Court Opinion

ID: 9961812
Source: CourtListenerOpinion
Date Created: 2024-04-19 20:08:29.081511+00
Date Added: 2024-06-11T08:18:57.079184
License: Public Domain

Matter of Aoki
               2024 NY Slip Op 31341(U)
                     April 12, 2024
          Surrogate's Court, New York County
        Docket Number: File No. 2008-2604/H/I
                    Judge: Rita Mella
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                                                                                                 New York Counly Surrogate's Court
                                                                                                     DATA ENTRY DEPT.
                                                                                                       APR 12 2024
        SURROGATE'S COURT OF THE STATE OF NEW YORK
        COUNTY OF NEW YORK
        -------------------------------------------------------------------------x
        In the Matter of the Application of Devon Aoki and Steven
        Aoki as Beneficiaries of the Trust Created under Article VIII
        of the Will of                                                               DECISION and ORDER

                 ROCKY H. AOKI, also known as                                        File No.: 2008-2604/H/1
                     Hiroaki Aoki,
                                         Deceased,

        to Revoke the Letters of Trusteeship Issued to Keiko Ono
        Aoki as Trustee of the Trust.
        -------------------------------------------------------------------------x
        In the Matter of the Judicial Settlement of the First
        Intermediate Account of Proceedings of Keiko Ono Aoki
        as Trustee of the Trust under Article VIII of the Will of

                 ROCKY H. AOKI, also known as                                        File No.: 2008-2604/F
                     Hiroaki Aoki,
                                         Deceased.
        -------------------------------------------------------------------------x
        In the Matter of the Judicial Settlement of the Second
        Intermediate Account of Proceedings of Keiko Ono Aoki as
        Trustee of the Trust under Article VIII of the Will of

                ROCKY H. AOKI, also known as                                         File No.: 2008-2604/K
                    Hiroaki Aoki,
                                        Deceased.
        -------------------------------------------------------------------------x

        MELLA, S.:

        The following papers were considered on the cross-motions regarding discovery, including by
        subpoena, sought from non-parties Schulte Roth & Zabel LLP and Cowan, Liebowitz & Latman PC:

        Documents Considered                                                                       Numbered
        Notice of Motion, dated April 14, 2022, for a Protective Order and to
          Quash Subpoena, by Respondent Keiko Aoki, with Affirmation,
          dated April 14, 2022, of Vincent Levy, Esq., Attaching Exhibits                             1, 2
        Keiko Aoki's Memorandum of Law in Support                                                     3
        Notice of Cross-Motion, dated April 21, 2022, by Devon Aoki and
         Steven Aoki, to Compel Discovery, with Affirmation,
         dated April 21, 2022, of David C. Rose, Esq., Attaching Exhibits                            4,5
        Devon Aoki and Steven Aoki's Memorandum of Law in Opposition
          to Motion and in Support of Cross-Motion                                                    6
        Affidavit of Keiko Aoki, dated April 29, 2022, in Reply                                       7

[* 1]
        Affirmation of Taleah Jennings, Esq., dated April 29, 2022,
          in Opposition to Cross-Motion                                                          8
        Reply Affirmation, dated April 29, 2022, of Vincent Levy, Esq.,
          Attaching Exhibits                                                                    9
        Keiko Aoki's Reply Memorandum of Law and in Opposition to Cross-Motion                  10

        The following papers were considered on the cross-motions regarding, in part, discovery of
        communications with Schulman Bhattacharya, LLC:

        Documents Considered                                                                  Numbered

        Notice of Motion to Compel, dated August 19, 2022, by Devon Aoki and
         Steven Aoki, with Affirmation, dated August 19, 2022, of Andrew M.
         Goldsmith, Esq., Attaching Exhibits                                                     11, 12
        Notice of Motion to Compel, dated August 26, 2022, by Guardian ad
         Litem Jessica M. Baquet, Esq. (GAL), with Affirmation
         of Jessica M. Baquet, Esq., dated August 26, 2022, Attaching Exhibits                   13, 14
        Memorandum of Law in Support of GAL's Motion                                             15
        Notice of Cross-Motion to Compel, dated September 13, 2022, by
         Keiko Aoki, with Affirmation, dated September 13, 2022, of Jordan
         Pietzsch, Esq., Attaching Exhibits                                                      16, 17
        Memorandum of Law in Opposition to Motions and in Support of
          Cross-Motion                                                                          18
        Reply Affirmation, dated September 23, 2022, of Jessica M. Baquet, Esq., in
          Further Support of GAL Motion, Attaching Exhibits                                     19
        GAL's Reply Memorandum of Law                                                           20
        Reply Affirmation, dated September 23, 2022, of Andrew M. Goldsmith, Esq.,
          Attaching Exhibits                                                                    21

               Litigation in the estate of Rocky Aoki, the founder of the Benihana Restaurant chain, has

        a long history, which is set forth in prior decisions of this and other courts and will not be

        repeated here. For present purposes, it is sufficient to note that decedent died in July 2008, and,

        more than 15 years later, there are still a number of contested proceedings pending in this court.

        Relevant here are three of those proceedings: in one, two of decedent's children, Devon Aoki

        and Steven Aoki (Devon and Steven) seek the removal of decedent's surviving spouse, Keiko

        Ono Aoki (Keiko), as Trustee of a trust created under decedent's will (the Trust); in the other

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        two proceedings, Keiko seeks the settlement of her accounts as Testamentary Trustee. 1 Before

        the court in these proceedings are two sets of cross-motions that raise the issue of the scope of

        the attorney-client privilege under circumstances where the party claiming privilege serves as a

        fiduciary and asserts advice of counsel as a defense. This decision determines these cross-

        motions. 2

                                                        BACKGROUND

                 The first set of cross-motions was filed in the removal proceeding. Thereafter, however,

        in recognition of the overlapping issues in the removal proceeding and Keiko's accounting as

        Trustee, the parties agreed that discovery in all proceedings should be conducted jointly, and it is

        currently contemplated that there will be a joint trial of the removal claims and the accounting

        objections.

