Mid-Hudson Props., Inc. v Klein

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Mid-Hudson Props., Inc. v Klein 2016 NY Slip Op 32973(U) April 6, 2016 Supreme Court, Dutchess County Docket Number: 2015-50818 Judge: James V. Brands Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] DUTCHESS COUNTY CLERK 04/07/2016 01:08 PM NYSCEF DOC. NO. 34 INDEX NO. 2015-50818 RECEIVED NYSCEF: 04/06/2016 IL' .. r,i I SUPREME COURT - STATE OF NEW YORK DUTCHESS COUNTY .. Present: Hon. JAMES V. BRANDS Justice. SUPREME COURT: DUTCHESS COUNTY x MID-HUDSON PROPERTIES, INC., Plaintiffs, -againstDECISION AND ORDER Index No.: 2015-50818 STEVEN KLEIN, MICHAEL VARBLE, KLEIN VARBLE & GRECO, P.C., KLEIN VARBLE & ASSOCIATES, P.C., and JOl-IN DOES 1-3, Defendants. _______________________ .. . '".1 x Background Facts: Plaintiff commenced this action by filing pleadings in Supreme Court, New York County on March 6, 2014 to recovcrmonetary and punitive damages arising from the alleged breach of a fiveyear leasc agreement with tenants Steven Klein, Michael Varble, and Kevin Greco for the purpose of conducting the tenants' law practice under Klein Varble & Greco, P.c. ("KVG"). Said lease was later modified to reflect KVG as the tenant. KVG law firm later dissolved, and the law firm of Klein Varble & Asso~iates, P.C. ("KYA") continued occupancy ofthc lcased premises at issue. Notably, there is no personal guaranty on the subjcct lease. KVG and KVA interposed an answer with counterclaims on March 25,2014. Plaintiff subsequently filed amended pleadings on April 15,2014. In pertinent part, plaintiff further alleges that KVA is essentially the 'alter ego' of the former KVG organized by its principals Michael Varble and Steven Klein for the purpose of evading payments due under the lease agreement. Plaintiff alleges that same is evidenced by KV A assuming the same clients, billing, and collection offees as the former KVG (see Amended Complaint'1l20-'1l24). The ddendants interposed an answer with counterclaims on April 21, 2014. Plaintiff previously moved in Supreme Court, New. York Cqunty for a self-executing order compelling disclosure or striking defendants' answer. Defendants' cross-moved to change venue to Dutchess County. The court order dated January 23, 2015 transferred this matter to Supreme Court, Dutchess County and permitted plaintiff to renew its discovery-related motion for determination by this eourl. 1 of 4 ~ '~l~ [* 2] Following the transfer to Dutchess County, plaintiffs counsel filed a Request for Judicial Intervention in May 2015. A preliminary conference order was signed by plaintiffs counsel and Michael Varble on behalf on KVA on June 22, 2015. Said order required discovery demands to be servcd by June 30. 2015; responses by July 30, 2015; dcpositions on or before August 15,2015; and discovcry to bc completed by Octobcr 15,2015. On October 16, 2015. plaintiff filed a motion which again sought to strike defendants' answer, grant summary judgment in favor of plaintiff, or any further just reliefbased on defendants' failure to comply with the preliminary conference order. This court's decision and order dated February 10. 2016 directed defendants to serve discovery responses within 30 days and depositions to be conducted within 30 days thereafter, or the answer would be stricken. Al the Apri 14.2016 confCrence. plaintiffs counsel made an oral application in court to strike the defendants' answer pursuant to CPLR 93126 and this court's prior order. Notably, a notice of appearance was never filed on behalf of any of the defendants to date. Neither Varble nor any attorneys appeared at the conference on behalf ofKVG or KVA. Steven Klein appeared on his own behalf. lIe stated on the rccord in open court that hc rclicd on a written agreement between himself and Varble which arose during thc 'winding down' phasc ofthcir partnership wherein it was agreed that Varble \\ould litigate this matter. lie stales that be was unaware of the lack of prosecution until receipt of the february 10, 2016 order. He presented plaintiff s counsel with documents which he stated represcnted complete document disclosures with the exception of the law firms' client list. Klein