Biedermann v Skyline Restoration Inc.

[*1] Biedermann v Skyline Restoration Inc. 2008 NY Slip Op 50406(U) [18 Misc 3d 1142(A)] Decided on February 13, 2008 Supreme Court, Nassau County LaMarca, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 13, 2008
Supreme Court, Nassau County

Eugene Biedermann, Plaintiff,

against

Skyline Restoration Inc., JOHN KALAFATIS Individually, JOHN TSAMPAS Individually, and WILLIAM PEIRRAKEAS, Individually, Defendants.



12071/05

William R. LaMarca, J.

Requested Relief

Counsel for plaintiff, EUGENE BIEDERMAN, moves for an order, pursuant to CPLR §3126, striking defendants' answer based upon their willful and contumacious refusal to comply with discovery or, in the alternative, for an order of preclusion with respect to testimony and evidence at the time of trial. Counsel for defendants, SKYLINE RESTORATION, INC., JOHN KALAFATIS, individually, JOHN TSAMPAS, individually, and WILLIAM PEIRRAKEAS, individually (hereinafter collectively referred to as "SKYLINE"), opposes the motion, which is determined as follows:

Background

Plai ntiff commenced the instant action on August 1, 2005 for breach of contract, unjust enrichment and violation of New York Labor Law §§191C-198, arising from salary and commissions allegedly due and owing to plaintiff from SKYLINE for his work as project manager on various SKYLINE jobs. Plaintiff alleged that he worked for SKYLINE, a commercial restoration company, from March 2003 through March 2005, pursuant to a written employment agreement, dated March 10, 2003, which provided for plaintiff's continuous employment, which could be terminated upon thirty (30) days written notice of either party. The agreement, drafted by the defendants and executed by KALAFATIS and BIEDERMAN, provided for a base salary of $78,000.00 per year, or $1,500.00 per week, plus semi-annual bonus commissions in the form of 1099 income on 1) any project solicited by plaintiff or 2) any project not solicited by plaintiff but to which he was assigned [*2]as project manager. ¶ 3(b) and ( c ) of the agreement provided for calculation of the semi-annual bonus as follows: on projects solicited by plaintiff, project price less direct hard costs (labor materials and equipment rental), less overhead calculated at 10% of project contract price, less direct project management fees as determined by SKYLINE, in its sole discretion, as necessary or appropriate, with the net to be divided by 2 or 50 % of the net profit in accordance with this formula. On projects not solicited by BIEDERMAN, the calculation formula is as follows: project price less direct hard costs (labor materials and equipment rental), less overhead calculated at 10% of project contract price, with the net to be divided by 3 or 33 1/3 % of the net profit in accordance with this formula.

Counsel for plaintiff states that, when Mr. BIEDERMAN was terminated on March 10, 2005, he was owed commissions of $99,099.00 for 2003, $19,935.50 for 2004, and the estimated sum of $537,565.00 for 2005. Moreover, counsel claims that plaintiff was not paid his salary for the period from January 3, 2005 through March 10, 2005, nor paid his monthly expenses totaling $14,303.00 for January, February and March 2005. It is alleged that, when defendants failed to pay the sums claimed to be due and owing, plaintiff commenced the instant action.

Counsel for plaintiff contends that throughout the litigation, the defendants have engaged in dilatory tactics and have willfully and contumaciously failed to properly comply with discovery in an effort to delay and obfuscate the instant action. Counsel states that, despite repeated courtesies to defendants' counsel, first Peter Marinis Esq., second Gregory A. Sioris, Esq., third John J. Palmeri, Esq., and now, Michael H. Maizes, Esq., defendants fourth set of attorneys, defendants still have failed to provide basic discovery, demanded in formal discovery demands and directed in various compliance orders of the Court. Counsel for plaintiff points out that, in order to determine "net profit" for the fixing of plaintiff's commissions, it is necessary to receive detailed information about the costs and expenses for each job on which plaintiff was involved. Counsel states that defendants did not formally respond to plaintiff's first Notice for Discovery and Inspection, dated January 13, 2006, but faxed some documentation to counsel's office some four (4) months later, on March 12, 2006, including a spread sheet, which purportedly indicated the jobs that plaintiff had procured or served as project manager. Counsel states that the spread sheet did not account for all of the relevant jobs or contracts and was inaccurate.

