Miracle Sound, Inc. v. New York Property Ins. Underwriting Ass'n

• Decision Date: 15 January 1991
• Parties: MIRACLE SOUND, INC., Plaintiff-Respondent, v. NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 346

564 N.Y.S.2d 346

169 A.D.2d 468

MIRACLE SOUND, INC., Plaintiff-Respondent, v. NEW YORK PROPERTY INSURANCE UNDERWRITING ASSOCIATION,

Defendant-Appellant.

Supreme Court, Appellate Division,

First Department.

Jan. 15, 1991.

Before ELLERIN, J.P., and WALLACH, SMITH and RUBIN, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County, entered September 14, 1989, which granted plaintiff's motion for a protective order to the extent of striking defendant's interrogatories 5-12, 22, 24-25, 34, 37-49, 51-53 and 55, limiting interrogatories 18-20 and 54 to a period of one year prior to the loss and interrogatory 21 solely to plaintiff, and limiting defendant's deposition notice of plaintiff's accountant, Benjamin Rosenstark, to plaintiff's affairs for a period of one year prior to the loss, unanimously modified, on the law, the facts, and in the exercise of discretion, to the extent of denying plaintiff's motion for a protective order as to interrogatories 5-12, 21, 37 (limited to a net worth statement as of January 1, 1987), 45-47, 49 (limited to a two-year period prior to the loss), 51 (limited to 1987 tax returns), and 55 (limited to a two-year period prior to the loss), and permitting examination of accountant Rosenstark as to plaintiff's principal's finances for a two-year period prior to the loss, and is otherwise affirmed, without costs.

The order of same court, entered June 14, 1990, which denied defendant's motion to renew the prior motion and to strike plaintiff's complaint for failure of its principal to answer certain questions in his examination before trial and interrogatory 19, or alternatively to compel such answers, and granted plaintiff's cross motion to vacate the deposition notices served on two non-party witnesses to the extent of barring examination as to items vacated by prior orders, is unanimously modified, on the law, the facts, and in the exercise of discretion, to the extent of granting defendant's motion to compel plaintiff to fully answer interrogatory 19, and denying plaintiff's cross motion to vacate the deposition notices served on the non-party witnesses, and is otherwise affirmed, without costs.

In this action on a fire insurance policy, the insurer has interposed various defenses, including arson and the insured's misrepresentation or concealment of material facts in its proof of loss and pre-action examination under oath. The appeal is taken by the insurer from various disclosure rulings relating in the main to these defenses. Our review of IAS's disclosure rulings is guided by the following considerations. First, the standard of review is abuse of discretion. Second, as long as an affirmative defense remains undismissed, its merit must be assumed and questions concerning it must be answered if not unnecessarily burdensome. Third, the defense of arson puts in issue the financial condition of not only plaintiff but also that of its only shareholder and officer, Mr. Ben-Jacob, as relevant to whether there was a motive to commit arson (2423 Mermaid Realty Corp. v. New York Property Ins. Underwriting Assn., 142 A.D.2d 124, 534 N.Y.S.2d 999, lv. denied, 74 N.Y.2d 607, 545 N.Y.S.2d 103, 543 N.E.2d 746; see also, Shawanga Holding Corp. v. New York Property Ins. Underwriting Assn., 57 A.D.2d 677, 394 N.Y.S.2d 69, lv. denied, 43 N.Y.2d 643, 401 N.Y.S.2d 1027, 372 N.E.2d 580). Fourth, the dispute as to whether IAS should have granted defendant's motion to renew is, from the perspective of an appellate court, a red herring, given defendant's appeal from both orders. The renewal motion sought answers to six interrogatories previously struck, all pertaining to the personal finances of Mr. Ben-Jacob. Since IAS had before it a defense of arson the merits of which were not under attack, it is clear that these six should not have been stricken on the first motion. Fifth, taking defendant's 22nd and 23rd affirmative defenses at face value, any deliberate, material misrepresentation made by Mr. Ben-Jacob...