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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
ATLANTIC CASAULTY INSURANCE
COMPANY,
Index No.: 510798/2018
Plaintiff,
v. AFFIRMATION IN
SUPPORT OF MOTION
EASTERN FRUIT & VEGETABLES INC.
Defendant.
DEBRA M. KREBS, ESQ., an attorney duly admitted to practice law in the courts of the
State of New York, and a partner in the law firm Keidel, Weldon & Cunningham, LLP, counsel
for Plaintiff, Atlantic Casualty Insurance Company (“Atlantic Casualty”), hereby affirms the
following under penalties of perjury:
1. As counsel for Atlantic Casualty, I am familiar with the facts and circumstances set
forth in this Affirmation.
2. This Affirmation is respectfully submitted in support of Atlantic Casualty’s motion
seeking an order pursuant to CPLR 3126 in light of Defendant’s failure to comply with this Court’s
order dated November 4, 2020, which order grants the following relief: (a) striking Defendant’s
Answer; and/or (b) precluding Defendant from denying any of the claims asserted herein and from
producing any evidence or testimony in this matter; and/or (c) precluding Defendant from
contesting the fact that Defendant owes premiums, the amount sought, Defendant’s notice of the
premiums, Defendant’s notice of the fact that the premiums remain outstanding and Plaintiff’s
entitlement to the premiums sought herein; and (d) such other and further relief as this Court deems
just, equitable and proper.
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SUMMARY
3. In this action, Atlantic Casualty seeks to recover earned premiums, which
Defendant has failed and/or refused to pay to Atlantic Casualty in connection with insurance
coverage Atlantic Casualty provided to Defendant. See, Complaint [NYSCEF Doc. No. 1].
4. As discussed below, Defendant responded to Atlantic Casualty’s discovery
demands and interrogatories in this case by pointing to documents filed on the docket. Although
Atlantic Casualty requested that Defendant produce its own documents relevant to this matter,
Defendant’s responses merely point to memoranda of law and documents from other peoples’ files.
Not only are these documents not from Defendant’s own files, but they were not responsive to the
requests made.
5. Atlantic Casualty previously filed a motion addressing the insufficiency of those
responses (the “Prior Motion,” a copy of which is attached as Exhibit 1). In response to that
motion, the Court issued an order directing, among other things, the following:
Upon review of the materials sought by plaintiff, defendant to provide the following
responses by 1/7/21:
***
(2) Respond to the D&I and interrogatories only insofar as seeking documents
and materials during the contract periods, 2016 and 2017, providing specific
legal/factual basis for any objections to each demand; specifically identify any
items for which privilege is being claimed and provide a privilege log as to such
items, and provide affidavit of diligent search as to those documents not subject to
objection which are not provided in the responses and provide all documents to
support any claims of payment of premiums.
Failure to comply shall result in preclusion or issue preclusion as may be
appropriate.
Exhibit 2 at p. 2.
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6. In blatant disregard of the Court’s order, Defendant served new responses which
were essentially the same as the prior responses, except that Defendant raised an additional
objection and removed some of its responses in light of the Court limiting Atlantic’s demands to
the two policy periods. As discussed more fully below, these responses continue to be insufficient.
7. In particular, although Atlantic Casualty served discovery demands and
interrogatories in October 2019 – almost a year and a half ago – and has obtained two court orders
compelling Defendant’s responses, Defendant has still not provided even a single document and
has responded to only one of Atlantic Casualty’s interrogatories.
8. For the reasons discussed more fully below, itis respectfully requested that this
Court grant an appropriate relief to Plaintiff pursuant to CPLR 3126.
RELEVANT PROCEDURAL HISTORY
9. Atlantic Casualty commenced this action on May 24, 2018. See, Summons and
Complaint, Prior Motion Exhibit A, 1 [NYSCEF Doc. No. 1]. Defendant filed an Answer on
June 29, 2018. See, Answer, Prior Motion Exhibit B, [NYSCEF Doc. No. 3].
10. After a round of early dispositive motions were resolved, on October 28, 2019,
Atlantic Casualty served its First Set of Interrogatories, First Notice for Discovery and Inspection
and Omnibus Demands on Defendant. See, Demands, Prior Motion Exhibits C, D and E,
respectively; [NYSCEF Doc. Nos. 62-67].
11. On January 13, 2020, a Preliminary Conference was held. During the conference,
Defendant argued to the Court that discovery should be stayed as Defendant had just filed a second
motion to dismiss. The Court rejected Defendant’s argument and directed that Defendant respond
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Citations to “Prior Motion Exhibit” is to exhibits attached to the Prior Motion.To further distinguish the exhibits,
we have used numbers to identify the exhibits attached to this motion, and any exhibits attached to this motion are
cited in bold lettering.
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to Atlantic Casualty’s demands within 30 days of the date of the order. See, Preliminary
Conference Order, Prior Motion Exhibit F, [NYSCEF Doc. No. 79].
12. On February 7, 2020, Defendant filed and served purported responses to Atlantic
Casualty’s Interrogatories and Notice for Discovery and Inspection. See, Prior Motion Exhibits G
and H, respectively; [NYSCEF, Doc. Nos. 81 and 82]. As discussed in our correspondence to
Defendant’s counsel dated March 10, 2020 (Prior Motion Exhibit I), Defendant’s purported
responses did not respond at all to the substance of Atlantic Casualty’s requests. In particular,
Defendant responded to only one interrogatory with substantive information and did not produce
even a single document. Instead, in response to all of Atlantic Casualty’s document demands and
all but one of Atlantic Casualty’s interrogatories, Defendant pointed to documents filed on the
docket, including memoranda of law and documents from other peoples’ files.
