Putien New Power Intl. Trade Co., Ltd. v Esquire Footwear Brands, LLC 2024 NY Slip Op 33550(U) October 3, 2024 Supreme Court, New York County Docket Number: Index No. 157819/2022 Judge: Emily Morales-Minerva Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: NEW YORK COUNTY CLERK 10/07/2024 12:55 PM INDEX NO. 157819/2022 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 10/04/2024
SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. EMILY MORALES-MINERVA PART 42M Justice --------------------X INDEX NO. 157819/2022 PUTIEN NEW POWER INTERNATIONAL TRADE CO., MOTION DATE 05/30/2024 LTD.,
Plaintiff, MOTION SEQ. NO. 004
- V -
ESQUIRE FOOTWEAR BRANDS, LLC, ISAAC SAADA, DECISION + ORDER ON WHITE OAK COMMERCIAL FINANCE, LLC MOTION
Defendants.
--------------------X The following e-filed documents, listed by NYSCEF document number (Motion 004) 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 83, 84 were read on this motion to/for DISCOVERY
APPEARANCES:
Bluestone, P.C., New York, New York (M. Zachary Bluestone, Esq., of counsel), for plaintiff.
Goldberg Segalla LLP, New York, New York (Adam S. Katz, Esq., of counsel), for defendants Esquire Footwear Brands LLC and Isaac Saada.
HON. EMILY MORALES-MINERVA:
In this action for an alleged fraudulent conveyance, PUTIEN
NEW POWER INTERNATIONAL TRADE CO., LTD. ("plaintiff") moves,
pursuant to CPLR § 3214, for an order compelling defendants
ESQUIRE FOOTWEAR BRANDS, LLC, and ISAAC SAADA (collectively,
"defendants") to comply with plaintiff's first set of
interrogatories and first requests for production. Plaintiff
also seeks an order awarding them costs, and imposing penalties
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on defendants. Defendants oppose the motion, and cross-move for
a protective order.
For the reasons set forth below, the court grants the
subject motion, in part, and denies the cross-motion in its
entirety.
BACKGROUND
On June 08, 2021, in a related action for breach of
contract, the court (Andrew Borrok, J.S,C.), entered a default
judgment in favor of plaintiff PUTIEN NEW POWER INTERNATIONAL
TRADE co., LTD. (plaintiff)· against non-party Esquire Footwear
LLC "in the amount of $1,449,529.74, plus statutory interest of
9%- per annum from the date of entry of judgment, plus costs and
disbursements" {Putien New Power Int'l Trade Co. v. Esquire
Footwear LLC, 2021 N.Y. Misc. LEXIS 19332, *l [Sup Ct, NY Cnty
2021] ) .
In this action, plaintiff filed a complaint seeking to
recover said amount against defendant Esquire Footwear Brands,
LLC {"Esquire Footwear Brands 11 ) , Issac Saada {"Saada"), and
White Oak Commercial Finance, LLC ("White Oak"), alleging that
they engaged in a scheme to evade non-party Esquire Footwear
LLC's. creditors, including the plaintiff, by fraudulently
transferring its assets to defendant Esquire Footwear Brands.
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The causes of action asserted in the complaint are first,
successor liability against Esquire Footwear Brands; second,
fraudulent transfer under the New York Debtor & Creditor Law
("DCL") against Esquire Footwear Brands and Isaac Saada --- the
former Chief Executive Officer (CEO) of non-party Esquire
Footwear and current CEO of Esquire Footwear Brands; third,
breach of fiduciary duty against Saada pursuant to the trust
fund doctrine; and fourth, aiding and abetting _the alleged
breach of fiduciary duty and fraudulent transfer against
defendant White Oak, non-party Esquire Footwear LLC's first-
priority secured creditor.
Defendants moved, pre-answer, for an order dismissing all
causes of action asserted against Saada, a ·portion of the
successor liability claim, and the second and third causes of
actions for fraudulent transfer entirely (see CPLR § 3211 [a]
[7]). In addition, defendant White Oak moved to dismiss all
claims against it.
The court (N. Bannon, J.S.C.), granted Esquire Footwear
Brands and Saada's motion to the extent that it dismissed the
second and third causes of action for fraudulent transfer, but
denied the motion to the extent that it sought an order
dismissing all causes of action against Saada and sought an
order dismissing a portion of the first cause of action against
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Esquire Footwear Brands. 1 The same court granted defendant White
Oak's motion for summary judgment in its entirety, dismissing
all causes of action against White Oak.
Therefore, the only causes of action before this court are
plaintiff's causes of action for successor liability against
Esquire Footwear Brands and breach of fiduciary duty against
Saada based on the trust fund doctrine.