                In the first set of cross-motions, suspended Trustee Keiko, moves for a protective order

        (CPLR 3103) and to quash a subpoena (CPLR 2304) served on her former counsel, Schulte Roth

        and Zabel LLP (Schulte). Devon and Steven, who are beneficiaries of the Trust, have cross-

        moved, pursuant to CPLR 3124, to compel: 1) Keiko to comply with certain discovery demands

        seeking communications between her and Schulte and also between her and another firm that had

        represented her as Trustee, Cowan, Liebowitz & Latman PC (Cowan); and 2) Schulte to comply

        with their subpoena which requests production of certain documents and an examination under

        I Keiko initially accounted as Trustee for the period from September 3, 20 IO through September 30, 2016. In 2020,
        in response to Devon and Steven's removal petition, which included substantial allegations of possible waste and
        bad faith, the court suspended Keiko as Trustee. Thereafter, Keiko filed a separate accounting for the period from
        October I, 2016 through March 12, 2020, the date a successor trustee was appointed on an interim basis (the Interim
        Successor Trustee). Although styled as a separate accounting, the second is a continuation of Keiko's initial
        accounting.

        2 Some of these motions, such as Keiko's September 13, 2022 motion, which is part of the second set ofcross-
        motions, raised other discovery issues, but they were resolved in a decision of this court dated November 16, 2022
        (see Matter ofAoki, NYLJ, November 21, 2022, at 23, col 3 [Sur Ct, NY County]).

                                                                 3

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        oath of a person to be designated by Schulte (Schulte Subpoena). Regarding the documents

        sought, current counsel to Keiko confirms that Schulte has delivered to them all documents

        responsive to the Schulte Subpoena. Consequently, the portions of the cross-motions relating to

        documents sought in the Schulte Subpoena have been resolved as against Schulte. Current

        counsel to Keiko, however, has not produced the responsive documents received from Schulte,

        claiming that they are protected from disclosure by the attorney-client communication privilege.

        Thus, the remainder of the relief sought in Devon and Steven's cross-motion requires resolution.

                 Attorney-client privilege issues are also involved in the second set of cross-motions.

        There, Devon and Steven request, among other relief, an order compelling the production of

        documents-also withheld by Keiko-from another firm which previously represented her,

        Schulman Bhattacharya, LLC (Schulman). They seek to compel production of certain

        communications of Keiko with that firm, as well as communications among her and the Schulte

        and Schulman firms, that Keiko claimed were privileged in her privilege log. These

        communications are in the possession of Keiko' s current counsel, but Keiko objects to their

        disclosure on privilege grounds.

                The court appointed a guardian ad litem (GAL) in Keiko's initial accounting and the

        removal proceeding to protect the interests of the Trust's contingent remainder beneficiaries-

        Devon's infant children and Steven's unborn issue. 3 The GAL has taken positions in line with

        those of Devon and Steven, joining their removal proceeding as a petitioner and also objecting to

        Keiko's account as Trustee. With respect to the second set of cross-motions, the GAL supported

        Devon and Steven's motions to compel, and also moved separately to compel Keiko to comply

        3 Under the Trust, Steven's share vested upon his attaining the age of 45. Consequently, the GAL's appointment for
        the contingent remainder interests for Steven's share of the Trust is no longer necessary, and the GAL's appointment
        is now limited to Devon's infant children. The orders dated May 22, 2018 and June 21, 2022, appointing the GAL
        in these proceedings are amended accordingly.

                                                                 4

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        with the GAL's own discovery demands. That motion was granted in part in the court's

        November 16, 2022 decision.

                 After both sets of cross-motions were submitted, the parties also raised other challenges

        to the privilege log of Keiko on the one hand, and to Devon and Steven's privilege log on the

        other, and those were addressed in a decision of this court dated June 27, 2023 (see Matter of

        Aoki, NYLJ, June 30, 2023, at 6, col 2 [Sur Ct, NY County]). In addition, the parties agreed to

        have a referee (the Referee) resolve the parties' privilege disputes, and a referral order has been

        entered (id). 4

                                                            DISCUSSION

                 In New York, the right of parties to maintain the confidentiality of their communications

        with their lawyers and to insulate those communications from disclosure to their adversaries is

        protected by statute (CPLR 4503) and by long-standing principles that courts have upheld for

        centuries (see Spectrum Systems Intern. Corp. v Chemical Bank, 78 NY2d 371, 3 77

        [1991][noting that the attorney-client privilege is the oldest among common law evidentiary

        principles]). This well-established rule, however, is in"[o ]bvious tension" with the policy of this

        State to encourage liberal discovery in civil disputes (id. at 376-377), and, as a result, courts

        narrowly construe the privilege (see Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27

        NY3d 616, 624 [2016]). The statute itself recognizes that a party may waive the privilege

        (CPLR 4503 [a]).

                 Keiko, as the party asserting the privilege, "bears the burden of establishing [her]

        entitlement to protection by showing that the communication at issue was between an attorney

        4 The court anticipates that this decision will assist the Referee's resolution of all privilege and related disclosure
        issues.