13. We made numerous efforts to obtain more appropriate responses, but our efforts
were unsuccessful. See, Prior Motion Affirmation of Good Faith.
14. As noted above, we filed a motion seeking relief pursuant to CPLR 3126 or
CPLR 3124. The Court granted that motion to the extent that it ordered the following:
Upon review of the materials sought by plaintiff, defendant to provide the following
responses by 1/7/21:
***
(2) Respond to the D&I and interrogatories only insofar as seeking documents
and materials during the contract periods, 2016 and 2017, providing specific
legal/factual basis for any objections to each demand; specifically identify any
items for which privilege is being claimed and provide a privilege log as to such
items, and provide affidavit of diligent search as to those documents not subject to
objection which are not provided in the responses and provide all documents to
support any claims of payment of premiums.
Failure to comply shall result in preclusion or issue preclusion as may be
appropriate.
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Exhibit 2 at p. 2.
15. On January 7, 2021 Defendant filed its Second Response to Atlantic Casualty’s
First Notice for Discovery & Inspection (the “Amended Response to D&I”) and Second Response
to Atlantic Casualty’s First Set of Interrogatories (the “Amended Interrogatory Response”).
16. As discussed more fully below, those responses do not comply with the Court’s
order and do not correct any of the deficiencies with Defendant’s prior responses.
ARGUMENT
17. For the Court’s convenience, we have marked copies of Atlantic Casualty’s
discovery demands and interrogatories with the responses provided by Defendant. Those marked
documents are attached as Exhibit 7 (Defendant’s Amended Response to D&I) and Exhibit 8
(Defendant’s Amended Interrogatory Response). Where Defendant’s responses refer to a
document filed on the docket, we have provided a brief description of the docket item for a better
understanding of the response. The specific responses addressed in this motion are highlighted in
yellow. The reasons these are deficient are discussed more fully below.
A. Defendant’s Privilege Objection
18. Defendant objects to paragraphs 15 and 16 Atlantic Casualty’s document demand
based upon a claim of privilege.
19. Previously, Defendant had only raised objection (though unspecified) with respect
to paragraph 15 – not paragraph 16. Pursuant to CPLR 3122, if a party seeks to object to any
disclosure requested, the party must do so within twenty days of service of the demand.
(See, Anonymous v High Sch. for Envtl. Studies, 32 AD3d 353, 359 [1st Dept 2006]). Since
Defendant did not assert such claimed privilege within the required period of time, and since
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Defendant initially responded without raising such objection, it is respectfully requested that the
Court find any such objection waived, at the very least with respect to paragraph 16
20. Additionally, the Court has ordered that Defendant “specifically identify any items
for which privilege is being claimed and provide privilege log as to such items[.]” (Order, Exhibit
2 at p. 2). Defendant failed to provide the required privilege log, and, in fact, did not even specify
the privilege being asserted. In short, Defendant’s privilege assertion is not only insufficient, it
fails to comply with the Court Rules as well as this Court’s order. Accordingly, it is respectfully
requested that this Court strike Defendant’s objection.
21. Nonetheless, even if the Court were to consider Defendant’s privilege assertion, it
is respectfully submitted that there is no basis for such objection.
22. Although the objection does not specify the privilege being asserted, Defendant
cites to Levine v Bornstein, 13 Misc 2d 161 [Sup Ct, Kings County 1958] in support of such
objection. The Levine matter addresses the Fifth Amendment right to avoid self-incrimination.
23. It is well settled that “[t]he burden of establishing that the documents sought are
covered by a certain privilege rests on the party asserting the privilege (citation omitted).”
(Anonymous, supra, 32 AD3d at 359). Defendant has failed to demonstrate that the privilege
applies. To the contrary, the privilege does not apply.
24. The Fifth Amendment self-incrimination clause states that “[n]o person . . . shall
be compelled in any criminal case to be a witness against himself.”
25. The provision only provides that “no person” shall be compelled to be witness
against himself. As a result, the privilege does not extend to a collective entity, such as a
corporation. (See, In re Two Grand Jury Subpoenae Duces Tecum, 793 F2d 69, 72 [2d Cir 1986]
(“No artificial organization may invoke the personal privilege against self-incrimination.”)). Since
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Defendant is a corporation, it does not have standing to assert the Fifth Amendment privilege
against self-incrimination.
26. Additionally, the United States Supreme Court has explained that the Fifth
Amendment privilege does not extend to the production of documents such as tax returns or related
financial documents:
The word ‘witness’ in the constitutional text limits the relevant category of
compelled incriminating communications to those that are ‘testimonial’ in
character. As Justice Holmes observed, there is a significant difference between the
use of compulsion to extort communications from a defendant and compelling a
person to engage in conduct that may be incriminating. Thus, even though the act
may provide incriminating evidence, a criminal suspect may be compelled to put
on a shirt, to provide a blood sample or handwriting exemplar, or to make a
recording of his voice. The act of exhibiting such physical characteristics is not the
same as a sworn communication by a witness that relates either express or implied
assertions of fact or belief. (Citation omitted). Similarly, the fact that incriminating
evidence may be the byproduct of obedience to a regulatory requirement, such as
filing an income tax return, maintaining required records, or reporting an accident,
does not clothe such required conduct with the testimonial privilege.
(United States v Hubbell, 530 US 27, 34-35 [2000]; see also, Ashkenazi v Lincoln Natl. Life Ins.
