Opinion
Index No. 25292/17E
11-21-2022
Daniel PLATOVSKY and 2235 Bassford Ave. Corp., Plaintiff(s), v. Ari BERNSTEIN, Stephen Friedman, Esq., 2235 Bassford Partners LLC, "John Doe" Bernstein and John Does 1-10, The Latter Parties Being Purported Members, Officers or Managers of 2235 Bassford Partners LLC Other Than Plaintiff Daniel Platovsky, Defendant Ari Bernstein or Defendant Stephen Friedman, Esq., Defendant(s). Ari Bernstein, Michael Bernstein, 2235 Bassford Partners LLC, Counterclaim-Plaintiff(s), v. Daniel Platovsky, 2235 Bassford Ave. Corp., and NBR NYC Realty Corp., Counterclaim-Defendant(s).
In this action for, inter alia , unjust enrichment, defendants/counterclaim plaintiffs ARI BERNSTEIN, (AR), MICHAEL BERNSTEIN (MR) and 2235 BASSFORD PARTNERS LLC (Bassford LLC) move seeking an order, inter alia , pursuant to CPLR § 3212 granting AR, MR, and Bassford LLC summary judgment with respect to the causes of action in the amended complaint and the counterclaims interposed by AR, MR, and Bassford LLC. Upon the grant of summary judgment, AR, MR, and Bassford LLC seek dismissal of the amended complaint and an inquest on the counterclaims. AR, MR, and Bassford aver that the foregoing is warranted because plaintiffs have failed to comply with the Court's (Douglas, J.) order, dated March 4, 2020, and subsequent orders extending the time within which to comply with the same, which conditionally precluded plaintiffs from offering evidence in support of the causes of action in the amended complaint and in opposition to the counterclaims interposed by AR, MR, and Bassford LLC. The instant motion is unopposed.
Although MR is listed as "JOHN DOE" BERNSTEIN in the complaint, it is clear, per AR, MR, and Bassford LLC's answer, that MR, who is alleged to be AR's father in both the amended complaint and the foregoing answer, is "JOHN DOE" BERNSTEIN.
The instant motion is being made pursuant to this Court's order dated August 1, 2022, which after a conference pursuant to Rule 14 of the Rules of the Commercial Division(22 NYCRR 202.70 ) granted AR, MR, and Bassford LLC leave to make the motion they sought leave to make in a letter dated October 15, 2021. Notably, pursuant to this Court's Part Rules and the Rules of the Commercial Division, the only portion of the motion for which leave was required is that portion seeking sanctions pursuant to 22 NYCRR 130-1.1.
For the reasons that follow hereinafter, the instant motion is denied.
The instant action is for fraud, unjust enrichment, conversion, breach of fiduciary duty, accounting, and declaratory judgment. The amended complaint alleges the following. From April 13, 1992 through May 5, 2015, plaintiff DANIEL PLATOVSKY (Platovsky) was the sole shareholder of plaintiff 2235 BASSFORD AVE CORP. (Bassford Corp), a corporation which owned the premises located at 2235 Bassford Avenue, Bronx, NY (2235) and which managed it through defendant NBR REALTY CORP. (NBR), another company owned by Platovsky. Platovsky, after suffering a stroke and from which he was recovering, retained defendant STEPHEN FRIEDMAN, ESQ. (Friedman), a friend and attorney, to represent him in the sale of 2235 to Bassford LLC, of which Platovsky, AR, MR - AR's father - and Friedman are members. While 2235 was sold to Bassford LLC, Friedman never provided Platovsky with a copy of the contract of sale or the closing statement. Moreover, Friedman only provided Platovsky with $125,000 of the $900,000 for which 2235 was sold and told Platovsky that the rest of the funds were used to buy Platovsky's membership in Bassford LLC. Despite being told by AR that Platovsky and Friedman were members of Bassford LLC, Platovsky was never provided with any documentation evincing the same. After the closing, Platovsky continued to manage 2235, was told that Bassford LLC had no written operating agreement, and disagreements between AR, Platovsky, and Friedman arose regarding the operation of Bassford LLC and each party's respective interest in the same. Platovsky became aware that someone was interested in purchasing 2235, that the prospective buyer was misled into believing that only AR and MR were members of Bassford LLC, and that Bassford LLC had a written operation agreement. On June 5, 2017, in an attempt to resolve the dispute between the parties relative to the operation of Bassford LLC and each member's respective share, Platovsky's new attorney advised counsel for Bassford LLC that provided that any sums from the sale of 2235 were placed in escrow until the issues between the members of Bassford LLC could be settled, Platovsky would not prevent the sale. AR, MR, and Friedman declined Platovsky's proposal. Moreover, Platovsky requested closing statements and records from the sale of 2235 to Bassford LLC to no avail. 2235 was eventually sold, but the sale was made without notice to Platovsky, without a vote by Bassford LLC's members, and without providing Platovsky with the contract for said sale. On June 15, 2017, without prior notice by Bassford LLC and without a meeting to vote on the change, Platovsky learned that NBR had been replaced with HRC Management, which since then, has managed 2235.
