Phoenix Grantor Trust v Exclusive Hospitality, LLC

[*1] Phoenix Grantor Trust v Exclusive Hospitality, LLC 2018 NY Slip Op 50808(U) Decided on June 5, 2018 Supreme Court, Queens County Weiss, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 5, 2018
Supreme Court, Queens County

Phoenix Grantor Trust, Plaintiff,

against

Exclusive Hospitality, LLC, HIREN SHAH, VISHNU PATEL, DINESHCHANDRA G. PATEL, MUKESH I. PATEL, VIKAS B. PATEL, MAULESHKUMAR PATEL, AMRUT PATEL, KANAIYALAL K. PATEL, DILIPKUMAR I. PATEL, VIKRAM G. PATEL, CHANDRESH M. PATEL, KAUSHIK PATEL, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, THE NEW YORK CITY ENVIRONMENTAL CONTROL BOARD, NEW YORK CITY DEPARTMENT OF FINANCE, AND JOHN AND JANE DOES 1-10, ABC LLC 1-10 XYZ CORP, 1-10, Defendants.



710949/15
Allan B. Weiss, J.

The following numbered papers read on:

this motion (Seq.No.6) by defendants Exclusive Hospitality, LLC (Exclusive), Hiren Shah, Chandresh M. Patel and Kaushik Patel s/h/a Kaushek Patel (the Exclusive defendants) pursuant to CPLR 2304, 3101, 3120 and 3122 to quash the subpoenas duces tecum and ad testificandum issued by plaintiff to nonparty JPMorgan Chase Bank (Chase) and nonparty Mirani, Bagdai, Thakkar & Associates, LLC (Mirani); and this cross motion by plaintiff for an award of counsel fees and costs in relation to the motion pursuant to 22 NYCRR 130-1.1;

this motion (Seq.# 7) by defendants Exclusive, Hiren Shah, Chandresh M. Patel and Kaushik Patel (the Exclusive defendants) (1) pursuant to CPLR 2304, 3103, 3120 and 3122 to quash the subpoena duces tecum issued by plaintiff to nonparty McSamm Hotel Group LLC (McSamm), and (2) pursuant to CPLR 2304, 3103, 3120 and 3122 for a protective order directing that the Exclusive defendants are not required to respond to plaintiff's second and third [*2]discovery demands for inspection and copying of documents; and this cross motion by plaintiff (1) to compel the Exclusive defendants to respond and produce documents responsive to plaintiff's second and third discovery demands for inspection and copying of documents, (2) to compel defendant Chandresh M. Patel to appear for an examination before trial, and (3) for an award of counsel fees and costs pursuant to 22 NYCRR 130-1.1;

this motion (Seq.# 8) by plaintiff (1) to quash the subpoena duces tecum issued by the Exclusive defendants to nonparty Capital Crossing Servicing Company, LLC (Capital Crossing) and the subpoena duces tecum issued by the Exclusive defendants to nonparty Phoenix NPL LLC (Phoenix NPL), (2) pursuant to CPLR 2304 and 3103 for a protective order prohibiting the Exclusive defendants and defendants Maulesh Patel s/h/a Mauleshkumar Patel, Vishnu V. Patel s/h/a Vishnu Patel, Mukesh Patel s/h/a Mukesh I. Patel, Vakram G. Patel s/h/a Vikram G. Patel, Dinesh G. Patel s/h/a Dineshchandra G. Patel, Amrut K. Patel s/h/a Amrut Patel, Dilipkumar I. Patel, Vikas Patel s/h/a Vikas B. Patel and Kanaiyalal Patel s/h/a Kanaiyalal K. Patel (the Patel defendants) from seeking disclosure of the documents pursuant to which Phoenix NPL purchased the subject mortgage loan and any information related to the purchase price of the subject mortgage loan or other loans from the Federal Deposit Insurance Corp. (FDIC) portfolio of loans, and (3) for an award of counsel fees and costs pursuant to 22 NYCRR 130-1.1; and this cross motion by the Patel defendants to compel the production of all documents sought in their Second Demand for Production of Documents and Inspection.

Papers/EF DOC -Numbered

Mot.Seq# 6 Notice of Motion - Affidavits - Exhibits 259-266, 283

Notice of Cross Motion - Affidavits - Exhibits 342-381

Answering Affidavits - Exhibits 267-272, 426-432, 455-457

Mot.Seq# 7 Notice of Motion - Affidavits - Exhibits 273-282

Notice of Cross Motion - Affidavits - Exhibits 297-341

Answering Affidavits - Exhibits 433-440

Mot.Seq# 8 Notice of Motion - Affidavits - Exhibits 287-295 [FN1]

Notice of Cross Motion - Affidavits - Exhibits 385-405

Answering Affidavits - Exhibits 409-421, 441-446,[FN2] 452-454

Upon the foregoing papers it is ordered that the motions Seq. Nos. 6, 7, and 8 (including cross motions) are consolidated for a single decision, and are determined as follows:

Plaintiff commenced this action seeking to foreclose a consolidated mortgage on the real [*3]property located at 53-01 and 53-05 Queens Boulevard, Queens, New York (the subject property) given by defendant Exclusive to secure an "Amended, Restated and Consolidated" promissory note, evidencing a loan in the principal amount of $10,500,000.00, plus interest, for the acquisition of land and construction of a hotel, from National Republic Bank of Chicago (NRBC), and to recover on guarantees. In its complaint, plaintiff alleges that defendant Exclusive defaulted under the note and mortgage by failing to make payment of the balance of the mortgage debt at maturity on October 18, 2015, and to pay real estate taxes and assessments. Plaintiff further alleges that defendants Hiren Shah, Vishnu Patel, Dineshchandra G. Patel, Mukesh Patel, Vikas Patel, Mauleshkumar Patel, Amrut Patel, Kanaiyalal K. Patel, Dilipkumar I. Patel and Vikram G. Patel, and Chandresh M. Patel and Kaushik Patel s/h/a Kaushek Patel are guarantors of payment of all amounts due and owing NRBC, pursuant to their respective guaranties. Plaintiff additionally alleges it is successor by assignment to Phoenix NPL, as the assignee of the Federal Deposit Insurance Corp. (FDIC) in its capacity as the receiver for NRBC, and physically possesses the note and related debt instruments.

In lieu of answering, the Exclusive defendants moved to dismiss the complaint insofar as asserted against them, and the Patel defendants separately moved to dismiss the complaint insofar as asserted against them. Both motions were denied (see order dated June 20, 2016). Plaintiff moved for leave to appoint a temporary receiver. The motion was denied by order dated August 2, 2016. The motion by plaintiff for leave to reargue and renew its motion for leave to appoint a temporary receiver was also denied (see order dated March 16, 2017).

The Exclusive defendants thereafter served a combined answer, asserting various affirmative defenses, including lack of standing, and interposing counterclaims based upon their claim that Exclusive obtained a 10-year mortgage loan from NRBC, the note executed by the managers of Exclusive at the closing of the mortgage transaction was a 10-year note, Exclusive is not in default under the loan documents, and that to the extent plaintiff relies upon a note with a five-year term, the note has been altered to reduce the term from a 10-year term, without their knowledge or consent and as a consequence of fraud. The Exclusive defendants seek declaratory relief and an award of the costs, including reasonable attorneys' fees. The Patel defendants also served a combined answer, with various affirmative defenses. It is unclear whether the remaining defendants have appeared or answered.

At the outset, the court notes that the parties have already engaged in extensive document discovery and have held depositions of defendants Kaushik Patel and Hiren Shah, and of nonparty witnesses, Julie Kaminski, the attorney who represented NRBC in connection with the mortgage loan transaction, and Brian Doherty, an employee of Capital Crossing, the servicer of the subject mortgage loan. Plaintiff's counsel asserts, without contradiction, that plaintiff has provided the Exclusive defendants and the Patel defendants with approximately 7000 pages of documents which are responsive to their demands, including all non-privileged documents and communications related to the subject mortgage loan between plaintiff, Capital Crossing, Phoenix NPL, the FDIC, and/or Wolin Rosen, Ltd., the attorneys who represented NRBC in connection with the subject loan transaction, all non-privileged documents and communications related to the loan between NRBC and the FDIC in the possession, custody and control of Phoenix NPL and Capital Crossing. Plaintiff's counsel also states that neither Capital Crossing nor Phoenix NPL ever exchanged any documents or communications related to the loan with [*4]NRBC or any governmental agency or entity other than the FDIC, which documents have already been produced by plaintiff.

CPLR 3101(a) provides that "[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof." The phrase "material and necessary" must " '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' " (Matter of Kapon v Koch, 23 NY3d 32, 38 [2014], quoting Allen v Crowell—Collier Publ. Co., 21 NY2d 403, 406 [1968]). However, "unlimited disclosure is not mandated, and the rules provide that the court may issue a protective order 'denying, limiting, conditioning or regulating the use of any disclosure device' to 'prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts' " (County of Suffolk v. Long Is. Power Auth., 100 AD3d 944, 946 [2d Dept 2012], quoting CPLR 3103[a]; see Berkowitz v 29 Woodmere Blvd. Owners', Inc., 135 AD3d 798 [2d Dept 2016]; Accent Collections, Inc. v Cappelli Enters., Inc., 84 AD3d 1283 [2d Dept 2011]). Thus, the court may issue a protective order that can be used to limit, condition or regulate the disclosure device used, including where a disclosure device seeks irrelevant information or is otherwise overly broad and unduly burdensome (see CPLR 3103; White Bay Enterprises, Ltd. v Newsday, Inc., 288 AD2d 211 [2d Dept 2001]). Any party opposing the disclosure, not just the nonparty, may seek a protective order (see Velez v Hunts Point Multi—Service Center, Inc., 29 AD3d 104 [1st Dept 2006]). The supervision of disclosure and the setting of reasonable terms and conditions rests within the sound discretion of the court and, "absent an improvident exercise of that discretion, its determination will not be disturbed" (Mattocks v White Motor Corp., 258 AD2d 628, 629 [2d Dept 2009] [citation omitted]; see Gilman & Ciocia, Inc. v Walsh, 45 AD3d 531 [2d Dept 2007]).