It appears that, thereafter, counsel for plaintiff wrote to plaintiffs then counsel, Sioris, on September 21, 2006, in a good faith attempt to work out discovery issues, and sent a Second Notice for Discovery and Inspection, of same date, which specifically set forth the documents required for "each and every job number listed in the complaint". Counsel for plaintiff states that by, November 25, 2006, no response was received and Sioris made application to be relieved as defendants' counsel, which was granted by order of the Court, dated December 19, 2006, based upon defendants refusal to cooperate and pay outstanding attorney's fees, then totaling $18,000.00. When new counsel for defendants', Palmeri, appeared at a regularly scheduled compliance conference, plaintiff's counsel followed up with new counsel in a good faith effort to work out discovery issues and extended the time for defendants to provide discovery until February 12, 2007. It appears that on February 6, 2006, some responses to plaintiff's demands were forwarded, however, [*3]counsel for plaintiff states the responses were deficient as no responses to the Second D & I demand were provided. Thereafter, despite repeated requests to Palmeri to provide the demanded discovery and to schedule depositions, Palmeri first claimed that the demands were "oppressive". At that point in time, although the Court had directed a March 16, 2007 deadline for discovery and an April 30, 2007 deadline for depositions, counsel for plaintiff still had not received responses to plaintiff's demand for copies of relevant contracts and their underlying documentation that were outstanding for more than a year.

On May 7, 2007, counsel for the parties appeared for a compliance conference, at which time the Court requested that plaintiff once again clarify the outstanding discovery demands and documents that he required, and defendants' counsel indicated that defendants would make such information and documents available. Notwithstanding same, as the final certification conference date approached and despite several reminder letters from plaintiff's counsel, counsel for defendants represented that his clients were "amassing" the documents and he was still trying to ascertain when the requested documents would be available. At the certification conference, on June 11, 2007, the Court certified that matter ready for trial and, notwithstanding same, the defendants agreed to make the requested documents available to the plaintiffs at defendants' counsels' office. It appears that files were made available to plaintiff's counsel on August 10, 2007, however counsel for plaintiff asserts that many documents were missing from the files, including the documentation specifically requested by plaintiff with respect to expenditures paid out on each job. Importantly, the entire files for which defendants claimed losses, #

1127 and #

1118, were not provided as part of the discovery. In a letter, dated August 10, 2007, counsel for plaintiff expressed his displeasure with the level of production and his inability to file a Note of Issue as directed by the Court in the June 11, 2007 order. Although counsel for defendants executed a stipulation to extend the time for filing the Note of Issue until October 11, 2007, which was "So Ordered" by the Court, counsel for plaintiff states that four (4) phone calls to counsel for defendants' office were not returned, and a final good faith letter, dated September 11, 2007, was ignored. Counsel for plaintiff states that he filed a Note of Issue, on October 10, 2007, with an attached affirmation reiterating that defendants have failed to properly comply with discovery and that depositions of the parties have not been scheduled or held.

