Ambac Assur. Corp. v Countrywide Home Loans, Inc.
Ambac guaranteed payments on residential mortgage-backed securities issued by Countrywide. When those securities failed during the financial crisis, Ambac sued, alleging fraud. Ambac named Bank of America (BoA) as a defendant, based on its merger with Countrywide. Discovery ensued, and in 2012, Ambac challenged BoA's withholding of approximately 400 communications between BoA and Countrywide after the signing of the merger plan in January 2008 but before its closing in July. BoA claimed they were protected by the attorney-client privilege because they pertained to legal issues the companies needed to resolve jointly in anticipation of the closing. Although the parties were represented by separate counsel, the merger agreement directed them to share privileged information and purported to protect the information from outside disclosure. A Referee concluded that the exchange of privileged communications waives the attorney-client privilege and that the communications would be entitled to protection only if BoA could establish an exception, such as the common interest doctrine, which permits limited disclosure of confidential communications to parties who share a common legal (as opposed to business or commercial) interest in pending or reasonably anticipated litigation. The court held that the doctrine applies only if there is "reasonable anticipation of litigation." The Appellate Division reversed. The New York Court of Appeals reversed, reinstating the trial court order holding that privilege did not apply because the communication did not relate to pending or anticipated litigation. View "Ambac Assur. Corp. v Countrywide Home Loans, Inc." on Justia Law