In addition, the court may quash, fix conditions or modify a subpoena (see CPLR 2304). Because a nonparty is likely to be less cognizant of the issues in pending litigation than a party, when disclosure is sought from a nonparty witness, as statement, either on the face of the subpoena or in an accompanying notice, must be provided as to the "circumstances or reasons" why the disclosure is "sought or required" from the nonparty witness (CPLR 3101[a][4]; see Matter of Kapon v Koch, 23 NY3d at 39; Hudson City Savings Bank v 59 Sands Point, LLC, 153 AD3d 611 [2d Dept 2017]; Reid v Soults, 138 AD3d 1091, 1092 [2d Dept 2016]). After the subpoenaing party has established compliance with the CPLR 3101(a)(4) notice requirement, disclosure from a nonparty requires no more than a showing that the requested information is relevant to the prosecution or defense of the action (see Matter of Kapon v Koch, 23 NY3d at 38; see also Ferolito v Arizona Beverages USA, LLC, 119 AD3d 642, 643 [2d Dept 2014]; Jacobs v Johnston, 97 AD3d 538, 538-539 [2d Dept 2012]). However, the party or nonparty moving to vacate the subpoena has the initial burden of establishing either that the requested deposition testimony or documents are "utterly irrelevant' " to the action" or that "the futility of the process to uncover anything legitimate is inevitable or obvious' " (Matter of Kapon v Koch, 23 NY3d at 38, quoting Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 331-332 [1988]; see Ferolito v Arizona Beverages USA, LLC, 119 AD3d at 643).

Motion Seq. No. 6

The Chase Subpoena

With respect to the branch of the motion by the Exclusive defendants pursuant to CPLR 2304, 3101, 3120 and 3122 to quash the subpoena duces tecum and ad testificandum issued by plaintiff to nonparty Chase (the Chase subpoena), the Chase subpoena fails to provide sufficient notice of the "circumstances or reasons" why the disclosure was "sought or required" from Chase (CPLR 3101[a][4]). On its face, the subpoena vaguely and conclusorily states that such disclosure is sought from Chase because Chase "posess[es] information material and relevant to the dispute between to [sic] the parties concerning the matters set forth on Exhibit A." Exhibit A, however, merely sets forth definitions and instructions, followed by a list of the documents requested, i.e. various bank records relative to defendant Exclusive's account, including statements, checks, deposit slips, signature cards and amendments thereto, and records of incoming and outgoing wire transfers or electronic funds transfers from October 1, 2014 to the date of the subpoena. It does not indicate the circumstances or reasons why disclosure is sought. In addition, there is no separate notice, setting forth the circumstances or reasons underpinning the request for production of the documents, accompanying the subpoena (cf. Matter of Kapon v Koch, 23 NY3d 32, 39 [copies of the amended complaint therein were annexed to the subpoenas]; Bianchi v Galster Mgt. Corp., 131 AD3d 558 [2d Dept 2015] [copy of a document providing the circumstances or reasons requiring the deposition was attached to the subpoena]). Absent the required notice, the Chase subpoena is facially deficient (CPLR 3101[a][4]). That branch of the motion by the Exclusive defendants to quash the subpoena duces tecum ad testificandum issued by plaintiff to Chase is granted.

The Mirani Subpoena

With respect to the branch of the motion by the Exclusive defendants pursuant to CPLR 2304, 3101, 3120 and 3122 to quash the subpoena duces tecum and ad testificandum issued to nonparty Mirani (the Mirani subpoena), plaintiff's counsel did not seek, under CPLR 3108, the issuance of a commission or letters rogatory in furtherance of discovery in this action. Rather, plaintiff's counsel caused, pursuant to the New Jersey Rules of Court (R:4:11-4[b]), the Mirani subpoena to be issued in New Jersey directing Mirani to appear for deposition and produce the sought-after documents at the New Jersey law offices of plaintiff's counsel, on November 2, 2017. Rule 4:11-4(b)(1) of the New Jersey Rules of Court provides that whenever the deposition of a person is to be taken in New Jersey pursuant to the laws of a foreign state for use in connection with proceedings in the foreign state, an out-of-state attorney or party may submit a foreign subpoena along with a New Jersey subpoena, in the name of the Clerk of the New Jersey Superior Court, to an attorney authorized to practice law in New Jersey or to the Clerk of the Superior Court or designee. Under Rule 4:11-4(b)(6) of the New Jersey Rules of Court, a motion or application to the court for a protective order or to enforce, quash or modify a subpoena issued by the attorney authorized to practice in New Jersey or by the Clerk of the Superior Court under section (b) of Rule 4:11-4 must be submitted to the court in the county which discovery is to be conducted, or the deponent resides, is employed or transacts business.

