The incredible disappearing 3103

B.Y., M.D., P.C. v Lancer Ins. Co., 2010 NY Slip Op 50493(U) (App. Term, 9th and 10th Jud. Dists., 2010)

CPLR 3103 (a) empowers the motion court to issue a protective order “at any time.” The failure of a party to respond to disclosure demands within the applicable time periods (see CPLR 3122 [a]; 3133 [a]) or to move promptly for a protective order after receipt of said demands, however, is “more likely to be resolved against the movant who provided no objections and was tardy with the motion. The issuance of a protective order is within the broad discretion of the court and such dilatory conduct can often result in a court’s refusal to exercise its powers under CPLR 3103 (a)” (Connors, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C3103:3). Accordingly, since B.Y. did not proffer a reasonable excuse for its delay, the court did not improvidently exercise its discretion in denying B.Y.’s motion for a protective order.

In view of the fact that B.Y. failed to timely challenge the propriety of defendant’s notice for discovery and inspection (see CPLR 3122 [a]) or timely object to defendant’s “demand for verified written interrogatories” (see CPLR 3133 [a]), it is obligated to produce the information sought except as to matters which are privileged or palpably improper (see New Era [*3]Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A], 2009 NY Slip Op 51396[U] [App Term, 9th & 10th Jud Dists 2009]). To the extent that defendant’s discovery demands concern matters relating to defenses which defendant is precluded from raising, they are palpably improper notwithstanding the fact that B.Y. did not timely object thereto (id.). However, defendant seeks discovery, inter alia, to support its defense that B.Y. is ineligible to recover no-fault benefits as a fraudulently incorporated professional service corporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]), a defense which is not precluded (see New Era Acupuncture, P.C., 24 Misc 3d 134[A], 2009 NY Slip Op 51396[U]). As a result, discovery of certain items requested by defendant is not palpably improper, and B.Y. did not demonstrate that such information was privileged. Consequently, defendant is entitled to production of the documents and information demanded in items 1 through 7, 9, 10, 12 through 16, 19, 41, and 42 of its notice for discovery and inspection, and to responses to questions 1, 6 through 9, and 23 through 25 of its “demand for verified written interrogatories” insofar as the information sought relates to B.Y. (see CPLR 3101 [a]; One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738 [2008]; Midwood Acupuncture, P.C. v State Farm Fire & Cas. Co., 21 Misc 3d 144[A], 2008 NY Slip Op 52468[U] [App Term, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]).

JT makes an excellent point about Mallela discovery,

I also do not think baseless allegations, without a sufficient evidentiary presentation, should allow this type of discovery.  Some articulated threshold standard is necessary, so the bar can have some clarity on this issue.

I sincerely hope, but sincerely doubt that we will ever get such a standard, because the Appellate Term, Second Department operates under the presumption that fraud must exist, otherwise it wouldn’t be alleged.