ALBANY, N.Y. (AP) — New York’s highest court says Bank of America can’t hide its communications with Countrywide Financial from an insurer alleging fraud by Countrywide before the bank bought it.
The Court of Appeals says attorney-client privilege doesn’t shield hundreds of communications between the institutions and their lawyers from Ambac Assurance Corp.
Ambac claims in a lawsuit that Countrywide illegally misrepresented its mortgage-backed securities. The insurer guaranteed payments on securities issued by Countrywide subsidiaries between 2004 and 2006.
The court says attorney-client privilege is generally lost when shared with third parties, except when it relates to pending or anticipated litigation.
The four judges rejected the bank’s argument that privilege should apply more broadly to any common legal interest, concluding any benefits would be outweighed by lost evidence and potential abuse.