Plaintiff's counsel is authorized to practice of law in New Jersey and New York. The [*5]Exclusive defendants do not dispute that Mirani's place of business is in Passaic County, New Jersey. Thus, pursuant to the Rules of Court of New Jersey, any motion by the Exclusive defendants to quash the Mirani subpoena should have been made to the court in Passaic County, New Jersey (see New Jersey Rules of Court Rule 4:11-4[b][6]; see also Matter of Aerco Intl., Inc. (Precision Machining & Stamping Inc.), 40 Misc 3d 571 [Sup Ct, Westchester County 2013]). The branch of the motion by the Exclusive defendants to quash the subpoena duces tecum and ad testificandum issued to nonparty Mirani is denied.

The cross motion by plaintiff pursuant to 22 NYCRR 130-1.1 for an award of counsel fees and costs in relation to the motion by the Exclusive defendants to quash the Chase and Mirani subpoenas is denied. Plaintiff has failed to demonstrate that the conduct of the Exclusive defendants was frivolous (see 22 NYCRR 130—1.1[c]).

Motion Seq. No. 7

McSamm subpoena

With respect to that branch of the motion by the Exclusive defendants pursuant to CPLR 2304. 3103, 3120 and 3122 to quash the subpoena duces tecum issued by plaintiff to nonparty McSamm Hotel Group LLC (McSamm) (the McSamm subpoena), the McSamm subpoena fails to provide sufficient notice of the "circumstances or reasons" that disclosure is "sought or required" from McSamm (CPLR 3101[a][4]). On its face, the McSamm subpoena vaguely and conclusorily states that such disclosure is sought because McSamm "posess[es] information material and relevant to the dispute between to [sic] the parties concerning the matters set forth on Exhibit A." Exhibit A, however, does not indicate the circumstances or reasons why disclosure is sought. It merely sets forth definitions and instructions, followed by a list of the documents requested, i.e. various emails and attachments. Nor is there a separate notice, setting forth the circumstances or reasons such disclosure is sought or required, accompanying the subpoena (cf. Matter of Kapon v Koch, 23 NY3d 32, 39; Bianchi v Galster Mgt. Corp., 131 AD3d 558). Absent the required notice, the McSamm subpoena is facially deficient (CPLR 3101[a][4]). That branch of the motion by the Exclusive defendants to quash the subpoena duces tecum issued by plaintiff to McSamm is granted.

Plaintiff's Second Discovery Demand for Inspection and Copying of Documents

The court notes that the second discovery demand for inspection and copying of documents is directed at defendants Exclusive and Hiren Shah, and the Patel defendants. Thus, that branch of the cross motion by plaintiff to compel defendants Chandresh M. Patel and Kaushik Patel to respond to that demand is denied.

By Request Nos. 1, 2, 3 and 4 of the second discovery demand, plaintiff seeks disclosure of financial statements, profit and loss statements, balance sheets and tax returns for defendant Exclusive for the years 2014, 2015, 2016 and 2017. These items are not material or necessary to the resolution of plaintiff's claim that defendants are in default under the mortgage loan based upon defendants' alleged failure to make payment of the amounts due at maturity, and the real [*6]estate taxes and assessments despite written demand, or defendants' defenses and/or counterclaims. Nor has plaintiff shown that such disclosure would lead to the discovery of admissible proof which would bear on these claims and defenses. "The issues framed by the pleadings determine the scope of discovery in a particular action" (Mavroudis v. State Wide Ins. Co., 102 AD2d 864 [2d Dept 1984]; see Kern v City of Rochester, 261 AD2d 904 [2d Dept 1999]). Although plaintiff contends that defendant Exclusive is obligated under the loan documents to make full financial disclosure and protect cash proceeds pledged as collateral, plaintiff has not alleged any default by defendant Exclusive in fulfilling such obligations, as a predicate for the institution of this action for foreclosure. Hence, any disclosure relative to these financial documents based upon a claim of alleged additional defaults, is not relevant to the issues herein. In addition, to the extent plaintiff seeks, by Request No. 3, disclosure of K-1, W-2 and 1099 statements given by defendant Exclusive to members, partners or owners of Exclusive, such statements likewise are utterly irrelevant to the issues presented in this action.