Based on the foregoing, plaintiffs interpose five causes of action against Friedman. The first cause of action is for fraud, wherein it is alleged that Friedman falsely represented to Platovsky that he would receive all the proceeds from the sale of 2235 and then only tendered $125,000, a small portion thereof. The second cause of action is for breach of fiduciary duty, wherein it is alleged that in failing to turn over all proceeds from the sale of 2235 to plaintiffs and the records evincing the sale, Friedman breached the foregoing duty. The third cause of action is conversion, wherein it is alleged that in failing to tender all proceeds from the sale of 2235 to plaintiffs, to which they had a possessory right, Friedman converted said funds. The fourth cause of action is for an accounting, wherein it is alleged that in light of the preceding causes of action and in the absence of an adequate remedy at law, an accounting is warranted. The fifth cause of action is for unjust enrichment, wherein it is alleged that in failing to tender all the proceeds from the sale of 2235 to plaintiffs’ detriment, Friedman has been unjustly enriched. The sixth cause of action is against all defendants for conversion, wherein it is alleged that in keeping the proceeds from the sale of 2235, defendants converted the same. The seventh cause of action is against all defendants for unjust enrichment, wherein it is alleged that defendants have retained funds due to plaintiffs and have failed to transfer 2235's title to plaintiffs. The eighth cause of action is against all defendants, except Bassford LLC, for breach of fiduciary duty by members of a limited liability company to its fellow members, wherein it is alleged that AR, MR, and Friedman owed a duty of loyalty to Platovsky and breached the same. The ninth cause of action is against all defendants for rescission, wherein it is alleged that defendants improperly transferred 2235's title to Bassford LLC. The tenth cause of action is against all defendants for declaratory judgment, wherein plaintiffs seek declaration that title to 2235 remains with Bassford Corp. The eleventh cause of action is against all defendants for declaratory judgment, wherein plaintiffs seek declaration that plaintiffs failed to comply with New York Limited Liability Company Law. The twelfth cause of action is against all defendants for declaratory judgment, wherein plaintiffs seek declaration of the percentage share each member owns in Bassford LLC. The thirteenth cause of action is against all defendants for a preliminary injunction, wherein plaintiffs seek to enjoin the sale of 2235 to a third-party. The fourteenth cause of action is against all defendants for a preliminary injunction, wherein plaintiffs seek to enjoin the change of management at 2235. The fifteenth cause of action is against AR for bad faith and intentional misconduct, wherein it is alleged that AR refused to recognize Platovsky as a member of Bassford LLC.
Within their answer, AR, MR, and Bassford LLC interpose ten counterclaims premised on the following. In January 2015, Friedman introduced AR to Platovsky. Friedman had helped Platovsky terminate a contract to sell 2235 to a third-party for $3.2 million, which would have only netted Platovsky $40,000. With Friedman's help, Platovsky and AR negotiated a deal, memorialized by email, whereby 2235 would be sold to Bassford LLC for $4.25 million, Platovsky would continue to manage 2235 for a fee, Platovsky would receive $125,000 in cash, and where Platovsky would pay Bassford LLC $828,000 - the remaining proceeds of the sale - in exchange for 49 percent of all profits derived by Bassford LLC from 2235. On April 28, 2015, AR and MR established Bassford LLC. Per the operating agreement, AR and MR each owned 50 percent of Bassford LLC and AR was named the manager. On May 15, 2015, after Bassford LLC obtained a mortgage to purchase 2235, which was guaranteed by AR and MR, the sale closed and title in 2235 was conveyed to Bassford LLC. Thereafter, Platovsky began to convert the rents paid by tenants at 2235, stealing at least $550,000. When confronted, Platovsky alleged that he was using the rents to pay 2235's expenses and to make improvements to the apartments therein. Demands that Platovsky produce corroborating documents proved fruitless. Because Platovsky neglected to pay 2235's operating expenses, AR was forced to pay $175,000 to Bassford LLC to cover mortgage, tax and insurance payments. In August 2016, AR gave Platovsky two choices; either he, for purposes of reimbursing Bassford LLC, produce all documents requested memorializing funds Platovsky embezzled or Bassford LLC would sell 2235. Platovsky opted for the sale of 2235 but refused to provide documents, such as rent rolls and leases, all of which were necessary to effectuate the sale. Despite the foregoing, in March 2017, Bassford LLC entered into a contract to sell 2235, the closing for which was scheduled to occur in June 2017. Realizing that the sale would sever Platovsky's income, Platovsky contacted the prospective buyer, indicated that Platovsky had an interest in Bassford LLC, and that he had not authorized the sale. On June 14, 2017, at the closing, Bassford LLC tendered documents evincing that Bassford LLC had the legal authority to sell 2235. However, based on the assertions made by Platovsky, the buyer refused to close. A day later, Bassford LLC hired HSC Management to manage 2235, placing notices indicating the same at 2235. On July 10, 2017, the buyer terminated the contract to purchase 2235. Based on the foregoing, AR, MR, and Bassford LLC interpose ten counterclaims against plaintiffs and NBR. The first counterclaim is for conversion, wherein it is alleged that while acting as manager at 2235, plaintiffs converted all rental income, which Bassford LLC as owner of 2235, was entitled to receive. The second counterclaim is for unjust enrichment, wherein it is alleged that in embezzling funds due to Bassford LLC, plaintiffs’ unjustly enriched themselves at Bassford LLC's expense. The third counterclaim is for breach of fiduciary duty, wherein it is alleged that as an employee of Bassford LLC, Platovsky breached the fiduciary duty owed to Bassford LLC by, inter alia , converting sums due to Bassford LLC. The fourth counterclaim is for an accounting, wherein it is alleged that Platovsky, by virtue of the fiduciary duty owed to Bassford LLC, is required to account for all sums received while he managed 2235. The fifth counterclaim is for replevin, wherein it is alleged that Bassford LLC is entitled to the return of records relating to the management of 2235 in plaintiffs’ possession. The sixth counterclaim is for trespass, wherein it is alleged that insofar as plaintiffs continue to be present at 2235, after Bassford LLC terminated them, they are liable for trespass. The seventh counterclaim is for a permanent injunction, wherein it is alleged that, to the extent that plaintiffs have violated Bassford LLC's right to possess 2235, plaintiffs should be permanently enjoined from any future violation of the same. The eighth counterclaim is for declaratory judgment, wherein it is alleged because Bassford LLC only has two members, it should be declared that Platovsky has no membership interest in Bassford LLC. The ninth counterclaim is for slander of title, wherein it is alleged that because Platovsky falsely represented that he had an ownership interest in Bassford LLC, Bassford LLC could not sell 2235 and could not distribute profits to its members. The tenth counterclaim is for tortious interference with a prospective business relationship, wherein it is alleged that by falsely claiming that he had a membership interest in Bassford LLC, which led to the termination of the contract to sell 2235 to another, Platovsky interfered with the foregoing contract.