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        and a client 'for the purpose of facilitating the rendition of legal advice or services, in the course

        of a professional relationship,' that the communication is predominantly of a legal character, that

        the communication was confidential and that the privilege was not waived" (Ambac Assur. Corp.

        v Countrywide Home Loans, Inc., 27 NY3d at 624, referencing Rossi v Blue Cross & Blue Shield

        o/Greater NY, 73 NY2d 588, 593-594 [1989]).

               Keiko's assertion of privilege in these proceedings took place in the following context.

        Keiko served not only as Trustee but also as chief executive officer (CEO) of Benihana of

        Tokyo, LLC (BOT), an entity wholly owned by the Trust. Devon and Steven and the GAL have

        offered as grounds for Keiko' s removal her litigation and business decisions while managing

        BOT and, specifically, its legal disputes with Benihana, Inc. (BI) (collectively, the BOT-BI

        Cases). In addition to serving as grounds for removal, Keiko's actions and decisions in the BOT-

        BI Cases serve as the basis for objections by Devon and Steven, and the GAL, who seek to

        surcharge Keiko in her accounting as Trustee. In particular, Devon and Steven and the GAL

        have alleged that these legal battles between BOT and BI were pursued in bad faith and led,

        among other things, to Keiko' s incurring unreasonable and unnecessary attorneys fees, which

        were borne by the Trust.

               In her Verified Answer and during the first phase of litigation in the removal proceeding,

        Keiko did not assert advice of counsel as a defense. However, in opposition to Devon and

        Steven's summary judgment motion in that proceeding, which the court denied in 2022 in favor

        of a trial, Keiko argued that summary removal should not be granted because she had relied in

        good faith on the advice of her counsel (see Matter ofAoki, NYLJ, June 27, 2022, at 21, col 1

        [Sur Ct, NY County]). In support of her good faith argument, Keiko offered excerpts of certain

        communications between her and counsel to BOT, in particular, Rosenberg Feldman Smith LLP

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        (RFS), and Joseph L. Manson, III, Esq. (Manson), in which the advice she allegedly followed

        was provided. After the motion for summary judgment was denied, as agreed to by the parties,

        Keiko filed an Amended Verified Answer in the removal proceeding which included the advice

        of counsel defense.

        Privilege of the Schulte Communications

                 As previously stated, the two sets of cross-motions involve similar issues but are distinct.

        The Schulte Subpoena and Devon and Steven's discovery demands seek Schulte

        communications related to, among other things: 1) the BOT-BI Cases; 2) the 2018 sale of a 75%

        equity interest in a BOT affiliate (the Minor Transaction); 5 3) investments that Keiko caused the

        Trust and BOT to make; 4) Keiko's compensation from BOT; 5) BOT's alleged use of Keiko's

        private residences as office space; and 6) transfers of funds or assets between and among the

        Trust and Keiko. Devon and Steven describe these six subjects about which Keiko received

        advice as generally relating to the "ongoing, real-time and prospective administration of the

        Trust" and argue that these communications must be produced because: (i) they are relevant to

        their claims in the removal and accounting proceedings, and the Interim Successor Trustee,

        whom the court appointed upon suspending Keiko, 6 waived the attorney-client privilege; or (ii)

        Keiko waived the privilege of those communications by affirmatively relying on advice of

        5 The Minor Transaction was a sale by BOT, while Keiko was Trustee and the CEO of BOT, of certain of its assets
        to an entity affiliated with a company known as Minor International. Although not originally pied in the removal
        petition, Devon and Steven made clear in their summary judgment motion they were relying on such transaction as a
        basis for removal and thereafter, upon agreement, amended their petition to include allegations regarding the sale.
        Schulte's billing time records make clear that the firm was providing counsel to Keiko concerning this transaction.
        For instance, the following entries come from those records:
        "02/28/18. Review research re. obligation to inform beneficiaries of potential sale; call with WDZ and GC, Minor
        International, to discuss trust and trustee authority."
        "05/07/18. Reviewed draft email re Minor Transaction and response to [Schulte] team re same."
        "O 1/18/19. [R]eview and respond to correspondence from S. Schiller regarding Minor transaction details."

        6 Although the Interim Successor Trustee is a party to these removal and accounting proceedings, he has not
        submitted papers or taken a position on these motions.

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        counsel as a defense.

               Keiko avers in opposition that she retained Schulte "in or around November 2016 to

        advise [her] in [her] capacity as Trustee of the Rocky H. Aoki Testamentary Trust ... in

        connection with the administration of the Trust and related litigation, including litigation against

        [Devon and Steven]." She further states: "I sought and obtained [Schulte ]'s advice concerning

        how actions I took related to BOT' s disputes with BI and the Minor transaction could affect

        actual and potential claims by [Devon and Steven]." Based on these assertions, she argues that

        all communications with Schulte (except the ones that she describes as "non-privileged

        communications" between Schulte and BOT's counsel or with "BI and related entities"),

        including those providing advice on the Trust's administration matters, are privileged. She

        reasons that the advice was rendered "when there was clear adversity between [Keiko] and

        [Devon and Steven] concerning [her] management of the Trust." Additionally, she maintains

        that it is only in her role as CEO of BOT, and not as Trustee, that she has asserted advice of

        counsel as a defense and that, therefore, the advice she received from Schulte in discharging her

        duties as Trustee, including defending against the claims of Devon and Steven, is not subject to

        any waiver.

