County of Suffolk v Love'm Sheltering, Inc.

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County of Suffolk v Love'm Sheltering, Inc. 2012 NY Slip Op 30942(U) April 10, 2012 Sup Ct, Suffolk County Docket Number: 1399-10 Judge: Thomas F. Whelan Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER INDEX No. _10_'9_9_·_10 _ SUPREME COURT . STATE OF NEW YORK IAS. PART 33 ¢ SUFFOLK COUNTY PRESENT: I·lon. THOMAS F. WHELAN Justice of the Supreme Court MOTION DATE 3/301l2 ADJ. DATES Mot. Seq. # 008 . Mot D ConI. Adj. to 7/l71l2 ......... ¢.... ¢....................................... ·········X COUNTY OF SUFFOLK, Plaintiff, -againstLOVE'M directors, directors, capacity, capacity SHELTERING, INC., and its officers and: LOVE'M, INC., and its officers and RICHARD MORRISON, in his individual: MARY MORRISON, in her individual CHRJSTINE MALAFI Suffolk County Attorney By: Jennifer K. McNamara Assist County Atty. Atty. For Plaintiff PO Box 6100 Hauppauge, NY J 1788 SOLOMON & HERRERA, PLLC Attys. For Defs Love'M Inc. & Morrison 2950 Hempstead Tnpk. Levittown, NY 11756 Defendants ANDREW R. BENSI, ESQ. Atty. For Def. Love'M Sheltering, Inc. 2950 Hempstead Tnpk. Levittown, NY 11756 ...................................................... ·········X Upon the following papers numbered I to 10 read on this joint motion by the defendants for leave to rcanwc plaintiffs prior motion for a protective order and the joint cross motion by defendants for an order compelling disclosure Noticc of Motion/Order to Show Cause and supporting papers 1-4 ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 5-6 : Reply papers ~ 9-10 ; Other ; ("'lId !l:fteIIle"'lil\~ tt'JUlISel ill Stippl"llt Oflllld ill ("JppositlOll\0 tIle ItlotiOl~ it is. ORDERED that this motion (#008) by the defendants, Love'M, Inc., Richard Morrison and Mary Morrison. for leave to reargue motion (#006) by the plaintiff for a protective order and defendants' prior cross motion (#007) to compel disclosure is considered under CPLR 2221and is granted and the order of this court dated February 22, 2012, which partially granted the plaintiffs motion and denied the defendants' cross motion, is hereby recalled and vacated; and it is further ORDERED that upon reargument the plaintiffs motion (#006) for a protective order is denied while the defendants' cross motion to compel document production and for an order directing the continuation of an examination before tria! of the Suffolk County Comptroller is granted to the extent set forth herein; and it is further [* 2] County ofSulTolk v Lovc'M Index No. 01399/20]0 Sheltering, Inc. Page 2 ORDERED thallhe conlt;>;rencc presently scheduled for A"£~v 2. 2() / 2 is hereby adjourned until 2 July 17,2012. Ncw York. at 9:30 a.m. in Part 33 at the courthouse located at I Courl Street - Annex. Riverhead. Thisaclion was brought toenforceajudgment in theamoul1tof$809.417.91 against defendants Mon'isol1 and Lovc'm Inc. ,,,,hieh the plaintiff secured against defendant, Love'M Sheltering, Inc. (hereinancr "Sheltering") in January of 2008. This judgmcnt was awarded upon the plamtiffs successful prosccution or its claim to rccover ovcrpayments made to Sheltering under a 1999 contract by which Sheltering agreed to provide emergency housing and othcr services to indigent residents of Suffolk County. This claim was interposed as a counterclaim in a hybrid Article 78/declaratoryjudgmcnt action commenced by Sheltering against the plaintiffin 2004 and was predicated upon the tenns of the 1999 contract between the parties and a June 8, 2004 audit ofShcltering's fiscal operations from January 1.2000 through December 31,2000 by the Sufrolk County Comptroller. Sheltering's challenges to the validity of the audit and the amount of overpayments to which the plaintifTclairned an entitlement wcre rejected by the trial court in an order dated April 7.2005 (see Index # 14978/2004). The order of the trial court was affirmed by the Appellate Division, Second Department on October 24, 2006 (see Love'M Shelterillg,IIlc. )' COUlltyof Suffolk, 33 AD3d 923, 824 NYS2d 98 [2d Dept2006l). To succeed on its complaint in this action, the plaintiff must successfully pierce the corporate veil of defendant Sheltering. The parties have engaged in certain pre-trial discovery proceedings including the deposition of the Suffolk County Comptroller, which was in its second day, when the parties broke due to time constraints but without completion of such deposition by defendants Morrison and Lovc'M Inc. (hereinafter the Morrison defendants). After counsel ",,'ere unable to agree upon a date ror the continuation of said deposition and the re~opcning of samc by defendant Sheltering and issues pertaining to the production of documents refcrred to in said deposition, motion practicc ensued. By order dated February 22, 20 J 2, this court granted in part the plaintiff's Illation (denominated as a cross motion #006) for a protective order against supplemental document demands issued by the defendants subsequent to the two day deposition of the Comptroller and his production for any further deposition. In that salllc order, the coul1 denied the defendants' motion to strike, conditionally, the plaintiffs complaint for failure to furnish the documents dcmanded in their supplemental document discovery request. By the instant Illation. the defendants scek to rearguc both of these prior motions. The court grants tht: dt:fendants leave to reargue, in as much as it overlooked the fact thal the deposition orthe plaintiffs Comptroller by the Morrison defendants was incomplete and that the right of defendant Sheltering to resume its inquiry ortlle Comptroller was duly reserved by its counsel, pending receipt of documents that were referred to in thc two days of deposition testimony already recorded (see 22211pJ: Hirsh II Stern. 83 AD2d 783,920 NYS2d 783 ["2d Dcpt 2011 D. Accordingly. thc order 01" February 22. 2012 is hereby recalled and vacaled and the applications that were the subject orlhat order arc hereby determined as set forth herein (see Cillquemalli v Old Slip A.\"Soc.,LP .. 77 AD3d 603. 912 NYS2d 224 [2d Dept 2010J). cruz That lhe Morrison defendants are entitled to complele their deposition of the Comptroller is now clear from the record. since such deposition was halted prior to its complelion due to the [* 3] County ofSuJ'folk v Lovc'M Sheltering, Inc. Index No. 01399/2010 Page 3 constraints of time. Those portions of the plaintiff's motion wherein it seeks a protective order against the Morrison's continuation of the Comptroller's deposition is denied. Like,",visedenied are the plamtifT's demands for an order denying the defendant's request for a resumption of the deposition of the Comptroller by defendant Sheltering, as such resumption was specifically reserved by its counsel on the record. Those portions of the plaintiffs motion for a protective order relJeving it of any· obligation to further produce the Comptroller for deposition are thus denied. The remaining portions ofthe plaintiff's motion wherein it seeks a protective order agall1st the supplementary document demands served by the defendants following the two days of deposition testimony by thc Comptroller is denied, as the defendants' cross motion to compel the production of such documents by way of a conditional order of dismissal is granted but only in so far as contemplated by CLR 3124. At issue on these applications are four groups or categories of documents set forth in the defendants supplemental demand, as the defendants "have accepted" the representation of plaintiffs COtll1selthat "the other documents sought by the defendants do not exist (see p. 3, '1 7 of the Affirmation ofartorney Bcnsi in support of cross motion and the reply affirmation of attorney Shinner at ~ 7). The documents at issue are as follows: a) Any records from any Suffolk County Department or entity that made reference to any finding determination or review that the rents that were being paid by Love'M Sheltering Inc. to Love'M Inc. were either below market value, at fair market value or in excess of fair market value: b) Copies of any requests for rulings, or interpretations or new procedures on the Reimbursable Cost Manual from the Department of Social Services pertaining to related companies for purpose of real property and for the purchase of electronic goods for the period January ], 2000 through December 31, 2005 submitted to the Suffolk County Comptroller's office; e) Copies of any responses from the Suffolk County Comptroller's on-ice in response to the requests set forth .. [above]. .. d) A true copy of the Settlement Agreement with Penates. Pursuant to CPLR 3101 (a), "full disclosure of all matter, material and necessary in the prosecution or derensc of an action" is required. The phrase "materia! and necessary" should be "interpreted liberally to require disclosurc, upon request, of any facts bearing on the controversy which wlll assist preparation for trial by sharpening the Issues and reducing delay and prolixity The test IS one of usefulness and reason" (Auerbach v Klein, 30 AD3d 451, 816 NYS2d 376 [2d Depl 20061, CjuotingAllen 11 Crowell-Collier Pub. Co., 21 NY2d 403, 406, 288 NYS2d 449 [1968]). While the disclosure provisions oCthe CPLR should be liberally construed, the scope of permIssible discovery is not unlimited and the principle of "full disclosure" does not give a party the right to uncontrolled [* 4] County ofSutfolk v Love'M Sheltering, Inc. Index No. 01399/2010 Page 4 and unfettered disclosure (see Friel v Papa, 87 AD3d 1108,930 NYS2d 39[2d Dept 201l: JFK Family Ltd. Partnership v Millbrae Natural Gas, 83 AD3d 899, 920 NYS2d 70812d Dept. 20111). The Supreme Court is thus vested with broad discretion to oversee the discovery process and to determine what is 'material and necessary' as that phrase is used in CPLR 3101(a) (see Auerbach v Klein. 30 AD3d 451, supra; see also Orgel v Stewart Title Ins. Co., 9 J AD3d 922, --- NYS2d ---- [2d Dcrt 2012J; GiallO v /0(/1I110a, 78 AD3d 768, 911 NYS2d 398 [2d Dept 2010]). The terms material amI relevant have been read to include evidence required for trial preparation as well as madmissiblc matterthat may lead to the disclosure of admissible proof (see Montalvo v CVS Pharmacy, Inc., 8 J AD3d 611, 915 NYS2d 865 [2d Dept 201 II). It is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result In the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims (see Allen v Crowell-Collier Pub. Co. ,21 NY2d 403, supra). Unsubstantiated, bare allegations of relevancy are insufficient to establish the factual predicate regarding relevancy (see Beckles v Kingsbrook Jewish Med. Ctr., 36 AD3d 733, 830 NY,2d 203 [2d Dept 20071). Instead, a showing that the method of discovery sought will result in the disclosure of relevant evidence or matter that is reasonably calculated to lead to the discovery of admissible proof bearing on the claims is required (see Vyas v Campbell, 4 AD3d 417,771 NYS2d 375 [2d Dept 2004 D, Where issues arc limited by undisputed facts or defenses in bar, discovery may be correspondingly limited (see Markel Ins. Co. v Bottini Fuel., 89 AD3d 1212,932 NYS2d 570 [3d Dcpt 2011]; Davis v Camers/one Tel. Co., LLC, 78 AD3d 1263,910 NYS2d 254 [3d Dept 2010]). When a particular discovery demand is inappropriate, the court may "make a protective order" with respect to that dcmand (CPLR 3103[a]). "Such order shall be designed to prevent unreasonable annoyance_ expense, embarrassment, disadvantage, or other prejudice to any person" (id: see D'Adamo v Saini Dominic'., Home, 87 AD3d 966, 929 NYS2d 301 [2d Dcpt 2011]). In support of its Illotion for a protective order, the plaintiff claims that thc documents in disputc arc neither material nor relevant to the issues joined by the pleadings, including issues germane to the plaintiffs claim I()f a judicial piercing of the corporate veil of the judgment debtor, Love'M Sheltering. Inc. The court finds, hO\vever, that the defendants failcd to show the relevance or materiality of the Penates settlement documents, the production of which, arc demanded in subparagraph d) of the supplemental demand as quoted above. The defendants lailed to show that the details of the County's settlement with the Penates, a provider of shelter services who was. like defendant Sheltering, the target of claims by the County for recoupment of overpayments bear. upon any claim asserted or defense possessed by lhe parties to this actIOn. In contrast. the defendants have demonstrated that the requested documents may contain inlonnation that is relevant. necessary and material to the assertion of defenses possessed by the Morrison defendants and defendant Sheltering. The record sufficlcntly establishes that without thc disclosure orthe documents listed in ~~ a): b) and c) orthe demand as quoted above, both groups or defendants will be stymied in thc preparation of their defenses to the plaintilTs claims in this action, Those claims arc singularly premised upon the 2000 audit of Sheltering that is attached to the complaint 111 thIS action, which audit was used to support the plaintiff's claims in the underlying action in which rhe plainti ITsecured its judgment against defendant Sheltering. [* 5] County ofSutfolk v Lovc'M Sheltering. Inc. lndex No 01399/2010 Page 5 Although defendant Sheltering may be bound by principles of res judicata and collateral estoppel from challenging the accuracy of the 2000 audit at the trial of this action, or any motion equivalenlthcreoL the Morrison defendants would not be so bound. Defendant Sheltering would thus be entitled to the discovery of the documents merely due its status as a party co-defendant of the Morrison defendants. In any event, the plaintiff failed to demonstrate that its claim of res judicata/collateral estoppel with respect to the audit eradicates any of the defendants' entit1cmenlto discovery o1'the documents used in the compilation of the 2000 audit which the plaintitTadmits is the sale basis for its corporate veil piercing claims against Sheltering (see 10 of the Affirmation in Opposition by plaintiffs counsel). '1 Nevertheless, the court finds that the remaining relevant demands are overly broad and burdensome. For example, the defendants' first demand that cal [s for the production or any records from m~ySlIffi:)lkCounty Department or entity that made reference to any finding, determination or review that the rents that were bemg paid by Love'M Sheltering Inc. to Love'M Inc. were either below market value, a1 fair market value or in excess of fair market value is improper. Demands employing terms such as "any and all" and those without limitation as to time have long been viewed as improper due to over breadth (see Tornheim v Blue & White Food Prod. Corp., 73 AD3d 745, 899 NYS2d 650 [2d Dcpt 20 10]). The defendant's second and third demands are also overly broad due to the failure to identify the term "related companies". In view of the foregoing, the defendants are hereby' granted thirty days leave to remedy the defects outlined above by service of new tailored demands with respect to the documents listed in 4J'1 a); b); and c) of the demand as quoted above. The plaintiff shall fully respond thereto within thit1y days of receipt of the demands. Within 30 days of their receipt of the plaintiffs response, the defendants shall re-notice the continuing deposition of the Suffolk County Comptroller in writing on not less than J 0 days notice to plaintiff's counsel. The scheduling oftl1e deposition of the plaintiffs other witness, Stephen McMaster which was stayed order of this COUlt dated March 6, 2012, shall be the subject of a further order. The dcJ(;~ndants are reminded that they must separately move for affirmative relief in their favor, as joint motions for such relief are not contemplated by Article 22 of the CPLR. " I\ , ("\,JII1\i 'I. 'I \ L , I, '1// DATED: THOMAS , ' ) v' F" WHELAN" _ JSC

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