Finally, the Court (N. Bannon, J.S.C}, directed Esquire
Footwear Brands and Saada to file an answer to the remaining
causes of action within 20 days from the date of that order and
scheduled a preliminary conference on January 18, 2024 (see
Putien New Power Int'l Trade Co. v. Esquire Footwear Brands,
LLC, 2024 NY Misc LEXIS 237, *9-10 [January 15, 2024]}.
All parties appeared at said conference, which took place
off record. Following the conference, the court (N. Bannon,
J.S.C.) issued a conference order directing, among other things,
that defendants file responses and/or objections to plaintiff's
interrogatories and document requests within a certain deadline
(see NYSCEF Doc. No. 53, Preliminary Conference Order}.
1 The court (N. Bannon, J.S.C.) held that the "plaintiff's allegations that Esquire Footwear transferred its assets, goodwill, client relationships, vendor numbers, offices, warehouse, management, and employees to Esquire Brands, and that there was continuity of ownership" was sufficient to state a successor liability claim under the mere continuation doctrine (NYSCEF Doc. No. 49, Decision and Order, January 15, 2024). However, the same court dismissed the fraudulent transfer causes of action, finding that the plaintiff failed to plead with sufficient particularity the facts constituting these claims.
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Defendants provided no answers and filed their objections
two days late. Defendants also filed their answer to the
complaint two weeks late.
However, thereafter, the parties met and conferred on
discovery to no avail.
Then, on May 09, 2024, plaintiff filed a motion (seq. no.
003), pursuant to CPLR § 3215, for an order granting it a
default judgment against Esquire· Footwear Brands and Saada for
failure to submit a timely answer. Defendant Esquire Footwear
Brands cross-moved for, among other things, an order compelling
plaintiff to accept the untimely answer.
The undersigned denied plaintiff's motion for a default
judgment, as plaintiff failed to submit proof of the facts
constituting the claim. Additionally, the undersigned granted
Esquire Footwear Brand's cross-motion to compel acceptance of
its late answer. Along with finding Esquire Footwear Brand had
an excuse, the court based its reasoning on the judiciary's
strong preference for adjudicating cases on the merits (see
NYSCEF Doc. No. 91, Decision and Order, dated July 8, 2024).
Plaintiffs now file motion (seq. no. 004), pursuant to CPLR
§ 3214, for an order compelling defendant to (a} provide
complete sworn answers to plaintiff's first set of
interrogatories; to (b} provide complete responses to
plaintiff's first requests for production; and to. (c} produce
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all documents responsive to plaintiff's first requests for
production within seven days of the court's order on the motion.
Defendants oppose the motion, maintaining that plaintiff's
requests are unduly burdensome and exceedingly overbroad.
ANALYSIS
"There shall be full disclosure of all evidence material
and necessary in the prosecution or defense of an action,
regardless of the burden of proof, by (1) a party, or the
officer, director, member, agent or employee of a party" (see
CPLR § 3101 [governing the scope of disclosure] [emphasis
added]). What is "material and necessary" is left to the sound
discretion of the lower courts (Andon ex rel. Andon v 302-304
Mott St. Assoc., 94 NY2d 740 [2000]). However, it is settled
that parties seeking disclosure need not demonstrate "items
[they have] not yet obtained contain material evidence" (Forman
v Henkin, 30 NY3d 656, 664 [2018]).
Indeed, the "purpose of discovery is to determine if
material relevant to a claim or defense exists" (id.), and its
scope extends to matters that may lead to the revelation of
admissible proof (id.; see also Allen v. Crowell-Collier
Publishing Co., 21 NY2d 403, 406 [1968] [holding "the words,
'material and necessary', are . . . to be interpreted liberally
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to require disclosure, upon request, of any facts bearing on the
,controversy which will assist preparation for trial by
sharpening the issues and reducing delay and prolixity"];
Gerardo v Breton, 212 AD3d 461 [1st Dept 2023] [citing Allen,
supra, 21 NY2d at 46, for the same proposition]).
·A party objecting to certain disclosure "shall serve a
response which shall state with reasonable particularity the
reasons for each objection" (CPLR § 3122 [a]). Refusal to
produce relevant and material documents based on an unsupported
claim of undue burden or a general and unspecified assertion of
·"privilege" fails to meet CPLR § 3122 (a) 's requirement of
"reasonable particularity," and is insufficient ·as a matter of
law (see Anonymous v H.S. for Envtl. Studies, 32 AD3d 353, 359
[1st Dept 2006]).