Co., 2010 US Dist LEXIS 161249, at *16 [EDNY 2010] (“Since the tax returns are required
records, the Court finds that the content of the returns are not protected by the Fifth
Amendment privilege against self-incrimination. Moreover, courts have held that not only do the
contents of tax returns fall within the required records exception, but the compelled act of
production of tax returns is not considered to be subject to the Fifth Amendment privilege.”))
27. Defendant asserts this objection with respect to the demands seeking Defendant’s
tax returns (¶15) and documents evidencing Defendant’s gross receipts (¶16). These were
requested because Defendant’s principal took the position that “defendant does not believe that we
owe as much as the plaintiff alleges.” See, Affidavit of Asif Jhangir, Prior Motion Exhibit 5, at
¶8. The premiums at issue in this lawsuit were calculated by Overland Solutions during a premium
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audit. A copy of the premium audit is attached as Exhibit 9. As stated in the premium audit, the
records reviewed include Defendant’s general ledger, quarterly payroll returns, yearly tax returns
and gross receipts on yearly tax return form 1120. Id. We contacted Overland Solutions to obtain
copies of the documents confirming the amounts reflected in the audit. We were advised by
Overland Solutions that, when they conduct an audit, they only review the insured’s documents –
they do not copy the documents and do not maintain copies of the documents in their files. As a
result, they were not able to produce such documents.
28. As a result, and to address Defendant’s defense regarding the audited amount,
paragraph 10 of the discovery demand requests “[a]ll Documents provided by You to Overland
Solutions and/or any other person or entity in connection with the Audit.” See, Notice for
Discovery and Inspection, Prior Motion Exhibit D at ¶10; see also, Exhibit 7 at ¶10. Defendant
did not object to that paragraph. See, Response, Prior Motion Exhibit G; see also, Exhibit 7 at
¶10. In addition, to more specifically ensure production of certain documents, paragraph 15 of the
demand requests copies of Defendant’s tax returns (which we understand the Court has limited to
2016 and 2017) and documents evidencing Defendant’s gross receipts (which we understand the
Court has limited to the period from April 17, 2016 through October 3, 2017 – i.e. the effective
dates of the subject policies). Since the requested documents fall within the “act of production”
exception to the Fifth Amendment privilege against self-incrimination, Defendant has failed to
demonstrate that the documents requested in those paragraphs are privileged.
29. Since the documents are relevant and, in fact, the Court has already ordered
Defendant to produce the same, it is respectfully submitted that Defendant’s failure to produce
such documents is in violation, and in fact defiance, of the Court’s order.
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B. Defendant Has Failed to Provide Documents Which are Material and
Necessary to this Matter
30. Although the Court has already ordered production of the documents at issue in this
motion, in an excess of caution, we nonetheless once again demonstrate that the documents being
requested are material and necessary to this matter.
31. The following are the document demands at issue in this motion:
(6) Your complete file with respect to the Policies.
(7) All Documents in Your possession relating to the Policies.
(8) Your complete file with respect to the Audit.
(9) All Documents in Your possession relating to the Audit.
(10) All Documents provided by You to Overland Solutions and/or any other
person or entity in connection with the Audit.
(11) Those Documents evidencing any Correspondence or Communications,
including the correspondence and/or communications themselves, between You
and any of the following people or entities:
a. Atlantic Casualty
b. Morstan
c. Andreoli
d. Overland Solutions
(12) Those Documents evidencing any correspondence or communications,
including the Correspondence and/or Communications themselves, relating to
and/or referencing:
a. The Policies
b. The Audit
(13) All bills, invoices and/or other documents requesting payment, which You
received in connection with the Policies and/or the Audit.
(14) All Documents evidencing any payment by You for premiums owed in
connection with the Policies and/or the Audit.
(15) Copies of all tax returns filed by or on behalf of Eastern Fruit & Vegetables,
Inc. for tax years 2014, 2015, 2016 and 2017.
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(16) All Documents evidencing Eastern Fruit & Vegetables, Inc.’s gross receipts
during the period from April 17, 2014 to October 3, 2017.
Notice for Discovery and Inspection, Prior Motion Exhibit D.
32. Since this lawsuit concerns two insurance policies issued to Defendant (the
“Policies”), Defendant’s file regarding the Policies (¶6), documents in Defendant’s possession
relating to the Policies (¶7), communications with Atlantic Casualty, Morstan (the wholesale
broker), Andreoli (the insured’s retail broker) and Overland Solutions (the auditor) (¶11); and
communications regarding the Policies (¶12) are relevant to this lawsuit. Atlantic Casualty seeks
such documents in order to address issues relating to, among other things, Defendant's receipt of
the Policies, Defendant’s receipt of documents showing that the premiums were calculated upon
$250,000 in anticipated earnings (where Defendant’s actual earnings were more than 11 times that
amount); Defendant's receipt of premium notices, Defendant's receipt of amendatory endorsements
regarding the additional premium, payment of premiums, issues relating to the audit, issues
relating to the audit premium, and issues relating to Defendant's gross earnings used to calculate
the audit premium.
33. The remaining documents which were requested address issues concerning the
audit – i.e. Defendant’s file relating to the Audit (¶8); documents in Defendant’s possession
relating to the Audit (¶9); documents provided to the auditor (¶10); communications regarding the
audit (¶12); bills, invoices and/or other documents which Defendant received in connection with
the Policies and/or the Audit (¶13); documents evidencing premium payments by Defendant in
connection with the Policies and/or the Audit (¶14); Defendant’s tax returns for 2016 and 2017 2
(¶15); and documents evidencing Defendant’s gross receipts for the period from April 17, 2016
2
As limited by the Court’s November 4, 2020 order.
