Gilman & Ciocia, Inc. v Walsh
Annotate this CaseDecided on December 21, 2006
Supreme Court, Dutchess County
Gilman & Ciocia, Inc., Plaintiff,
against
David Walsh, Bernard Kerner, Rosalie Maiorano and Margaret Walsh, Defendants.
3882/05
TO: VERONICA A. McMILLAN, ESQ.
LEWIS & GREER, P.C.
Attorneys for Plaintiff
510 Haight Avenue, Suite 202
Poughkeepsie, New York 12603
KENNETH L. KUTNER, ESQ.
Attorney for Defendants,
100 Park Avenue, 20th Floor
New York, New York 10017
NCAS
Gilman & Ciocia, Inc. v. Walsh
James D. Pagones, J.
The plaintiff moves, pursuant to CPLR 3124, for an order compelling the
defendants to produce responses to the plaintiff's several demands for discovery and, in the
alternative, for an order pursuant to CPLR 3126 precluding the defendants from offering
evidence at trial regarding the demanded items which have not been provided. The plaintiff also
seeks an order of costs and attorneys fees for the defendants' willful failure to comply with the
discovery order. The defendants cross-move, pursuant to CPLR 3103, for a protective order
denying the plaintiff access to the defendants' confidential information.
The plaintiff's counsel has not provided a separate affirmation of good faith as
required by 22 NYCRR §202.7. However, counsel's affirmation in support of the instant motion
substantially complies with that provision and details counsel's repeated efforts to obtain
responses to the outstanding demands for discovery. As part of that effort, on July 21, 2006, the
court conducted a compliance conference and directed the defendants to respond to the plaintiff's
outstanding demands within forty-five days by either providing written objections to specific
demands or detailed responses to demands. The parties were further directed to complete
depositions on or before October 27, 2006 and the plaintiff was directed to file a note of issue on
or before November 30, 2006. As of the date of the instant motion, the defendants had failed to
respond in any manner to the plaintiff's demand as directed by the court. In response to this
application, the defendants' counsel provides a purported response to the plaintiff's outstanding
discovery demands. The defendants' entire response to the plaintiff's first request for document
production is to object to each and every item demanded. The defendants' response to the
plaintiff's first set of interrogatories appears responsive except for an objection to request "9" for
the names and addresses of the defendants' clients.
CPLR §3101 requires full disclosure of matter material and necessary in the
prosecution or defense of an action regardless of the burden of proof unless the material is
privileged or attorney's work product. The plaintiff served interrogatories and demands for
documentation on [*2]September 28, 2005. The defendants made
no response to those demands and did not serve written objections as required by CPLR Rule
3122. At a compliance conference held on July 21, 2006, the defendants were directed to respond
to outstanding demands by either providing the documents and responses to interrogatories or
submitting written objections pursuant to CPLR Rule 3122 within forty-five days of the
conference. The defendants did neither. The record reflects that the defendants ignored repeated
efforts by the plaintiff's counsel to obtain discovery before and after the compliance conference
held by the court. It was not until after the plaintiff was compelled to bring the instant motion
that the defendants deigned to respond in any manner. The defendants audaciously now seek a
protective order pursuant to CPLR §3103, although the demands have been outstanding for more
than a year. The plaintiff's complaint alleges that each of the defendants violated a tax preparer
employer agreement (TPEA) by "stealing and wrongfully appropriating" the plaintiff's customers
by performing tax preparation, accounting and consulting services for the plaintiff's customers
and retaining one hundred percent of the revenues for themselves.
DOCUMENT
DEMANDS
The plaintiff's first demand for documents requests each
document evidencing that the office referred to in paragraphs 13 and 22 of the defendants' answer
was "leased, maintained and/or owned by any of the defendants." The defendants object to this
demand on the ground that it is vague, ambiguous, overbroad and burdensome and because it
"inaccurately recites the statement" contained in paragraphs 13 and 22 of the answer. The
defendants have failed to articulate in what manner the demand inaccurately recites the statement
referred to. Nonetheless, the defendants respond that they have no documents responsive to this
demand. It is difficult to understand how the defendants were able to determine that they have no
documents responsive to this demand while simultaneously objecting to it as being vague and
ambiguous. I find that the plaintiff's demand was neither vague or ambiguous. In paragraphs 13
and 22 of the answer, the defendants allege that Walsh and Maiorano were wrongfully locked out
of their business premises. The plaintiff is requesting any documents demonstrating that the
business premises referred to were either leased, maintained or owned by any of the defendants.