Counsel for plaintiff's frustration in obtaining regular and necessary discovery is reflected in the instant motion which seeks to strike defendants' answer based upon their willful and contumacious refusal to comply with discovery or, in the alternative, for an order of preclusion with respect to testimony and evidence at the time of trial. In response to the motion, we learn for the first time that defendants have substituted yet another attorney, Michael Maizes, Esq., who submits an affirmation of counsel and affidavits of JOHN KALAFATIS and Anthony Chu, the custodian of records for the defendants, who essentially claim that defendants have provided "a lot" of discovery and that plaintiff has provided "almost nothing" in the way of discovery. Now, on the eve of trial, incoming counsel states that defendants former counsel did not serve appropriate demands and he will resolve that deficiency by serving appropriate demands. Additionally, new counsel for defendants claims that he as worked "round the clock" to get this matter back on track and, instead of global spread sheets provided by former counsel which required plaintiff to "decipher profits [*4]for each job", he has annexed profit and loss statements for each job, prepared by his clients, that show every check, receipt, invoice and payroll tax statement. The problem is that he has no back-up documentation for the entries on the profit and loss statements because he claims there are no actual checks issued for each job because the company utilizes a "split check" system in which they pay vendors large payments to cover materials for many jobs and thereafter split the payment between the different jobs. Indeed, defendants suggest that the project manager is in charge of this record keeping and that plaintiff should have his own records and he should be required to produce same via reciprocal discovery if anything is missing. Defendant KALAFATIS states that plaintiff has produced no bill of particulars, no statement of witnesses, no adverse party statements and no inspection of his files, and that the burden of proof appears to be "juxtaposed". The keeper of records, Anthony Chu, states that prior to the August 10, 2007 meeting, he searched the stored records and retrieved the relevant project files for inspection. Mr. Chu acknowledged that some of the requested files were not provided because they couldn't be located, however SKYLINE has detailed electronic records that should be relied upon. Mr. Chu claims that, to the extent that records exist, they have been put in the file by the project manager and suggests that any deficiency in the files is of the plaintiff's making.

In reply, counsel for plaintiff points out that the new documents and profit and loss statements produced on the motion are wholly inconsistent with the spread sheets previously produced by defendants, are useless and serve to further obfuscate. Moreover, counsel asserts that plaintiff responded completely to defendants' Notice of Discovery and Inspection, dated March 9, 2007, and no objections were made as to the adequacy of said responses. Nor were any demands made for a bill of particulars, for witnesses, adverse party statements or for inspection of plaintiff's files. Plaintiff rejects as "preposterous" defendants suggestion that any documents not in their possession are held by the plaintiff. Moreover, counsel for plaintiff contends that the defendants failure to locate the files for which they claim substantial losses must not be accepted by the Court because the defendants can simply manipulate the numbers in an effort to negate the commissions owed to the plaintiff.

The Law

CPLR §3101(a) requires the "full disclosure of all information that is material and necessary to the defense or prosecution of an action". The "material and necessary" requirement directed in CPLR §3101(a) is to be liberally construed to require disclosure where the matter sought will assist in trial preparation by sharpening the issues and reducing delay. Andon v 302-304 Mott Street Associates, 94 NY2d 746, 709 NYS2d 873, 731 NE2d 589 (C.A. 2000), citing Allen v Crowell-Collier Publishing Co., 21 NY2d 403.

Furthermore, the Courts have held that the failure of a party to challenge a Notice for Discovery and Inspection within the time prescribed by CPLR §3122 "forecloses inquiry into the propriety of the information sought except with regard to material that is privileged pursuant to CPLR §3101 or requests that are palpably improper". Garcia v Jomber Realty Inc., 264 AD2d 809,695 NYS2d 607 (2nd Dept. 1999); see also, McMahon v Aviette Agency, Inc., 301 AD2d 820, 753 NYS2d 605 (3rd Dept. 2003). CPLR §3122 provides, as follows: Within twenty days of service of a notice . . . under rule 3120 or section [*5]3121, the party to whom the notice . . . is directed, if that party objects to the disclosure, inspection, or examination, shall serve a response which shall state with reasonable particularity the reasons for each objection.