               Relevance of the Communications Sought

               Objectants to the account of a fiduciary are statutorily "entitled to all rights" granted

        under Article 31 of the CPLR (SCP A 2211 [2]). Parties to a proceeding for the removal of a

        fiduciary may also conduct Article 31 discovery (see e.g. Matter of Langfur, NYLJ, Apr. 21,

        1992, at 28, col 3 [Sur Ct, Nassau County]; Matter of Ohm, NYLJ, Dec. 20, 1993, at 24, col 3

        [Sur Ct, Westchester County]). Pursuant to CPLR 3 l0l(a), "there shall be full disclosure of all

        matter material and necessary in the prosecution or defense of an action." Thus, any information

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        or document that would tend to support the removal and surcharge claims of Devon and Steven

        and the GAL-including that Keiko wasted the assets of the Trust by engaging in the BOT-BI

        Cases against the advice of counsel---or Keiko' s defenses against those claims is material and

        should be disclosed, unless privileged. Because communications between Keiko and her

        lawyers-whether privileged or not-would tend to support the respective claims of the parties,

        they may not be withheld on relevance grounds.

                The Attorney-Client Privilege of Fiduciaries

                The parties here do not dispute that, unless separately waived, a trustee does not lose the

        right to have independent counsel-and risk having such communications with counsel disclosed

        and the privilege invaded-in adversarial proceedings by beneficiaries and others against that

        individual as trustee (see CPLR 4503 [a][2]; Beck v Manufacturers Hanover Tr. Co., 218 AD2d

        1, 17 [1st Dept 1995]; Matter of Baker, 139 Misc 2d 573, 577 [Sur Ct, Nassau County 1988]).

        Keiko takes issue, however, with what she characterizes as Devon and Steven's improper

        reliance on the "fiduciary exception" to the attorney-client privilege. As explained by the United

        States Supreme Court in US. v Jicarilla Apache Nation (564 US 162, 170 [2011]), under that

        exception, "when a trustee obtain[s] legal advice to guide the administration of the trust, and not

        for the trustee's own defense in litigation, the [trust] beneficiaries [are] entitled to the production

        of documents related to that advice."

               The New York Court of Appeals embraced to a certain extent this exception to the

        attorney-client privilege in Hoopes v Carota (74 NY2d 716 [1989]). In Hoopes, the Court held

        that the privilege afforded to communications between fiduciaries and their lawyers could be

        invaded through a "good cause" showing, which included a demonstration of an identity of

        interests between the beneficiaries of a trust and the trustee concerning the advice that the

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         fiduciary obtained from counsel. In 2002, however, the legislature amended CPLR 4503 and

         "effectively eliminat[ ed]" the fiduciary exception with respect to communications between

         personal representatives of estates, including trustees, and their counsel (see Nama Holdings,

         LLC v Greenberg Traurig LLP, 133 AD3d 46, 55, n 5 [1st Dept 2015]). In particular, the 2002

         amendment (L 2002, ch 430, § 1), added section (a)(2)(A) to CPLR 4503, which states:

                "For purposes of the attorney-client privilege, if the client is a personal representative
                [defined in (a)(2)(B) to include testamentary trustees, as Keiko is here] and the attorney
                represents the personal representative in that capacity, in the absence of an agreement
                between the attorney and the personal representative to the contrary:

                        "(i) No beneficiary of the estate is, or shall be treated as, the client of the attorney
                solely by reason of his or her status as beneficiary;

                        "(ii) The existence of a fiduciary relationship between the personal representative
                and a beneficiary of the estate does not by itself constitute or give rise to any waiver of
                the privilege for confidential communications made in the course of professional
                employment between the attorney or his or her employee and the personal representative
                who is the client;"

                This amendment to CPLR 4503 made clear that confidential communications between

         estate fiduciaries and their counsel are generally protected by the privilege, and that good cause

         to invade the privilege of those communications could not be established by the mere fact that

         the fiduciary owed a duty to the beneficiaries (adding subsection [2][A][ii] to CPRL 4503[a] to

         the CPLR). The amendment also clarified that, for purposes of the attorney-client privilege, the

         beneficiary should not be treated as a client of the estate fiduciary's attorney (adding subsection

         4503[a][2][A][i] to the CPLR).

                Relying on that amendment and the elimination of the fiduciary exception, Keiko argues

         that she can assert the attorney-client privilege as to all communications with Schulte (except the

         ones that, as previously noted, she describes as non-privileged), including those pertaining to the

         administration of the Trust and her management of BOT. Devon and Steven maintain that Keiko

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         must disclose her communications with Schulte pertaining to the ongoing administration of the

         Trust not because the fiduciary exception applies but because the privilege has been waived by

         the Interim Successor Trustee who replaced Keiko in March 2020.

                  Waiver of the Privilege by the Interim Successor Trustee

                  Devon and Steven argue that Keiko has no standing to assert the attorney-client privilege

         with respect to the communications between her in her capacity as Trustee and her lawyers

         because the privilege belongs not to Keiko individually but to the office of the trustee. There is

         no dispute that the Interim Successor Trustee has declined to assert any privilege with respect to

         communications with Keiko's prior lawyers regarding advice she received as Trustee and as

         CEO of BOT while serving as Trustee,7 and such waiver, Devon and Steven maintain, prevents

         Keiko from asserting any privilege with respect to communications that pertain to "ongoing,

         real-time administration of the Trust," including Keiko's decisions about the management of

         BOT and its litigations.