In support of the instant motion, AR, MR, and Bassford LLC submit the Court's (Douglas J.) order, dated March 4, 2020, wherein the Court granted AR, MR, and Bassford LLC's motion seeking, inter alia , discovery sanctions for plaintiffs and NBR's failure to timely and fully comply with the Court's order compelling compliance with AR, MR, and Bassford LLC's discovery requests. Significantly, the Court issued a conditional order, which stated
that Daniel Platovsky, 2235 Bassford Ave. Corp., and NBR Realty Corp. are precluded from offering any evidence at the trial of this action or counterclaim unless they provide all of the items requested in Bernstein's discovery notices dated October 4, 2017 and objected to or not furnished in Platovsky's responses of May 28, 2019, including any items claimed to be public record and any items claimed to be in the possession of Platovsky's prior attorney, no later than 20 days following service of a copy of this Order with notice of entry.
AR, MR, and Bassford LLC submit this Court's order (McShan, J.), dated July 2, 2020, which while noting that plaintiffs and NBR failed to comply with the Court's previous conditional order, nevertheless excused the noncompliance in light of the Covid-19 pandemic and the executive orders issued as a result thereof. The Court extended plaintiffs and NBR's time to comply with the conditional order until January 31, 2020.
AR, MR and Bassford LLC submit an undated affidavit by Platovsky, wherein he explains his attempts to locate and provide documents to AR, MR, and Bassford LLC. With regard to records for Bassford Corp and NBR, Platovsky states that those records were kept in the basement of 2235, to which he no longer has access. With respect AR, MR, and Bassford LLC's demand seeking bank records, Platovsky states that
[t]he bank records sought are annexed to the Supplemental response. While I received Chase bank statements for Bassford Corp. which are annexed to the Supplemental response, it doesn't include copies of checks. I have asked Chase to provide the missing data.
AR, MR, and Bassford LLC submit the Court's (McShan, J.) order, dated October 6, 2020, wherein the Court
decline[d] to sanction Plaintiffs/Counterclaim Defendants for their failure to produce documents which are located in the subject property controlled by Bernstein, and from which they have been enjoined from entering and remaining pursuant to the July 26,2017 Order.
In addition, because Platovsky produced records compliant with the prior discovery orders, the Court held that "Plaintiffs/Counterclaim Defendants have substantially complied with Justice Douglas’ March 4, 2020 Order and this Court's July 2, 2020 Decision and Order." The Court, noting that AR, MR, and Bassford LLC were entitled to the documents housed in the basement of 2235, ordered that Platovsky be given access to them and that they be provided by November 12, 2020.
AR, MR and Bassford LLC submit the Court's (McShan, J.) order, dated November 30, 2020, which extended Platovsky's time to produce documents housed in 2235's basement until January 29, 2021.
AR, MR, and Bassford LLC submit portions of Platovsky's deposition transcript, wherein he testified that he was depositing rent checks from 2235 into Bassford Corp's account because he needed access to those funds to pay "people I was hiring[,] to do work or purchasing supplies," and because AR neglected to provide the needed funds, and Platovsky was not a signatory on Bassford LLC's bank account. Platovsky also testified that he requested all of Bassford Corp's bank records from Chase Bank and had not been notified that they had been located.
AR, MR, and Bassford LLC submit documents a subpoena, dated September 2, 2021, which evinces that movants sought documents from Chase Bank, including
[a]ny and all correspondence related to the specified account with the account holder or any person acting on behalf of the account holder (including but not limited to Daniel Platovsky and Steven S. Sieratzki, Esq.) and including but not limited to any requests for reproduction of account documents, during the period May 2015 through August 31, 2021.
AR, MR, and Bassford LLC also submit the records purportedly obtained from Chase Bank via a subpoena. Said documents contain a legion of checks for rent made payable to Bassford Corp and deposited into the same's Chase Bank account.
MOTION TO ENFORCE CONDITIONAL ORDER OF PRECLUSION
AR, MR, and Bassford LLC's motion seeking to enforce the Court's conditional order, initially issued on March 4, 2020, is denied. Significantly, pursuant to the Court's order, dated October 6, 2020, plaintiffs and NBR substantially complied with the prior conditional order such that they were no longer subject to the threat of preclusion imposed by the conditional order.