To the extent plaintiff seeks, by Request No. 5, disclosure of checks, wire transfers and other forms of payment evidencing that defendant Exclusive paid all real estate taxes and assessments for the subject premises for calendar years 2014, 2015, 2016 and 2017, the claimed default in payment of the real estate taxes occurred no later than October 21, 2015, when the action was commenced. Plaintiff therefore may obtain disclosure from defendants Exclusive and Hiren Shah of checks, wire transfers and other forms of payment evidencing that defendant Exclusive paid all real estate taxes and assessments for the subject property only for calendar year 2014, and for the period of January 1, 2015 through October 21, 2015. With respect to Request No. 8, plaintiff also may obtain disclosure from defendants Exclusive and Hiren Shah of those tax bills, water and sewer bills and statements regarding any tax, liability or sums owed by defendant Exclusive in relation to the subject property which were received by the Exclusive defendants from the City of New York from May 20, 2008, the date of the subject mortgage, only until October 21, 2015.

Request No. 6 seeks disclosure of bank statements, cancelled checks, wire transfers and payments relating to defendant Exclusive's account at JPMorgan Chase Bank evidencing all funds held in escrow by Exclusive relating to the monthly principal payments due to the holder of the subject note for the period of January 1, 2016 through the present. Plaintiff commenced this action based upon defaults which are alleged to have occurred before October 21, 2015. The items sought in Request No. 6 are not material or necessary to this action, and are not likely to lead to evidence that would be relevant to the claimed defaults by defendants or defendants' defenses or counterclaims.

Request No. 7 seeks disclosure of bank statements, cancelled checks, wire transfers and all debts and credits relating to defendant Exclusive's account at JPMorgan Chase Bank, including but not limited to account No. 100869700, for the period January 1, 2014 to the present. Plaintiff may obtain disclosure from defendants Exclusive and Hiren Shah of those bank statements, cancelled checks, wire transfers and all debts and credits relating to defendant Exclusive's accounts at Chase, including but not limited to account No. 100869700, but only to the extent such statements, wire transfers, debts and credits are related to the payment of the subject mortgage loan or real property taxes for the subject property, for the period January 1, 2014 to October 21, 2015. To the extent Request No. 7 seeks disclosure of such items for any [*7]period after October 21, 2015, or in relation to other business, loans, etc., of defendant Exclusive, they are not material or necessary to this action, and are not likely to lead to evidence that would be relevant to the claimed defaults by defendants or defendants' defenses and/or counterclaims.

To the extent Request Nos. 9 and 10 seek disclosure of emails sent by any of defendants Exclusive and Hiren Shah, and the Patel defendants to Julie Kaminski, the attorney who represented NRBC in connection with the mortgage loan transaction, during the period of 2007 through October 21, 2015, regarding the subject mortgage loan, and Edward Fitzgerald, the president of NRBC or other representative of NRBC, or a representative of the FDIC, regarding the subject mortgage loan, such emails are material or necessary to the issues in controversy herein, including the term/maturity date of the subject mortgage loan, and whether there was an assent by defendant Exclusive to any alteration of the note. Thus, plaintiff may obtain such disclosure from defendants Exclusive and Hiren Shah only for the period January 1, 2007 through October 21, 2015. To the extent Request No. 10 seeks disclosure of emails sent by Kaminski or Fitzgerald, or other NRBC representatives to the Exclusive defendants, during the period of 2007 through October 21, 2015, regarding the subject mortgage loan, it is undisputed that plaintiff already is in possession of such emails, and has full access to the NRBC file, insofar as plaintiff previously produced thousands of pages of documents from that file. To the extent Request Nos. 10 and 11 seek disclosure of emails exchanged by and between any of the Exclusive defendants and Kaminski, Fitzgerald, other representatives of NRBC, or representatives of FDIC for the period following commencement of the action, such items are neither material nor necessary, nor likely to lead to relevant evidence.

Request No. 12 seeks disclosure of copies of all tax appeals or proceedings challenging the taxes assessed against or relating to the subject property. These items are utterly irrelevant to the issues in this action.