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through October 3, 2017 3 (¶16). In particular, these issues are relevant to, among other things, the
calculation of the additional premiums, notification to Defendant of the additional premiums owed,
and Defendant’s failure to pay the additional premiums.
34. Defendant did not provide a single document in response to these demands.
Instead, to the extent Defendant responded at all, Defendant referred to documents filed on the
docket some of which come from Atlantic Casualty’s files, some of which come from the files of
the surplus lines broker involved in placing the policy and none of which come from Defendant’s
files. These documents are not sufficient to respond to Atlantic Casualty’s demands.
35. In fact, Defendant’s second responses are very similar to Defendant’s initial
responses which were at issue in Atlantic Casualty’s prior motion and which the Court previously
found insufficient to comply with Atlantic Casualty’s demands.
36. Since Defendant has failed to provide any substantive responses to Atlantic
Casualty’s Notice for Discovery and Inspection and has disregarded a specific order directing
Defendant to do so, it is respectfully requested that this Court issue an appropriate sanction
pursuant to CPLR 3126.
C. Defendant Has Failed to Provide Information Which is Material and
Necessary to this Matter
37. Although the Court has already ordered that Defendant respond to the
interrogatories at issue in this motion, in an excess of caution, we nonetheless once again
demonstrate that those interrogatories seek information which is material and necessary to this
matter.
38. The following are the interrogatories at issue in this motion:
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See footnote 2.
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(1) Identify all persons who provided any information or documents used to
draft responses to these interrogatories.
(2) Identify all persons whom You believe possess knowledge of the facts
relevant to the subject matter of this case, and for each such person, summarize the
knowledge which You believe he or she possesses.
(3) Identify all fact witnesses You intend to rely upon at the time of any
dispositive motion, hearing or trial of this matter.
(5) Identify each address at which Eastern Fruit & Vegetables, Inc. regularly
received mail from June 2, 2017 through the date this lawsuit was commenced.
(6) Identify all payments You made in connection with the Policy and/or the
Audit.
(7) Identify all documents and information You provided to Overland Solutions
and/or any other person in connection with the Audit.
(8) Set forth Eastern Fruit & Vegetables Inc.’s gross receipts for the following
periods and identify all documents and/or other information relied upon you in
calculating its gross receipts for each period:
a. April 17, 2014 to April 17, 2015;
b. April 17, 2015 to April 17, 2016;
c. April 17, 2016 to April 17, 2017
d. April 17, 2016 to April 17, 2017; and
e. May 1, 2016 to May 1, 2017.
(9) Set forth when You first received copies of each of the Policies.
(100 Identify each communication or correspondence between You and any of
the following people or entities:
a. Atlantic Casualty;
b. Morstan;
c. Andreoli; and/or
d. Overland Solutions.
(11) Identify each communication or correspondence, relating to and/or
referencing:
a. The Policy; and/or
b. The Audit.
(12) Set forth the basis for your affirmative defense that Atlantic Casualty is
estopped from asserting this action and the rules and principals of equity.
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(13) Set forth the basis for your claim that Atlantic Casualty was “doing
business” in the State of New York. Where possible, identify each act or
transaction by which you claim Atlantic Casualty did business in New York.
Where you are not able to identify particular acts or transactions, provide as much
detail as possible, including identifying the general nature of the acts and/or
transactions and the time period(s) during which you claim those acts and/or
transactions took place.
Interrogatories, Prior Motion Exhibit C.
39. As noted above, paragraphs 1, 2 and 3 ask that Defendant identify the persons who
provided information and documents used to draft the responses to the interrogatories and to
identify persons who possess knowledge of facts relevant to the lawsuit and the persons whose
testimony Defendant intends to rely upon. These interrogatories clearly seek information relevant
to this matter, as they seek to identify persons who have relevant knowledge. The responses point
to documents filed on the docket, including the Atlantic Casualty audit summary, the audit
endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law,
the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the
subpoena response. These are not responsive to the interrogatories.
40. Paragraph 5 asks for the address at which Defendant regularly received mail. We
served Defendant with a request to admit that Defendant received the letters advising Defendant
of the outstanding premium. That request for admission was a subject of the Prior Motion.
However, the Court did not direct Defendant to respond those paragraphs of the request for
admission. To ensure that Atlantic Casualty will be able to establish Defendant’s receipt of such
letters (as well as address other relevant issues), Atlantic’s interrogatories asked that Defendant
identify its addresses. In response, Defendant points to documents filed on the docket, including
the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter,
affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to
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Morstan and the cover letter from Morstan enclosing the subpoena response. These are not
responsive to the interrogatories.
41. Paragraph 6 asks Defendant to identify payments made by Defendant in connection
with the Policies and/or the Audit. Defendant’s response points to documents filed on the docket,
including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this
matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a
subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. None
of those documents even reference the amounts of premiums paid by Defendant. These are clearly
not responsive to the interrogatories.
42. Paragraph 7 asks that Defendant identify all documents and information Defendant
provided to Overland Solutions in connection with the Audit. These documents are relevant to
establishing Defendant’s gross earnings on which the premiums were based and, therefore, are
relevant to calculating the premium for the Policies. In response to this interrogatory, Defendant
points to documents filed on the docket, including the Atlantic Casualty audit summary, the audit
endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law,
the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the
subpoena response. Since none of these even existed at the time of the Audit, it is respectfully
submitted that this response is non-responsive to Atlantic Casualty’s interrogatory.
