Fletcher v The Dakota

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Fletcher v The Dakota 2013 NY Slip Op 31146(U) May 24, 2013 Supreme Court, New York County Docket Number: 101289/11 Judge: Eileen A. Rakower 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. SCANNED ON 512912013 [* 1] Index No. 1-1 P1ai n t i f fs , - against - FILED i i 1 MAY 2 9 2013 THE DAKOTA, et al., EW YORK /Dl 3 sq/// 4 CISION a dORDER I CLERK S OFFICE Mot Seq. 16 Defen Plaintiffs Alphonese Fletcher, Jr. ( Fletcher ) and Fletcher Asset Management, Inc. ( FAM ) (collectively, Plaintiffs ) commenced this action on February 1,20 1 I . Plaintiffs action concerns the Board ofThe Dakota s denial ofFletcher s application to purchase an apartment adjacent to the one (Apartment 50) he owns for purposes of combining the two. Fletcher has been a resident of The Dakota and a shareholder of the corporation since 1992 and has previously served on the Board of The Dakota, including two ternis as Board President, Fletcher alleges that The Dakota discriminated against him, inter alia, based on his race, in their refusal to approve his application to purchase the adjacent apartment. Fletcher also alleges retaliation against him for his protecting the rights of others, including minority and Jewish shareholders and applicants of The Dakota. Fletcher alleges that in early 2007 he objected to the discriminatory treatment of a Jewish couple applying to purchase an apartment and in another instance protested the Board s unjustified denials of an African-American shareholder s requests to fix her bathroom. Fletcher also alleges that during the period in which his application was pending, Defendants defamed Fletcher by making numerous false statements to others regarding his financial condition in order to taint consideration of his application, including that he had not fulfilled binding charitable cornrnitnients; that Fletcher was playing the race card and using his status as x i African-American to persuade the Board to approve his application; that Fletcher s assets were illiquid and dif ficult to value; and that FAM s business loans left it overextended and at risk of collapse. 1 [* 2] Certain claims and defendants were disniissed by this Court in an order dated July 21, 201 1 and additional claiins were dismissed, on appeal of that order, by the Appellate Division, First Department, by decision dated July 3, 201 2 , The claims currcntly remaining in the action are as follows: As to The Dakota, claims of discrimination, retaliation, tortious interference with contract, and defamation based upon statements made before the filing ofthe Complaint that Fletcher had not fulfilled binding charitable pledges but instead (owed money to charity, that Fletcher was living on borrowed money, and that [blased 011 the financial information submitted by Fletcher, approving Fletcher s application was not in the best interest of The Dakota; As to defendant Barnes, discrimination; and As to defendant Nitze, defamation based only upon the statement allegedly made to Craig Hatkoff that Fletcher had not given the money he promised to give to charity and that he owes it. More specifically, as for Plaintiffs fifth cause of action for defamation, the Appellate Division held that the following defamatory statements are pleaded with sufficient particularity: [At an April 14,20 10 board meeting,] one or more of the Individual Defendants told the other members of the Board that Fletcher had not fulfilled binding charitable commitments and pledges, that Fletcher s assets were all illiquid and difficult to value, and that FAM s business loans left it over-extended and at risk of collapse ... [On or before May 7, 20 10, Nitze told Dakota shareholder Craig Hatkoff that Fletcher] had not actually given the money he had promised to give [to charity] and he owes it ... [At some point between June 24,20 10 and September 20 IO] one or more of the Individual Defendants falsely and maliciously stated to Hatkoff that 2 [* 3] Fletcher had checked out of his business and was living on borrowed money ... On September 14, 201 0, .., the Board sent a letter to certain Dakota shareholders ... [It stated, inter alia,] [blased on the financial information submitted by Fletcher, the Board concluded that approving such a purchase would not be in the best interest o ¬The Dakota ... [The letter] also contained the false and misleading statement that Fletcher had declined the Board s request to provide additional financial information. The Second Amended Coinplaint alleges that because of the alleged defamatory statements made by Defendants, Fletcher and FAM have each suffered damages to their respective reputations as a trusted and successful investment advisor and a successful investment firm, and that this injury has had a damaging effect on relationships with current and prospective investors and on resulting profits. Defendants The Dakota, Inc. ( The Dakota ), Bruce Barnes, and Peter Nitze (collectively, Defendants ) now move by way of Order to Show Cause pursuant to CPLR $3 126(c) for an Order striking the Fifth Cause of Action (Defamation) of the Second Amended Complaint for willful failure to comply with the Court s prior discovery orders and failure to produce documents and information relevant and material to said claims, or alternatively, precluding Plaintiffs from submitting evidence of damages in support of the Fifth Cause of Action. On August 3,20 1 1, Defendants served document requests and interrogatories on Plaintiff. On September 28, 2012, the Court granted Defendants motion to compel production of various categories of documents and inforination and directed production within thirty days of receipt of the Order. On November 30, 2012, the Court issued another Order directing Plaintiffs to produce by January 7,20 13 all documents previously scheduled to be produced by Novernbcr 2, 20 12. On February 5,2013, the Court held a compliance conference, and issued another Order directing Plaintiffs to coinpletc the production of documents pursuant to the Court s previous two orders prior to Fletcher s deposition, The Court held another compliance conference on March 5, 2013, and the Court issued another order directing Plaintiffs to comply with the outstanding discovery. 