That branch of the motion by the Exclusive defendants pursuant to CPLR 2304, 3103, 3120 and 3122 for a protective order in relation to plaintiff's second discovery demand for inspection and copying of documents is granted to the extent that defendants Exclusive and Hiren Shah are not required to respond to (1) Requests Nos. 1, 2, 3, 4, 6, and 12, (2) Request No. 5 insofar as it seeks disclosure of checks, wire transfers, and other forms of payment evidencing that defendant Exclusive paid all real estate taxes and assessments for the subject property for the period October 22, 2015 through December 31, 2015, and for the calendar years 2016 and 2017, (3) Request No. 7 insofar as it seeks disclosure of (a) bank statements, cancelled checks, wire transfers and all debts and credits relating to defendant Exclusive's account at Chase, including but not limited to account No. 100869700, which are unrelated to the payment of the subject mortgage loan or real property taxes for the subject property for the period January 1, 2014 to October 21, 2015, and (b) bank statements, cancelled checks, wire transfers and all debts and credits relating to defendant Exclusive's account at Chase, including but not limited to account No. 100869700, after October 21, 2015, (4) Request No. 8 insofar as it seeks disclosure of tax bills, water and sewer bills and statements regarding any tax, liability or sums owed by defendant Exclusive in relation to the subject property which were received by the Exclusive defendants from the City of New York after October 21, 2015, (5) Request No. 9 insofar as it seeks disclosure of emails sent by defendants Exclusive and Hiren Shah, and the Patel defendants to Julie Kaminski regarding the subject mortgage loan, (6) Request No. 10 insofar as it seeks emails [*8]sent by defendants Exclusive and Hiren Shah, and the Patel defendants to Edward Fitzgerald or another representative of NRBC, regarding the subject mortgage loan, after October 21, 2015, and (7) Request No. 11 insofar as it seeks disclosure of emails sent by defendants Exclusive and Hiren Shah, and the Patel defendants to Edward Fitzgerald or a representative of the FDIC regarding the subject mortgage loan after October 21, 2015.

The branch of the cross motion by plaintiff to compel defendants Exclusive and Hiren Shah to respond and produce documents responsive to plaintiff's second discovery demands for inspection and copying of documents is granted only to the extent of directing defendants Exclusive and Hiren Shah to produce for inspection and copying, at the offices of Windels Marx Lane & Mittendorf, LLP, plaintiff's counsel, at 156 West 56th Street, New York, New York on July 9, 2018 at 10:00 A.M., (1) checks, wire transfers and other forms of payment evidencing that defendant Exclusive paid all real estate taxes and assessments for the subject property for calendar year 2014, and for the period of January 1, 2015 through October 21, 2015, (2) those bank statements, cancelled checks, wire transfers and all debts and credits relating to the payment of the subject mortgage loan or real property taxes for the subject property, for the period January 1, 2014 to October 21, 2015, made from defendant Exclusive's accounts at Chase, including but not limited to account No. 100869700, (3) those tax bills, water and sewer bills and statements regarding any tax, liability or sums owed by defendant Exclusive in relation to the subject property which were received by the Exclusive defendants from the City of New York from May 20, 2008 through October 21, 2015, (4) those emails sent by defendants Exclusive and Hiren Shah, and the Patel defendants to Kaminski or Fitzgerald, or other representative of NRBC or a representative of the FDIC during the period of January 1, 2007 through October 21, 2015, regarding the subject mortgage loan.

Plaintiff's Third Discovery Demand for Inspection and Copying of Documents

The court notes that the third discovery demand for inspection and copying of documents is directed at defendants Exclusive and Hiren Shah, and the Patel defendants. Thus, that branch of the cross motion by plaintiff to compel defendants Chandresh M. Patel and Kaushik Patel to respond to that demand is denied.

Plaintiff, by Requests Nos. 1, 2, 3, 4 and 5 of the third discovery demand, seeks disclosure of the loan instruments referring to, relating to or evidencing the "Sterling Loan," "Hillside Loan," and "Krishna Loan," correspondence exchanged by and among defendants Exclusive and Hiren Shah, and the Patel defendants, referring to such loans, and correspondence exchanged between those defendants and NRBC referring or relating to such loans. Such loan instruments, and correspondence related thereto, are wholly irrelevant to this action.

Request No. 6 seeks disclosure of all correspondence, documents and communications between defendants Exclusive and Hiren Shah, and the Patel defendants, and NRBC regarding financing for Exclusive or the subject property involving the U.S. Small Business Administration (SBA), including any SBA loan programs.[FN3] These requested items are duplicative, insofar as [*9]plaintiff has full access to NRBC's file regarding the subject mortgage loan, having produced thousands of documents from it.

Plaintiff's Request No. 7 seeks disclosure of all documents sent by or received from certain email addresses "regarding the [subject mortgage loan], NRBC's administration of the ... loan, the FDIC, or [p]laintiff." Although Request No. 7 lists the email addresses, the identity of the person or entity associated with them is not specified. Moreover, the request is clearly overbroad since it seeks disclosure of all documents sent by or received from such addresses regarding the FDIC or plaintiff, and is not limited to those regarding the subject mortgage loan. Furthermore, it is duplicative insofar as it appears to seek emailed documents which are already in the possession of plaintiff by virtue of plaintiff's possession of the files of Kaminski and NRBC regarding the subject mortgage loan.

That branch of the motion by the Exclusive defendants pursuant to CPLR 2304, 3103, 3120 and 3122 for a protective order directing that defendants Exclusive and Hiren Shah are not required to respond to plaintiff's third discovery demand for inspection and copying of documents is granted, and that branch of the cross motion by plaintiff to compel defendants Exclusive and Hiren Shah to respond and produce documents responsive to plaintiff's third discovery demand is denied.

