVI's

counsel contacted him on several occasions asking him to waive

the privilege on behalf of The Upper Curst, and he refused to do

18 Levy and L & W successfully opposed ZVI's motion to compel production of the subject attorney-client communications. Then, when ZVI, despite that ruling, attached the communications to its summary judgment filing, Levy and L & W successfully moved to strike them.

24

so every time. It is not clear what more the trustee reasonably

should have done. See Magnetar Technologies Corp. v. Six Flags

Theme Park Inc., 886 F. Supp. 2d 466, 486 (D. Del. 2012) ("[A]

waiver of a joint privilege is not accomplished by failing to

take precautions to prevent disclosing documents in the custody

of a former joint client or through delay in not immediately

requesting their return"). Furthermore, given that the waiver

of the privilege was not complete until the trustee consented,

ZVI should not be permitted to use the premature disclosure of

the communications by Higgins and Huggard -- a disclosure that

ZVI induced -- as grounds for arguing that the trustee had

impliedly waived the privilege. In sum, the first judge

correctly concluded that there was no implied waiver.

e>

The orders allowing Levy and L & W's

motion to strike and denying ZVI's motion to compel are

affirmed. The judgment entered January 5, 2015, and the final

judgment as to the claims against Levy and L & W entered January

22, 2016, are affirmed.