Legal malpractice

The court held that the trial court erred when it found that defendants-Bess and Seyburn Kahn could invoke the attorney-client privilege because plaintiff-Bernstein alleged facts such that the fraud exception prevented the use of the attorney-client privilege by these defendants in this case. Further, the court held that since it found the crime-fraud exception to the attorney-client privilege applied to communications between appellee-Poss, Bess and Seyburn Kahn, the court did not need to decide whether the attorney-client privilege could be asserted against Bernstein. Poss, a doctor of podiatric medicine, employed Bernstein as a podiatrist. After 10/90, when Poss was convicted of healthcare fraud, which resulted in the suspension of his medical license until 1992, Poss proposed a new business venture to Bernstein. He would be the sole shareholder of a new business where he would provide podiatry services and Poss would provide management and administrative services and they would split the profits equally. Bernstein agreed to the proposal. Poss had a prior relationship with Bess and Seyburn Kahn and recommended that Bernstein retain Bess to incorporate Foot Health Centers (FHC). Bernstein did so. Bess prepared and filed the appropriate paperwork, which resulted in FHC being incorporated on 8/15/91. In 1998, Bess at the direction of Poss, filed articles of incorporation for Foot & Ankle Health Centers, P.C. (FAHC). Later, Bess filed documents to dissolve FHC. Poss was listed as the sole director of FAHC, but Bernstein was named as a shareholder and the vice president. Bernstein claimed that until 6/06, when he began negotiating to end his business relationships with Poss, he believed that he was a 50% shareholder in FAHC. At that time he learned that he was only a 2% shareholder. He then sued Bess and Seyburn Kahn for legal malpractice and breach of fiduciary duty committed during their representation of Bernstein. He alleged that Bess and the law firm assisted Poss in fraudulently converting his 100% interest in FHC into a 2% interest in FAHC. In anticipation of deposing Bess, Bernstein moved the trial court for an order preventing Bess and the law firm from claiming attorney-client privilege. The trial court denied the motion. Plaintiff acknowledged that the privilege belonged to the corporation, but argued that because he was a shareholder and officer of FAHC, the privilege did not prevent disclosure to him and that the crime-fraud exception to the privilege prohibited Bess and the law firm from invoking the privilege. The court rejected the defendants' claim that the exception did not apply because plaintiff failed to plead with particularity the relevant circumstances. The court also held that Fassihi applied where similar to that case, "Bernstein alleged that Bess failed to disclose relevant information about the purpose of FAHC," and "Bess assisted Poss in fraudulently converting Bernstein's interest in the corporation," failed to provide him with stock certificates, financial information, business records, or any other relevant information. Reversed and remanded.