Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
SHORT FORM ORDER
SUPREME COURT - STATE OF NEW YORKCOUNTY OF NASSAU - PART 19
Present: HON. WILLIAM R. LaMARCAJustice
ASTORIA FEDERAL SAVINGS & LOANASSOC., Successor by merger withLong Island Savings Bank, FSB
Motion Sequence # 002 , # 003, # 004#005
Submitted January 10 and
January 24, 2007, respectively.Plaintiff,
-against- INDEX NO: 11934/05
JAMES J. HARTRIDGE,
Defendant.
The following papers were read on this motion:
ARO Non-Part Notice of Motion (# 002)............................................Aff rmation in Oppos ition.................................................................................CUCCI and WILSHIRE Non-Part Amended Notice of Motion(# 003)........CUCCI and WILSHIRE Non-Part Memorandum of Law in Support...........Aff rmation in Oppos ition.................................................................................Castellano Reply Aff rmation............................................................................ 6Reply Memorandum of Law..............................................................................Sur-Reply Affi rmation..................... ...................................................................BEST NEST Non-Part Notice of Motion (# 004)..................................Affirmation in Opposition......................................... ........
... ........ ....................
Reply Affrmation...
... ....
I""""""""""""'" I"""'" I"""" ...
.......... ......................
KARANASOS and SACCO & FILLAS Non-Part Notice of Motion (# 005)..Affirmation in Opposition .........
............. ........... ........... ......... ......... ..................
Reply Affirmation. ..... ....
....... .......................... .............. ... ....... .......... ....... ..........
Requested Relief
Without identifying itself, counsel for non-party ARO CAPITAL , LLC (hereinafter
referred to as "ARO"), purported successor in interest to plaintiff, ASTORIA FEDERAL
SAVINGS & LOAN ASSOC. , successor by merger with LONG ISLAND SAVINGS BANK
FSB (hereinafter referred to as "ASTORIA"), moves (# 002) for an order quashing the
subpoenas served by defendant , JAMES J. HARTRIDGE (hereinafter referred to as
HARTRIDGE"), and for an order disqualifying HARTRIDGE's attorney, Samuel Glass
Esq. , as counsel for the defendant. In companion motions , non-party Matthew Cucci and
Wilshire Investment Group, LLC (hereinafter referred to as "CUCCI" and "WILSHIRE"
move (# 003) for an order quashing the judicial subpoena issued to CUCCI and prohibiting
JPMorgan Chase Bank , N. , (hereinafter referred to as "JPMORGAN"), from disclosing
any information sought by HARTRIDGE and/or quashing the subpoena issued by
HARTRIDGE to JPMORGAN; non-party, BEST NEST REAL TV GROUP , INC. (hereinafter
referred to as "BEST NEST"), moves (# 004) for an order quashing the judicial subpoena
duces tecum served by HARTRIDGE , disqualifying defendant's attorney, Samuel Glass
Esq. , and for costs , disbursements and reasonable attorney s fees on the motion; and non-
party Chris Karanasos and his attorneys , Sacco & Filas , LLP (hereinafter referred to as
KARANASOS" and "SACCO & FILLAS"), move (# 005) for an order quashing the judicial
subpoenas duces tecum served by HARTRIDGE , disqualifying defendant's attorney,
Samuel Glass , Esq. and for costs , disbursements and attorney s fees on the motion.
Counsel for HARTRIDGE opposes all of the motions, which are determined as follows:
Background
This litigation arises from a real property mortgage foreclosure action initiated by
ASTORIA against HARTRIDGE , the then owner of certain property located at 3749 Mill
Road , Seaford, New York. Counsel for HARTRIDGE relates that a Judgment of
Foreclosure and Sale was signed by the Court, on December 14 2005 , in the principal
amount of $33,465. , and the foreclosure sale was held on June 27 , 2006. Plaintiff
ASTORIA, allegedly assigned the mortgage , note and this foreclosure action to ARO just
a few days before the foreclosure sale. Counsel states that , although the Court was filled
with potential bidders on the morning of the sale , ARO was the only bidder who submitted
a bid on the premises, in the nominal sum of $500.00, and ARO was issued a Referee
Deed to the premises the same day of the foreclosure sale. Counsel points out that the
end result was that HARTRIDGE's home , appraised by the Nassau County Assessors
Office to be valued at $445 200. 00 in January 2006 , was sold by ARO to itselffor $500.
and that ARO now seeks a deficiency judgment against HARTRIDGE in the sum of
$48,776.43 (see Referee s Report).
