Nakdimen v Landa

[*1] Nakdimen v Landa 2007 NY Slip Op 51302(U) [16 Misc 3d 1106(A)] Decided on June 25, 2007 Supreme Court, Nassau County Austin, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 25, 2007
Supreme Court, Nassau County

Shelly Nakdimen, Plaintiff,

against

Benjamin Landa, Bent Philipson, Judy Landa, Debroah Philipson, Abrams, Fensterman, Fensterman, Flowers, Greenberg & Eisman, LLP., Howard Fensterman, Mark Zafrin, New Franklin Rehabilitation and Healthcare Facility, LLC, Fort Tryon Rehabilitation and Healthcare Facility, LLC, Bayview Manor, LLC, Pinegrove Manor, LLC, Pinegrove Manor II, LLC, Oinegrove Manor III, LLC, Pinegrove Manor IV, LLC, West Lawrence Realty, LLC and West Lawrence Care Center, LLC, Defendants.



11267-06



COUNSEL FOR PLAINTIFF

Dollinger, Gonski & Grossman, Esqs.

One Old Country Road

P.O. Box 9010

Carle Place, New York 11516

COUNSEL FOR DEFENDANTS

Abrams, Fensterman, Fensterman, Eisman, Greenberg, Fornato & Einiger, LLP

1111 Marcus Avenue - Suite 107

Lake Success, New York 11042

Leonard B. Austin, J.

Defendants move to quash subpoenas duces tecum issued by Plaintiff, Shelly Nakdiman ("Nakdimen"), to Bank of America ("BOA"), Greystone Private Equity LLC, ("Equity"), Greystone Corporate Realty Services ("Realty") and Greystone & Co., Inc. ("Greystone").

BACKGROUND

Defendant Pinegrove Manor, LLC ("Pinegrove") owns real estate and a building in Great Neck, New York. Defendant Pinegrove Manor II, LLC ("Pinegrove II") owns and operates a skilled nursing facility known as Grace Plaza Nursing and Rehabilitation Center ( Grace Plaza") in the building owned by Pinegrove. Defendant Pinegrove Manor III, LLC ("Pinegrove III") owned the parking lot for the Grace Plaza facility. Pinegrove III has recently been merged into Pinegrove.

Although the names are similar, Defendants assert that Pinegrove Manor IV, LLC has no relation to Grace Plaza.[FN1]

Nakdimen alleges that, in June 2003, she delivered money to Defendant Abrams, Fensterman, Fensterman, Flowers, Greenberg & Eisman, LLP to be held in escrow to purchase a membership interest in Pinegrove II/Grace Plaza.

The Pinegrove 2003 Amended and Restated Operating Agreement indicates that Nakdimen owns a 3% interest in Pinegrove.

The Pinegrove II 2003 Amended and Restated Operating Agreement indicates that [*2]Nakdimen is the owner of a 3% interest in Pinegrove II.[FN2]

Neither party has produced either a signed or unsigned copy of the Operating Agreement for Pinegrove III or any other documents reflecting the names of the members or percentage owned by each member.

Pinegrove II asserts Nakdimen failed to execute documents required by the New York State Department of Health to add her to the license and approve her as a member of a limited liability company that operates a skilled nursing facility. As a result of her failure to sign these documents, Nakdimen did not become a member of Pinegrove II.

Nakdimen has issued a subpoena duces tecum to BOA seeking copies of the bank statements and checks issued by Pinegrove, Pinegrove II, Pinegrove III and Pinegrove IV for the period of August through and including December 2006. Nakdiman also seeks checks and statements for the same period for a specifically identified bank account maintained by Pinegrove with Fleet Bank.

Nakdimen has subpoenaed from the Greystone entities the files in connection with the refinancing of the mortgage of the premises at 15 St. Paul's Place, Great Neck, New York by Pinegrove. Nakdimen specifically seeks copies of all documents executed by, or on behalf of, Pinegrove in connection with the transaction, copies of all checks and wire transfers issued regarding the disbursement of the mortgage proceeds and copies of any closing statements prepared for or on behalf of the Greystone entities. Nakdimen further seeks copies of the attendance sheet identifying all persons who attended the closing and copies of all correspondence issued by Greystone or its attorneys to Pinegrove, Pinegrove's counsel, the FHA and/or HUD in connection with the loan.

Identical subpoenas were served upon each of Greystone, Equity and Realty.

Defendants move to quash the subpoenas served upon BOA, Greystone, Equity and Realty.

