SH575 Holdings LLC v. Reliable Abstract Co.
| Decision Date | 18 November 2022 |
| Docket Number | Index No. 651246/2019,Motion Seq. No. 006 |
| Citation | 2022 NY Slip Op 33968 (U) |
| Court | New York Supreme Court |
| Parties | SH575 HOLDINGS LLC, Plaintiff, v. RELIABLE ABSTRACT CO., L.L.C., YAKOV DECKELBAUM, RICHMOND STUYVESANT HOLDINGS, LLC.CARL CALLER, THE MARCAL GROUP LLC.MARK CALLER, JAYSUKHLAL DOMADIA, ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.O.TISSA 16TH CORP, TISSA FUNDING, CORP., HOWARD HERSHKOVICH, PINCUS CARLEBACH, JOHN AND JANE DOES, ABC COMPANIES Defendant. |
MOTION DATE 04/01/2022
DECISION+ ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 006) 144,145,146,147, 148, 149, 150, 151, 152, 153 154, 155, 156, 157, 158, 159, 160, 161, 162, 163, 164, 165 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177 178, 179 were read on this motion to/for SANCTIONS
Plaintiff moves pursuant to CPLR 3126 for discovery sanctions against defendants Richard Stuyvesant Holdings, LLC (Richard Stuyvesant), Carl Caller, The Marcal Group, LLC, and Mark Caller (together, the Caller Defendants). The Caller Defendants oppose the motion.
This action arises out of a conversion by defendant Pincus David Carlebach (Carlebach), a disbarred bankruptcy attorney, of $1 million deposited by plaintiff into Carlebach's IOLA account under a March 10, 2017 Agreement for the purchase of real property (the Property) from Carlebach's client, Liberty Towers Realty LLC (Liberty) in connection with a bankruptcy proceeding (NYSCEF # 48-Amended Verified Complaint).
With regard to the Caller Defendants, the Amended Verified Complaint alleges as follows. On August 16, 2016, before plaintiffs contract to purchase the property, Richard Stuyvesant entered into a purchase contract for the Property and deposited $500,000 into Carlebach's IOLA account (id, ¶ 110). The Caller Defendants had worked with Carlebach to achieve their aligned interests for a substantial period of time of at least one year (id., ¶¶ 106-108). Richard Stuyvesant's purchase contract for the Property was cancelled on January 13, 2017 (id., ¶¶ 114-1119). However, when its $500,000 deposit was not returned by 5:00 pm the next day, rather than report the failure, the Caller Defendants continued to work with Carlebach to either acquire the Property or to receive $500,000 upon Carlebach's further deposits into his IOLA account (id., ¶¶ 120, 125). On or about March 22, 2017, or 12 days after plaintiffs deposit of $1 million into Carlebach's escrow account, Richard Stuyvesant was repaid its $500,000 that it should have received more than two months earlier (id., ¶¶ 126, 130-31).
On June 27, 2017, plaintiffs purchase contract for the Property was canceled, and when plaintiff did not receive the $1 million deposit back, plaintiff reported Carlebach to the authorities (id., ¶¶ 29, 43). Based on Carlebach's escrow account statements subpoenaed by plaintiff from Citibank, N. A. (Carlebach's financial institution), the Caller Defendants received $500,000 of the plaintiffs $1 million (id., ¶¶ 35-44, 126-131).
Seven of the defendants[1] moved to dismiss the amended complaint pursuant to CPLR 3211(a)(1) and (7). By Decision and Order dated April 15, 2020, Hon. O. Peter Sherwood (ret.) granted the motions (NYSCEF # 125). The dismissal was affirmed on appeal (NYSCEF # 138).
By Stipulation of Discontinuance dated June 9, 2021, the parties agreed to discontinue any and all claims and counterclaims against defendant Robinson Brog Leinwand Greene Genovese & Gluck P.C. (NYSCEF # 137). Carlebach, who has been released from prison but cannot be located, is in default. Therefore, the only claims being pursued are against the Caller Defendants to recover the $500,000 of plaintiffs $1 million deposit.
On July 22, 2021, a preliminary conference was held. The Caller Defendants were ordered to produce responses to discovery demands by December 3, 2021 (NYSCEF # 141). On January 12, 2022, a compliance conference was held and the Caller Defendants were ordered to produce discovery documents by February 11, 2022. The Caller Defendants were advised that failure to comply with the discovery deadline could result in penalties pursuant to CPLR 3126 (NYSCEF # 142). At the time of a status conference held on March 17, 2022, the documents had not been produced and the order provided that "upon consent of the parties, and with permission of the court, plaintiff may move for discovery sanctions pursuant to CPLR 3126" (NYSCEF # 143).
On April 1, 2022, plaintiff moved pursuant to CPLR 3126 for discovery sanctions against the Caller Defendants for failure to produce document discovery (NYSCEF #s 144-172). The Caller Defendants filed untimely opposition consisting of their attorney's affirmation in which it was asserted that striking the pleadings was too harsh a remedy because they had produced 102 pages of documents on February 11, 2022. At the same time, the Caller Defendants conceded that their responses was deficient in certain respects, and asserted that the cause of the deficiency was their counsel's busy work schedule due to the pandemic (NYSCEF # 173, ¶¶ 3-6). In its reply, plaintiff pointed out that during the status conference in March 2022, defense counsel did not raise his work schedule as the cause of his clients' failure to comply with discovery (NYSCEF #s 175-176).
After the motion was marked fully submitted, the Caller Defendants submitted a supplemental affirmation from their attorney who states that since their originally opposition was filed, the Caller Defendants supplemented their "discovery response, consisting of 992 pages, which were produced to plaintiff on May 9, 2022 [and that] [t]he documents consist principally of emails, litigation documents and materials relating to the various proceedings and transactions underlying this matter" (NYSCEF # 177, ¶¶ 3,4). The attorney also affirms that the production is "based on a complete search by defendants of the email accounts of defendants Carl Caller and Mark Caller, and non-party Aryeh Fried (an attorney employed by Carl Caller)," and lists the email addresses searched (id., ¶ 5).
In his letter response to the supplemental affirmation, plaintiffs attorney states that (NYSCEF # 179).
After the submission of the motion, a conference was held on July 28, 2022, at which the parties agreed to attempt to settle the action (NYSCEF # 180). On September 17, 2022, a meeting was held between the parties and their counsel regarding mediating the dispute; however, the matter was not mediated reportedly because after plaintiff chose a mediator from a list of five provided by the Caller Defendants, the Caller Defendants failed to respond to schedule the mediation.
CPLR 3126 (3) provides that if a party "refuses to obey an order for disclosure or willfully 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," including "an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or any part thereof, or rendering a judgment by default against the disobedient party." Under CPLR_3126 (1)(2), the court is also authorized to order that the issues encompassed by the disclosure demand "be deemed resolved," in the favor of the party seeking the discovery or that the party be precluded from...
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