Counsel for HARTRIDGE states that, subsequent to the foreclosure sale , it was
learned from Joseph Johns , a bidder who attended the sale and who intended to bid on
the foreclosed property, that he and other bidders were approached at the sale site by
CUCCI , who recommended that they not bid on the premises because there was a high
senior mortgage on the premises , and that the sale was being made subject to that
mortgage. Counsel states that, in fact, there was no senior mortgage on the premises and
that CUCCI was acting as an agent of ARO at the sale and made false representations to
potential bidders in order to make the sale uninviting so the potential bidders would refrain
from bidding, allowing ARO to purchase the property for a nominal price , which is exactly
what occurred.
It appears that a month later, ARO conveyed the premises to KARANASOS
brother- in- law of an ARO member, Evangelos Pollatos , for the sum of $175 000.00.
order to complete the sale , KARANASOS put down $50 000. 00 and gave a mortgage to
BEST NEST in the amount of $125 000. 00. Counsel for HARTRIDGE contends that this
conveyance to KARANSOS and mortgage to BEST NEST were shams to establish the
appearance that bonafide purchasers have rights in the subject premises.
By Order to Show Cause , dated August 7 2006 , HARTRIDGE moved inter alia
to set aside the recent foreclosure sale of the premises, and to vacate the Referee s deed
to ARO , as well as the deed from ARO to KARANASOS and the mortgage to BEST NEST.
He alleged that substantial irregularities at the foreclosure sale prevented competitive
bidding on his home which deprived him of any surplus on the residence. By Short Form
Order, dated October 27 2006 (Palmieri , J. ), the Court determined the motion and found
that "(b)ecause there are sharp issues offact upon which the decision rests , a hearing shall
be held ... . The Court framed the issues , as follows:
At issue here is whether the sale was properly conducted and if not, whethersuch failure was a mere irregularity, which should not cause the sale to bevacated or of such magnitude that the sale should be set aside. Specificallyat issue is what were the terms of the sale as announced by the referee tothe public , whether there was any misconduct on the part of plaintiff, Aro , thereal party in interest, or any persons acting on their behalf, whether therewas any other misconduct by persons present which might have affected theintegrity of the sale , whether the bid price was so inadequate as to shock theconscience of the Court even in the absence of misconduct or error, thestatus of Karanasos and Best Nest in relation to the above describedtransaction and what remedies should apply.
Counsel for HARTRIDGE states that in preparation for the hearing, all of the
subpoenas issued herein seek information that is material and relevant to the issues before
the Court. The subpoena served on ARO and its principal , Evangelos Pollatos , seeks
documents pertaining to the formation of ARO , which would reflect whether CUCCI has a
financial interest in ARO , documents pertaining to ARO's purchase of the mortgage
documents pertaining to the sale of the property and the issuance of the Referee s Deed
and documents pertaining to the sale of the premises to KARANASOS. The subpoenas
served on JPMORGAN , seeks bank records pertaining to CUCCI and a company he owns
WILSHIRE , which are limited in scope and specifically identify the records requested. The
records being subpoenaed from CUCCI seek agreements and documents concerning the
premises , the financial transactions (check bank records , etc) pertaining to the alleged
purchase of the assignment of the note, mortgage and this action , the financial
transactions (checks, bank records, etc.) pertaining to the sale of the premises to
KARANASOS, and the notes generated at the foreclosure sale and phone records , which
are limited in time from January 1 , 2006 , through October 1 , 2006. The subpoena served
on BEST NEST seeks documents pertaining to the formation of BEST NEST to determine
if any of the other parties (CUCCI , POLLATOS , KARANOSOS , etc. ) have any financial
interest in BEST NEST, and documents pertaining to the mortgage on the premises and
the loan BEST NEST allegedly made to the alleged good faith purchaser, KARANASOS.
