JNG Constr., Ltd. v. Roussopoulos

• Decision Date: 27 March 2019
• Docket Number: Index No. 101485/14,2017–06738
• Citation: 170 A.D.3d 1136,96 N.Y.S.3d 655
• Parties: JNG CONSTRUCTION, LTD., Respondent, v. George ROUSSOPOULOS, Appellant.
• Court: New York Supreme Court — Appellate Division

170 A.D.3d 1136

96 N.Y.S.3d 655

JNG CONSTRUCTION, LTD., Respondent,

v.George ROUSSOPOULOS, Appellant.

2017–06738

Index No. 101485/14

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

Argued - June 21, 2018

March 27, 2019

Babchik & Young, LLP, White Plains, N.Y. (Bruce M. Young and Emily Mann of counsel), for appellant.

Bonfiglio & Asterita, LLC, Staten Island, N.Y. (Steven D. Schwartzman of counsel), for respondent.

REINALDO E. RIVERA, J.P., MARK C. DILLON, JEFFREY A. COHEN, ANGELA G. IANNACCI, JJ.

DECISION & ORDER

ORDERED that the judgment is modified, on the facts, by reducing the award to the plaintiff from the principal sum of $ 71,500, plus interest at the rate of 9% per annum from December 31, 1998, to the principal sum of $ 55,500, plus interest at the rate of 9% per annum from December 31, 1998; as so modified, the judgment is affirmed, without costs or disbursements, that branch of the plaintiff's motion which was to confirm the referee's report is granted to the extent of confirming so much of the report as recommended that the plaintiff be awarded the principal sum of $ 55,500, plus interest at the rate of 9% per annum from December 31, 1998, and is otherwise denied, that branch of the defendant's cross motion which was to reject so much of the referee's report as recommended that the plaintiff be awarded a principal sum greater than $ 55,500 is granted, the order is modified accordingly, and the matter is remitted to the Supreme Court, Richmond County, for the entry of an appropriate amended judgment.

In 2014, the plaintiff commenced this action to recover damages for breach of an oral loan agreement that it entered into with the defendant in 1998. The plaintiff allegedly loaned the defendant the sum of $ 71,500, consisting of $ 55,500 in checks and $ 16,000 in cash, with an interest rate of 9% per year and a maturity date of December 31, 2013. The complaint alleged that the defendant failed to repay any portion of the loan.

Following joinder of issue, the plaintiff moved by notice of motion dated October 21, 2015, pursuant to CPLR 3126 to strike the defendant's answer and for leave to enter a default judgment or, in the alternative, to preclude the defendant from introducing evidence in his defense at trial, based on the defendant's alleged failure to respond to certain discovery demands, orders, and a stipulation. In support of the motion, the plaintiff alleged that the defendant failed to provide the name and address of the financial institution where he had deposited the loan proceeds, in violation of a preliminary conference order dated February 24, 2015, a discovery order dated June 19, 2015, and a discovery stipulation dated August 11, 2015. Further, the plaintiff alleged that the defendant failed to supplement his responses to the plaintiff's notice to admit dated March 17, 2015, in violation of the stipulation dated August 11, 2015, and that he failed to provide a response to the plaintiff's notice for discovery and inspection and its demand for answers to interrogatories, both dated March 17, 2015, in violation of the order dated June 19, 2015, and the stipulation dated August 11, 2015. The defendant opposed the plaintiff's motion and cross-moved, inter alia, pursuant to CPLR 3124 to compel the plaintiff to respond to his notice for discovery and inspection dated February 2, 2015. In an order dated January 22, 2016, the Supreme Court granted that branch of the plaintiff's motion which was to preclude the defendant from introducing evidence in his defense at trial, denied the defendant's cross-motion, and directed the plaintiff to move for leave to enter a default judgment by March 11, 2016.

Thereafter, by notice of motion dated February 3, 2016, the defendant moved pursuant to CPLR 2221 to "vacat[e]" the order dated January 22, 2016, and, upon vacatur, pursuant to CPLR 3124 to compel discovery. The defendant argued that vacatur of the order was warranted because his failure to comply with discovery orders was attributable to law office failure. The plaintiff opposed the defendant's motion and cross-moved by notice of cross motion dated March 4, 2016, for leave to enter a default judgment. In an order dated April 8, 2016, the Supreme Court denied the defendant's motion to vacate the order dated January 22, 2016, and granted the plaintiff's cross motion for leave to enter a default judgment. In a second order dated April 8, 2016, the court awarded the plaintiff a default judgment on the issue of liability and directed an inquest on the issue of damages following the filing of a note of issue. The matter was referred to a referee to hear and report on the issue of damages. After an inquest, at which the plaintiff's principal, John Kafantaris, testified, the referee issued a report recommending that the court find that the defendant owed the plaintiff the principal sum of $ 71,500, plus interest at the rate of 9% per annum from December 31, 1998.

