DealLawyers.com Blog

This Morris James blog reviews a recent ruling from Master in Chancery Patricia Griffin addressing various privilege issues arising in a dispute between parties to a business negotiation. Twin Willows, LLC v. Lewis Pritzkur, Trustee, (Del. Ch.; 2/22) arose out of an assignment of a property sale agreement from the respondents to the petitioner.  That agreement was not fully performed, and litigation ensued.

During the course of that litigation, the petitioner moved to compel production of communications between the respondents & the seller of the property. In response, the respondents asserted attorney work product and common interest privileges. This excerpt from the blog describes the Master’s ruling:

The Master granted in part and denied in part Twin Willows’ motion.  The Master addressed several categories of documents. Most notably, the Master explained the common interest doctrine’s application to a situation involving both business and legal issues, while conducting an in camera review of the challenged documents.  Here, Pritzkur and the other Respondents shared a sufficiently similar interest, as evidenced by their conduct throughout the litigation, and their joint goal of selling the property.

However, the Master noted that certain withheld communications appeared to relate to the negotiation of a commercial transaction, and therefore not within the ambit of the common interest privilege.  While discussions of the performance or negotiation were commercial in nature and not privileged, discussions of ancillary property rights and co-tenancy issues, as well as documents related to the original partition matter were privileged.  Communications not pertaining to a legal objective were ordered to be produced, and documents concerning both commercial and legal interests were ordered to be redacted accordingly.

The “common interest” privilege protects privileged information that is exchanged by two parties represented by counsel concerning a legal matter in which they share a common interest. The privilege has often been asserted to protect communications between buyers & sellers during the course of a acquisition. However, this decision follows a long line of Delaware authority holding that that if the primary focus of the alleged common interest was commercial, “[i]t is of no moment that the parties may have been developing a business deal that included as a component the desire to avoid litigation.”

– John Jenkins