"The purpose of disclosure procedures is to advance the function of a trial, to ascertain truth and to accelerate the disposition of suits" ( Rios v Donovan , 21 AD2d 409, 411 [1st Dept 1964] ). Accordingly, our courts possess wide discretion to decide whether information sought is "material and necessary" to the prosecution or defense of an action ( Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968] ). The terms
material and necessary, are, in our view, to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason. CPLR 3101 (subd. [a]) should be construed, as the leading text on practice puts it, to permit discovery of testimony which is sufficiently related to the issues in litigation to make the effort to obtain it in preparation for trial reasonable
(id. at 406 [internal quotation marks omitted]). In other words, information that is relevant to an issue in a case is discoverable ( Wadolowski v Cohen , 99 AD3d 793, 794 [2d Dept 2012] ["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, and unsubstantiated bare allegations of relevancy are insufficient to establish the factual predicate regarding relevancy."]; Crazytown Furniture, Inc. v Brooklyn Union Gas Co. , 150 AD2d 420, 420 [2d Dept 1989] ). Whether information is discoverable does not hinge on whether the information sought is admissible and information is therefore discoverable merely if it "may lead to the disclosure of admissible proof" ( Twenty Four Hour Fuel Oil Corp. v Hunter Ambulance , 226 AD2d 175, 175 [1st Dept 1996] ). That said, however, "unlimited disclosure is not mandated, and the court may deny, limit, condition, or regulate the use of any disclosure device to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts" ( Diaz v City of New York , 117 AD3d 777, 777 [2d Dept 2014] ). Thus, the trial court has broad discretion in determining the scope and breadth of discovery, must supervise disclosure and set reasonable terms and conditions therefor (id. ). Absent an improvident exercise of discretion, the trial court's determinations should not be disturbed on appeal (id. ).
Commensurate with the court's ability to order disclosure is its power to issue sanctions for the failure to comply with an order mandating disclosure ( Gibbs v St. Barnabas Hosp. , 16 NY3d 74, 81 [2010] ["But there is also a compelling need for courts to require compliance with enforcement orders if the authority of the courts is to be respected by the bar, litigants and the public."]). Indeed,
[a]s this Court has repeatedly emphasized, our court system is dependent on all parties engaged in litigation abiding by the rules of proper practice. The failure to comply with deadlines not only impairs the efficient functioning of the courts and the adjudication of claims, but it places jurists unnecessarily in the position of having to order enforcement remedies to respond to the delinquent conduct of members of the bar, often to the detriment of the litigants they represent. Chronic noncompliance with deadlines breeds disrespect for the dictates of the Civil Practice Law and Rules and a culture in which cases can linger for years without resolution. Furthermore, those lawyers who engage their best efforts to comply with practice rules are also effectively penalized because they must somehow explain to their clients why they cannot secure timely responses from recalcitrant adversaries, which leads to the erosion of their attorney-client relationships as well. For these reasons, it is important to adhere to the position we declared a decade ago that ‘if the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity’
(id. at 81).
Accordingly, pursuant to CPLR § 3126,
[i]f any party, or a person ... refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed pursuant to this article, the court may make such orders with regard to the failure or refusal as are just, among them ... an order prohibiting the disobedient party from supporting or opposing designated claims or defenses, from producing in evidence designated things or items of testimony, or from introducing any evidence of the physical, mental or blood condition sought to be determined, or from using certain witnesses; or ... an order striking out pleadings or parts thereof.
It is well settled that "[t]he nature and degree of a penalty to be imposed under CPLR 3126 for discovery violations is addressed to the court's discretion" ( Zakhidov v Boulevard Tenants Corp. , 96 AD3d 737, 738 [2d Dept 2012] ). Striking a party's pleading for failure to provide discovery, however, is an extreme sanction, and warranted only when the failure to disclose is willful and contumacious ( Bako v V.T. Trucking Co. , 143 AD2d 561, 561 [1st Dept 1999] ). Similarly, since the discovery sanction imposed must be commensurate with the disobedience it is designed to punish, the less drastic sanction of preclusion is also only appropriate when there is a clear showing that a party has willfully and contumaciously failed to comply with court-ordered discovery (Zakhido at 739; Assael v Metropolitan Transit Authority , 4 AD3d 443, 444 [2d Dept 2004] ; Pryzant v City of New York , 300 AD2d 383, 383 [2d Dept 2002] ). Willful and contumacious behavior can be readily inferred upon a party's repeated non-compliance with court orders mandating discovery (Pryzant at 383). When a party adopts a pattern of willful non-compliance with discovery demands ( Gutierrez v Bernard , 267 AD2d 65, 66 [1st Dept 1999] ) and repeatedly violates discovery orders, thereby delaying the discovery process, the striking of pleadings is warranted ( Moog v City of New York , 30 AD3d 490, 491 [2d Dept 2006] ; Helms v Gangemi , 265 AD2d 203, 204 [1st Dept 1999] ). Stated differently, discovery sanctions should ensue when there is a willful failure to "disclose information that the court has found should have been disclosed" ( Byam v City of New York , 68 AD3d 798, 801 [2d Dept 2009] ).
