Metro United Packaging Group, LLC v United Packaging Group Corp.
Annotate this CaseDecided on June 23, 2014
Supreme Court, Queens County
Metro United Packaging Group, LLC and ASHOK BHATT, Plaintiffs,
against
United Packaging Group Corp., CBT PROPERTIES, LLC and EPHRAIM KLEIN, Defendants.
19417/2011
Robert J. McDonald, J.
The following papers numbered 1 to 11 were read on this motion by plaintiffs for an order striking the defendants' answer, or, in the alternative, precluding defendants from producing non-party witness Schlomo Kovo to testify at trial and for an adverse inference charge; and for an order precluding the defendants from introducing documents related to income produced by United Packaging and Metro United as a result of defendants alleged failure to produce and maintain certain documents, and precluding defendants from cross-examining witnesses with regard to the documents:
Papers Numbered
Order to Show Cause-Affidavits-Exhibits.................1 - 6 Affirmation in Opposition...............................7 - 11
In this action for damages for breach of contract and tortious interference with contract and for a permanent injunction, plaintiffs' counsel seeks an order striking the [*2]defendants' answer or in the alternative precluding defendants from producing non-party witness, Schlomo Kovo, to testify at trial and for an adverse inference charge; precluding the defendants from introducing documents related to income produced by United Packaging and Metro United as a result of defendants' alleged failure to maintain said documents; and precluding defendants from cross-examining witnesses with regard to the documents.
Counsel for plaintiff alleges that on November 4, 2011 he served a notice of deposition seeking to obtain the testimony of Schlomo Kovo, defendant Klein's son-in-law and an employee of United Packaging with knowledge of material facts. The witness failed to appear for a deposition. Plaintiff subsequently questioned Klein at his deposition with regard to the whereabouts of Kovo. Klein's first deposition was held on June 27, 2013 at which time Klein allegedly denied knowledge of all material facts as to the operation, bookkeeping, collection, and bank deposits, claiming that Kovo ran the office and did the bookkeeping and handled all the financials. When asked at that time about Kovo's location, Klein testified that Kovo moved to Israel with his wife and children sometime prior to the date of the deposition held in June 2013.
At Klein's continued deposition in November 2013, Mr. Klein testified that Kovo moved to Israel in August 2013. He stated that before August 2013 he was in the United States. Plaintiffs contend, therefore, that Klein intentionally testified falsely at his June 2013 deposition with regard to the whereabouts of Mr. Kovo and that his misrepresentation frustrated the plaintiffs' efforts to depose Kovo.
With respect to document disclosure, plaintiffs contend that their first demand for documents was made on November 4, 2011. Counsel states that for over two years defendants failed and refused to produce the requested documents pertaining to the income produced by Metro and United Packing during the relevant period of May 2011 through December 2012, tax documents for the relevant period, payroll documents for the relevant period and sales orders for the relevant period. Defendants claim the documents that were not turned over were destroyed during Hurricane Sandy in October 2012. However, plaintiffs assert that the defendants were on notice one year prior to the hurricane that the documents had been requested for production. Further, counsel asserts that because there were significant warnings prior to the hurricane, the defendants had an obligation to protect and preserve the documents by moving them to a safer location. Plaintiffs claim that the defendants wilfully refused [*3]to produce and protect the requested documents and that their reckless disregard amounts to spoliation of the documents.
In view of the alleged spoliation of records, plaintiffs seek an order striking the defendants' answer pursuant to CPLR 3126, or in the alternative, precluding the defendants from introducing the documents into evidence and precluding the defendants from cross-examining witnesses regarding the documents (citing Ingoglia v. Barnes & Noble Coll. Booksellers, Inc., 48 AD3d 636 [2d Dept. 2008]; Denoyelles v. Gallagher, 40 AD3d 1027 [2d Dept. 2007][when a party negligently loses or intentionally destroys key evidence, thereby depriving the non-responsible party from being able to prove its claim or defense, the responsible party may be sanctioned by the striking of its pleading]; Molinari v Smith, 39 AD3d 607 [2d Dept. 2007]; Mylonas v Town of Brookhaven, 305 AD2d 561 [2d Dept. 2003]; Baglio v St. John's Queens Hosp., 303 AD2d 341 [2d Dept. 2003]).
In opposition, defendants' counsel contends that the plaintiff filed a Note of Issue on December 16, 2013 affirming that all discovery was complete and as such sanctions for violations of discovery are not appropriate at this juncture (citing Blinds To Go (US), Inc. v. Times Plaza Dev., L.P., 111 AD3d 775 [2d Dept. 2013][the defendant failed to demonstrate any unusual or unanticipated circumstances so as to warrant vacating the Note of Issue and ordering additional discovery]). Secondly, defendants argue that the plaintiff failed to file an affirmation of good faith pursuant to NYCRR 202.7 (citing 148 Magnolia, LLC v. Merrimack Mut. Fire Ins. Co., 62 AD3d 486 [1st Dept. 2009]; Fulton v. Allstate Ins. Co., 14 AD3d 380 [1st Dept. 2005]). Third, counsel asserts that plaintiff has failed to serve non-party Schlomo Kovo with notice of the instant motion (citing 3120(b); Dune Deck Owners Corp. v J.J. & P. Assoc. Corp., 85 AD3d 109 [2d Dept. 2011]. Fourth, it is argued that plaintiff failed to comply with 22 NYCRR 202.21(d)(e) in that plaintiffs failed to move to vacate the Note of Issue within 20 days of filing (citing Audiovox Corp. v Benyamini, 265 AD2d 135 [2d Dept. 2000]). Counsel also alleges that Schlomo Kovo already testified under oath at a preliminary hearing.
The defendant also submits an affidavit from Ephrainm Klein dated March 20 2014, in which he states that he did not hide the fact that Kovo was terminated as an employee and moved to Israel. In explaining the discrepancy in the testimony regarding when Kovo moved to Israel, Ephraim states that he let Kovo go due to difficulties in the business causing "bad blood" between him and his son-in-law. He states that he was not speaking to his [*4]daughter or his son-in-law and as a result when he testified in June that Kovo had already moved to Israel it was because he had mistakenly heard from others that he left the country. He states that he actually moved at he end of August.
Upon review and consideration of the plaintiffs' motion and defendants' affirmation in opposition, this Court finds that Klein's testimony at his EBT in June to the effect that his son-in-law, Schlomo Kovo, a non-party witness with knowledge of essential facts concerning the underlying action, left the country when in fact he was still here, had the effect of frustrating the ability of the plaintiff to adequately prepare for trial. Mr. Klein testified at his deposition that Kovo ran the office, did the bookkeeping and handled all the financials. This court finds that the witness, under oath and in bad faith and without adequate excuse, failed to disclose the whereabouts of a necessary witness.
Accordingly the plaintiff's motion for an order precluding the defendants from producing Schlomo Kovo as a witness at trial is granted.
That branch of the plaintiff's application for an order striking the defendants' answer on the ground of spoliation for failure to preserve documents is denied as the plaintiff has not shown that the defendants negligently lost or intentionally destroyed key evidence and deprived the plaintiffs from being able to prove its claim. However, this ruling is without prejudice to the plaintiffs moving at trial as to preclusion of documents or precluding cross-examination of witnesses with respect to any records or documents sought to be introduced at trial and not produced during discovery as is appropriate under the circumstances.
Dated: June 23, 2014
Long Island City, NY
_____________________
ROBERT J. MCDONALD
J.S.C.
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