DISCUSSION

CPLR 3120(1) permits any party to serve upon a non-party a subpoena duces tecum requiring the non-party to produce documents which are in control of the non-party.

CPLR 3101(a) provides for full disclosure by a party to an action of "...all matter

material and necessary in the prosecution of the action...regardless of the burden of proof." CPLR 3101(b) provides that privileged material shall not be subject to discovery.

"The words, material and necessary', are, in our view, to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity, The test is one of usefulness and reason." Allen v. Crowell-Collier Publishing Co., 21 NY2d 403, 406 (1968). If the material sought could possibly be used as evidence in chief, for rebuttal or for cross-examination, it should be produced. Id.; and Wind v. Eli Lilly & Co., 164 AD2d 885 (2nd Dept. 1990). [*3]

Discovery is also permitted of documents that are not admissible provided that production of such documents may lead to disclosure of admissible evidence. Matter of New York County DES Litigation, 171 AD2d 119 (1st Dept. 1991); and Fell v. Presbyterian Hosp. in the City of New York, 98 AD2d 624 (1st Dept. 1983).

Defendants seek to quash the subpoenas on the grounds they are irrelevant to an issue in this case; to wit: Is Nakdimen a member of the Pinegrove, Pinegrove II and/or Pinegrove III?

If this was the sole issue in this case, then the material that is sought by the subpoenas would not be subject to discovery. However, Nakdimen also claims a breach of fiduciary duty and seeks an accounting from the Pinegrove entities to determine why she has not received any distribution. The Pinegrove entity bank statements would provide information regarding their income and expenses. This information would be relevant to Nakdimen's accounting and breach of fiduciary duty claims. Therefore, it is properly subject to discovery.

The subpoenaed bank records should be in the possession of the Defendants and should be produced by them. However, while Defendants may have these statements and checks, they are either unwilling or unable to produce them in connection with discovery. Where material which is discoverable has not been produced by a party, the adverse party seeking discovery has established special circumstances permitting discovery of the documents from a non-party. See, Lanzello v. Lakritz, 287 AD2d 601 (2nd Dept. 2001).

The mortgage on the Pinegrove property, on which Grace Plaza operates, was refinanced in November 2006. The purported reason for the refinance was to reduce the interest rate and the payments. However, the amount obtained in the refinance appears to be far in excess of the amount needed to pay off the existing mortgage. If the amount of the refinance was in excess of the amount needed to satisfy Pinegrove's existing obligations, Nakdimen would be entitled to information regarding the additional funds as well as how, to whom and for what purpose the excess was disbursed.

As with the bank statements, Defendants have not indicated that they possess the documents that Plaintiff has subpoenaed or that they are willing to produce same pursuant to a discovery demand.

Defendants do not assert that any privilege attaches to the subpoenaed items. Their sole objection is relevance. The materials subject to the subpoena are relevant to the action since they provide evidence or may lead to the discovery of evidence. Allen v. Crowell-Collier Publishing Co., supra. See, Southampton Taxpayers Against Reassessment v. Assessor of the Village of Southampton, 176 AD2d 795 (2nd Dept. 1991).

Nakdimen's reliance upon Limited Liability Company Law §1102(b) and Article 8.2 of the Pinegrove operating agreement is misplaced. Those provisions would be relevant if Nakdimen was seeking permission to inspect these documents at the Pinegrove entity offices. This application relates to subpoenas served upon non-parties.

The records of Pinegrove IV do not appear to have any relationship to the Great Neck property. Nakdimen has not made a showing of its relationship to this property or this action. Thus, the subpoena issued to BOA must be quashed to the extent it seeks records of Pinegrove IV.

Accordingly, it is,

ORDERED,that Defendants' motion to quash the subpoenas issued to Bank of

America, Greystone Private Equity, LLC, Greystone Corporate Realty Services and

Greystone & Co., Inc. is granted to the extent of quashing the subpoena served upon Bank of [*4]America seeking the checks and statements of Pinegrove Manor IV and is, in all other respects, denied.

This constitutes the decision and order of this Court.

Dated: Mineola, NY_____________________________

June 25, 2007Hon. LEONARD B. AUSTIN, J.S.C. Footnotes

Footnote 1:The Court has checked the New York State Department of State web site regarding Pinegrove Manor IV, LLC. The records of the Department of State indicate the existence of Pinegrove Manor IV, Ltd. but not a limited liability company known as Pinegrove Manor IV, LLC,

Footnote 2: On the signed Restated and Amended Operating Agreement for Pinegrove II, the space for Nakdimen's signature has been "whited out."