Where the failure to disclose is neither willful nor contumacious, and instead constitutes a single instance of non-compliance for which a reasonable excuse is proffered, the extreme sanction of striking of a party's pleading is unwarranted ( Palmenta v Columbia University , 266 AD2d 90, 91 [1st Dept 1999] ). Nor is the striking of a party's pleading warranted merely by virtue of "imperfect compliance with discovery demands" ( Commerce & Industry Insurance Company v Lib-Com, Ltd , 266 AD2d 142, 144 [1st Dept 1999] ).
Instead of an outright sanction, a court can issue a conditional order which
is one that grants the motion and imposes the sanction unless within a specified time the resisting party provides the disclosure. The new time period, set by the court in the order disposing of the 3126 motion, will usually run from the time a copy of the order is served on the recalcitrant party with notice of its entry. The order may itself set the time and place of the disclosure, or leave that to the movant, perhaps with only an outside date set as a warning to the resisting party
(Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3126:10). Significantly, a self-executing conditional order is absolute and requires the imposition of the conditional sanction prescribed therein when it is established that the discovery ordered by the same was not timely provided( Ubozoh v Mueller , 204 AD3d 485, 485 [1st Dept 2022] ["Upon plaintiff's failure to comply with the portion of a self-executing preclusion order directing her to provide defendants with a bill of particulars and HIPAA-compliant medical authorizations within a specified time, the order became absolute and precluded plaintiff from offering evidence as to any of her alleged injuries or other damages."]; see Wilson v Galicia Contr. & Restoration Corp. , 10 NY3d 827, 830 [2008] ; Zouev v City of New York , 32 AD3d 850, 850 [2d Dept 2006] ; Marrone v Orson Holding Corp. , 302 AD2d 371, 371 [2d Dept 2003] ).In order to prevent the sanction conditionally imposed by a conditional order, the noncomplying party must demonstrate a reasonable excuse for failing to comply with the order and a meritorious claim or defense (Gibbs at 80; Marrone at 371; Macancela v Pekurar , 286 AD2d 320, 321 [2d Dept 2001] ; Smith by Smith v Lefrak Org., Inc. , 96 AD2d 859, 860 [2d Dept 1983], affd sub nom. Smith v Lefrak Org., Inc. , 60 NY2d 828 [1983] ).
Here, while it is true that a self-executing conditional order is absolute when it is established that the discovery ordered by the same was not timely provided and requires the imposition of the conditional sanction prescribed therein (Ubozoh at 485; see Wilson at 830; Zouev at 850; Marrone at 371), the very language in the Court's order, dated October 6, 2020, namely "that Plaintiffs/Counterclaim Defendants have substantially complied with Justice Douglas’ March 4, 2020 Order and this Court's July 2, 2020 Decision and Order," is evidence that in providing the discovery referenced by the order and sought by AR, MR, and Bassford, LLC, plaintiffs and NBR had complied to the extent that preclusion was unwarranted. Indeed, as noted above, the Court stated that insofar as the only documents yet to be provided were those within 2235, to which plaintiffs and NBR had no access, the failure to produce the same was not sanctionable. This is the only fair reading of the Court's order because in its order, dated July 2, 2020, the Court, finding that plaintiffs and NBR had not complied with the conditional order, expressly referenced the conditional order's continuing application, stating "that Plaintiffs shall fully comply with the conditional order of preclusion dated March 4, 2020 on or before July 31, 2020." Thus, there, it was clear that the conditional sanction for noncompliance was still in play. By contrast, in its order, dated October 6, 2020, the Court never referenced the conditional order, in reference to discovery required to be produced by plaintiffs and NBR, only ordering that
Plaintiffs/Counterclaim Defendants shall produce documents in response to Bernstein's discovery demands related to the books and records maintained during the course of Plaintiffs/Counterclaim Defendants’ role as property manager on or before November 12, 2020.
While it is true, as urged by AR, MR and Bassford LLC, that ordinarily in order to prevent the sanction imposed by a conditional order, the noncomplying party must demonstrate a reasonable excuse for failing to comply and a meritorious claim or defense (Gibbs at 80; Marrone at 371; Macancela at 321; Smith by Smith at 860), elements, which per the record were not demonstrated when the Court issued its order, dated October 6, 2020, the Court's decision to relieve plaintiffs and NBR from the consequences of the order is now, nevertheless, the law of the case. Hence, this Court, even if there was an error in that decision, may not revisit the issues determined therein. Accordingly, even if plaintiffs and NBR failed to provide the remaining discovery ordered by the Court - and there is no assertion to that effect - such failure would not, on this record, warrant automatic preclusion.
To be sure, the law of the case doctrine generally bars the re-litigation of a prior pre-judgment judicial determination made within the same action ( People v Evans , 94 NY2d 499, 502 [2000] ; Brownrigg v New York City Housing Authority , 29 AD3d 721, 722 [2d Dept 2006] ). Judges of coordinate jurisdiction are thus prohibited from entertaining or deciding previously decided matters ( id. at 503-504 ; Gee Tai Chong Realty Corp. v GA Insurance Company of New York , 283 AD2d 295, 296 [1st Dept 2001] ). Significantly,
[o]nce a point is decided within a case, the doctrine of the law of the case makes it binding not only on the parties, but on all other judges of coordinate jurisdiction. While the adoption of the Individual Assignment System has greatly attenuated reliance upon the doctrine, where an application on an issue is directed to different justices, the finality to be ascribed to the prior ruling becomes a paramount consideration
(Gee Tai Chong Realty Corp. at 296 [internal quotation marks omitted]). In certain instances, however, the doctrine is not absolute and its applicability is circumscribed. Accordingly, the doctrine is only applicable when parties seek to re-litigate issues that were previously resolved on the merits (Gee Tai Chong Realty Corp. at 296), and where the parties were previously afforded a full and fair opportunity to litigate the issues being raised (Evans at 502; Gee Tai Chong Realty Corp. at 296). Moreover, a previously decided issue can be re-litigated if there exist extraordinary circumstances or there is a change in law applicable to the issues previously decided (Brownrigg at 722; Foley v Roche , 86 AD2d 887, 887 [2d Dept 1982] ).
