Reich v 559 St. Johns Pl, LLC

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Reich v 559 St. Johns Pl, LLC 2022 NY Slip Op 32923(U) August 17, 2022 Supreme Court, Kings County Docket Number: Index No. 506861/19 Judge: Lawrence Knipel Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 506861/2019 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 RECEIVED NYSCEF: 08/30/2022 At an IAS Term, Part COMM,,6 of the Supreme Court of the State of New York, held in and for the County of Kings, at the. Courthouse, at 36() Adams Street, Brooklyn, New York, on the 17 th day of August, 2022. PRES ENT: HON. LA WREN CE KN IPEL, Justice. -------------------- .------ .-------. ------------- .--- .---------- X ALEXANDER REICH, Plaintiff, -againstIndex No. 506861/19 559 ST. JOHNS PL, LLC; LATANYA A. PIERCE; LENOX PACIFIC LLC; THE CITYOFNEW YORK; NEW YORK GrTY DEPARTMENTOF TAXATION AND FINANCE; NEW YORI( CITY DEPARTMENT OF HOUSING PRESERVATION.AND DEVELOPMENT; et. al., Moti0i1 Sequence 4 Defendants. --- .-------------------- .--------------------- .------- . ------X. The following e-filed papers read herein: NYSCEF Doc Nos. Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed"_·_ _ _ _ _ __ Opposition Affidavits (Affirmations) Annexed._ _ __ Reply Affidavits (Affirmations)_·_ _ _ _ _ _ _ __ 112-116 118-'- 122 125. In thiscommercialmortgage foreclosureaction, defendant 559 ST. JOI-INSPL.LLC (hereinafter ''559 St. Johns'') moves for art order compelling plaintiff to respond to its Demand for Discovery and Inspection dated March 3 1, 2021, or, in the altern~ti ve, an order strjk ing. plaintiff's comp la int pursuant to CPLR 3126. According to the complaint, on .August 21, 2008, Nechadim Corp., (hereinafter ''NEC'') loaned 559 St. Johns the principal a1nountof$450,000;00 (heteinafterthe "Loan;') [* 1] 1 of 6 INDEX NO. 506861/2019 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 RECEIVED NYSCEF: 08/30/2022 (NYSCEF Doc No. 1, iJ 12). Plaintiff Alexai1der Reich (plairttift) is the owner of NEC (id.); To evidence its indebtedness under the Loan, 559 St. Johns executed a note in the mnount of $450,000.00 in favor of NEC which was secured by a ntortgage ertcmnbeting the property located at 1308 Caton Avenue in Brooklyn, New York (hereinafter ''Mortgaged Premi'ses") (id. at ,i,i 14-15). The complaint further alleges that 559 St. Johns failed to comply with the ter111s and conditions ofthe Note and Mortgage by defaulting in the paymentofthe interest and principal when due (id. at ,i 34). In its answer, 559 St. Johns asserts severaLcounterclaims including causes ofaction for fraud and violation of the Federal Racketeering Influencedand Corrupt Organizations Act(see NYSCEF Doc No. 11, Counterclaims ,i,i 1, 3). 559 St. Johns alleges, in sum and . . substance, that plaintiff and NEG fraudulently induced the Loan by advancing less funds than theagreed llpon amount, obtaining large sums ofmortey from the defendant "under., the-table" as a cortditioi1 of the Loan, forcing defendant to pay plaintiff broker's m1d attorneJ's fees as well as all closing costs, including ones mandated by law to be paid by the lender (see id. at Counterclaims ,i IJ. 559 St. Johns seeks, via its courtterclaims, that the Mortgage be rescinded and that plaintiff be made to pay defendant damages (id.). On August 23, 2021, 559 St Johns filed the instant motion seeking to compd plaintiff to respond to its Demand forDiscovery and Inspection dated March 31, 2021. 559 .·St. John's demand seeks the·following: "(l} True and accurate copies of any and all mortgage agreements entered into between plajntiff Alexander Reich (and/or his corporation Nechadim Corp) 1 and any individual(s) or entity, be. it individual or corporate entity, from January l id07 to December 31 20 I 0, wherein Alexander Reich a:nd/ol' Nechadim Corp was the mortgagee irt said a:greelTient., whether 2 [* 2] 2 of 6 INDEX NO. 506861/2019 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 RECEIVED NYSCEF: 08/30/2022 recorded or not. To be clear, we are requesting copies of any and all mortgages made in favor of Alexander Reich and/or his corporation Nechadim Corp, from January 2007 to December 31, 2010, whether recorded or not. {2) True and accurate copies of the bank statements ofany and. all bank accounts maintained, in the United States, by plaintiff Alexander Reich, in his personal name and/or under the name his corporation, Nechadim Corp, for the period January 1,200$ to December 31, 2008: To be clear, we are requesting copies of any ahd all bank statements of Alexander Reich and/or his corporation Nechadim Corp, from January 1, 2008 to December 31, 2008, as maintained in the United States of America"(NYSCEF Doc No. 114). In opposition to 559 St. Johns' motion, plaintiff states that he has responded to defendant's request notwithstanding the "absurd scope of the discovery requested" (NYSCEFDoc No. 118,J'[ 4}. Plaintiff argues that defendant seeks items that are irrelevant to a mortgage foreclosure action such as all mortgage agreements made by plaintiffand his company duringaspecifiedperiod oftime as well as all ofplaintiffs bank statements from over a decade ago. Plaintiff nevertheless represents that he hc1s produced all of the records thathe could locate. In reply, 559 St. Johns contends that plaintiff has failed to adequately respond to its denrnnds. In this re ga:rd, 559 St. Johns claims thc1t p Iaintiffhas only produced 14 mortgages butthat 559 St. Johns located, through ACRIS, six additional mortgages that plaintiff made. but which were not disclosed. Further, since A CRIS only covers New York City and not the ·entire state, the search for.mortgages. given by plaintiff is. incomplete and- that said irtforination c~n. only be provided IJy plaintiff. 