The defendants' response indicates that they have no such evidence. Therefore, it is ordered that
the plaintiff's motion is granted to the extent that the defendants are precluded from offering any
documentary evidence at trial that the business premises referenced in paragraphs 13 and 22 of
the verified answer was leased, maintained and/or owned by any of the defendants.
The plaintiff's second demand requests the document referred to as the "agreement"
in paragraph 44 of the answer. The defendants object to this demand by using the same
boilerplate as their response to demand "1" but indicate that they "will produce documents
responsive to this demand." The defendants offer no time parameters for when these documents
might be provided and no explanation as to why these documents have not been provided in the
more than one year since the plaintiff has attempted to obtain disclosure. Therefore, it is ordered
that the defendants shall be precluded from offering any evidence that the plaintiff breached the
agreement referenced in paragraph 44 of the answer unless the defendants serve documents
responsive to this demand upon the plaintiff's counsel on or before January 3, 2007.
[*3]
The plaintiff's third demand requested each
document evidencing the plaintiff's "culpable conduct" and "unclean hands" as referred to in
paragraphs 45 and 46 of the defendants' answer. The defendants again rely initially upon
boilerplate and then vaguely state that they will produce documents responsive to this demand.
The defendants have provided no indication as to when the plaintiff might anticipate production
and the defendants have offered no explanation as to why the documents have not been
previously produced. Therefore, it is ordered that the defendants shall be precluded from offering
any evidence of the plaintiff's culpable conduct or unclean hands unless copies of all documents
responsive to demand "3" are served upon the plaintiff's counsel on or before January 3, 2007.
The plaintiff's fourth demand requested documents evidencing that the plaintiff acted
fraudulently or with "economic duress" as alleged in paragraph 49 of the defendants' answer. The
defendants again insert boilerplate language and then assert that they have no documents
responsive to the demand. Therefore, it is ordered that the defendants shall be precluded at the
trial of this action from presenting any documentary evidence that the plaintiff acted fraudulently
or with economic duress.
The plaintiff's fifth demand was for each document evidencing each defendants' list
of customers and clients. The defendants object on the grounds that the demand is vague,
ambiguous, overbroad and burdensome and not reasonably calculated to lead to the discovery of
admissible evidence. The plaintiff's complaint alleges that the defendants stole and wrongfully
appropriated customers from the plaintiff by performing tax preparation, accounting and
consulting services and retaining one hundred percent of the revenues for the work. The
plaintiff's complaint is based on tax preparer employment agreements ("TPEA") with the
defendants, which contain confidentiality provisions providing for liquidated damages upon a
breach. The complaint alleges that each of the defendants breached their respective agreements
by poaching the plaintiff's clients and retaining one hundred percent of the revenues for
themselves in violation of the TPEA. The plaintiff's counsel's affirmation provides a justification
for demands "5-13" and demand "15" which, according to counsel, were "tailored to determine
Defendants' activities while the TPEAs were in effect as well as assisting Plaintiff in proving the
exact amount of its damages." Counsel avers that:
"An examination of these documents is required in order to determine if the
Defendants were servicing any of the Plaintiff's clients. Where there are clients-in-common
between the Plaintiff and the Defendants, the Defendants may have solicited those clients
through a breach of the TPEAs, and thus, wrongly appropriated those clients from the Plaintiff."
Plaintiff's counsel's own affirmation defines demands "5-13" and demand "15" as
part of a fishing expedition. Counsel avers that the documents are required to determine "if" the
defendants were servicing any of the plaintiff's clients or whether they "may have" solicited those
clients. The plaintiff's complaint asserts, upon information and belief, that the activities described
in demands "5-13" and demand "15" did take place. It is presumed that the plaintiff's verified
complaint was made upon good faith information and belief and that the plaintiff had some basis,
other than the fact that the three defendants terminated their employment with the plaintiff, for
[*4]alleging theft and misappropriation of confidential client
information. For example, if the plaintiff is aware that certain clients terminated their relationship
with the plaintiff on or about the time that the defendants entered into their new business
enterprise and that those clients became clients of the defendants, it would be proper for the
plaintiff to ask if each of those specific clients is now or ever has been a client of the defendants
and when each of those specific individuals became clients. However, based upon the
information presented on these motions, the court is compelled to conclude that the information
demanded in demands "5-13" and demand "15" are not material to the prosecution of this action
and are presumptively privileged. Therefore, it is ordered that the defendants' cross-motion for a
protective order with regard to demands "5-13" and demand "15" is granted and those demands
are stricken.
