Opinion
Index No. 654374/2020
09-06-2022
Latin Markets Brazil, LLC D/B/A MARKETS GROUP, Plaintiff, v. William McArdle, THOMAS MALLON, TITAN INVESTORS LLC, Defendant.
Unpublished Opinion
Robert R. Reed, J.
Plaintiff, Latin Markets Brazil, commenced this action against defendants William McArdle, Thomas Mallon and Titan Investors LLC, alleging that defendants McArdle and Mallon, former employees of plaintiff, stole trade secrets and misappropriated proprietary information belonging to the plaintiff in violation of their employment agreements. Plaintiff asserts six causes of action against defendants for misappropriation of trade secrets, breach of contract, unfair competition, tortious interference, breach of fiduciary duty, and conversion. Plaintiff moves, pursuant to CPLR 3124, for an order compelling defendants to provide discovery responses. Plaintiff also moves pursuant to 22 NYCRR 130-1-1 for attorneys' fees, and pursuant to CPLR 3211(7) to dismiss defendants' fourth counterclaim for hostile work environment. Defendants cross-move to amend their counterclaims, and for sanctions and attorneys' fees pursuant to 22 NYCRR 130-1-1. For the foregoing reasons, plaintiff's motion is denied and defendants' cross-motion to amend is granted.
Section 202.70 of the Uniform Civil Rules for the Supreme Court titled, "Rules for the Commercial Division of the Supreme Court" sets forth specific rules with respect to the filing of discovery motions. Rule 14 provides that all disclosure disputes in a pending case will be governed by the part rules to which the case is assigned. This court's rules require that the parties confer in good faith on all discovery disputes and directs the parties to write to the court if the parties are unable to resolve the dispute (see, Part 43 Rule 6[h]). Prior to the filing of any motion, Commercial Division Rule 24 requires that the court be given the opportunity to resolve disputes by pre-motion conference, and expressly prohibits the filing of motions before the court has had the opportunity to conference the matter.
Here, the filing of the instant motion was done without leave of court and in direct contravention of Commercial Division Rules 14 and 24, and Part 43 Rule 6[h]. This fact alone permits denial of the motion (Maple Drake Austell Owner, LLC v D.F. Pray, Inc., 75 Misc.3d 1203 (A)[NY Sup. Ct. 2022][discovery motions should be denied if a party fails to adhere to the court rules]; D'Amour v Ohrenstein & Brown, LLP, 17 Misc.3d 1130 (A) [NY Sup. Ct. 2007] [denying plaintiffs' discovery motion as they did not contact the court before making the motion as required by Rule 14 of the Commercial Division Rules to arrange a conference for the purpose of resolving the issues raised by the motion"]). Given the plaintiff did not comply with this court's directives with respect to identifying and notifying the court of discovery disputes and affording the court the opportunity to adequately address the parties concerns prior to the filing of any motions, plaintiff's request for attorneys' fees and costs pursuant to 22 NYCRR 130-1-1(c) is denied.
Regarding the merits of plaintiff's application, the moving papers identify several outstanding discovery demands. Plaintiff requests an order directing defendants to: (1) produce documents in response to plaintiff's second notice for the production of documents, (2) produce ESI documents from hard drives used by defendants in their current business, (3) supplement interrogatory responses to plaintiff's first set of interrogatory demands, (4) respond to plaintiff's CPLR 3118 notice, (5) return computers belonging to plaintiff, and (6) to fully respond to this court's April 6, 2022 compliance conference order (see NYSCEF doc. no. 96).
After filing the instant motion, plaintiff withdrew several requests for relief (NYSCEF doc. no. 122), leaving the following demands to be addressed by this court: (1) a response to plaintiff's second notice for the production of documents and (4) an outstanding response to plaintiff's CPLR 3118 notice. A discovery conference was held with all parties on August 18, 2022, and the merits of plaintiff's motion was addressed (NYSCEF doc. no. 142). Plaintiff's motion, to the extent it seeks an order to compel discovery responses pursuant to CPLR 3124, is, accordingly, moot.
Regarding that portion of plaintiff's motion that seeks an order, pursuant to CPLR 3211(7), to dismiss defendants fourth counterclaim for hostile work environment, the motion is denied. Following the filing of plaintiff's motion to compel, defendants' cross-moved for leave to amend their fourth counterclaim and assert claims for violations of the Human Rights Law for employer retaliation (NYSCEF doc. no. 113). Defendant McArdle submitted an affidavit that set forth factual allegations in support of the argument that defendants were subject to a toxic and abusive work environment (NYSCEF doc. no. 115). The affidavit further alleges that plaintiff, only after McArdle and Mallon demanded payment of their sales commissions, retaliated against McArdle and Mallon both inside and outside the work environment (NYSCEF doc. no. 115, paras 10-14).
Under CPLR 3025(b), "[a] party may amend his pleading, or supplement it by setting forth additional or subsequent transactions or occurrences, at any time by leave of court or by stipulation of all parties." Rule 3025(b) continues as follows: "[l]eave shall be freely given upon such terms as may be just including the granting of costs and continuances." The standard is not a high one as the moving party only needs to show that the amendment "is not palpably insufficient or devoid of merit" (MBIA v. Greystone & Co., Inc., et al., 74 A.D.3d 499, 500 [1st Dep't 2010]).
Defendants' factual allegations identified in the McArdle affidavit are sufficient to support defendants' application to amend (Boliak v Reilly, 161 A.D.3d 625 [1st Dept 2018][movant was not required to make any evidentiary showing in support of its motion][ Cruz v Brown, 129 A.D.3d 455, 456 [1st Dept 2015]). Plaintiff did not allege any prejudice or surprise that would result from defendants' counterclaim amendment (Jacobson v Croman, 107 A.D.3d 644, 645 [1st Dept 2013]["The kind of prejudice required to defeat an amendment... must... be a showing of prejudice traceable not simply to the new matter sought to be added, but also to the fact that it is only now being added. There must be some special right lost in the interim, some change of position or some significant trouble or expense that could have been avoided had the original pleading contained what the amended one wants to add"] citing, A.J. Pegno Constr. Corp. v City of New York, 95 A.D.2d 655, 656 [1st Dept. 1983]). Absent any prejudice or surprise, defendants should be permitted to amend their pleadings.
However, that portion of defendants' motion that seeks sanctions and fees pursuant to New York Court Rule 130-1.1 is denied. Plaintiff's application, while taken without leave of court and in violation of court rules, was not completely devoid of merit, inasmuch as, following the filing of the motion, defendants fully complied with their outstanding discovery obligations resulting in plaintiff's partial withdrawal of the instant motion (22 NYCRR 130-1.1 [for purposes of this Part, conduct is frivolous if: (1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law]).
Accordingly, it is hereby
ORDERED that plaintiff's motion to compel discovery responses pursuant to CPLR 3124 is denied as moot; and it is further
ORDERED that plaintiff's motion to dismiss defendants' fourth counterclaim is denied, without prejudice; and it is further
ORDERED that defendants' cross-motion for leave to amend its fourth counterclaim, is granted; and it is further
ORDERED that within ten (10) days, defendants shall serve an amended answer with counterclaim upon the plaintiff with service of a copy of this order with notice of entry thereof; and it is further
ORDERED that plaintiff shall serve an answer to the amended pleading or otherwise respond thereto within 20 days from the date of said service; and it is further
ORDERED that plaintiff's motion and defendants' cross-motion for sanctions and fees pursuant to 22 NYCRR 130-1-1 are denied.