By notice of motion dated December 12, 2016, the plaintiff moved to confirm the referee's report and for leave to enter a judgment. The defendant cross-moved by notice of cross motion dated January 25, 2017, to reject the referee's report and to dismiss the complaint as time-barred, for lack of standing, and on the ground that the plaintiff perpetrated a fraud on the court. In an order dated April 7, 2017, the Supreme Court granted the plaintiff's motion and denied the defendant's cross motion. Subsequently, the court issued a judgment dated May 5, 2017, in favor of the plaintiff and against the defendant in the principal sum of $ 71,500, plus interest at the rate of 9% per annum from December 31, 1998. The defendant appeals.

The Supreme Court providently exercised its discretion in granting those branches of the plaintiff's October 2015 motion and its March 2016 cross motion which were, respectively, to preclude the defendant from introducing evidence in his defense at trial and for leave to enter a default judgment. "If a party ‘refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed ... the court may make such orders with regard to the failure or refusal as are just’ " ( Smith v. County of Nassau, 138 A.D.3d 726, 728, 30 N.Y.S.3d 143, quoting CPLR 3126 ). Such orders include "an order prohibiting the disobedient party from supporting or opposing designated claims or defenses" ( CPLR 3126[2] ), or an order "rendering a judgment by default against the disobedient party" ( CPLR 3126[3] ). "To invoke the drastic remedy of preclusion, the court must determine that the offending party's lack of cooperation with disclosure was willful, deliberate, and contumacious" ( Aha Sales, Inc. v. Creative Bath Prods., Inc., 110 A.D.3d 1019, 1019, 973 N.Y.S.2d 791 ; see Watson v. 518 Pa. Hous. Dev. Fund Corp., 160 A.D.3d 907, 910, 76 N.Y.S.3d 66 ; Zakhidov v. Boulevard Tenants Corp., 96 A.D.3d 737, 739, 945 N.Y.S.2d 756 ). " ‘The willful and contumacious character of a party's conduct may be inferred from the party's repeated failure to comply with court-ordered discovery, and the absence of any reasonable excuse for those failures, or a failure to comply with court-ordered discovery over an extended period of time’ " ( Watson v. 518 Pa. Hous. Dev. Fund Corp., 160 A.D.3d at 910, 76 N.Y.S.3d 66, quoting New York Timber, LLC v. Seneca Cos., 133 A.D.3d 576, 577, 19 N.Y.S.3d 78 ; see Aha Sales, Inc. v. Creative Bath Prods., Inc., 110 A.D.3d 1019, 973 N.Y.S.2d 791 ). " ‘Absent an improvident exercise of discretion, the determination to impose sanctions for conduct that frustrates the purpose of the CPLR should not be disturbed’ " ( Honghui Kuang v. MetLife, 159 A.D.3d 878, 881, 74 N.Y.S.3d 88, quoting Lotardo v. Lotardo, 31 A.D.3d 504, 505, 818 N.Y.S.2d 568 ).

Here, the willful and contumacious character of the defendant's conduct can be inferred from his repeated failures over an extended period of time, without an adequate excuse, to comply with the plaintiff's discovery demands, the Supreme Court's discovery orders, and the parties' discovery stipulation (see Hasan v. 18–24 Luquer St. Realty, LLC, 144 A.D.3d 631, 632, 45 N.Y.S.3d 98 ; Aha Sales, Inc. v. Creative Bath Prods., Inc., 110 A.D.3d at 1020, 973 N.Y.S.2d 791 ; Carabello v. Luna, 49 A.D.3d 679, 680, 853 N.Y.S.2d 663 ; Moog v. City of New York, 30 A.D.3d 490, 491, 820 N.Y.S.2d 593 ). Accordingly, the court providently exercised its discretion in granting those branches of the plaintiff's motion and cross motion which were to preclude the defendant from introducing evidence in his defense at trial and for leave to enter a default judgment (see Carabello v. Luna, 49 A.D.3d 679, 853 N.Y.S.2d 663 ). Moreover, the court's determination to grant those branches of the plaintiff's motion and cross motion rendered academic that branch of the defendant's cross motion which was pursuant to CPLR 3124 to compel discovery (see e.g. Cadet–Duval v. Gursim Holding, Inc., 147 A.D.3d 718, 719, 45 N.Y.S.3d 585 ).

The Supreme Court also providently exercised its discretion in denying that branch of the defendant's February 2016 motion which was to vacate the order dated January 22, 2016, on the ground of law office failure. Contrary to the defendant's contention, he failed to provide a basis for vacating the order. While law office failure may, under certain circumstances, prevent a finding of willful and contumacious conduct or excuse a party's failure to comply with a conditional order of preclusion (see e.g. Marks v. Vigo, 303 A.D.2d 306, 307, 756 N.Y.S.2d 568 ), these arguments should have been advanced by the defendant in his...