3 [* 4] This Court s Orders of February 22, 2013 and March 5 , 2013 specified that Plaintiffs would produce by March 19, 20 13 documents regarding identities of investors, current as of 9/14/20 10 and prospective investors in Fletcher Funds alleged to have been affected by reputational harm in plaintiff defamation cause of action. The February 22,20 13 Order provided that Failure to comply will be deemed willful and contumacious. Pursuant to the Court s March 5, 20 13 Order, Plaintiffs document production including ordered produccd [sic] by Order dated February 22, 2013 will be completed on or before March 19, 201 3, with any documents not produced by that date to be precluded. Defendants allege that Plaintiffs have refused to produce documents and withheld testimony concerning the identities of b c ~ ~ r e n t prospective investors and that the Second Amended Complaint alleges learned of, were affected by, the allegedly defamatory statements of The Dakota and Nitze. Defendants state that this information is necessary to substantiate any concrete harm suffered by Plaintiffs. In the supporting affirmation of Christine H. Chung, Chung states that Plaintiffs have refused to produce a list of investors, and states that their latest document production, dated March 19, 20 13, redacts investors names and contains no identification of current or potential investors. In the opposing afkmation of Nathaniel P.T. Read, Read states that on April 22,20 13, Plaintiffs produced unredacted versions of documents regarding the thencurrent investors impacted by Defendants alleged defamatory statements, additional documents regarding prospective investors, and a small number of documents identified during Plaintiffs final privilege log to review. In her reply affirmation, Christine W,Chung states that at his deposition on April 25,20 13, Fletcher testified that he was not involved in the creation of the list, and that it included only some, not all, of the investors that he believes were impacted by Defendants defamation and other wrongful acts. Furthermore, Chung states that the list does not identify any prospective investors impacted by the statements. Plaintiff states that in their April 22 letter, Plaintiffs listed business and governmental entities that Plaintiffs claim were prospective investors, but did not identify them as investors who were impacted by the alleged defamatory statements. Pursuant to CPLR $3 126, a court may impose a wide range of penalties upon 4 [* 5] any party who refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed, pursuant to this article, [and] the court may make such orders with regard to the failure or refusal as are just . . . See also Sage Realty Corp. v. Proskuuer Rose, LLP, 275 A D , 2d 1 I , I7 [ 1 Dept 20001 (sanctions warranted when a party intentionally, contumaciously or in bad faith fdils to comply with a discovery order. . . ). The sanction imposed should be commensurate with the nature and extent of the disobedience. C r s i n hita v. Ct o New York, 269 A.D. 2d 135, 137 [ 1 Dept 20001. iy f In order to invoke the drastic remedy o f a preclusion order . . .the court must determine that the party s failure to coinply . . was the result of willful, deliberate, and contumacious conduct or the equivalent. Vcilel v. City ~ ~ N P I I . 208 A,D. Yo&, 2d 524, 525 [2d Dept 19941). Sustained noncompliance over a period oftime raises the inference that the noncomplying party s conduct was willful, See e.g, Goldstein v. CJBC World Mkts Corp., 39 A.D. 3d 217,217 [lstDept 20091. e Plaintiffs failures in this action to comply with their discovery obligations and to frustrate Defendants ability to obtain meaningful discovery has been previously documented in tlic Court in prior orders. This Court s March 5, 2012 Order specilically stated, Plaintiff s document production including ordered produced [sic] by Order dated February 22, 201 3 will be completed on or before March 19, 2013, with any documents not produced by that date to be precluded. Here, as Plaintiffs acknowledge, despite the last Order, they produced an unredacted list of then current investors impacted by Defendants alleged defamatory statements on April 22 20 13, aft-er the deadline. Furthermore, the list provided, as acknowledged by Fletcher, is not complete. Based on Defendants repeated failure to comply with this Court s Orders and to provide complete, responsive information within the deadlines imposed, preclusion is therefore warranted at this juncture, Wherefore it is hereby ORDERED that defendants niotion is granted solely to the extent that plaintiffs shall be precluded from offering evidence demanded, but not disclosed by March 19, 20 13 regarding their alleged damages from defendants alleged defamation, namely the current and prospective investors influenced by the statements made. 5 [* 6] 0 This constitutes the decision and order of the court. All other relief requested is denied. DATED: 5\ LI \3 L\ EILEEN A. RAKOWER, J.S.C. MAY 2 9 21113 6 I

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