The nature and degree of the penalty to be imposed for failure to comply with a disclosure order is a matter generally left to the discretion of the Court. Kingsley v Kantor, 265 AD2d 529, 697 NYS2d (2nd Dept. 1999). To invoke the drastic remedy of preclusion, the Court must determine that the party's failure to comply with a disclosure order was the result of willful, deliberate and continuous conduct or its equivalent. Patterson v New York City Health & Hospitals Corp., 284 AD2d 516, 726 NYS2d 715 (2nd Dept. 2001); see also, CPLR § 3126; Foncette v LA Express, 295 AD2d 471, 744 NYS2d 429 (2nd Dept. 2002). Where plaintiffs have failed to timely respond to court orders or provide any excuse for the delay, and then failed to supply adequate responses to discovery demands, such conduct may be considered willful and contumacious, warranting dismissal of the pleadings. (Hanlon v Rosenthal, 7 AD3d 758, 776 NYS2d 906 [2nd Dept. 2004], or an order of preclusion. Precise Court Reporting, Inc. v Karten, 6 AD3d 412, 775 NYS2d 339 [2nd Dept. 2004]).

Discussion

After a careful reading of the submissions herein, the Court rejects incoming counsel's attempt to paint plaintiff in a bad light and finds that defendants failure to timely provide formal and adequate responses to plaintiff's repeated discovery demands and the discovery orders of the Court was willful and without an adequate excuse. Defendants' present and fourth counsel cannot appear on the eve of trial and expect the Court to excuse more than a year of delays and empty promises on the part of defendants' prior counsel, nor can he first serve demands for discovery from the plaintiff that have, in essence, been waived by inaction on the part of defendants. Defendants' attempt to "clear things up" by submitting new and different Profit and Loss Statements that contradict prior spread sheets supplied by defendants are unavailing, particularly since the back-up documentation for the allegedly "missing" files on which defendants allegedly sustained substantial losses cannot be located. The documents submitted by the defendants in opposition contradict the documents previously submitted by defendants in prior inadequate responses, as well as other documents submitted contemporaneously therewith. The submissions serve to further obfuscate and delay matters and cannot be held to be a good faith effort by the defendants to meaningfully address the scope of the requests. Defendants have not timely objected to the plaintiff's demands for discovery and the Court finds that defendants continuing efforts to frustrate the disclosure scheme provided by the CPLR is a basis for dismissal of the pleading. Zletz v Wetanson, 67 NY2d 711, 499 NYS2d 933, 190 NE2d 852 (C.A. 1986); Paull v First UNUM Life Insurance Company, 267 AD2d 970, 701 NYS2d 545 (4th Dept. 1999). "Compliance with a disclosure order requires both a timely response and one that evinces a good faith effort to address the requests meaningfully". Kihl v Pfeffer, 94 NY2d 1181, 700 NYS2d 87, 722 NE2d 55 (C.A. 1999). Based on the foregoing, it is hereby

ORDERED, that plaintiff's motion to strike defendants answer for their willful and contumacious refusal to comply with discovery or, in the alternative, for an order of [*6]preclusion with respect to testimony and evidence at the time of trial is granted to the extent that the defendants answer is struck and plaintiff is granted judgment against the defendants as to liability. Striking defendants' answer is equivalent to granting plaintiff a default judgment and an inquest must be conducted to determine damages. Kihl v Pfeffer, supra . An assessment of damages shall proceed on February 28, 2008, the present date of trial or on any adjourned date, at which time the defendants and their witnesses are precluded from offering any evidence of their claimed losses or of any of defendants calculations with respect to relevant project numbers which they have failed to substantiate in discovery; and it is further

ORDERED, that plaintiff is awarded costs on the motion in the sum of $100 (CPLR §8102) together with reasonable attorneys fees, upon presentation to the trial Court of proof of services rendered with respect to the motion.

All further requested relief not specifically granted is denied.

This constitutes the decision and order of the Court.

Dated: February 13, 2008

_________________________

WILLIAM R. LaMARCA, J.S.C.

TO:Perry & Campanelli, LLP

Attorneys for Plaintiff

129 Front Street

Mineola, NY 11501

Maizes & Maizes, LLP

Attorneys for Defendants

2027 Williamsbridge Road

Bronx, NY 10461

biederman-skyline,#

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