Cnty. of Warren ex rel. Westmount Health Facility v. Swan

• Decision Date: 31 March 2022
• Docket Number: 532196
• Parties: COUNTY OF WARREN, ON BEHALF OF WESTMOUNT HEALTH FACILITY, Appellant, v. Michael R. SWAN, as Administrator of the Estate of Joseph Garry Jr., Deceased, Defendant, and Jeffrey Garry, Respondent. (Action No. 1.) County of Warren, on Behalf of Westmount Health Facility, Appellant, v. Estate of Joseph Garry Jr., Deceased, Defendant, and Jeffrey Garry et al., Respondents. (Action No. 2.)
• Court: New York Supreme Court — Appellate Division

203 A.D.3d 1504

166 N.Y.S.3d 318

COUNTY OF WARREN, ON BEHALF OF WESTMOUNT HEALTH FACILITY, Appellant,

v.Michael R. SWAN, as Administrator of the Estate of Joseph Garry Jr., Deceased, Defendant,andJeffrey Garry, Respondent.

(Action No. 1.)

County of Warren, on Behalf of Westmount Health Facility, Appellant,

v.Estate of Joseph Garry Jr., Deceased, Defendant,andJeffrey Garry et al., Respondents.

(Action No. 2.)

532196

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: February 10, 2022

Decided and Entered: March 31, 2022

The Clements Firm, Glens Falls (Thomas G. Clements of counsel), for appellant.

The Baynes Law Firm, PLLC, Ravena (Brendan F. Baynes of counsel), for respondents.

Before: Egan Jr., J.P., Clark, Aarons, Reynolds Fitzgerald and McShan, JJ.

MEMORANDUM AND ORDER

McShan, J. Appeals (1) from an order of the Supreme Court (Muller, J.), entered May 20, 2019 in Warren County, which, in action No. 2, among other things, denied plaintiff's motion to compel disclosure, and (2) from an order of said court, entered August 28, 2020 in Warren County, which, in action Nos. 1 and 2, among other things, granted certain defendants’ cross motion for a protective order.

Plaintiff commenced these actions on behalf of Westmount Health Facility, a nursing facility, to recover a balance allegedly due for services rendered to Joseph Garry Jr. (hereinafter decedent). Upon decedent's admission to Westmount on April 6, 2009, decedent's son, defendant Jeffrey Garry, executed a "responsible party agreement" with Westmount in which he "agree[d] to pay [Westmount] its basic monthly private rate for nursing home services rendered to [decedent] and any and all ancillary charges incurred by [decedent] from [decedent's] income and/or resources." Decedent was discharged on April 30, 2009 but was later readmitted to Westmount on June 19, 2009, where he remained until his death on July 5, 2010. It is undisputed that, from the time of decedent's initial admission to Westmount to the date of his death, Jeffrey Garry had been serving as decedent's attorney-in-fact pursuant to a durable power of attorney and was a cotrustee of defendant The Garry Family Trust (hereinafter the trust), a revocable trust owned by decedent.

After issue was joined by all defendants in action No. 2 except decedent's estate (hereinafter collectively referred to as defendants), plaintiff served discovery demands seeking, among other things: state and federal tax returns of decedent, the trust and certain corporate entities in which decedent and/or the trust held an interest; accountings, balance sheets and income and expense statements for the trust; records of asset transfers between the trust and its beneficiaries; and records of asset transfers by Jeffrey Garry. Defendants complied with certain of the requests, but objected to the production of most of the financial documents and all of the requested tax returns. Subsequently, plaintiff served a discovery demand upon defendant Michael Garry, the other cotrustee of the trust,¹ seeking copies of various financial documents including the tax returns of decedent and the trust. Plaintiff also served interrogatories upon Jeffrey Garry and Michael Garry requesting certain financial information regarding decedent's assets. These requests were either met with objections by defendants or went unanswered.

Plaintiff thereafter moved to compel disclosure in action No. 2, asserting that the requested financial information would show the existence, nature, value and control of the assets and/or income of decedent prior to his death and were therefore relevant to the issue of whether Jeffrey Garry breached the agreement by failing to use available resources of the estate to pay the outstanding nursing home bills. In its reply to defendants’ papers in opposition, plaintiff advised that defendant Michael R. Swan, the public administrator of decedent's estate, had agreed to acquire decedent's tax returns directly from the Internal Revenue Service. In a May 2019 order, Supreme Court denied the motion to compel as premature on the basis that decedent's tax returns were forthcoming and an analysis thereof would have a direct bearing on the issue of whether the other financial documents sought on the motion were material and relevant.

