Opinion
No. 353909/P.
06-30-2014
In the Matter of Petition of Jonathon Kirk BAUGHER, as Preliminary Executor of the Last Will and Testament of Phebe H. Baugher, Deceased, and as the Fiduciary of a Deceased Trustee Vested with such Authority as a Result of the Decision and Order of the Surrogate's Court of Queens County to Discover Property Pursuant to SCPA 2103 and/or to Recover Property Withheld Pursuant to SCPA 2104 and for Advice and Direction Pursuant to SCPA 2107 and for Other Relief.
Katten Muchin Rosenman LLP, New York, for Respondent, W.S. Wilson Corporation. Rosenberg Calica & Birney LLP, Garden City, for Petitioner, Jonathon Kirk Baugher. Skadden, Arps, Slate, Meagher & Flom LLP, New York, for Petitioner, Jonathon Kirk Baugher. Sepe & O'Mahony, PLLC, Rockville Centre, for Respondent, Jeffrey Keith Baugher. Forchelli, Curto, Deegan, et al., Uniondale, Guardian ad Litem for Minors.
Katten Muchin Rosenman LLP, New York, for Respondent, W.S. Wilson Corporation.
Rosenberg Calica & Birney LLP, Garden City, for Petitioner, Jonathon Kirk Baugher.
Skadden, Arps, Slate, Meagher & Flom LLP, New York, for Petitioner, Jonathon Kirk Baugher.
Sepe & O'Mahony, PLLC, Rockville Centre, for Respondent, Jeffrey Keith Baugher.
Forchelli, Curto, Deegan, et al., Uniondale, Guardian ad Litem for Minors.
Opinion
EDWARD W. McCARTY III, J.
Before the court is a motion filed by W.S. Wilson Corporation, respondent in the proceeding brought by Jonathan Kirk Baugher, as preliminary executor of the estate of Phebe Baugher. W.S. Wilson Corporation seeks an order pursuant to CPLR 2221 granting leave to reargue, vacate or modify this court's order, dated November 13, 2013. The order resulted from the court's decisions dated September 30, 2013 (Dec. Nos. 29019 and 29020), which were issued in response to the motion filed by Jonathon Kirk Baugher, and the cross-motion filed by W.S. Wilson, to compel discovery in this proceeding.
For the reasons that follow, the motion to reargue is granted. Upon granting leave to reargue, the court's decision is modified to the extent set forth below.
BACKGROUND
As noted in this court's previous decision, Phebe H. Baugher (“Phebe” or “decedent”) died on November 4, 2008. She was survived by seven children: Jonathon Kirk Baugher, Jeffrey Keith Baugher, Richard Scott Baugher, William Hugh Baugher, Laraine Baugher Stueck, Ralph Edmond Baugher, and Lisa Baugher Eppley (“Jonathon,” “Jeffrey,” “Richard,” “William,” “Laraine,” “Ralph,” and “Lisa”).
A petition for probate of an instrument dated May 11, 2008 was filed in this court, but the proceeding was held in abeyance pending a determination in the discovery proceeding. Jeffrey, Jonathon and the decedent's grandchildren, four of whom are infants, are the named beneficiaries under the terms of the propounded will, to the exclusion of decedent's other surviving children.
The decedent's interest in W.S. Wilson Corporation (“Wilson”) was created pursuant to a testamentary trust created by decedent's father, Hugh Hirshon, for the benefit of his wife and Phebe. The trust owned 100% of the Wilson stock. Upon decedent's death, the trust remainder passed to decedent's children and to Hugh Hirshon's grandnieces and grandnephews.
In the underlying proceeding, Jonathon, in his capacity as the preliminary executor of Phebe's estate, sought the turnover to decedent's estate of nearly $22,000,000.00 of the undistributed income of Wilson. Each side sought discovery from the other, and Jonathan asserted that he was entitled to discovery of the various documents, including the minutes of the meetings of the board of directors conducted after decedent's death in 2008 (the “post–2008 minutes”). When Wilson did not produce all of the documents demanded, Jonathon asked the court to compel discovery.
In its prior decision, this court stated that Wilson opposed disclosure of the post–2008 minutes on four grounds, namely:
1. The documents are not relevant, since they post-date the death of decedent in 2008.
2. The demand for these documents is overly broad and burdensome.
3. The documents contain confidential business information.
4. The minutes of the meetings of the board of directors contain privileged attorney-client communications and attorney work product.
The decision indicated that Wilson had conceded that the post–2008 minutes included information pertinent to Wilson's defense of the claim made by the estate, but that the post–2008 minutes would still be protected from disclosure if they contained advice of counsel. The order following the decision, dated November 13, 2013, directed Wilson to “submit to this Court, for in camera review, within 60 days of service of a copy of this Order, those portions of the post–2008 minutes of the meetings of the corporation's board of directors alleged to contain privileged information.”