The plaintiff's demand "14" seeks certificates of assumed names filed by any of the
defendants. The defendants have submitted a boilerplate response. I find that there is no basis
upon which the defendants may object to this demand. Therefore, it is ordered that the defendants
shall respond to demand "14" by providing certificates of assumed names filed by any of the
defendants by serving the same upon the plaintiff's counsel on or before January 3, 2007.
The plaintiff's demand "16" requests each document the defendants plan to offer at
the trial of this matter not previously demanded. The defendants rely again upon their boilerplate
which, coincidentally, is finally applicable to this demand. This demand is so vague, ambiguous
and overbroad that it is palpably improper. This demand is not calculated to lead to the discovery
of admissible evidence. Therefore, it is ordered that the defendants' motion for a protective order
with regard to demand "16" is granted and that demand is stricken.
The plaintiff contends that the defendants' responses to its interrogatories are
deficient and warrant an order of preclusion. While the plaintiff may not be entirely satisfied with
the responses "1-8", I find that they are responsive to the interrogatories and substantially comply
with the requirements of CPLR Rule 3133. Therefore, it is ordered that the plaintiff's motion for
an order of preclusion with regard to the responses to interrogatories "1-8" is denied. The
plaintiff's interrogatory "9" seeks the name and address of each of the defendants' current
customers and clients. As previously noted, this information is not material in the manner
presented and constitutes privileged information. Therefore, it is ordered that the defendants'
motion for a protective order with regard to interrogatory "9" is granted and that interrogatory is
stricken.
It has been held that in order to invoke the drastic remedy of striking a pleading for
failure to disclose pursuant to CPLR §3126, as demanded by the plaintiff, the court "must
determine that the party's failure to comply was the result of willful, deliberate and contemptuous
conduct or its equivalent. (Beard v. Peconic Foam Insulation Corp., 149 AD2d 5, 556 [2d
Dept. 1989].) The uncontroverted facts presented on these motions are that the defendants did not
respond in any manner to the plaintiff's demands for discovery in spite of numerous requests and
intervention by the court. The defendants did not object to the demands for more than one year
and did not seek a protective order until after this motion was filed. Significantly, the defendants'
responses even at [*5]this late date appear designed more to
obfuscate than enlighten. Neither the defendants nor their counsel have proffered any explanation
for this wholesale refusal to comply with the Civil Practice Law and Rules and the directions of
this court. There are ample grounds upon which this court may conclude that the defendants'
failure to respond was willful and contemptuous. Nonetheless, under all of the circumstances
presented, the court finds that monetary sanctions are preferable to a dismissal in the first
instance. (Geltman v. St. Agnes Hospital, 186 AD2d 534 [2d Dept. 1992].) Therefore, it
is ordered that the plaintiff's motion for sanctions pursuant to CPLR §3126 is granted to the
extent that the defendants are to remit the sum of $400.00 to the plaintiff's counsel on or before
January 3, 2007 and to provide written proof of payment to this court within the same period of
time.
The Court read and considered the following documents upon these applications:
It is further ordered, in the discretion of the court, pursuant to CPLR §§8106 and
8202 that the plaintiff is awarded costs on this motion in the amount of $100.00 and the plaintiff
shall have judgment against the defendants therefore. It is ordered that the defendants shall pay
the motion costs awarded herein within fifteen days of the date of this order and shall provide
written proof of payment to the court within the same period of time.
The foregoing constitutes the decision and order of the Court.
Dated: Poughkeepsie, New York
December 21, 2006
HON. JAMES D. PAGONES, A.J.S.C.
TO: VERONICA A. McMILLAN, ESQ.
LEWIS & GREER, P.C.
Attorneys for Plaintiff
510 Haight Avenue, Suite 202
Poughkeepsie, New York 12603
KENNETH L. KUTNER, ESQ.
Attorney for Defendants,
[*6]
100 Park Avenue, 20th Floor
New York, New York 10017
NCAS
Gilman & Ciocia, Inc. v. Walsh
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