                  For her part, Keiko argues that the privilege concerning her communications with Schulte

         belongs to her and to her alone-and that only she can waive it-because she retained that firm

         at a time she was in an adversarial relationship with Devon and Steven, who had threatened to

         remove her as Trustee or had actually sought her removal as a result of her decisions concerning

         the BOT-BI Cases, and other actions pertaining to BOT. 8 According to Keiko, the only relevant

         question is whether there was adversity between the Trust beneficiaries and her at the time that

         she retained counsel to defend her against the beneficiaries' claims and, once such adversity is

         7 Keiko no longer serves as CEO of BOT because the Interim Successor Trustee removed her.

         8 Specifically, Keiko maintains that any advice she received as Trustee concerning the BOT-BI Cases beginning as
         early as 2014, when Devon and Steven filed a petition in this court to compel her to account alleging that she was
         mismanaging BOT, is privileged.

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         established, the privilege of her communications with counsel attaches even if the advice

         pertained to ongoing or prospective administration of the Trust.

                There are several reasons to conclude that, when it comes to legal advice relating to the

         discharge of a trustee's duties, including the management of trust assets or the administration of

         those assets, the privilege belongs to the office of the trustee (see Matter of Kotick, 2016 NY Slip

         Op 32788[U] [Sur Ct, NY County]). First, there should be consistency in the application of

         privilege waiver rules relating to who, between a predecessor in office or its successor, holds the

         attorney-client privilege. The law in New York for decades has provided that the privilege

         attached to attorney-client communications regarding a corporation's day-to-day management or

         its ongoing operations passes to the directors and officers of its successor corporation (see Tekni-

         Plex, Inc. v Meyner and Landis, 89 NY2d 123, 133 [1996] ["where efforts are made to run the

         pre-existing business entity and manage its affairs, successor management stands in the shoes of

         prior management and controls the attorney-client privilege with respect to matters concerning

         the company's operations"]). To be sure, the Court of Appeals in Tekni-Plex distinguished

         between communications concerning the former corporation's "general business," the privilege

         as to which passed to the management of the successor corporation, and those communications

         which related to the adversarial negotiations for its acquisition, the privilege as to which did not.

         The conclusion reached here applies solely to communications between the former Trustee and

         her counsel as they relate to the ongoing administration of the Trust.

                Second, successor trustees play a special role in the protection of trust assets. By statute,

         successor trustees are granted "all powers, duties and discretion of the original [trustee]" (EPTL

         11-1.l[b][12]), including the power and duty to administer the trust (EPTL 7-2.3[b][2]; SCPA

         1502[6]). As part of these duties, the successor trustee must receive the assets from his or her

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         predecessor and ensure that the latter acted properly in administering the trust. In fact, the failure

         of a successor fiduciary to address any breach of duty by his or her predecessor in the

         administration of the trust exposes the former to liability (see Bank of New York v New Jersey

         Title Guarantee & Trust Co., 256 App Div 609,611 [1st Dept 1939] [a successor trustee who

         "neglects to take proper steps to redress a breach of trust committed by the predecessor" is liable

         to trust beneficiaries], Iv denied, rearg denied, 257 App Div 806 [1st Dept 1939]). In order to

         discharge this critical responsibility, the successor trustee must be privy to all aspects of the

         predecessor's actions, including those involving litigation decisions, and must be able to waive

         the privilege afforded to the communications between the predecessor and the lawyers who

         represented him or her whenever the successor deems it necessary.

                Third, the practical realities of trust administration support this conclusion. The business

         of any trust may include litigation. In fact, a successor trustee has the authority to substitute for

         his or her predecessor in any action or proceeding pending in favor of the latter at the time he or

         she ceased to act as trustee (SCPA 706[2]). A change in trustee-whether that change is the

         result of resignation, removal or some other reason-while litigation is ongoing should not cause

         the successor trustee to lose the right to assert the attorney-client privilege. The opposite result

         would unnecessarily disrupt the interests of the trust and its beneficiaries.

                Keiko's argument that only she can waive the privilege of the Schulte communications

         because, as Trustee, she was in an adversarial relationship with Devon and Steven when the firm

         advised her regarding BOT ignores the reality that, at present, only the Interim Successor Trustee

         has a fiduciary duty to protect the Trust and its beneficiaries. This duty requires the Interim

         Successor Trustee to hold and assert the attorney-client privilege pertaining to ongoing Trust

         management advice in the manner most beneficial to the Trust, including waiving it, if necessary

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         to protect its assets. On the other hand, Keiko, as suspended Trustee, is only bound by self-

         interest.

                  The court thus concludes that the Interim Successor Trustee holds the privilege as to

         communications pertaining to the former trustee's ongoing administration of the Trust and its

         assets and as to advice sought to guide her in the discharge of her duties, including her decisions

         related to BOT, its management, its decision to engage in the Minor Transaction, and the BOT-

         BI Cases. 9 The Interim Successor Trustee having declined to assert any privilege with respect to

         communications between Keiko and the lawyers who represented her as Trustee in these matters,

         those communications must be disclosed to Devon and Steven and the GAL. 10

                  The parties here disagree as to whether some of the advice that Keiko claims is privileged

         was provided to defend her in connection with adversarial proceedings with Devon and Steven-

         including the proceedings in this court, and thus concededly not discoverable-or whether it was

         provided in connection with the administration of BOT, an asset of the Trust, and therefore must

         be disclosed pursuant to this court's determination today. As has been explained by the Court of

         Appeals, disputes concerning privilege are better determined by examining the communications

         themselves (see Spectrum Systems Intern. Corp. v Chemical Bank, 78 NY2d at 381

         ["Determining document immunity claims, and reviewing them, are largely fact-specific

         processes" and "better practice" is to conduct in camera review]; see also Nama Holdings, LLC v

         9 The fact that the successor trustee here is serving on an interim basis does not make a difference in this analysis.
         During their tenures, interim successor trustees have the same fiduciary obligations as other successor trustees and
         should not be hamstrung in their ability to carry out their duties. Additionally, for the reasons explained above, the
         party holding the office of trustee must be able to control the access to communications of the "office" with its
         counsel related to the administration of the trust. The duty to administer the trust and protect its assets is no less
         onerous in a situation where the trustee serves on an interim basis.

