Opinion
998-04.
Decided November 3, 2004.
Drew, Davidoff Edwards Law Offices, LLP, Monticello, NY, By: Michael Davidoff, Esq., of counsel, Attorney for Plaintiff.
Orseck Law Offices, Liberty, NY, By: Gerald Orseck, Esq., of counsel, Attorney for Plaintiff.
Kirkpatrick Lockhart, LLP, New York, NY, By: Eva M. Ciko, Esq., of counsel Attorney for Defendant H.O. Penn Machinery Co., Inc.
Sedgwick, Detert, Moran Arnold, LLP, Newark, N.J., By: James H. Keale, Esq., of counsel, Ailyn Abin, Esq., of counsel, Attorney for Defendant Caterpillar, Inc.
This matter comes on by plaintiff's Motion to Compel discovery pursuant to the automatic stay provision of CPLR 3214.
Plaintiff submitted Order To Show Cause (OSC) dated October 1, 2004 to compel discovery and to stay the preliminary injunction hearing scheduled for October 14, 2004. Said OSC was returnable on October 12, 2004.
Defendants H.O. Penn Machinery Co., Inc. (hereinafter Penn) submits Affirmation in Opposition and Caterpillar, Inc. (hereinafter Caterpillar) submits opposition in the form of Memorandum of Law in Opposition.
Plaintiff submits Rely.
At the return date of the OSC (October 12, 2004) the Court adjourned the matter for oral argument to October 25, 2004 and stayed the October 14, 2004 preliminary injunction hearing.
Oral Argument was held on October 25, 2004 wherein this Court reserved on the OSC to issue a written Decision and Order and scheduled the preliminary injunction hearing for November 9, 2004.
BACKGROUND
Arthur Glick Leasing Ltd. (a different company to the herein plaintiff Arthur Glick Truck Sales, Inc.) owned an Ocean Yacht powered by twin Caterpillar marine diesel engines and which were serviced by H.O. Penn Machinery Co., Inc., the defendants herein.
Due to malfunctioning of the engines Arthur Glick Leasing Ltd. commenced a lawsuit in Supreme Court, Sullivan County, in 2001 under Index #2595-01 naming the herein defendants Caterpillar and Penn, as well as other defendants (hereinafter "Boat Lawsuit").
The plaintiff herein, Arthur Glick Truck Sales, Inc., has various dealership agreements with defendants Caterpillar and Penn to perform warranty service and repair of Caterpillar engines with parts from Penn which are installed in Kenworth, GMC and other trucks for which plaintiff is a franchised truck dealer. Said dealership agreements have been previously and periodically renewed without incident.
The representatives for both Caterpillar and Penn involved in the "Boat Lawsuit" are separate and distinct from any representatives of Caterpillar and Penn involved in the dealership agreements with herein plaintiff Arthur Glick Truck Sales, Inc.
After allegations of threats by defendants Caterpillar and Penn representatives for Arthur Glick Truck Sales, Inc. to settle the "Boat Lawsuit" and after settlement could not be achieved in the "Boat Lawsuit", H.O. Penn sent a letter dated April 8, 2004, purporting to be a thirty day notice, to terminate and not renew defendant's dealership agreements which were scheduled for termination and renewal on May 8, 2004.
Said above actions resulted in the commencement of the within action under Index #0998-04.
The matter was commenced in May 6, 2004 with the service of a complaint and a TRO staying the cancellation of dealership agreements between the plaintiff and the defendants. The preliminary inunction hearing was scheduled for June 7, 2004.
On May 26, 2004, prior to the preliminary injunction hearing, the action was removed to federal court by defendant H.O. Penn.
Upon an Opinion Order dated July 30, 2004, the United States District Court for the Second District remanded the action back to Sullivan County after the lone federal question was withdrawn.
The federal court did not hold a preliminary injunction hearing and did not decide any substantive issue regarding the TRO or the underlying law suit.
After this matter was received back from the federal court, this Court set a scheduling conference for August 25, 2004.
A schedule was set wherein the plaintiff would serve an amended complaint by September 22, 2004 and the defendants, after consenting to withdraw their answers to the original complaint upon the service of the amended complaint, would either serve answers or motions to dismiss thereafter.
In addition, any opposition by the defendants to the plaintiff's requested injunction would be served by September 13, 2004 and the plaintiff's reply, if any, by September 22, 2004.
Based upon the above schedule, the preliminary injunction hearing was scheduled, on consent, for September 29, 2004.
Lastly, discovery would be exchanged by the parties without court intervention.
Plaintiff, thereafter, served an amended complaint upon the defendants and, on September 13, 2004, sought limited discovery for eight (8) sets of documents.
Defendants filed motions to dismiss the amended complaint on September 21, 2004.
Defendant Caterpillar then transmitted a letter dated September 24, 2004 to plaintiff's counsel stating that they would not respond to discovery until this Court rules on the then filed motion to dismiss since a motion to dismiss automatically stays discovery under CPLR § 3214.
In response, plaintiff secured an OSC from this Court dated October 1, 2004 and returnable October 12, 2004 which stayed the October 14, 2004 scheduled preliminary injunction hearing and requested an order to compel discovery prior to the hearing.
ARGUMENT
Defendants Penn and Caterpillar argue four points:
1. that CPLR 3214 contains an automatic stay of discovery upon the filing of a motion to dismiss;
2. that the plaintiffs can not show either the irreparable harm or likelihood of success on the merits necessary for the issuance of a preliminary injunction;
3. that neither Penn nor Caterpillar meet the criteria of the New York Franchised Motor Vehicle Dealers' Act (Act) and the action must be dismissed.
4. that the discovery is irrelevant to the preliminary injunction and only goes to the defendant's motion to dismiss (which has an automatic stay of discovery attached.)
Plaintiffs argue that the information requested in discovery is:
1. necessary, crucial and vital to its right to the preliminary injunction;
2. known only by the defendants, not privileged and was generated prior to the commencement of the within action;
3. relevant to show that the defendants fall within the purview of the ACT;
4. contemplated and authorized under CPLR at the discretion of the court, and
5. the filing of the defendant's motions to dismiss (with the attached automatic discovery stay in CPLR 3214) subsequent to plaintiff's discovery demands were filed only to frustrate the plaintiff's discovery and stifle the search for the truth at the preliminary injunction hearing.
In addition, the plaintiff argues that he will be irreparably harmed without the injunction as he would completely lose his business and the discovery will shown that the defendants meet the criteria of the ACT and, thus, he has a high likelihood of success on the merits of the action herein.
THE LAW
On a motion for a preliminary injunction the movant must show irreparable injury, loss or damages in order for the defendant to be restrained. CPLR § 3214(a).
The court shall set a hearing for a preliminary injunction at the earliest possible time. CPLR § 3214(a).
A motion to dismiss automatically stays disclosure until determination of the motion, unless the court orders otherwise. CPLR § 3214(b). ( emphasis added).
The stay in CPLR § 3214(b) is automatic but statutorily the court may, of course, direct otherwise. See, McKinney's Consolidated Laws of New York, Book 7B, Rule 3214, Practice Commentaries, David D. Siegel, p536.
Despite far reaching consequences there is little case law activity on CPLR § 3214. See, McKinney's Consolidated Laws of New York, Book 7B, Rule 3214, Practice Commentaries, David D. Siegel, p536.
The scant precedents and CPLR § 3214 (b) itself authorizes the court to order discovery not withstanding the automatic stay of CPLR § 3214 (b).
Hence, despite the automatic stay provision of CPLR § 3214 (b) the trial court may direct otherwise if there is a legitimate need for discovery. Reilly v. Oakwood Heights Community Church, 269 AD2d 582 (2nd Dept., 2000). In Reilly the trial court's order granting defendant motion to dismiss unless plaintiff provided discovery within 60 days was affirmed by the appellate division.
CONCLUSION
At the heart of the within action is whether either or both of the defendants meet the criteria of the New York Franchised Motor Vehicle Dealers' Act.
There is no question that the plaintiff will suffer irreparable injury by the loss of his business if the defendants may cancel or fail to renew dealership agreements with the plaintiff.
This Court is of the opinion that the discovery of eight (8) sets of documents requested by the plaintiff (prior to the defendant's motions to dismiss) is necessary for the preliminary injunction hearing and to defend the subsequently filed motions to dismiss. Some of the documents go directly to the issue of Caterpillar and Penn meeting the criteria of the New York Franchised Motor Vehicle Dealers' Act.
The prolix time for the plaintiff to secure a preliminary injunction hearing (despite the mandate of CPLR § 6313 to hold such hearing at the earliest possible time) from the date of the complaint and TRO on May 6, 2004 can be directly contributed to the defendant's unsuccessful removal to federal court and, now, to their motion to dismiss after remand back to Sullivan County and this Court's scheduling conference.
Based upon the above, it is
ORDERED, that plaintiff's motion to compel discovery is granted, and it is further
ORDERED, that defendant H.O. Penn Machinery Co., Inc. and defendant Caterpillar, Inc. shall comply with plaintiff's First Document Request dated September 13, 2004 and the two requests for documents in plaintiff's Affirmation in Support of the Motion to Compel listed in paragraph 5 within ten days after service of this Decision and Order with Notice of Entry, and it is further
ORDERED, that plaintiff shall review said discovery compliance and file and serve any reply to defendant's opposition to the preliminary injunction within ten days, and it is further
ORDERED, that defendant's motions to dismiss are stayed until this Court sets a date after the preliminary injunction hearing conclusion and decision, and it is further
ORDERED, that the preliminary injunction hearing shall commence on December 2, 2004 at 10:30 am.
This shall constitute the Decision and Order of this Court.