The subpoena served on KARANASOS and the attorneys who represented him in the
purchase of the residence , SACCO & FILLAS , seek documents concerning KARANASOS'
purchase of the premises , what persons or entities received the proceeds of sale from the
sale to KARANASOS , and what information KARANASOS had in his possession prior to
his receiving the deed. Counsel for HARTRIDGE states that these documents are relevant
to show the inter-relationship of these parties and whether KARANASOS had knowledge
of the events detailed above , which would deprive him of the good faith purchaser defense.
Generally, all of the non-party movants seek to quash the subpoenas on the ground
that they are a "fishing expedition , a tool to harass the movants , over broad , irrelevant
oppressive , frivolous, and not likely to lead to relevant information. In particular , ARO and
Pollatos state that the documents sought are proprietary and confidential and have nothing
to do with the allegation that CUCCI interfered with the foreclosure sale. CUCCI claims
that the bank records sought from JPMORGAN demonstrates a patently improper use of
subpoena power as Mr. CUCCI's personal financial statements and banking records , and
those of his company, WILSHIRE , are protected bank records , particularly in light of the
fast rise of identity theft and the need to protect an individual's private information. Also
counsel for CUCCI claims that the subpoenas are facially defective in that they fail to
comply with CPLR 92301 which requires that "(a) trial subpoena duces tecum shall state
on its face that all papers or other items delivered to the court pursuant to such subpoena
shall be accompanied by a copy of such subpoena . BEST NEST contends that the
subpoena is facially defective pursuant to CPLR 92301 , that service of the subpoena was
improper and that a subpoena cannot be directed to a corporation and must identify who
at the corporation must attend, that BEST NEST was not present at the sale and that the
documents requested can be obtained from the County Clerk. KARANASOS and SACCO
& FILLAS assert that the subpoenas are facially defective pursuant to CPLR 92301 , that
SACCO & FILLAS were not properly served as no managing or general agent of the
business partnership was served and no subpoenas were mailed to either of the two (2)
partners at their respective homes pursuant to CPLR 9310 (b)(c) or (d), thatthe documents
are protected by the attorney client privilege under CPLR 94503 and that there is no
evidence to show that either KARANOSOS or his attorneys misled prospective buyers at
the foreclosure sale or that KARANOSOS is anything other that a bonafide purchaser for
value.
With respect to those movants who seek to have defendant's attorney, Samuel
Glass , Esq. disqualified , they claim that they plan to call him as a witness at the scheduled
hearing and that he cannot "as a matter of law" continue to represent the defendant. In the
alternative, they claim that, because Mr. Glass is also the attorney for Joseph Johns, a
prospective bidder at the public foreclosure sale, there is a conflict of interest in his
continued representation of defendant and Johns in the event that the foreclosure sale is
set aside in that both parties wil most likely be bidding at a newly scheduled sale.
In opposition to the motions , counsel for HARTRIDGE asserts that all of the
subpoenas seek documents and testimony relevant to the issues framed by Justice
Palmieri in the order directing a hearing. Counsel states that the standard to be applied
on a motion to quash a subpoena duces tecum is whether the requested information is
utterly irrelevant to any proper inquiry (Ayubo v Eastman Kodak Co. Inc 158 AD2d 641
551 NYS2d 944 (2 Dept. 1990)) and contends that none of the movants have met their
burden of showing that the requested records are irrelevant and the motion must be
denied. (Velez v Hunts Point Mult-Service Center Inc. 29 AD3d 104 811 NYS2d 5
Dept. 2006)).