43. Paragraph 8 requests Defendant’s gross receipts for the periods from April 17, 2016
to April 17, 2017 and from April 2017 to October 3, 2017. 4 As discussed above, these documents
are relevant to calculating the premiums owed. Defendant’s response points to documents filed
on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the
4
As noted above, we understand this interrogatory to be limited by the Court’s November 4, 2020 order.
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pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines
affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena
response. If this response was intended to confirm that the gross receipts reflected in the audit
summary are accurate gross receipts for the relevant period of time, then no further response is
needed. However, since the response is not explicit, it is not clear whether this is a fair reading of
the response. To the extent that the response is unclear, it is respectfully submitted that the
response is inappropriate and insufficient.
44. Paragraph 9 asks Defendant to identify when Defendant first received copies of
each of the Policies. As discussed above, this was requested because Defendant denies receipt of
the Policies prior to the audit. Defendant responded by pointing to documents filed on the docket,
including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this
matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a
subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. None
of these identify when Defendant received the Policies and, as a result, these are insufficient to
respond to Atlantic Casualty’s interrogatory.
45. Interrogatory 10 asks Defendant to identify communications between Defendant
and any of the following: Atlantic Casualty, Morstan (the surplus lines broker), Andreoli
(Defendant’s retail broker) and Overland Solutions (the auditor). As discussed above, these are
relevant to address issues relating to, among other things, Defendant’s receipt of the Policies,
Defendant’s receipt of premium notices, Defendant’s receipt of amendatory endorsements
regarding the additional premium, payment of premiums, issues relating to the audit, issues
relating to the audit premium, and issues relating to Defendant’s gross earnings used to calculate
the audit premium. Defendant’s reference to documents filed on the docket, in particular, the
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subpoena served on Morstan, Morstan’s subpoena response, and Morstan’s cover letter enclosing
the subpoena response, are not responsive to this interrogatory.
46. Interrogatory 11 asks Defendant to identify communications regarding the Policies
and/or the Audit. As discussed above, this is relevant to address issues relating to, among other
things, Defendant’s receipt of the Policies, Defendant’s receipt of premium notices, Defendant’s
receipt of amendatory endorsements regarding the additional premium, payment of premiums,
issues relating to the audit, issues relating to the audit premium, and issues relating to Defendant’s
gross earnings used to calculate the audit premium. Defendant’s reference to documents filed on
the docket, in particular, the subpoena served on Morstan, Morstan’s subpoena response, and
Morstan’s cover letter enclosing the subpoena response, are not responsive to this interrogatory.
47. Interrogatory 12 asks Defendant to set forth the basis for its affirmative defense that
Atlantic Casualty is estopped from asserting this action and that the rules and principals of equity
apply. Clearly, the information requested is relevant, since it is specifically intended to identify
the basis for one of Defendant’s affirmative defenses. In response, Defendant refers to memoranda
of law which it previously filed in this matter. One might conclude from this response that
Defendant intends its estoppel defense (i.e. Defendant’s Seventh Affirmative Defense) to be
limited to its argument under Business Corporation Law § 1312(a). However, as demonstrated in
the Affirmation of Blake Morris submitted in connection with Defendant’s motion to dismiss, the
only affirmative defenses Defendant claims are based upon Business Corporation Law § 1312(a)
are the second, fourth and sixth defenses. See, Affirmation, Exhibit 10 at ¶¶15-17. As a result,
citing these memoranda of law in response to Atlantic Casualty’s interrogatory regarding
Defendant’s Seventh Affirmative Defense is non-responsive.
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48. In paragraph 13 we ask Defendant to specify each act or transaction by which
Defendant claims Atlantic Casualty did business in New York or, where not able to identify
particular acts or transactions to provide as much detail as possible, including identifying the
general nature of the acts and/or transactions and the periods of time when Defendant claims those
acts and/or transactions took place. Defendant responded by once again pointing to two
memoranda of law which it filed on the docket. Since memoranda of law, by their very nature,
are intended to discuss the law, and since the memoranda of law to which Defendant points, do
not identify any of the facts which Atlantic Casualty seeks, it is clear that the response provided
does not respond to Atlantic Casualty’s interrogatory.
49. Since Defendant has failed to provide any substantive responses to Atlantic
Casualty’s Interrogatories and has disregarded a specific order directing Defendant to do so, it is
respectfully requested that this Court issue an appropriate sanction pursuant to CPLR 3126.
D. Striking a Pleading Pursuant to CPLR 3126 is Warranted Where, as
Here, Defendant has Willfully Disobeyed a Court Order
50. CPLR 3126 provides that:
If any party, or a person who at the time a deposition is taken or an examination or
inspection is made is an officer, director, member, employee or agent of a party or
otherwise under a party’s control, refuses to obey an order for disclosure or wilfully
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, among them:
1. an order that the issues to which the information is relevant shall be
deemed resolved for purposes of the action in accordance with the claims
of the party obtaining the order; or
2. an order prohibiting the disobedient party from supporting or opposing
designated claims or defenses, from producing in evidence designated
things or items of testimony, or from introducing any evidence of the
physical, mental or blood condition sought to be determined, or from using
certain witnesses; or
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3. 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.
51. The striking of a pleading is warranted where a party’s conduct has been willful
and contumacious. “Where a party in these circumstances disobeys a court order and by his
conduct frustrates the disclosure scheme provided by the CPLR, dismissal of the [pleading] is
within the broad discretion of the trial court (citations omitted).” (Zletz v Wetanson, 67 NY2d
711, 713 [1986]).