Accordingly, once a prior a judge on a motion conclusively decides an issue, it becomes binding upon the proceedings thereafter. In Gee Tai Chong Realty Corp , the court denied defendants’ motion for summary judgment and held that defendants were obligated to provide the plaintiff with insurance coverage (id. at 296). Thereafter, at trial, when defendants sought to re-litigate the issue of coverage, the Court concluded that re-litigation of the issue of coverage was barred by the law of the case doctrine (id. at 296).
Significantly, however, when motions for summary judgment result in denials of the same premised upon issues of fact precluding such relief, such decision does not precluded the re-litigation of summary judgment at trial or thereafter, since no conclusive finding has been made so as to trigger the law of the case doctrine ( Cushman & Wakefield, Inc. v 214 East 49th Street Corp. , 218 AD2d 464, 468 [1st Dept 1996] ["The dissent is correct when it notes that this case was tried upon the supposition that the pretrial decision denying both parties’ respective motions for summary judgment (Altman, J.) had narrowed the issues at trial, and that the quantum of plaintiff's brokerage services, however slight, was not in controversy before the trial court. Indeed, there was never any dispute as to the two brief visits made by plaintiff's salesman to defendant. But we are unable to conclude that the outcome of the parties’ motion practice was to relieve plaintiff of its obligation to establish a prima facie case, or its obligation, if it were ultimately to prevail, to prove its case by a preponderance of the credible evidence. This Court, of course, is not bound by the doctrine of ‘law of the case’ made on pretrial motions in reviewing a full record after trial."]; Sackman-Gilliland Corporation v Senator Holding Group Corp. , 43 AD2d 948, 949 [2d Dept 1974] ["A denial of a motion for summary judgment is not necessarily res judicata or the law of the case that there is an issue of fact in the case that will be established at the trial."]).
Based on the foregoing, where as here, the issue of preclusion was previously decided on the merits, the Court's prior decision, albeit arguably contrary to prevailing law, stands.
It is true that an argument can be made that AR, MR and Bassford LLC discovered, by execution of a subpoena, that Platovsky had not, in fact, requested Bassford Corp's records from Chase Bank after the Court's order, dated October 6, 2020, such that he clearly violated the prior conditional order and arguably lied in his affidavit. However, that should have prompted a renewal motion, seeking preclusion based on the foregoing, which has never been made. To the extent that the instant motion could be treated as such, this Court declines to do so. Moreover and significantly, while here, the subpoena served by movants upon Chase Bank, seeks copies of any requests made by Platovsky seeking Bassford Corp's bank records, nothing provided by movants from Chase Bank conclusively establishes that Chase Bank reported and/or disclosed that Platovsky never made such a request. As such, the assertion, that Platovsky never made such request and therefore lied to the Court, is wholly unsupported by the record.
MOTION FOR SUMMARY JUDGMENT
AR, MR, and Bassford LLC's motion seeking summary judgment, dismissal of the complaint and an inquest on the counterclaims is denied. Significantly, having denied the motion to enforce the prior conditional order, the sole basis on which summary judgment is sought, the portion of the motion seeking summary judgment must also be denied.
The proponent of a motion for summary judgment carries the initial burden of tendering sufficient admissible evidence to demonstrate the absence of a material issue of fact as a matter of law ( Alvarez v Prospect Hospital , 68 NY2d 320, 324 [1986] ; Zuckerman v City of New York , 49 NY2d 557, 562 [1980] ). Thus, a defendant seeking summary judgment must establish prima facie entitlement to such relief by affirmatively demonstrating, with evidence, the merits of the claim or defense, and not merely by pointing to gaps in plaintiff's proof ( Mondello v DiStefano , 16 AD3d 637, 638 [2d Dept 2005] ; Peskin v New York City Transit Authority , 304 AD2d 634, 634 [2d Dept 2003] ). There is no requirement that the proof be submitted by affidavit, but rather that all evidence proffered be in admissible form ( Muniz v Bacchus , 282 AD2d 387, 388 [1st Dept 2001], revd on other grounds Ortiz v City of New York , 67 AD3d 21, 25 [1st Dept 2009] ). Notably, the court can consider otherwise inadmissible evidence, when the opponent fails to object to its admissibility and instead relies on the same ( Niagara Frontier Tr. Metro Sys. v County of Erie , 212 AD2d 1027, 1028 [4th Dept 1995] ), or when the opponent fails to object to the admission of such evidence ( Bank of New York Mellon v Gordon , 171 AD3d 197, 202 [2d Dept 2019] ["However, as a general matter, a court should not examine the admissibility of evidence submitted in support of a motion for summary judgment unless the nonmoving party has specifically raised that issue in its opposition to the motion."]; see Greene v Kevin D. Greene, LLC , 188 AD3d 1012, 1013 [2d Dept 2020] ; Rosenblatt v St. George Health and Racquetball Assoc., LLC , 119 AD3d 45, 55 [2d Dept 2014] ["Thus, the Supreme Court erred when it, sua sponte, determined that the plaintiff's deposition transcript was inadmissible because of the lack of a certification and, as a result, concluded that Eastern Athletic had failed to meet its prima facie burden."]). The latter is premised on the well settled principle that a court ought not raise arguments never raised by the parties themselves ( Misicki v Caradonna , 12 NY3d 511, 519 [2009] ["We are not in the business of blindsiding litigants, who expect us to decide their appeals on rationales advanced by the parties, not arguments their adversaries never made."]).