559 St. Johns asserts thatthisinformafion is relevant because its -counterclaims alleges that plairitiff and his corporation, NEC, violated the. licensing provisions of Banking [* 3] Law § 590, which require$ iicensure ·for· 3 of 6 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 INDEX NO. 506861/2019 RECEIVED NYSCEF: 08/30/2022 making mortgage loans unless the provider does not originate more thanthree residential mortgage loans in a calendar year, nor more than five in a two-year period. In addition; 559 St. Johns argues that plaintiffs banking records are relevant because one of its counterclaims alleges that plaintiff and NEC forced borrowers, including 559 St. Johns, to pay an under-the-table Cash payment of 10% of the loan an1ount prior to giving loans to borrowers and also requested that these under-the-table cash payments be ma.de in small increments to avoid detection. 559 St. Johns points out that plaintiff has failed to provide any documents responsive to this request purportedly due to the passage of time, However, this excuse is unavailing because plaintiff failed to timely make this objection and plaintiff has been aware of this counterclaim since 2015, when 559 St. Johns first asserted this defense and counterclaim to plaintiffs initial foreclosure action regarding the same Mortgage. Based on the foregoing, 559 St Johns argues that plaintiff has violated the discovery rules and his complaint should be stricken. Discussion CPLR §3101(1) provides for "full disclosure ofall matters material and'necessary for the prosecution and defense of an action .... " The words ''material and necessary" are to be interpreted liberally to require disclosure of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and ' ' prolixity (see Allen v Crowelf,.Collier Publishing Co., 21 N\'2d 403, 406 [Ct App 1968]). "The test is one ofusefulness and reason" (id:). -~[T]he scope of permissible discovery is not entirely unlimited and the trial coiui is invested with broad discretion to supervise•discbv¢ry. and to determine. what is '1naterial 4 [* 4] 4 of 6 INDEX NO. 506861/2019 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 RECEIVED NYSCEF: 08/30/2022 and necessary' as that phrase is used in CPLR 3101(a)" (Auerbach v Klein, 30AD3d451, 452 [2d Dept 2006]} "It is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims" (Goinez vState ofNew York, I06AD3d 870, 872 [2d Dept 2013] [internal quotation marks . . and citations omitted]). Although courts are normally reluctant to grant disdosute of financial records due totheir private and confidential nature, where the moving party makes a strongshowing of necessity and demonstrates that the information is not available frorrt other sources, the request is granted (see Dore v Allstate J11dem. Co;, 264 AD2d 804 [2d Dept 1999]; see also David Leino.ff, Inc. v 208 West 29th St. Assocs:, 243 AD2d 418, 419 [1st Dept 1997). Here, 559 St. Johns has adequately demonstrated that the subject discovery is relevant to establishing its counterclaims and that tfo:: information sought by way of plaintiffs bank records is not ava1lable from other sources. In addition, 559 St. Johns' demand is narrowly tailored to one year. However, it is not inconceivable that plaintiff is not in possession of his bank records from 2008, which is 14 years ago. As such, plaintiff shall provide an affidavit·stating the name(s) of his banking institution(s) during the 2008 year and 559 St. Johns is directed to subpoena the financial institutions for the relevant records. As for559 St. ,Tohns;request for copies·.ofall mortgages made infavor·ofpla.intiff or NEG from fap.uary 2007 through December 31, 2010; whether recorded or not, plaintiff shall provide ail affidavit iis ting a 11. such mortgages made inJavor of plaintiff or NEC from January 2007 through December 31, 2010 and a: statement that plaintiff has prpviqed all 5 [* 5] 5 of 6 INDEX NO. 506861/2019 FILED: KINGS COUNTY CLERK 08/30/2022 11:29 AM NYSCEF DOC. NO. 222 RECEIVED NYSCEF: 08/30/2022 copies of mortgages within that timefi'.arhe in his possession. Plaintiff shall provide the foregoing affidavit within 30 days of notice of entry of this decision. Accordingly, 559 St. Johns' motion to compel is granted solely to the extent stated herein, but is othetwise denied. This constitutes the decision and ordei- of the court, ENTER, HON. LAWRENCE KNIPEL ADMINISTRATfVE JUDGE 6 [* 6] 6 of 6

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