52. In Zeltz, the Court of Appeals upheld the striking of a plaintiff’s pleading where a
plaintiff has acted similar to the Defendant in this lawsuit. In particular, in affirming the striking
of plaintiff’s pleading, the Court explained
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ATLANTIC CASAULTY INSURANCE COMPANY, Index No.: 510798/2018 Plaintiff, v. AFFIRMATION IN SUPPORT OF MOTION EASTERN FRUIT & VEGETABLES INC. Defendant. DEBRA M. KREBS, ESQ., an attorney duly admitted to practice law in the courts of the State of New York, and a partner in the law firm Keidel, Weldon & Cunningham, LLP, counsel for Plaintiff, Atlantic Casualty Insurance Company (“Atlantic Casualty”), hereby affirms the following under penalties of perjury: 1. As counsel for Atlantic Casualty, I am familiar with the facts and circumstances set forth in this Affirmation. 2. This Affirmation is respectfully submitted in support of Atlantic Casualty’s motion seeking an order pursuant to CPLR 3126 in light of Defendant’s failure to comply with this Court’s order dated November 4, 2020, which order grants the following relief: (a) striking Defendant’s Answer; and/or (b) precluding Defendant from denying any of the claims asserted herein and from producing any evidence or testimony in this matter; and/or (c) precluding Defendant from contesting the fact that Defendant owes premiums, the amount sought, Defendant’s notice of the premiums, Defendant’s notice of the fact that the premiums remain outstanding and Plaintiff’s entitlement to the premiums sought herein; and (d) such other and further relief as this Court deems just, equitable and proper. 1 SUMMARY 3. In this action, Atlantic Casualty seeks to recover earned premiums, which Defendant has failed and/or refused to pay to Atlantic Casualty in connection with insurance coverage Atlantic Casualty provided to Defendant. See, Complaint [NYSCEF Doc. No. 1]. 4. As discussed below, Defendant responded to Atlantic Casualty’s discovery demands and interrogatories in this case by pointing to documents filed on the docket. Although Atlantic Casualty requested that Defendant produce its own documents relevant to this matter, Defendant’s responses merely point to memoranda of law and documents from other peoples’ files. Not only are these documents not from Defendant’s own files, but they were not responsive to the requests made. 5. Atlantic Casualty previously filed a motion addressing the insufficiency of those responses (the “Prior Motion,” a copy of which is attached as Exhibit 1). In response to that motion, the Court issued an order directing, among other things, the following: Upon review of the materials sought by plaintiff, defendant to provide the following responses by 1/7/21: *** (2) Respond to the D&I and interrogatories only insofar as seeking documents and materials during the contract periods, 2016 and 2017, providing specific legal/factual basis for any objections to each demand; specifically identify any items for which privilege is being claimed and provide a privilege log as to such items, and provide affidavit of diligent search as to those documents not subject to objection which are not provided in the responses and provide all documents to support any claims of payment of premiums. Failure to comply shall result in preclusion or issue preclusion as may be appropriate. Exhibit 2 at p. 2. 2 6. In blatant disregard of the Court’s order, Defendant served new responses which were essentially the same as the prior responses, except that Defendant raised an additional objection and removed some of its responses in light of the Court limiting Atlantic’s demands to the two policy periods. As discussed more fully below, these responses continue to be insufficient. 7. In particular, although Atlantic Casualty served discovery demands and interrogatories in October 2019 – almost a year and a half ago – and has obtained two court orders compelling Defendant’s responses, Defendant has still not provided even a single document and has responded to only one of Atlantic Casualty’s interrogatories. 8. For the reasons discussed more fully below, itis respectfully requested that this Court grant an appropriate relief to Plaintiff pursuant to CPLR 3126. RELEVANT PROCEDURAL HISTORY 9. Atlantic Casualty commenced this action on May 24, 2018. See, Summons and Complaint, Prior Motion Exhibit A, 1 [NYSCEF Doc. No. 1]. Defendant filed an Answer on June 29, 2018. See, Answer, Prior Motion Exhibit B, [NYSCEF Doc. No. 3]. 10. After a round of early dispositive motions were resolved, on October 28, 2019, Atlantic Casualty served its First Set of Interrogatories, First Notice for Discovery and Inspection and Omnibus Demands on Defendant. See, Demands, Prior Motion Exhibits C, D and E, respectively; [NYSCEF Doc. Nos. 62-67]. 11. On January 13, 2020, a Preliminary Conference was held. During the conference, Defendant argued to the Court that discovery should be stayed as Defendant had just filed a second motion to dismiss. The Court rejected Defendant’s argument and directed that Defendant respond 1 Citations to “Prior Motion Exhibit” is to exhibits attached to the Prior Motion.To further distinguish the exhibits, we have used numbers to identify the exhibits attached to this motion, and any exhibits attached to this motion are cited in bold lettering. 3 to Atlantic Casualty’s demands within 30 days of the date of the order. See, Preliminary Conference Order, Prior Motion Exhibit F, [NYSCEF Doc. No. 79]. 12. On February 7, 2020, Defendant filed and served purported responses to Atlantic Casualty’s Interrogatories and Notice for Discovery and Inspection. See, Prior Motion Exhibits G and H, respectively; [NYSCEF, Doc. Nos. 81 and 82]. As discussed in our correspondence to Defendant’s counsel dated March 10, 2020 (Prior Motion Exhibit I), Defendant’s purported responses did not respond at all to the substance of Atlantic Casualty’s requests. In particular, Defendant responded to only one interrogatory with substantive information and did not produce even a single document. Instead, in response to all of Atlantic Casualty’s document demands and all but one of Atlantic Casualty’s interrogatories, Defendant pointed to documents filed on the docket, including memoranda of law and documents from other peoples’ files. 