MOTION TO REARGUE
Counsel for Wilson argues his client never conceded that the post–2008 minutes contained pertinent information or asserted attorney-client privilege with respect to the minutes. Rather, Wilson made the following arguments against disclosure of the post–2008 minutes:
1. The minutes contain confidential business information.
2. The minutes are irrelevant to the proceeding.
3. The minutes are not reasonably calculated to lead to evidence admissible at trial.
Counsel for Wilson specifically noted that no board meetings were held between May 2007 and May 2010, and that Jonathon offered no support for his argument that minutes of board meetings held after May 2010, which was both after decedent's death and after the commencement of the turnover proceeding, would be material, necessary or relevant, especially in view of the fact that Wilson issued no dividends or distributions after decedent's death in 2008. Nevertheless, in order to comply with the court's order, Wilson submitted photocopies of the post–2008 minutes for in camera review by the court, and asked that the court confirm that the minutes need not be turned over.
OPPOSITION TO MOTION TO REARGUE
Counsel for Jonathon submitted a memorandum of law in opposition to Wilson's motion to reargue, arguing that the court correctly required the post–2008 minutes be submitted for in camera review so that the court could make a determination as to their relevancy. In opposing the motion, counsel concedes that Wilson's arguments in opposition to discovery of the post–2008 minutes were based upon confidentiality and immateriality, rather than on privilege, but counsel for Jonathon concludes that “production of the documents for in camera review was harmless error, inasmuch as an in camera review would merely confirm whether the documents contained information relevant to [Jonathon's] claims.” Jonathon's counsel also notes that Wilson argues in its motion, for the first time, that even if Wilson were to enter into a confidentiality agreement with Jonathan and Jeffrey, such an agreement would be insufficient to protect the corporate business information contained in Wilson's post–2008 minutes. Counsel for Jonathon asserts that the court cannot consider an argument raised for the first time in the context of a motion for reargument, and that Wilson's request for permission to redact all “non-relevant confidential information” contained in the post–2008 minutes should be denied, as there is no basis for redaction once a confidentiality agreement has been executed.
ANALYSIS AND CONCLUSION
“Motions for reargument are addressed to the sound discretion of the court which decided the prior motion and may be granted upon a showing that the court overlooked or misapprehended the facts or law or for some [other] reason mistakenly arrived at its earlier decision” (Grimm v. Bailey, 105 AD3d 703, 704 [2d Dept 2013] [citations omitted] ). A motion for leave to reargue is governed by CPLR 2221 and is not based upon any new facts. A motion to reargue is not to be used as a means by which an unsuccessful party is permitted to argue again the same issues previously decided (William P. Pahl Equip. Corp. v. Kassis, 182 A.D.2d 22 [1st Dept 1992] ; Pro Brokerage v. Home Ins. Co., 99 A.D.2d 971 [1st Dept 1984] ), nor is it to be used as a means by which an unsuccessful party may present new or different arguments from those originally asserted (Giovanniello v. Carolina Wholesale Off. Mach. Co., Inc., 29 AD3d 737 [2d Dept 2006] ; Gellert & Rodner v. Gem Community Mgt., Inc., 20 AD3d 388 [2d Dept 2005] ; Amato v. Lord & Taylor, Inc., 10 AD3d 374 [2d Dept 2004] ; Frisenda v. X Large Enters., 280 A.D.2d 514 [2d Dept 2001] ; Foley v. Roche, 68 A.D.2d 558 [1st Dept 1979] ).
The sole issue before the court is whether corporate minutes which were generated over the course of a few years following the disputed transactions and the death of the decedent are exempt from discovery. The CPLR provides for “full disclosure of all evidence material and necessary in the prosecution or defense of an action” (CPLR 3101[a] ). New York courts have consistently and repeatedly construed this provision liberally where the information “will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Allen v. Crowell–Collier Publishing Co., 21 N.Y.2d 403, 406 [1968] ). Thus, the courts encourage pretrial discovery, limited only by reason and by the usefulness of the information sought (Altesman v. Eli Lily & Co., 164 A.D.2d 876, 877 [2d Dept 1990] ).
In the present motion, Wilson argues, and opposing counsel does not dispute, that Wilson did not concede that the minutes contained pertinent information, nor did they argue that the minutes contained privileged information pertinent to their defense in these proceedings. Upon reconsideration, the court agrees. Rather, the bases for Wilson's refusal to turn over the post–2008 minutes were: (1) relevancy, (2) confidentiality and (3) the breadth of the demands made.Discretion to determine the time period in which discovery will be granted or denied rests with the courts (see Nakash v. Hilton Hotel Corp., 184 A.D.2d 218 [1st Dept 1992] ). Disclosure of materials connected to events which occurred after the disputed transactions at the heart of a litigated matter may be relevant and may lead to admissible evidence concerning those transactions (see Bigman v. Dime Sav. Bank, FSB, 153 A.D.2d 912 [2d Dept 1989] ).
“The burden of demonstrating that particular subject matter is exempt from disclosure is on the party opposing discovery” (Bigman v. Dime Sav. Bank, FSB, 153 A.D.2d 912, 914 [2d Dept 1989] [internal citation omitted] ). The court finds that the request for the post–2008 minutes is not overly broad, and that Wilson has not yet met its burden of demonstrating that the requested materials are exempt from disclosure as irrelevant or confidential.
The court modifies its prior decision insofar as it directed submission of the post–2008 minutes for in camera review for the purpose of determining whether the minutes are exempt from discovery on the basis of attorney-client privilege. Instead, the court now finds that the post–2008 minutes, previously submitted to the court pursuant to the court's prior order, must be reviewed in camera for relevancy and confidential business information.Upon the court's completion of its review of the post–2008 minutes in camera, the court will issue a decision containing its findings.