Where an objecting party fails to respond to or comply with
discovery, "the party seeking disclosure may move to compel
compliance or a response," pursuant to CPLR § 3214. The court
may grant such a motion, after weighing "the need for discovery
against any special burden borne by the opposing party"
{Kavanagh v Ogden Allied Maint. Corp., 92 NY2d 952, 954 [1998]
[internal quotation marks and citation omitted]; see also
Valencia v City of New York, 188 AD3d 549, 550 [1st Dept 2020))
[providing that it is within the court's discretion to grant a
motion to compel]).
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"[W]hen courts are called upon to resolve a dispute,
discovery requests 'must be evaluated on a case-by-case basis
with due regard for the strong policy supporting open
disclosure'" (Forman, supra, 30 NY3d at 662 [citation omitted]).
"[I]n the event that judicial intervention becomes necessary,
courts should first consider the nature of the event giving rise
to the litigation and the injuries claimed, as well as any other
information specific to the case, to assess whether the relevant
material is likely to be found" (id. at 665).
"[I]f there is any possibility that the information is
sought in good faith for possible use as evidence-in-chief or in
rebuttal or for cross-examination, it should be considered
evidence material ... in the prosecution or defense" (Matter of
Arad 2 LLC v Hamo, 2024 N.Y. Misc. LEXIS 6727, *2-3 [Sup Ct, NY
Cnty 2024] [Robert R. Reed, J.S.C.], quoting Allen v Crowell-
Collier Publ. Co., 21 NY2d 403, 407 [1968]; see also Matter of
Kapon v Koch, 23 NY3d 32, 38 [2014]).
However, if "review of [a] document demand and
interrogatories reveals that . . . a substantial portion [of the
same] is overbroad, burdensome, or calls for irrelevant material
or conclusion . . . , the remedy is vacatur of the entire demand
and interrogatories" (Editel, New York v Liberty Studios, Inc.,
162 AD2d 345, 346 [1st Dept 1990] [citations omitted]; see also
International Plaza Assoc., L.P. v Lacher, 104 AD3d 578, 578 [i st
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Dept 20~3] [holding the motion court appropriately vacated the
discovery request in its entirety, although some of the requests
were relevant and not duplicative, and granting leave to serve
proper requests]; see also Rivera v New York City Haus. Auth.,
2016 N.Y. Misc. LEXIS 1654, *6 [Sup Ct, NY Cnty 2016) [Manuel
Mendez, J.S.C.]. This is true even if "some of the information
requested in [the demand and interrogatories] is necessary to
defend the action" (id.) .
. Applying these principles here, the court initially
addresses plaintiff's request for interrogatories from defendant
Saada, dated September 07, 2023, and plaintiff's request to
produce documents from Saada, dated the same. Both said
interrogatories and document demands are appropriate considering
the pending causes of action for successor liability and breach
of fiduciary quty based on the trust fund document.
The demands seek materials limited in time_.;_ January 01,
2019, through the date of the demand September 07, 2023
encompassing periods relevant to the alleged events and injury
(see NYSCEF Doc. No. 73, Plaintiff's First Request for the
Production of Documents, p 4). Further, among other things, the
requests are limited by reference to specific transactions,
persons, entities, warehouse addresses, agreements, and/or
relationships, coinciding with the facts as alleged in the
complaint.
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Finally, the information sought appears to deliberately
target materials that may likely contain pertinent information
about non-party Esquire Footwear LLC's relationship to
defendants Esquire Footwear Brand and Saada, if any, and
relevant information about said defendants' involvement, if any,
in the transfer of non-party Esquire Footwear, LLC's assets to
defendant Esquire Footwear Brand.
Saada's general objections to the "requests" and "specific"
objections to the request for production of documents are mostly
boilerplate and conclusory assertions that the requests are
overbroad or unduly burdensome (see NYSCEF Doc. No. 74,
Defendants' Responses). Additionally, most of Saada's responses
end with assurance that Saada will provide the documents
requested after meeting and conferring with plaintiff (id.).
The court turns next to plaintiff's request for
interrogatories, dated September 07, 2023, addressed to
defendant Esquire Footwear Brands, and plaintiff's request to
produce documents, dated and addressed the same. Taking the
requisite liberal approach to discovery, and considering the
causes of action before the court, it appears these demands are
appropriate.
They seek answers and materials within the time frame of
the allegations as set forth in the verified complaint, January
01, 2019, through the date of the demand (see NYSCEF Doc. No.
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73, Plaintiff's First Request for the Production of Documents,
p 4). Additionally, plaintiff makes requests that are tailored
to specific transactions, persons, entities, warehouse
address·es, agreements, and/or relationships, in line with the
facts alleged in the complaint.
