American Reliance Ins. Co. v. National General Ins. Co.

• Decision Date: 10 June 1991
• Citation: 174 A.D.2d 591,571 N.Y.S.2d 493
• Parties: AMERICAN RELIANCE INSURANCE COMPANY, etc., Appellant, v. NATIONAL GENERAL INSURANCE COMPANY, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 493

571 N.Y.S.2d 493

174 A.D.2d 591

AMERICAN RELIANCE INSURANCE COMPANY, etc., Appellant, v. NATIONAL GENERAL INSURANCE COMPANY, et al., Respondents.

Supreme Court, Appellate Division Second Department.

June 10, 1991.

Baumeister & Samuels, P.C., New York City (Ellen Relkin, of counsel), for appellant.

Bertram Herman, East Norwich, for respondent National General Ins. Co.

D'Amato & Lynch, New York City (Thomas F. Breen, of counsel), for respondent Steve Siegal, P.C.

Before BRACKEN, J.P., and KOOPER, SULLIVAN and LAWRENCE, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for the bad faith failure to settle a personal injury lawsuit within the limits of a policy of insurance, the plaintiff appeals from an order of the Supreme Court, Queens County (Rosenzweig, J.), dated January 3, 1990, which granted the branch of the motion of the defendant National General Insurance Company which was to dismiss the complaint.

ORDERED that the order is reversed, on the law and as a matter of discretion, with one bill of costs to the appellant, and the branch of the motion by the defendant National General Insurance Company which was to dismiss the complaint is denied, the complaint is reinstated, and the branch of the motion which was to direct further discovery is denied, with leave to renew before a different Justice of the Supreme Court upon additional papers.

In American Reliance Ins. Co. v. National General Ins. Co., 149 A.D.2d 554, 539 N.Y.S.2d 1004, we affirmed a prior order in this case by the Supreme Court, Queens County, which had directed one of the members of the law firm which formerly represented the plaintiff to appear for a deposition as a nonparty. We noted, in our decision, that the existence of an attorney-client relationship between the plaintiff and the witness to be deposed should not, under the circumstances of this case, deprive the defendants of their right to obtain the relevant pretrial disclosure which this witness was apparently in a position to provide.

Nothing in our order deprived this witness of his right to invoke the attorney-client privilege during the course of the deposition whenever he or his counsel believed, in good faith, that a specific question constituted an invasion of that privilege. Also, nothing in our prior order required the production of any specific document, much less the production of the documents which were exchanged between the plaintiff and the witness in his capacity as an attorney. In other words, there was nothing in this court's prior order which implicitly or explicitly deprived this witness of those rights retained by any witness, party or nonparty, during the course of any pretrial deposition, including the right to object to a question upon the basis of a good faith belief that the question invaded a recognized privilege.

The deposition of this witness was held on November 7, 1989, and lasted over three hours. The witness responded to the overwhelming majority of the questions posed by adverse counsel. However, the witness, upon advice of counsel, declined to respond to several questions for various reasons stated on the record.

Approximately one month following the conclusion of the deposition, the defendant National General Insurance Company (hereinafter NGIC) moved to compel further disclosure (see, CPLR 3124), or, in the alternative, to dismiss the complaint (see, CPLR 3126). The attorney for NGIC argued, in a brief affirmation, that the witness had willfully violated prior court orders respecting discovery when, during the course of the deposition, he refused to furnish copies of written communications made between the plaintiff and the law firm of which he was a member. The Supreme Court granted the motion to the extent of striking the complaint. This appeal followed. We reverse.

There exists no prior court order directing that the nonparty witness deposed in this case answer any specific question, or produce any particular document. As noted above, the order rendered by this court did nothing more than affirm so much of an earlier order as directed the witness to appear for a deposition. The witness has substantially complied with this order. Since there was no willful disobedience of a prior court order respecting discovery, and since there was no willful disobedience of a specific notice for discovery, the sanction imposed by the Supreme Court pursuant to CPLR 3126 was unwarranted as a matter of law, and a fortiori, as a matter of discretion (see generally, Mayers v. Consolidated Charcoal Co., 154...