Halitzer v. Ginsberg

80 A.D.2d 771, 436 N.Y.S.2d 738, 1981 N.Y. App. Div. LEXIS 10561

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: March 10, 1981
• Status: Published

Opinions

Order, Supreme Court, New York County, entered October 9, 1980, which, inter alia, granted plaintiff priority of examination, modified, on the law, to the extent of allowing full examination, except as to matters relating to the accounting, itself, and, as so modified, affirmed, without costs and disbursements. There is no statutorily mandated requirement that a plaintiff seeking to obtain priority in the taking of depositions pursuant to CPLR 3106 and 3103 must submit an affidavit by a party having knowledge of the facts, or, in the alternative, that the complaint be verified (cf. CPLR 3212). “If *** special circumstances warrant the plaintiff’s examining first, or some other plan appears desirable in an individual case, the court has ample authority *** to vary priorities” (3A Weinstein-Korn-Miller, NY Civ Prac, par 3106.02). Special Term issued an order granting plaintiffs’ priority of examination limited in scope to establishing the relationship between the plaintiffs and the defendant as partners. Defendant appeals from this order, contending that priority of examination should have remained with him. The plaintiffs cross-appeal, arguing that the court in granting them priority of examination should not have limited that examination, but should have permitted full disclosure. Plaintiffs allege, in effect, that tbey entered into a limited partnership with the defendant, whereby the defendant was the general partner and the plaintiffs were the limited partners. The partnership was to deal in real estate. Plaintiffs allege that they were induced to invest in the limited partnership by fraudulent representations and omissions made by the defendant general partner. Defendant is accused of acts of fraud and self-dealing with respect to the partnership properties involved, as well as failing to account to plaintiffs for profits and losses. Plaintiffs seek a declaration of their rights, the imposition of trusts upon the real properties involved, dissolution of the limited partnership, receivership and judicial sales of the real properties and an accounting. Plaintiffs moved, prior to joinder of issue, for priority of examination pursuant to CPLR 3106 (subd [a]), citing as exceptional circumstances that fraud and breach of fiduciary duty on the part of the defendant are involved and that knowledge of these activities is peculiarly within the custody of defendant. While we agree that it was proper for Special Term to grant the plaintiffs’ priority of examination under the special circumstances herein, we feel that the examination was unduly restricted. While it is obvious that plaintiffs are not entitled in the examination to disclosure relating to matters directly involved in the accounting itself, which disclosure is permissible only upon a showing that they are entitled to an accounting, the court nevertheless unduly restricted the examination solely to the issue of the relationship between the parties. Perusal of the record discloses that it is not really contested that the parties are in relationship of partners to each other. What the plaintiffs really are seeking to examine the defendant on are the matters of fraud and the related acts set forth in the complaint. Concur — Sandler, Lupiano and Lynch, JJ.; Murphy, P.J., dissents in a memorandum and Ross, J., concurs in the dissent in a separate memorandum as follows: