Opinion
350021/17
08-30-2019
MARIA ALEXIS A., Plaintiff, v. RENE-PIERRE A., Defendant.
Plaintiff is represented by Robert S. Cohen, Esq., Cohen Clair Lans Greifer Thorpe & Rottenstreich LLP, 885 Third Avenue, 32nd Floor, New York, New York 10022, 212-300-1100. Defendant is represented by Margaret M. Donohoe, Esq., Donohoe Talbert LLP, 120 West 45th Street, New York, New York 10036, 212-689-1600.
Plaintiff is represented by Robert S. Cohen, Esq., Cohen Clair Lans Greifer Thorpe & Rottenstreich LLP, 885 Third Avenue, 32nd Floor, New York, New York 10022, 212-300-1100.
Defendant is represented by Margaret M. Donohoe, Esq., Donohoe Talbert LLP, 120 West 45th Street, New York, New York 10036, 212-689-1600.
Lori S. Sattler, J.
In this matrimonial action, Plaintiff wife ("Plaintiff") moves this Court for an Order issuing a letter rogatory to French authorities to seek the deposition of Defendant husband's ("Defendant") brother. Defendant opposes the motion and cross-moves for a protective order, and an Order deeming discovery complete, directing the filing of a Note of Issue, and directing that the action be calendared for trial. Defendant further seeks to disqualify Plaintiff's counsel from serving as the escrow agent holding the sale proceeds of a vacation home, requests an Order directing that the escrowed funds be released to the parties equally with each party's counsel fees paid from their respective shares of the escrowed funds, and moves for counsel fees and sanctions totaling $55,000. Plaintiff opposes the cross-motion. The branch of Defendant's motion seeking to value Plaintiff's jewelry has been resolved.
The parties were married October 9, 1993 and Plaintiff filed this action for divorce on April 19, 2017. There is one emancipated child of the marriage. The parties engaged in extensive discovery for nearly a year after the action was commenced before filing the Request for Judicial Intervention. A Preliminary Conference was held on May 1, 2018, at which the parties agreed to deadlines for additional document production as well as party and non-party depositions.
Defendant was deposed over the course of three days on September 14, 2017, June 12, 2018, and December 11, 2018. Plaintiff also deposed several non-parties with whom Defendant has done business, as well as the attorney representing Defendant in his capacity as co-trustee of the 2001 Andre A. Revocable Trust ("the 2001 Trust"). Plaintiff now wishes to depose F.A., Defendant's brother and co-trustee of the 2001 Trust, who resides in Bordeaux, France.
Defendant, among other family members, is a beneficiary of the 2001 Trust, and from it he receives $32,000 of income each year. In 2005, he and F.A. became co-trustees at the request of their aunt, who was then the sole trustee. Defendant has produced the trust instrument and trust account statements from January 2015 to December 2018, the period Defendant says Plaintiff requested. According to Defendant, Plaintiff then subpoenaed the bank directly and received duplicate statements and additional documents that Defendant did not have in his possession, including a statement detailing activity from January 1, 2019 through the date of the subpoena, January 17, 2019.
At his deposition in September 2017, Defendant testified that he took a $100,000 loan from the 2001 Trust in June 2017, two months after the date of commencement of this action. At that time, he conceded that there was no written loan agreement but maintained the funds withdrawn were nevertheless a loan accruing interest. At his deposition in December 2018, Defendant claimed that he had subsequently borrowed an additional $1,150,000 from the 2001 Trust, although at the time there was no written loan agreement to document the purported loan. The trustees' attorney was also deposed and questioned about the loans.
Plaintiff filed the instant motion seeking to depose F.A., the co-trustee who would have had to agree to the loans. Defendant's opposition papers include two loan agreements between Defendant and F.A. for the $100,000 loan and the $1,150,000 loan respectively. Both agreements provide that interest shall accrue at a rate of 5% and provide for specific deadlines for repayment. Defendant contends that he has already repaid the $100,000 loan together with $8,710.96 of interest as required by that loan agreement.
It is undisputed that Defendant's interest in the 2001 Trust is his separate property, that Plaintiff herself is not a beneficiary, and that the two loans were taken after the commencement of this action. Plaintiff contends that Defendant has committed fraud by taking the two loans. Although she ultimately concedes that any wrongdoing by Defendant with respect to the 2001 Trust, is "admittedly one for the beneficiaries to pursue," she nevertheless contends that Defendant's post-commencement actions warrant deposing F.A., arguing that Defendant's ability to access these loans "raises serious questions about their legitimacy and, more globally, defendant's true resources." She queries, "If he (and perhaps [F.A.] as his co-trustee) is able to fraudulently and brazenly access seven figure sums, as though the Trust were a checking account, what additional funds are available for equitable distribution and the maintenance to which plaintiff is entitled?" She contends that deposing F.A. will answer that question.