also stated that he and defendants should reimbursed plaintiff s counsel for his attorneys fees for the confcrcnce requested to resolve the outstanding discovery issues. Decision: As regards Klein, this court finds that he has presented a reasonable excuse for his default based upon his reliance on a written agreement that Varble would prosecute this matter. Notably, Klein may have cross-claims against Varble for his breach thereof. Klein stated that he was first on notice of thc default upon receipt of the February 10, 20 I6 order, immediately after which Klein requested a court conferencc in an cffort to rcsolve discovery issucs. Klein made good faith efforts to obtain thc rcqucsted documents and prcscntcd same to plaintiffs counscl in open court at Klein's court appearance on his own behalf. Klein also has a potentially meritorious defense as to his personal liability for the debt, since it is undisputed tbattbere is no personal guaranty on the lease and Klein stated that the dissolution of KVG and establishment of KVA was not intended to circumvent debtor-creditor laws but instead resulted from former partner Greco leaving KVG. As regards Varble. thc court granted a dcfaultjudgmcnt in favor of plain tiff in open court on AprilS. 2016. Varble signed the preliminary conference order and reccived notice of this court's February 10. 2016 order. Despite the foregoing, Varble failed to proceed with discovery as per the preliminary conference order and subsequent court order, failed to oppose the prior motion filed by plaintiff. and failed to appear at the last court conference on AprilS, 2016. Accordingly, it is hereby -2- 2 of 4 [* 3] ORDERED that plaintiffs oral application to strike any answer filed on behalf of Michael Varble is granted. Counsel shall electronically file the proposed judgment against Varble, a copy of which was submitted to Chambers. It is ii.lrther ORDERED that plaintiffs Klein is denied, and it is further oral application to strike any answer filed on behalf of Steven ORDERED that Klein may file an amended answer asserting any defenses, counterclaims, and/or cross-e1aims within J 5 days hereof. It is further ORDERED that Klein shall disclosc the client list demanded by plaintiff within IS days hereof. Klein failed to meet his burden to prove a list of client 'names is protected as privileged (CPLR 31OJ [b]), attorney's work product (CPLR. 3 J 01 [c]) or material prepared for litigation (CPLR 3101 [d]). In so holding, the court recognizes that such information is relevant and material to cstablish a continuity of clicnts hetween KVG and KVA to support plaintiffs alter ego and debtor/creditor Jaw violation eIaims, and such names are retrievable from court documents filed by KVG and KVA which are a matter of public record.lt is further . ORDERED that depositions shall be conducted within 45 days hereof. It is further ORDERED that defendants shall reimburse plaintiffs counsel fees in the sum of $750 for his appearance at the April 5'h conference rcquested by defendant. It is fUI1her ORDERED that a status conference is scheduled for May 5, 2016 at 9:15a.m. The foregoing constitutes the decision and order of this cOUJ1. Dated: April 6, 2016 Poughkeepsie, New York ENTER: Jack S. Dweck, Esq. The Dwcck Law Firm, LLP I() Rockefcller Plaza, Suite 1015 New York, NY ]0020 Steven I-I.Klein, Esq. Steven H. Klein & Associates, P.e. 40 Garden Street, Suite 500 Poughkeepsie, NY 1260 I 3 of 4 [* 4] I •• ••.•• I )'1 • ;.. .-;-( : I",. ..~-."Jo Michael R. Varble, Esq. Michael R. Varble & Associates, P.C. 40 Garden Street, Suite 301 Poughkeepsie, NY 12601 " .'I .~J i'j Pursuant to CPLR Section 55 J 3, an appeal as of right must be taken within thirty days after service by a party upon the appellant of a eopy of the judgment or order appealed from and written notiee of its entry, except that when the appellant has served a eopy of the judgment or order and written notice of its entry, the appeal must be taken within thirty days thereof. ,. When submitting motion papers to .Judge Brands' Chambers, please do not submit any copies, Submit only tbe original papers, -4- 4 of 4 t f " ...I

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