Once movant meets his initial burden on summary judgment, the burden shifts to the opponent who must then produce sufficient evidence, generally also in admissible form, to establish the existence of a triable issue of fact (Zuckerman at 562). It is worth noting, however, that while the movant's burden to proffer evidence in admissible form is absolute, the opponent's burden is not. As noted by the Court of Appeals,
[t]o obtain summary judgment it is necessary that the movant establish his cause of action or defense ‘sufficiently to warrant the court as a matter of law in directing summary judgment’ in his favor, and he must do so by the tender of evidentiary proof in admissible form. On the other hand, to defeat a motion for summary judgment the opposing party must ‘show facts sufficient to require a trial of any issue of fact.’ Normally if the opponent is to succeed in defeating a summary judgment motion, he too, must make his showing by producing evidentiary proof in admissible form. The rule with respect to defeating a motion for summary judgment, however, is more flexible, for the opposing party, as contrasted with the movant, may be permitted to demonstrate acceptable excuse for his failure to meet strict requirement of tender in admissible form. Whether the excuse offered will be acceptable must depend on the circumstances in the particular case
( Friends of Animals v Associated Fur Manufacturers, Inc. , 46 NY2d 1065, 1067-1068 [1979] [internal citations omitted]). Accordingly, generally, if the opponent of a motion for summary judgment seeks to have the court consider inadmissible evidence, he must proffer an excuse for failing to submit evidence in admissible form ( Johnson v Phillips , 261 AD2d 269, 270 [1st Dept 1999] ).
When deciding a summary judgment motion the role of the Court is to make determinations as to the existence of bonafide issues of fact and not to delve into or resolve issues of credibility. As the Court stated in Knepka v Talman (278 AD2d 811, 811 [4th Dept 2000] ),
[s]upreme Court erred in resolving issues of credibility in granting defendants’ motion for summary judgment dismissing the complaint. Any inconsistencies between the deposition testimony of plaintiffs and their affidavits submitted in opposition to the motion present issues for trial
(see also Yaziciyan v Blancato , 267 AD2d 152, 152 [1st Dept 1999] ; Perez v Bronx Park Associates , 285 AD2d 402, 404 [1st Dept 2001] ). Accordingly, the Court's function when determining a motion for summary judgment is issue finding, not issue determination ( Sillman v Twentieth Century Fox Film Corp. , 3 NY2d 395, 404 [1957] ). Lastly, because summary judgment is such a drastic remedy, it should never be granted when there is any doubt as to the existence of a triable issue of fact ( Rotuba Extruders v Ceppos , 46 NY2d 223, 231 [1978] ). When the existence of an issue of fact is even debatable, summary judgment should be denied ( Stone v Goodson , 8 NY2d 8, 12 [1960] ).
It is well settled that where a plaintiff is precluded from offering any evidence at trial, such that it cannot prove its case, summary judgment and dismissal of the complaint is warranted (Gibbs at 83 [Court of Appeals reversed trial court's denial of defendant's motion to enforce a conditional order precluding plaintiff from offering any evidence as to defendant's negligence at trial and for summary judgment and dismissal of the complaint as a result thereof.]; Ubozoh at 485 ["Upon plaintiff's failure to comply with the portion of a self-executing preclusion order directing her to provide defendants with a bill of particulars and HIPAA-compliant medical authorizations within a specified time, the order became absolute and precluded plaintiff from offering evidence as to any of her alleged injuries or other damages. Since plaintiff cannot offer medical evidence of her alleged injuries, she will not be able to meet her threshold burden of showing that she sustained a serious injury as a result of the motor vehicle accident, as required under Insurance Law § 5102(d). As a result, plaintiff will not be able to make a prima facie case, and the complaint should be dismissed in its entirety" (internal citations omitted).]; Mancela at 701; Becerril by Francis v Skate Way Roller Rink, Inc. , 184 AD2d 365, 366 [1st Dept 1992] ; Rush v Mid Is. Hosp. , 128 AD2d 766, 766 [2d Dept 1987] Centenni v St. Peter of Alcantara , 99 AD2d 525, 525 [2d Dept 1984] ; Smith at 860-861).
Here, because this Court holds that plaintiffs and NBR were relieved from the conditional sanction of preclusion, there is no conditional order to enforce. Thus, summary judgment and dismissal of the complaint, which is urged solely on that basis, is denied. Moreover, to the extent that AR, MR and Bassford LLC seek summary judgment on their counterclaims and an inquest, that relief is denied insofar as the record is bereft of any evidence, let alone admissible evidence to support the counterclaims asserted. To be sure, the proponent of a motion for summary judgment carries the initial burden of tendering sufficient admissible evidence to demonstrate the absence of a material issue of fact as a matter of law (Alvarez at 324; Zuckerman at 562). Here, even if this Court had granted the application for summary judgment directed at the complaint, the wholesale absence of any evidence sufficient to establish summary judgment on any of the counterclaims would have nevertheless warranted denial of the portion of the instant motion directed at the counterclaims on this independent basis.