         10 That Keiko is no longer in office has no bearing on the court's privilege analysis. The court is not holding here
         that she lacks standing to assert attorney-client privilege at this time. Keiko's final status as Trustee has yet to be
         determined and, in any event, it is undisputed that she has standing to assert privilege with respect to advice she
         received to defend against Devon and Steven's claims.

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         Greenberg Traurig LLP, 133 AD3d at 58 [determining whether attorney communication relates

         to advice concerning litigation as opposed to concerning past or prospective actions ordinarily

         requires in camera review]). The parties' remaining disputes-which boil down to the nature of

         specific communications-are referred to the Referee for determination after an in camera

         review, if necessary.

                  Waiver of the Privilege by Keiko: "At Issue" Waiver ofAttorney Client-Privilege

                  Even if the attorney-client privilege here had not been waived-to the extent explained

         above-by the Interim Successor Trustee, Keiko's privilege arguments concerning some of her

         communications with Schulte fail for another reason: she has waived the privilege by asserting

         advice of counsel as a defense. In this regard, Devon and Steven maintain that, as to the six

         subjects of advice referred to above and listed in their discovery demands and the Schulte

         Subpoena, Keiko waived the privilege by placing at issue the advice she received from Schulte. 11

                  In response, Keiko makes several arguments. She maintains that, since 2019, CPLR

         4503(a)(2)(A)(iii) has expressly provided that personal representatives do not waive the privilege

         of their communications with their lawyers by asserting advice of counsel as a defense. Keiko

         also argues, as noted previously, that her invocation of this defense did not include her

         communications with attorneys from Schulte, which firm she claims was retained to represent

         her as Trustee in adversarial proceedings with Devon and Steven and that such representation

         was not related to her management of BOT. As support for this argument, Keiko relies on the

         language of her retainer agreement with Schulte, which states that the firm was hired "to

         represent and advise [Keiko] in connection with the administration of the Hiroaki Aoki Trust and

         11 With respect to advice concerning the Minor Transaction in particular, Devon and Steven assert that Keiko also
         placed at issue the advice of Cowan and seek in their motion to compel Keiko to comply with their request for her
         communications with that firm.

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         related litigation." Keiko's arguments are unavailing.

                 It is well established that when a party affirmatively puts the advice of her counsel "at

         issue," such as Keiko has here as a defense to acts offered as the basis for her removal and

         surcharge as Trustee, the privilege is waived as to the subject matter involved (see e.g. Village

         Bd. of Vil. of Pleasantville v Rattner, 130 AD2d 654, 655 [2d Dept 1987]; Matter ofStenovich v

         Wachtel/, Lipton, Rosen & Katz, 195 Misc 2d 99, 109 [Sup Ct, NY County 2003 ]). In that

         circumstance, invasion of the privilege is permitted or even required in order to ascertain the

         validity of the claim of the party asserting the privilege (see Nomura Asset Capital Corp. v

         Cadwalader, Wickersham & Taft LLP, 62 AD3d 581,582 [1st Dept 2009]). A party relying on

         such a defense may not "cherry pick" those attorney communications that support its position

         and withhold those that do not if they are within the subject matter for which the privilege was

         waived (see Metropolitan Bridge & Scaffolds Corp. v New York City Haus. Auth., 168 AD2d

         569,572 [1st Dept 2019] [prohibiting self-serving selective disclosure of privileged

         communications]; Melcher v Apollo Med. Fund Mgmt. LLC, 37 AD3d 217 [1st Dept 2007]

         [noting that disclosure of only selected portions of communications most beneficial to a party's

         position is not permitted]).

                The 2019 amendment to CPLR 4503 on which Keiko relies (L 2019, ch 529, § 1) does

         not, as she contends, eliminate all "at issue" waivers of the attorney-client privilege whenever a

         fiduciary interposes advice of counsel as a defense. That amendment added subsection

         4503(a)(2)(A)(iii) which states: "The fiduciary's testimony that he or she has relied on the

         attorney's advice shall not by itself constitute such a waiver." As the amendment's legislative

         history establishes, this subsection was added to the statute to "make[] clear" that a fiduciary

         does not waive the attorney-client privilege by "merely" asserting that he or she relied on

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         attorney advice (Introducer's Memorandum in Support, Bill Jacket, L 2019, ch 529, at 7).

                Further, nothing found in the Bill Jacket for the 2019 amendment-including the

         statement in support by the Unified Court System, Office of Court Administration which, acting

         on behalf of the Chief Administrative Judge and pursuant to the recommendation of his

         Surrogate's Court Advisory Committee, requested the introduction of this amendment-suggests

         that it was intended to preclude future affirmatively asserted "at issue" waivers or in any way

         displace the usual rules of waiver incorporated into subdivision [a][l] of the statute. To the

         contrary, the letter from Senator James F. Gaughran, the amendment's Introducer, to the

         Governor urging favorable executive action, emphasizes that "[t]his change will provide judges

         with discretion to make determinations as to whether such [advice of counsel] assertions lends

         [sic] to a waiver of privilege based on the facts of the individual case" (Letter from Senator

         Gaughran to Governor Andrew Cuomo, Bill Jacket, L 2019, ch 529, at 5). Far from insulating

         fiduciaries from "at issue" waivers of attorney-client privilege, as Keiko argues, CPLR 4503, as

         amended, leaves it to the courts to determine whether there has been a waiver and, if so, the

         extent to which the privilege has been waived.