Finally, the information sought targets materials that may
likely contain relevant information about non-party Esquire
Footwear LLC's relationship to defendants Esquire Footwear Brand
and Saada, if any, and relevant information about said
defendants' involvement, if any, in the transfer of non-party
Esquire Footwear, LLC's assets to defendant Esquire Footwear
Brand.
Defendant Esquire Footwear Brands objections are unavailing
as mostly conclusory and include several responses that the
limited liability corporation would provide the materials
following a meet and confer with plaintiff.
The cross-motion of defendants Esquire Footwear Brand and
Saada for a protective order is similarly unavailing. 2 CPLR
§ 3103 (a) provides:
2 Theparties' papers are technically noncompliant with 22 NYCRR § 202.7 (c), which requires motions related to disclosure to include "an affirmation of good faith effort to resolve the issues raised by the motion." However, the record otherwise establishes, through affirmations of counsel submitted in support of the motion and cross-motion, that the parties attempted on numerous occasions to resolve the outstandipg discovery issues prior to the filing of the subject motion (seq. no. 004) and cross-motion (see generally Loeb v Assara New York, LLP, 118 AD3d 457, 458 [1st Dept 2014); see also Encalada v Riverside Retail, LLC, 175 AD3d 467, 468 [1st Dept. 2019)) . Further, given the unique circumstances of this case, "'any further attempt
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"The court may at any time on its own initiative, or on motion of any party or of any person from whom or about whom discovery is sought, make a protective order denying, limiting, conditioning [sic] or regulating the use of any disclosure device. Such order shall be designed to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts."
Defendants make a brief argument in this regard, quoting
incomplete parts of the discovery demands and/or characterizing
requests without addressing the limiting language therein (see
NYSCEF Doc. No. 63, Affirmation of Adam Katz, Esq. in Support of
Defendants' Cross-Motion, 135-37; see also NYSCEF Doc. No. 83,
Affirmation of Adam Katz, Esq. in Support of Defendants'
Opposition to Plaintiff's Motion to Compel, at 16). On this
record, the court finds no basis for a finding of "unreasonable
annoyance, expense, disadvantage, or other prejudice" (id.).
Finally, the court addresses plaintiff's request for
reasonable attorneys' fees in filing this motion to compel.
Plaintiff submits no authority for this request and, generally,
a prevailing party in litigation may not recover attorneys' fees
from the losing party (Sage Sys., Inc. v Liss, 39 NY3d 27, 29
[2022], citing Hooper Assoc. v AGS Computers, 74 NY2d 487, 491
[1989]). Absent statute, agreement, or contract, containing
to resolve the dispute non-judicially'" would likely be futile (id., quoting Northern Leasing Sys., Inc. v Estate of Turner, 82 AD3d 490, 490 [1st Dept 2011]).
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'"unmistakably clear' language" permitting a successful party to
recovery for attorneys' fees, no such recovery is permissible
(Sage Sys, Inc., 39 NY3d at 31, citing Hooper, 74 NY2d at 492).
According.ly, it is,
ORDERED that plaintiff PUTIEN NEW POWWER INTERNATIONAL
TRADE CO., LTD's motion (seq. no. 004) granted, in part, to the
extent that it seeks an order directing defendants ESQUIRE
FOOTWEAR BRANDS, LLC, and ISSAC SAADA to comply with its
interrogatories and demand for document discovery, and the
motion is otherwise denied; it is further
ORDERED that defendants ESQUIRE FOOTWEAR BRANDS, LLC, and
ISSAC SAADA, shall submit responses to plaintiff's outstanding
interrogatories and request for document production within 60
days of service of this order with notice of entry; it is
further
ORDERED that, if either or both defendants have no
documents of the demand's nature in their possession, custody,
or control, either or both defendants must produce a Jackson
affidavit (see Jackson v City of New York, 185 AD2d 768 [1st
Dept 1992]); it is further
ORDERED that, if either or both defendants allege that
certain documents requested are privileged, either or both
defendants must submit a privilege log as to those materials; it
is further
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ORDERED that the cross-motion of defendants is denied in
its entirety; it is further
ORDERED that plaintiff shall serve defendants ESQUIRE
FOOTWEAR BRANDS, LLC, and ISSAC SAADA with notice of entry
within ten days of this decision and order; and it is further
ORDERED that the parties appear for a virtual status
conference in Part 42, on December 9, 2024, at 11:30 A.M.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
10/3/2024 DATE
~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION
GRANTED □ DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE
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