MOTION FOR SANCTIONS
AR, MR, and Bassford LLC's motion seeking sanctions pursuant to 22 NYCRR 130-1.1 is denied. Significantly, movants fail to establish that the affidavit submitted by Platovsky with respect to the records he obtained from Chase Bank contained false assertions, such that his behavior was frivolous.
22 NYCRR 130-1(a) states that
[t]he court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court, except where prohibited by law, costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part.
22 NYCRR 130-1(c)(1), (2), and (3), defines frivolous conduct as conduct that
is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law ... is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or ... asserts material factual statements that are false.
Sanctions pursuant to 22 NYCRR 130-1.1 are generally awarded when the behavior alleged to be worthy of sanctions has an element of frivolity, or if a party against whom sanctions is sought engages in frivolous conduct, such as advancing arguments devoid of legal merit, using legal procedures to delay the resolution of an action, or using the legal process as a means to harass another party ( Good Old Days Tavern, Inc. v. Zwirn , 261 AD2d 288, 289 [1st Dept 1999] [Court imposed a sanction of $1000 upon defendant for making a frivolous and meritless motion. Amount was meant to compensate plaintiff for having to oppose motion.]; Corto v Lefrak , 203 AD2d 94, 96 [1st Dept 1994] ; [Court imposed sanction upon plaintiff when evidence demonstrated that the action therein was frivolous, vexatious, and initiated to harass the defendant.]). In assessing whether to award sanctions, the threshold inquiry is whether the action is "completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law" ( Wagner v. Goldberg , 293 AD2d 527, 528 [2d Dept 2002] ; Felix v Herby Realty Corp. , 287 AD2d 683, 685 [2d Dept 2001] ). When awarding sanctions, the court must issue a written decision detailing the offending conduct, why said conduct was deemed frivolous, and why the amount awarded is appropriate ( 22 NYCRR 130—1.1 [d]; Breslaw v Breslaw , 209 AD2d 662, 663 [2d Dept 1994] ). Once the Court concludes that an action is frivolous, it can award costs amounting to actual attorney fees incurred ( Mascia v Maresco , 39 AD3d 504, 506 [2d Dept 2007] ; Heilbut v Heilbut , 18 AD3d 1, 7 [1st Dept 2005] ).
Here, AR, MR, and Bassford LLC seek sanctions against Platovsky on grounds that he submitted
a demonstrably false affidavit concerning their efforts to comply with the Conditional Order of Preclusion which had the effect and consequence of deceitfully prolonging this proceeding and multiplying the expenses, cost and fees expended by Defendants/Counterclaim Plaintiffs
(AR, MR, and Bassford LLC's Notice of Motion at Page 2). Accordingly, AR, MR, and Bassford LLC, by counsel, contend that the affidavit submitted by Platovsky, stating that despite a request to Chase Bank for all of Bassford Corp's bank records, the records provided to him by Chase Bank did not include copies of all checks deposited by Platovsky into Bassford Corp's bank account while Platovsky was managing 2235, was intentionally false. Movants’ falsity claim is premised on a subpoena they served upon Chase Bank, which they contend not only produced the relevant checks, but failed to evince that Platovsky ever made any request for the foregoing checks. Thus, movants contend that the foregoing can only mean one of two things: "either Mr. Platovsky's Affidavit was a lie, or else Chase did in fact produce the backup [records] to Counterclaim Defendants who then decided not to produce it given what those documents proved" (Affirmation of Hyman L. Schaffer at Paragraph 26).
The foregoing, however, fails to conclusively establish, as urged, that Platovsky's affidavit is false, and that as such, his conduct is frivolous under 22 NYCRR 130-1.1(c)(3). First, as noted above, while movants’ subpoena requested any records evincing any requests made by Platovsky for the records he, in his affidavit, swore that he requested, the record is nevertheless bereft of any response from Chase Bank confirming that no such requests were ever made. Accordingly, on this record, there is simply no proof that Platovsky did not request the relevant records and thereafter swore that he, in fact, did - the key to movants’ assertion. In other words, other than counsel's uncorroborated assertion, the record is bereft of actual evidence that Chase Bank indicated that it searched its records and did not find any requests by Platovsky for the records he was ordered to produce by the Court and which he swore that he requested. Second, contrary to movant's assertion, the fact that they received records via a subpoena, which Platovsky stated he was unable to obtain via a request, does not mean, ipso facto , that Platovsky lied. Instead, it is just as likely that Chase Bank was responsive to a request made by movants and not to one made by Platovsky. Notably, movants’ argument that Platovsky's attempt to shield Bassford Corp's Chase Bank records because they would establish that he had been depositing rent checks to that account instead of Bassford LLC's account is rather nonsensical. To be sure, the very transcripts that movants appended to the instant motion readily establish that Platovsky admitted the same, thereby significantly negating the argument in support of sanctions, namely that Platovsky lied in his affidavit. Accordingly, the motion for sanctions is denied. It is hereby
ORDERED that plaintiffs and NBR serve a copy of this Decision and Order, with Notice of Entry, upon all parties within thirty (30) days hereof. It is further
ORDERED that all parties appear for an in-person Settlement Conference on January 30, 2023 at 10am.
This constitutes this Court's decision and Order.