                Nor has Keiko met her burden of establishing that the Schulte communications were not

         within the subject matter of her advice-of-counsel waiver. Devon and Steven established that

         these communications concern matters that she put "at issue" in her defense to removal and

         surcharge and, in particular, her defense regarding the BOT-BI Cases. Specifically, Devon and

         Steven provide numerous examples from Schulte's billing records (which are addressed to the

         Trust "c/o Ms. Keiko Ono Aoki, Trustee") that belie her contention that the scope of Schulte's

         representation was limited to adversarial proceedings with the Trust's beneficiaries. For

         example, an entry on June 8, 2017, indicates that Schulte attorneys were conferring with each

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         other "re contempt hearing [involving a contempt application filed by BI against BOT regarding

         a Federal Court injunction in the BOT-BI Cases]" and that some of those lawyers then had a

         telephone conversation with Manson [BOT's attorney] "re same." Another entry from June 15,

         2017, shows that Schulte lawyers billed for "participat[ing] in meetings with J. Manson and K.

         Aoki regarding contempt order and status of surrogate's court proceedings." A third entry, dated

         June 20, 2017, states: "Call with J. Manson regarding contempt hearing, location of various files,

         and update on other proceedings; send email summarizing conversation to team; draft talking

         points for meeting with K. Aoki." 12 These entries as well as many others in this record provide

         ample grounds to conclude that Schulte played a role in advising Keiko in the BOT-BI Cases.

         Such advice is thus within the subject matter of Keiko's at-issue waiver and communications

         reflecting this advice must be disclosed.

                  The conclusion that Keiko waived the attorney-client privilege attached to the Schulte

         communications is also grounded on the well-established principle that a trustee who controls a

         business wholly owned by her trust, such as BOT here, cannot use the business form to shield

         her actions from scrutiny and is accountable for the administration of the affairs of the company

         12 Schulte's involvement in the transactions forming the alleged grounds for Keiko's removal and Devon and
         Steven's accounting objections illustrated by these entries was not an isolated instance. Schulte's time records also
         provide:
                  "06/16/17. Draft summary of conversations with J. Manson and K. Aoki."
                  "06/22/17. TC with J. Manson and W. Zabel re Contempt Hearing results, settlement strategies, and next
         steps."
                  "06/23/17. T/Cs Manson re Keiko; summarize settlement proposal w/J. Ro; tic Manson."
                  "07/18/17. Reviewed file and drafted talking points re structure of settlement with BI."
                  "07/19/17. Conferred with W. Zabel and J. Opheim re strategies for reaching out to Angelo Gordon
         [Angelo Gordon is the investment firm whose affiliate owns BI]."
                  "07/22/17. Emails with J. Opheim re Angelo Gordon and settlement."
                  "07/25/17. [D]raft email to K. Aoki regarding call and proposed response to proposal set forth in call with
         A. Fein [counsel to BI]."
                  "08/15/17. Conferred with J. Bentley re potential sale of BOT."
                  "I I /16/17. Conferred with T. Jennings and J. Opheim re settlement strategies. TC with J. Manson, T.
         Jennings and J. Opheim re same."
                  "11/16/17. Calls with WDZ, KOA [Keiko] re: settlement and business strategy."
                  "02/20/18. Call with Joe Manson re: BOT/BI litigations."

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         as trustee (see e.g. Matter of Hubbell, 302 NY 246 [1951]; Matter ofShehan, 285 App Div 785,

         793 [4th Dept 1955]; Matter ofScuderi, 247 AD2d 392, 393 [2d Dept 1991]; Matter of

         Schulman, 165 AD2d 499, 502 [3d Dept 1991]). In other words, Keiko and her decisions as

         CEO of BOT are subject to inquiry and discovery in the context of the removal and accounting

         proceedings. She placed advice of counsel at issue in defending against the claims of Devon and

         Steven and the GAL in those proceedings and, as a result, is not entitled to withhold disclosure

         of the advice she received from her counsel as Trustee concerning those matters.

                  In sum, because Keiko specifically interposed as a defense in opposition to summary

         judgment that her good faith in managing BOT, and in particular her litigation decisions

         concerning the BOT-BI Cases, could be established by attorney communications, she should not

         be allowed to "cherry pick" which of those communications she put "at issue." Additionally,

         Keiko cannot assert advice of counsel as a defense to efforts to remove as Trustee and surcharge

         her while also claiming that the scope of the waiver premised on such defense is limited only to

         advice received by her as CEO of BOT. As a result, advice Keiko received from her counsel

         concerning the BOT-BI Cases or concerning any other action vis-a-vis BOT (including the other

         five subjects identified in the Schulte Subpoena and Devon and Steven's discovery demands) 13 is

         discoverable.

                  This determination, however, does not preclude Keiko from asserting privilege with

         respect to advice she received to defend herself in the proceedings in this court against the claims

         of Devon and Steven and the GAL to the extent that such advice was not provided to guide her in

         13 As to the Minor Transaction in particular, Keiko placed the advice of the Cowan firm at issue, and she has also
         conceded that the firm represented BOT, in addition to her as Trustee. Communications with that firm are thus
         discoverable. To the extent that Keiko asserts privilege with respect to the advice she received from Cowan, if she
         has not done so yet, she must list the specific communications she seeks to withhold in her privilege log. Consistent
         with the rulings here, disputes concerning Keiko's privilege assertions related to the Cowan communications are
         referred to the Referee.