Moreover, counsel for HARTIRIDGE argues that CUCCI does not have standing to
challenge a subpoena issued to a bank seeking the depositors records. U. S. v Miler, 425
US435 , 96 S. Ct. 1619 (1976). The New York Court of Appeals and the various Appellate
Division Departments follow the precedent of U. S. v Miler and have routinely held that the
depositor has no standing to contest the subpoena issued to the bank. See, Cappetta v
Santucci 42 NY2d 1066 399 NYS2d 638 369 NE2d 1172 (C. A. 1977); Norkin v Hoey 181
AD2d 248, 586 NYS2d 92 (1 Dept. 1992); People v Doe 96 AD2d 1018,467 NYS2d 45
Dept. 1983). Bank records of a customer account are the business records of the
banks in which the customer can assert neither ownership nor possession , and the
customer has no legitimate expectation of privacy in the content of original checks , deposit
slips or other documents voluntarily conveyed to banks and exposed to their employees.
Norkin v Hoey, supra. The overwhelming weight of authority holds that a bank customer
has no legitimate cognizable interest nor propriety (sic) or possessory interests in the
records of a third-part bank, and therefore cannot preclude their production GLGllnc.
v Burgher 4 Misc 3d 1028A, 798 NYS2d 344 (Sup. Nassau Co. , 2004).
Counsel for HARTRIDGE maintains that the subpoenas are not defective as the
absence ofthe language requiring delivery of a copy of the subpoena with the subpoenaed
records is a mere irregularity which should be disregarded by the Court. CPLR 92001; Rule
2101 & 93026. CPLR Rule 2101 proves as follows:
A defect in the form of a paper, if a substantial right of a party is notprejudiced , shall be disregard by the Court, and leave to correct shall befreely given. The party on whom a paper is served shall be deemed to havewaived objection to any defect in form unless, within two days , after receiptthereof, he returns the paper to the party serving it with a statement ofparticular objections.
Counsel for HARTRI DGE claims that the purpose of providing a copy of the subpoena with
the records , is to aid the Court Clerk , and no prejudice has been shown.
Counsel for HARTRIDGE also claims that the record reflects that BEST NEST was
properly served with the subpoena and that it's claim that a corporation cannot be served
with a subpoena is unfounded and contrary to the law. See, Standard Fruit Steamship
Co. v Waterfront Commission of New York Harbor, 43 NY2d 11 400 NYS2d 732 , 371
NE2d 453 (C. A. 1977). The Standard Court held that a corporation is required to produce
offcers and employees who have knowledge of the transaction at issue , pursuant to a
subpoena served upon the corporation. However, the Court notes that it appears that
SACCO and FILLAS , a limited partnership, was not served in accordance with CPLR 931
a, which requires service upon any "managing or general agent or general partner of the
firm . When and if proper service of the subpoena is effectuated , it is the Court's view that
the records requested of the law firm were not prepared for litigation , but were prepared
for business purposes and are not privileged. Counsel for HARTRIDGE points out that the
attorney client privilege does not apply to 1) documents disclosed to third parties; 2)
documents generated by third parties; and 3) documents which are of a business rather
than legal nature. Netherby Ltd. v G. V. Trademark Investments Ltd. 261 AD2d 161 689
NYS2d 488 (1 Dept. 1999).
Counsel for HARTRIDGE states that no grounds exist to disqualify him as
defendant's attorney. He argues that he was not involved in the assignment of the
mortgage , the foreclosure sale , issuance of the Referee s Deed , nor the transfer to
KARANOSOS; that he is simply the attorney for the defendant , who appeared in this action
subsequent to the transactions and events which are relevant to this proceeding and that
there is no testimony that he can give that is necessary or relevant at the hearing. Counsel
states that in order to obtain disqualification , movant must demonstrate that 1) counsel'
testimony is necessary to their case; and 2) that counsel's testimony will be prejudicial to
his client. Goldberger v Eisner 21 AD3d 401 799 NYS2d 778 (2 Dept. 2005); Daniel
Gale Associates, Inc. v George 8 AD3d 608 , 779 NYS2d 573 (2 Dept. 2004). Indeed
22 NYCRR91200.21 provides that a lawyer may act as an advocate and also testify if a)
the testimony will relate solely to an uncontested issue; b) the testimony will relate solely
to a matter of formality and there is no reason to believe that substantial evidence will be
offered in opposition to the testimony; c) the testimony wil relate solely to the nature and
value of legal services rendered in the case by the lawyer or the lawyer s firm to the client;
and d) disqualification as an advocate will work a substantial hardship on the client.