A determination as to whether Defendant violated a trust instrument or breached his fiduciary duty in his role as a trustee is outside the scope of this divorce proceeding, and Plaintiff lacks standing to raise the issue. Rather, the limited issue before the Court is whether the broad discovery permitted in matrimonial matters allows Plaintiff to compel the deposition of a third party living outside the United States about post-commencement activity in connection with Defendant's separate property, and whether the information that Plaintiff claims is relevant can be obtained from Defendant directly.
Civil Practice Law and Rules ("CPLR") § 3101(a) provides that parties are entitled to "full disclosure of all evidence material and necessary in the prosecution or defense of an action." In matrimonial actions in particular, "[b]road pretrial disclosure which enables both spouses to obtain necessary information regarding the value and nature of the marital assets is critical if the trial court is to properly distribute marital assets" ( Jaffe v. Jaffe , 91 AD3d 551, 553 [1st Dept 2012], quoting Kaye v. Kaye , 102 AD2d 682, 686 [2d Dept 1984] ). In Kaye , the Second Department held that parties to a matrimonial proceeding are entitled to "a searching exploration of each other's assets and dealings at the time of and during the marriage, so as to delineate the extent of marital property, distinguish it from separate property, uncover hidden assets of marital property, discover possible waste of marital property, and in general gain any information which may bear on the issue of equitable distribution, as well as maintenance and child support. The entire financial history of the marriage must be open for inspection by both parties" ( 102 AD2d at 686 [internal quotations omitted] ).
A party's right to broad pretrial disclosure is not unlimited however, and courts are tasked with overseeing the discovery process to ensure that undue prejudice and delay do not occur due to open-ended discovery. CPLR § 3103(a) permits courts to limit or deny the use of any disclosure device "to prevent unreasonable annoyance, expense, embarrassment, disadvantage or other prejudice to any person or the courts." A party "will not be allowed to use pretrial discovery as a fishing expedition when they cannot set forth a reliable factual basis for what amounts to, at best, mere suspicions" ( Devore v. Pfizer, Inc. , 58 AD3d 138, 144 [1st Dept 2008] ).
CPLR 3108 provides: "A commission or letters rogatory may be issued where necessary or convenient for the taking of a deposition outside of the state." In Kahn v. Leo Schacter Diamonds, LLC , 139 AD3d 635, 635 (1st Dept 2016), the First Department noted that where international discovery is sought, movants must meet the higher standard of showing that the discovery is "crucial to the resolution of a key issue." It declined to issue letters rogatory because the party did "not seek to request anything from [the non-parties] that he could not obtain (or has not already obtained) from defendant" ( id. at 636 ).
Plaintiff seeks the issuance of a letter rogatory pursuant to CPLR 3108 as F.A. lives in France and has refused to be deposed voluntarily. She argues that the broad disclosure permitted in matrimonial actions allows her to take the deposition, and that for the reasons set forth above F.A.'s deposition is crucial to the issues in this proceeding. She argues that this matter is distinguishable from Kahn because "here, in contrast, plaintiff seeks further information regarding the nature of the purported loan, including whether there is any history of, or future contemplation of, distribution of money to the defendant and or [F.A.] to confirm (or deny) that the Trust is effectively their ‘piggy bank.’ " Defendant does not dispute that discovering all his financial holdings is key to this divorce action, but he argues that he has produced all information about his assets, and there is nothing new that can be learned through his brother.
In this action, information about Defendant's interest in the 2001 Trust is discoverable. To that end, Defendant has produced the 2001 Trust instrument, the 2001 Trust's bank statements which would show all transactions for more than four years, and the loan agreements for both post-commencement loans. He answered questions about the 2001 Trust during all three days of his deposition. Plaintiff has also subpoenaed additional financial documents and deposed the trustees' lawyer. Defendant has therefore already disclosed the material and necessary information for Plaintiff to assess her claim that Defendant might have additional access to separate property through the 2001 Trust, and any arguments relating to this information or Defendant's actions post-commencement may be raised at trial. To the extent Plaintiff seeks information from F.A. that she could not obtain or has not already obtained from Defendant, Plaintiff fails to set forth a reliable factual basis for what amounts to, at best, mere suspicions. Therefore, Plaintiff's request for a letter rogatory is denied and Defendant's motion for a protective order is granted with respect to a deposition of F.A.
However, Defendant's motions for an Order directing that discovery is closed and related relief are denied. While the parties have exchanged extensive document production and several party and non-party depositions have been completed, Defendant's papers do not demonstrate that all necessary discovery is complete such that discovery can be closed. Any open discovery issues may be addressed at the next status conference.
Regarding Defendant's requests relating to the parties' escrowed funds, the papers establish that any irregularities have been remedied, and it is well settled that those funds are marital property to be distributed after a trial and not by pendente lite Order ( Stewart v. Stewart , 118 AD2d 455, 456-57 [1st Dept 1986] ). Therefore, the relief Defendant seeks is denied.
That branch of Defendant's motion seeking counsel fees pursuant to DRL § 237 is denied in the absence of a demonstration that he is the non-monied spouse, and his motion for fees pursuant to 22 NYCRR 130-1.1 is without merit.
All other relief sought not addressed herein has nevertheless been considered and is denied. This constitutes the Decision and Order of the Court.