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[* 19]
         the ongoing administration of the Trust's assets. All the Schulte communications that Keiko

         seeks to withhold on this ground shall be included in a privilege log and the basis for any

         privilege assertion indicated. Disputes concerning whether communications fall into this

         category are referred to the Referee for determination after an in camera review, if necessary.

         Privilege of the Schulman Communications

                  In her privilege log, Keiko claimed privilege with respect to communications with

         Schulman, which fall into three categories: a) representation and advice in a trademark violation

         action filed by BI against BOT and Keiko individually in federal court; b) legal actions

         commenced by Manson against BOT and/or Keiko for the payment of his fees (the Manson

         Actions); and c) "Surrogate Court Proceedings." Some of the identified communications are

         between Keiko and Schulman lawyers and some are between her, Schulman lawyers and Schulte

         lawyers. Some of the communications between Keiko and Schulman lawyers are described in

         the log as "reflecting" discussions with Schulte. It is unclear from these descriptions whether the

         communications concern administration of the Trust or BOT or adversarial proceedings with

         Devon and Steven, or both. As to some communications, Keiko invokes the common interest

         exception to waiver of attorney-client privilege (see generally Ambac. Assur. Corp. v

         Countrywide Home Loans, Inc., 27 NY3d at 620 [communications with counsel disclosed to

         third party remain privileged if third party shares a common legal interest with client and

         communication is made "in furtherance" of that legal interest]). 14

                 Devon and Steven maintain that withholding such communications from disclosure is

         14 The parties further argue about the applicability here of what are called the "Nunan factors" for analyzing
         whether a corporate employee may claim privilege as to communications with corporate counsel, i.e., whether the
         employee may claim privilege as an individual even though the lawyer was retained by the corporation (see Nunan v
         Midwest, Inc., 11 Misc 3d 1052(A), 2006 NY Slip Op 50188[U], n 4 [Sup Ct, Monroe County 2006]). However,
         because it is clear from the retainer agreement with Schulman that Keiko was a client of the firm in her individual
         capacity in addition to her capacity as CEO of BOT, the court need not reach this issue.

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[* 20]
         improper because they are within Keiko's at-issue waiver or, inasmuch as Keiko received this

         advice as CEO of BOT, the privilege does not belong to Keiko. For her part, Keiko relies on her

         retainer agreement with Schulman to argue that she hired the firm to represent not only BOT but

         also to represent her in her individual capacity and that she has not waived her privilege as to

         these communications.

                 Keiko' s claims of individual representation regarding the Schulman communications

         related to the trademark litigation by BI and the Manson Actions (in which she had been sued in

         her individual capacity) are difficult to assess without reference to particular documents or

         communications and should be reviewed in camera by the Referee. Keiko must also provide to

         the Referee communications that she describes as related to "Surrogate Court Proceedings," even

         if she claims they are protected attorney work-product. To the extent the Referee determines that

         a communication in any of these three categories is solely referrable to advice to Keiko

         individually, it should be withheld. 15 However, to the extent the Referee determines that advice

         Keiko received overlaps partially or wholly with the advice provided to BOT by Schulman, and

         is within the subject matter waiver of Keiko' s advice of counsel defense, communications

         reflecting such advice should be disclosed.

                 Finally, to the extent that any of the Schulman communications relate to advice provided

         to BOT and Keiko in connection with a demand for arbitration that Keiko and BOT

         contemplated filing against Manson, those communications should be disclosed because Keiko

         placed the advice of Manson "at issue" in these proceedings.

         15 The Referee might find that any communication should be withheld on other privilege grounds and the court's
         conclusion here does not preclude the Referee from so finding.

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[* 21]
                                                        CONCLUSION

                 For the reasons discussed above, Keiko is directed to amend her privilege log to list all

         communications with the Schulte and Cowan firms over which she is asserting privilege,

         specifying in what capacity she received the advice reflected in the communication and whether

         the advice she received did or did not relate to the ongoing administration of the Trust or its

         assets, including BOT. If Keiko claims that the advice related to a court proceeding or action,

         she must indicate for each such entry the particular court proceeding or action for which attorney

         advice was given. Keiko is further directed to turn over to Devon and Steven's counsel and the

         GAL all communications with the Schulte, Cowan and Schulman firms as to which, in

         accordance with this Decision, privilege may not be asserted. Finally, Keiko is directed to

         deliver to the Referee the communications 16 with those firms as to which she continues to claim

         privilege regardless of the guidance provided by the court here. Such production-whether to

         Devon and Steven's counsel or to the Referee-must take place no later than May 21, 2024.

                 Accordingly, in the first set of cross-motions, Keiko's motion for a protective order and

         to quash the Schulte Subpoena as well as Devon and Steven's cross-motion to compel the

         production of the Schulte and Cowan communications are granted to the extent explained above.

         Devon and Steven's motion to compel Schulte to designate a witness to be examined concerning

         Keiko's communications with that firm is referred to the Referee to determine, upon his review

         of the documents, whether such examination is warranted or necessary to assist him in his work.

         In the second set of cross-motions, Devon and Steven's motion to compel production of the

         Schulman communications is also granted to the extent explained above.

         16 The Referee may choose to request that only a representative sample of communications in any category be

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[* 22]
                  This decision constitutes the order of the court.

                  Clerk to notify.

         Dated: April 12, 2024
                                                                      S~ATE

         provided to him for in camera review.

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[* 23]