Counsel argues that a party s entitlement to be represented in ongoing litigation by counsel
of his choosing is a valued right which should not be abridged absent a clear showing that
disqualification is warranted. Zutler v Drivershield Corp. 15 AD3d 397 , 790 NYS2d 485
Dept. 2005). Counsel points out that HARTRIDGE's Order to Show Cause was filed
in August 2006 , and the hearing, originally scheduled for December 5 2006 , has already
been adjourned. It is counsel's position that movants ' motion to disqualify counsel , coming
close to six (6) months after the initiating Order to Show Cause , is barred by laches and
should be rejected by the Court , as it is clearly an attempt to discomfort HARTRIDGE , who
would be required to retain counsel at this late stage ofthe proceedings , unfamiliar with the
case, at a significant financial hardship. See, Talvy v American Red Cross in Greater New
York 205 AD2d 143 , 618 NYS2d 25 Dept. 1994). It is the Court's judgment that
movants have failed to demonstrate that counsel for defendant's testimony is necessary
to their case orthat said testimony will be prejudicial to his client. Rodriguez v 11414- 1422
Ogden Avenue Realty Corp. 304 AD2d 400, 758 NYS2d 43 (1 sl Dept. 2003); see also
Talvy v American Red Cross in Greater New York, supra. Movants have provided only
speculation in support of their position , which is insufficient to disqualify counsel.
Goldberger v Eisner, supra.
Conclusion
After a careful reading of the submissions herein , the Court credits the analysis of
the defendant HARTRIDGE, except as above noted with respect to service of the
subpoena on SACCO and FILLAS , and finds that the scope of the subpoenas are valid
and reasonably calculated to lead to the discovery of relevant evidence. It is therefore
ORDERED that the motions by ARO, Pollatos , CUCCI , WILSHIRE , BEST NEST
and KARANASOS to quash the subpoenas served upon them are denied; and it is further
ORDERED that the motion by SACCO & FILLAS to quash the subpoena is granted
based upon improper service on the limited partnership; and it is further
ORDERED that ARO, Pollatos, CUCCI, WILSHIRE, BEST NEST and
KARANASOS are directed to comply with the subpoenas and produce the documents
demanded and forward same to the Record Room , Supreme Court-Nassau County, 100
Supreme Court Drive, Mineola, New York, 11501. The hearing is presently scheduled for
April 12 , 2007 in CCP and should proceed without delay; and it is further
ORDERED that the motions to disqualify defendant's counsel , Samuel Glass , Esq.
are denied.
The Court has considered the remaining contentions of movants herein and finds
them to be without merit.
All further requested relief not specifically granted is denied.
This constitutes the decision and order of the Court.
Dated: March 30 , 2007
WILLIAM R. LaMARCA , J.
ENTfiEDAPR 0 6 2001
fWQ OOU et .ee
TO: Adam E. Milkolay, Esq.Attorney for Plaintiff900 Merchants Concourse , Suite 208Westbury, NY 11590
Howard B. Arber, Esq.Attorney for non-party movant Aro Capital , LLC64 Hilton AvenueHempstead , NY 11550
Samuel!. Glass , Esq.Attorney for Defendant James J. Hartridge62 Nichols Court , Suite 302Hempstead , NY 11550
Bainton McCarthy LLCAttorney for non-party movant Matthew Cucci and Wilshire Investment Group LLC26 BroadwayNew York , NY 10004
Lisa Firshing, Esq.Attorney for non-party movant Best Nest Realty Inc.141-07 20 Avenue , Suite 601Whitestone , NY 11357
Sacco & Filas , LLPAttorneys for non-party movant Chris Karanasos141-07 20 Avenue , Suite 506Whitestone , NY 11357
Michael C. Wolkow , Esq.Referee3167 Merrick AvenueOceanside, NY 11572
astoriafederal-hartidge,#02,#03,#04 #05/subpoenas