13. We made numerous efforts to obtain more appropriate responses, but our efforts were unsuccessful. See, Prior Motion Affirmation of Good Faith. 14. As noted above, we filed a motion seeking relief pursuant to CPLR 3126 or CPLR 3124. The Court granted that motion to the extent that it ordered the following: Upon review of the materials sought by plaintiff, defendant to provide the following responses by 1/7/21: *** (2) Respond to the D&I and interrogatories only insofar as seeking documents and materials during the contract periods, 2016 and 2017, providing specific legal/factual basis for any objections to each demand; specifically identify any items for which privilege is being claimed and provide a privilege log as to such items, and provide affidavit of diligent search as to those documents not subject to objection which are not provided in the responses and provide all documents to support any claims of payment of premiums. Failure to comply shall result in preclusion or issue preclusion as may be appropriate. 4 Exhibit 2 at p. 2. 15. On January 7, 2021 Defendant filed its Second Response to Atlantic Casualty’s First Notice for Discovery & Inspection (the “Amended Response to D&I”) and Second Response to Atlantic Casualty’s First Set of Interrogatories (the “Amended Interrogatory Response”). 16. As discussed more fully below, those responses do not comply with the Court’s order and do not correct any of the deficiencies with Defendant’s prior responses. ARGUMENT 17. For the Court’s convenience, we have marked copies of Atlantic Casualty’s discovery demands and interrogatories with the responses provided by Defendant. Those marked documents are attached as Exhibit 7 (Defendant’s Amended Response to D&I) and Exhibit 8 (Defendant’s Amended Interrogatory Response). Where Defendant’s responses refer to a document filed on the docket, we have provided a brief description of the docket item for a better understanding of the response. The specific responses addressed in this motion are highlighted in yellow. The reasons these are deficient are discussed more fully below. A. Defendant’s Privilege Objection 18. Defendant objects to paragraphs 15 and 16 Atlantic Casualty’s document demand based upon a claim of privilege. 19. Previously, Defendant had only raised objection (though unspecified) with respect to paragraph 15 – not paragraph 16. Pursuant to CPLR 3122, if a party seeks to object to any disclosure requested, the party must do so within twenty days of service of the demand. (See, Anonymous v High Sch. for Envtl. Studies, 32 AD3d 353, 359 [1st Dept 2006]). Since Defendant did not assert such claimed privilege within the required period of time, and since 5 Defendant initially responded without raising such objection, it is respectfully requested that the Court find any such objection waived, at the very least with respect to paragraph 16 20. Additionally, the Court has ordered that Defendant “specifically identify any items for which privilege is being claimed and provide privilege log as to such items[.]” (Order, Exhibit 2 at p. 2). Defendant failed to provide the required privilege log, and, in fact, did not even specify the privilege being asserted. In short, Defendant’s privilege assertion is not only insufficient, it fails to comply with the Court Rules as well as this Court’s order. Accordingly, it is respectfully requested that this Court strike Defendant’s objection. 21. Nonetheless, even if the Court were to consider Defendant’s privilege assertion, it is respectfully submitted that there is no basis for such objection. 22. Although the objection does not specify the privilege being asserted, Defendant cites to Levine v Bornstein, 13 Misc 2d 161 [Sup Ct, Kings County 1958] in support of such objection. The Levine matter addresses the Fifth Amendment right to avoid self-incrimination. 23. It is well settled that “[t]he burden of establishing that the documents sought are covered by a certain privilege rests on the party asserting the privilege (citation omitted).” (Anonymous, supra, 32 AD3d at 359). Defendant has failed to demonstrate that the privilege applies. To the contrary, the privilege does not apply. 24. The Fifth Amendment self-incrimination clause states that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself.” 25. The provision only provides that “no person” shall be compelled to be witness against himself. As a result, the privilege does not extend to a collective entity, such as a corporation. (See, In re Two Grand Jury Subpoenae Duces Tecum, 793 F2d 69, 72 [2d Cir 1986] (“No artificial organization may invoke the personal privilege against self-incrimination.”)). Since 6 Defendant is a corporation, it does not have standing to assert the Fifth Amendment privilege against self-incrimination. 26. Additionally, the United States Supreme Court has explained that the Fifth Amendment privilege does not extend to the production of documents such as tax returns or related financial documents: The word ‘witness’ in the constitutional text limits the relevant category of compelled incriminating communications to those that are ‘testimonial’ in character. As Justice Holmes observed, there is a significant difference between the use of compulsion to extort communications from a defendant and compelling a person to engage in conduct that may be incriminating. Thus, even though the act may provide incriminating evidence, a criminal suspect may be compelled to put on a shirt, to provide a blood sample or handwriting exemplar, or to make a recording of his voice. The act of exhibiting such physical characteristics is not the same as a sworn communication by a witness that relates either express or implied assertions of fact or belief. (Citation omitted). Similarly, the fact that incriminating evidence may be the byproduct of obedience to a regulatory requirement, such as filing an income tax return, maintaining required records, or reporting an accident, does not clothe such required conduct with the testimonial privilege. (United States v Hubbell, 530 US 27, 34-35 [2000]; see also, Ashkenazi v Lincoln Natl. Life Ins. Co., 2010 US Dist LEXIS 161249, at *16 [EDNY 2010] (“Since the tax returns are required records, the Court finds that the content of the returns are not protected by the Fifth Amendment privilege against self-incrimination. Moreover, courts have held that not only do the contents of tax returns fall within the required records exception, but the compelled act of production of tax returns is not considered to be subject to the Fifth Amendment privilege.”)) 