After attempts to obtain decedent's signed tax returns from the Internal Revenue Service proved unsuccessful, plaintiff again moved to compel disclosure of the previously requested documents. Defendants cross-moved for a protective order, claiming that the documents sought were neither material nor relevant to the determination of the issues in the actions. Supreme Court appointed a referee to determine the motion and the cross motion (see CPLR 3104[a] ).² Following oral argument, the referee denied the motion to compel and granted the cross motion for a protective order, reasoning that the records sought by plaintiff constituted postjudgment disclosure that was available only in the event that a judgment was obtained against some or all of the defendants. Plaintiff thereafter moved for review and reversal of the referee's order (see CPLR 3104[d] ). Finding that the discovery demands to which defendants had objected were "palpably improper," Supreme Court, in an August 2020 order, denied the motion and granted the cross motion. Plaintiff appeals from both the May 2019 and the August 2020 orders.

CPLR 3101(a) mandates "full disclosure of all matter material and necessary in the prosecution or defense of an action." The party seeking discovery "must satisfy the threshold requirement that the request is reasonably calculated to yield information that is ‘material and necessary’ — i.e., relevant – regardless of whether discovery is sought from another party or a nonparty" ( Forman v. Henkin, 30 N.Y.3d 656, 661, 70 N.Y.S.3d 157, 93 N.E.3d 882 [2018] [internal citations omitted]; accord Calcagno v. Graziano, 200 A.D.3d 1248, 1250, 160 N.Y.S.3d 135 [2021] ). "The words, ‘material and necessary,’ are to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial" ( Melfe v. Roman Catholic Diocese of Albany, N.Y., 196 A.D.3d 811, 813, 151 N.Y.S.3d 233 [2021] [internal quotation marks and citations omitted]; accord Rote v. Snyder, 195 A.D.3d 1130, 1131, 149 N.Y.S.3d 634 [2021] ). "While discovery determinations rest within the sound discretion of the trial court, [this Court] is vested with a corresponding power to substitute its own discretion for that of the trial court, even in the absence of abuse" ( Perez v. Fleischer, 122 A.D.3d 1157, 1157–1158, 997 N.Y.S.2d 773 [2014] [internal quotation marks and citations omitted], lv dismissed 25 N.Y.3d 985, 9 N.Y.S.3d 177, 31 N.E.3d 594 [2015] ; see Those Uncertain Underwriters at Lloyds, London v. Occidental Gems, Inc., 11 N.Y.3d 843, 845, 873 N.Y.S.2d 239, 901 N.E.2d 732 [2008] ; C.T. v. Brant, 202 A.D.3d 1360, 1361, 162 N.Y.S.3d 551, 2022 N.Y. Slip Op. 01090, *2 [2022] ).

The complaints in both actions assert a cause of action for breach of the responsible party agreement. To establish such a cause of action, plaintiff must show that Jeffrey Garry failed to utilize decedent's available "income and/or resources" to pay for his care (see Wedgewood Care Ctr., Inc. v. Kravitz, 198 A.D.3d 124, 132–133, 154 N.Y.S.3d 312 [2021] ; Baptist Health Nursing & Rehabilitation Ctr., Inc. v. Baxter, 140 A.D.3d 1386, 1387–1388, 33 N.Y.S.3d 567 [2016] ; Sunshine Care Corp. v. Warrick, 100 A.D.3d 981, 982, 957 N.Y.S.2d 122 [2012] ; Troy Nursing & Rehabilitation Ctr., LLC v. Naylor, 94 A.D.3d 1353, 1354–1356, 944 N.Y.S.2d 323 [2012], lv dismissed 19 N.Y.3d 1045, 954 N.Y.S.2d 6, 978 N.E.2d 599 [2012] ). Thus, the existence, nature and value of decedent's income and/or assets during the period surrounding the execution of the agreement is plainly relevant to the prosecution of these actions. Plaintiff sought to obtain this information through disclosure of various financial documents, including decedent's tax returns. Although Supreme Court expressly found in its May 2019 order that decedent's tax returns were relevant and discoverable, it concluded that the motion to compel was premature given that Swan had authorized the release of such returns, the review of which would allow for a more informed determination as to whether the various other financial documents sought were material and relevant. Under the particular facts and circumstances presented here, we find such determination to be reasonable and within Supreme Court's broad discretionary authority to regulate discovery (see Smithers v. Smithers, 30 A.D.2d 693, 693, 291 N.Y.S.2d 897 [1968] ; cf. U.S. Bank Trust, N.A. v. Rose, 176 A.D.3d 1012, 1016, 110 N.Y.S.3d 700 [2019] ; Fulton v. Allstate Ins. Co., 14 A.D.3d 380, 382, 788 N.Y.S.2d 349 [2005] ).

We reach a different conclusion with respect to the August 2020 order. Despite having previously found that decedent's tax returns were material and relevant to the issues at hand, Supreme Court concluded in its August 2020 order that the demands for such documents were palpably improper. No basis was articulated for this change of course, nor can we discern one. Contrary to the position advanced by defendants and accepted by the referee, plaintiff was not improperly seeking postjudgment disclosure (see CPLR 5223, 5224 ). Unlike a typical action where the assets of a defendant are irrelevant unless and until a judgment is obtained, here, as previously discussed, the existence and...