Plaintiff's Notice to Take the Deposition of defendant Chandresh M. Patel

With respect to the branch of the cross motion by plaintiff to compel defendant Chandresh M. Patel to appear for an examination before trial, plaintiff served a notice dated July 1, 2016 to take the deposition of defendant Chandresh M. Patel, and pursuant to the preliminary conference order dated May 15, 2017, all depositions of the parties were to be concluded by September 19, 2017. By compliance conference order dated September 19, 2017, the court ordered all depositions to be completed by December 19, 2017 and directed that plaintiff appear for its deposition prior to the appearance by the remaining defendants for their depositions. No deposition of defendant Chandresh M. Patel has been held.

The Exclusive defendants do not specifically oppose the branch of the cross motion by plaintiff to compel defendant Chandresh M. Patel to appear for an examination before trial.[FN4] Under such circumstances, that branch of the cross motion by plaintiff to compel the deposition of defendant Chandresh M. Patel is granted to the extent that defendant Chandresh M. Patel shall [*10]appear for a deposition on or before July 23, 2018, at the offices of Windels MarxLane & Mittendorf, LLP, 156 West 56th Street, New York, New York 10019, counsel for plaintiff. The deposition shall not be adjourned.

That branch of the cross motion by plaintiff for an award of counsel fees and costs pursuant to 22 NYCRR 130-1.1 is denied.

Motion Seq. No. 8

Capital Crossing Subpoena

That branch of the motion by plaintiff to quash the subpoena duces tecum issued by the Exclusive defendants to nonparty Capital Crossing is granted. A subpoena is required to be served in the same manner as a summons unless the person or entity agrees upon another method of service (see CPLR 2303[a]; CLR 308). The Exclusive defendants have failed to offer any proof of service of the subpoena upon Capital Crossing. To the extent the Exclusive defendants claim they served the Capital Crossing subpoena upon Mark Slama, Esq., plaintiff's counsel, they have failed to show that Capital Crossing authorized Slama by appointment, or designation to receive process on its behalf (see CPLR 311—a[a]; Limited Liability Company Law § 303[a]). Furthermore, Slama denies that Capital Crossing authorized him to accept service of the Capital Crossing subpoena on its behalf. In addition, to the extent Slama received a copy of the Capital Crossing subpoena by email, the Exclusive defendants have failed to show that Capital Crossing agreed to the use of email as a method of service of the subpoena (see CPLR 311-a[a]).

Phoenix NPL Subpoena

With respect to the branch of the motion by plaintiff to quash the subpoena duces tecum issued by the Exclusive defendants to nonparty Phoenix NPL, the subpoena is facially deficient insofar as it fails to provide sufficient notice of the "circumstances or reasons" why the disclosure was "sought or required" from Phoenix NPL (CPLR 3101[a][4]). In addition, it calls for the production of all documents related to any loans allegedly made by NRBC to defendant Exclusive, and related to "the rules, policies and/or procedures regarding the creation, retention, storage, and/or deletion of electronic records, including, without limitation, electronic mail." To the extent the Exclusive defendants seek production of documents relative to "any" loan allegedly made by NRBC to defendant Exclusive, other than the subject mortgage loan, such documents are not material and necessary to the prosecution or defense of the action or the counterclaims, and are not likely to lead to evidence that would be relevant to the claimed defaults by defendants or defendants' defenses or counterclaims. Such subpoena therefore is overly broad and unduly burdensome. That branch of the motion by plaintiff to quash the subpoena duces tecum issued by the Exclusive defendants to nonparty Phoenix NPL LLC is granted. That branch of the motion by plaintiff for an award of counsel fees associated with its motion to quash is denied (see 22 NYCRR 130-1.1).

The Patel defendants' Second Notice for Discovery and Inspection of Documents

With respect to the cross motion by the Patel defendants to compel the production of all documents sought in their second notice for discovery and inspection of documents, served on September 27, 2017, the Patel defendants have failed to provide a copy of their second notice for discovery and inspection to the court in support of their cross motion, and no copy of such notice is included among the e-filed documents. It appears, however, that plaintiff did not produce any of the sought-after documents, but instead served a response. In the response, plaintiff recited, apparently verbatim, the various demands set forth in the Patel defendants' second notice for discovery and inspection, and raising various objections to each demand set forth in the second notice. The Patel defendants make no claim that plaintiff's recitations of their demands, as set forth in plaintiff's response, are inaccurate. Therefore, the court shall consider such recitations in determining which documents are sought and whether to compel their production.

Demands Nos. 1, 2, 3, and 4 of the second notice are overly broad in scope and unduly burdensome. It clearly is not within plaintiff's knowledge as to whether a document bearing Edward Fitzgerald's signature is genuine or not, or whether a document signed by any representative of NRBC was pre-dated or post-dated.

Plaintiff's counsel asserts that plaintiff has already produced all non-privileged documents responsive to Demand Nos. 5-8, 11, 13-22, 25-26, 33-34, and 36 of the second demand. The Patel defendants do not dispute such assertion, but rather contend that there is a need for further discovery in relation to a defense to a potential claim of plaintiff based upon an equitable mortgage. Plaintiff has neither asserted a claim based upon an equitable mortgage in the action, nor moved to amend its complaint to do so. The items sought by the Patel defendants which purportedly relate to an equitable mortgage claim, therefore, are immaterial and unnecessary to the prosecution of, or the defense or counterclaims asserted in, this action. Plaintiff's counsel, furthermore, indicates that plaintiff is not in possession of any documents related to the subject mortgage loan that are responsive to Demand Nos. 27-32 of the second notice.

With respect to Demand Nos. 9-10 and 12, the documents which evidence the amount of money paid by plaintiff or by Phoenix NPL, LLC for the subject mortgage loan or guarantees, or any other loans or guarantees purchased in a bundle with the subject mortgage loan or guarantees are completely irrelevant to the issues involved in this litigation. Again, there is no need for discovery in relation to a potential defense to a claim based upon an equitable mortgage.

Demand No. 23 seeks the production of any and all communications between any employee or representative of plaintiff and Julie Kaminski. Demand No. 24 seeks the production of any and all communications between Mark Slama, Esq. or "anyone" from the offices of plaintiff's counsel and Kaminski or anyone from Wolin Rosen, Ltd. Such demands are overly broad, and may include communications which are protected as work product of plaintiff's counsel, or under the attorney-client privilege, and thus are exempt from disclosure pursuant to CPLR 3101(b).

Demand No. 35 calls for production of any and all communications to any governmental agencies related to the filing of any forged signatures and any attempts to remove such filings from the public record. Such demand is ambiguous insofar as it does not indicate from whom the communications were made, and is overly broad and unduly burdensome as to be palpably improper.

The cross motion by the Patel defendants to compel the production of all documents [*11]sought in their second notice for discovery and inspection of documents is denied.

Plaintiff's Protective Order Request

With respect to the branch of the motion by plaintiff pursuant to CPLR 2304 and 3103 for a protective order prohibiting the Exclusive defendants and the Patel defendants from seeking disclosure of the underlying documents by which Phoenix NPL purchased the subject mortgage loan and any information related to the purchase price of the subject mortgage loan or other loans from the "FDIC portfolio" of loans, plaintiff has already produced the allonge dated as of February 20, 2015, the assignments of mortgage executed on March 25, 2015 and June 16, 2015, and the Omnibus Loan Assignment dated February 20, 2015. The documents underlying the purchase of the subject mortgage loan or information regarding the purchase price of it or other loans from the FDIC portfolio of loans are not material or necessary to the prosecution of this action, or the defenses or counterclaims, and are not likely to lead to evidence that would be relevant to the claimed defaults by defendants or defendants' defenses and/or counterclaims. The Exclusive defendants and the Patel defendants make no claim that they were parties to the assignments or the purchase. That branch of the motion by plaintiff pursuant to CPLR 2304 and 3103 for a protective order prohibiting the Exclusive defendants and the Patel defendants seeking disclosure of the underlying documents by which Phoenix NPL purchased the subject mortgage loan and any information related to the purchase price of the subject mortgage loan or other loans from the FDIC portfolio of loans is granted.

That branch of the motion by plaintiff for an award of counsel fees and costs pursuant to 22 NYCRR 130-1.1 is denied.

Dated: June 5, 2018

J.S.C. Footnotes

Footnote 1:The Exclusive defendants did not supply the court with working (hard) copies of their memorandum of law and reply memorandum of law (EF Doc. #288 and #442) as required pursuant to the court's rules regarding e-filed motions. The court excuses their failure to do so, and has considered the memoranda, but will not overlook such failure in the future.

Footnote 2:see n 1.

Footnote 3:Kaminski testified that Larry Lawrence, Esq., the attorney who represented the borrowers in connection with the mortgage loan transaction, told her, prior to the closing of the subject mortgage loan, that his clients had applied for an "SBA 504" loan with a 10-year term.

Footnote 4:Although counsel for defendant Chandresh Patel previously indicated in an email dated September 22, 2017 that Chandresh has medical issues which prevent him from testifying, the Exclusive defendants do not make that claim now, or offer any evidence thereof in opposition to the cross motion by plaintiff. Moreover, counsel for the Exclusive defendants indicated in an email dated December 13, 2017 that the Exclusive defendants would produce defendant Chandresh M. Patel at an agreed upon date and time.