27. Defendant asserts this objection with respect to the demands seeking Defendant’s tax returns (¶15) and documents evidencing Defendant’s gross receipts (¶16). These were requested because Defendant’s principal took the position that “defendant does not believe that we owe as much as the plaintiff alleges.” See, Affidavit of Asif Jhangir, Prior Motion Exhibit 5, at ¶8. The premiums at issue in this lawsuit were calculated by Overland Solutions during a premium 7 audit. A copy of the premium audit is attached as Exhibit 9. As stated in the premium audit, the records reviewed include Defendant’s general ledger, quarterly payroll returns, yearly tax returns and gross receipts on yearly tax return form 1120. Id. We contacted Overland Solutions to obtain copies of the documents confirming the amounts reflected in the audit. We were advised by Overland Solutions that, when they conduct an audit, they only review the insured’s documents – they do not copy the documents and do not maintain copies of the documents in their files. As a result, they were not able to produce such documents. 28. As a result, and to address Defendant’s defense regarding the audited amount, paragraph 10 of the discovery demand requests “[a]ll Documents provided by You to Overland Solutions and/or any other person or entity in connection with the Audit.” See, Notice for Discovery and Inspection, Prior Motion Exhibit D at ¶10; see also, Exhibit 7 at ¶10. Defendant did not object to that paragraph. See, Response, Prior Motion Exhibit G; see also, Exhibit 7 at ¶10. In addition, to more specifically ensure production of certain documents, paragraph 15 of the demand requests copies of Defendant’s tax returns (which we understand the Court has limited to 2016 and 2017) and documents evidencing Defendant’s gross receipts (which we understand the Court has limited to the period from April 17, 2016 through October 3, 2017 – i.e. the effective dates of the subject policies). Since the requested documents fall within the “act of production” exception to the Fifth Amendment privilege against self-incrimination, Defendant has failed to demonstrate that the documents requested in those paragraphs are privileged. 29. Since the documents are relevant and, in fact, the Court has already ordered Defendant to produce the same, it is respectfully submitted that Defendant’s failure to produce such documents is in violation, and in fact defiance, of the Court’s order. 8 B. Defendant Has Failed to Provide Documents Which are Material and Necessary to this Matter 30. Although the Court has already ordered production of the documents at issue in this motion, in an excess of caution, we nonetheless once again demonstrate that the documents being requested are material and necessary to this matter. 31. The following are the document demands at issue in this motion: (6) Your complete file with respect to the Policies. (7) All Documents in Your possession relating to the Policies. (8) Your complete file with respect to the Audit. (9) All Documents in Your possession relating to the Audit. (10) All Documents provided by You to Overland Solutions and/or any other person or entity in connection with the Audit. (11) Those Documents evidencing any Correspondence or Communications, including the correspondence and/or communications themselves, between You and any of the following people or entities: a. Atlantic Casualty b. Morstan c. Andreoli d. Overland Solutions (12) Those Documents evidencing any correspondence or communications, including the Correspondence and/or Communications themselves, relating to and/or referencing: a. The Policies b. The Audit (13) All bills, invoices and/or other documents requesting payment, which You received in connection with the Policies and/or the Audit. (14) All Documents evidencing any payment by You for premiums owed in connection with the Policies and/or the Audit. (15) Copies of all tax returns filed by or on behalf of Eastern Fruit & Vegetables, Inc. for tax years 2014, 2015, 2016 and 2017. 9 (16) All Documents evidencing Eastern Fruit & Vegetables, Inc.’s gross receipts during the period from April 17, 2014 to October 3, 2017. Notice for Discovery and Inspection, Prior Motion Exhibit D. 32. Since this lawsuit concerns two insurance policies issued to Defendant (the “Policies”), Defendant’s file regarding the Policies (¶6), documents in Defendant’s possession relating to the Policies (¶7), communications with Atlantic Casualty, Morstan (the wholesale broker), Andreoli (the insured’s retail broker) and Overland Solutions (the auditor) (¶11); and communications regarding the Policies (¶12) are relevant to this lawsuit. Atlantic Casualty seeks such documents in order to address issues relating to, among other things, Defendant's receipt of the Policies, Defendant’s receipt of documents showing that the premiums were calculated upon $250,000 in anticipated earnings (where Defendant’s actual earnings were more than 11 times that amount); Defendant's receipt of premium notices, Defendant's receipt of amendatory endorsements regarding the additional premium, payment of premiums, issues relating to the audit, issues relating to the audit premium, and issues relating to Defendant's gross earnings used to calculate the audit premium. 33. The remaining documents which were requested address issues concerning the audit – i.e. Defendant’s file relating to the Audit (¶8); documents in Defendant’s possession relating to the Audit (¶9); documents provided to the auditor (¶10); communications regarding the audit (¶12); bills, invoices and/or other documents which Defendant received in connection with the Policies and/or the Audit (¶13); documents evidencing premium payments by Defendant in connection with the Policies and/or the Audit (¶14); Defendant’s tax returns for 2016 and 2017 2 (¶15); and documents evidencing Defendant’s gross receipts for the period from April 17, 2016 2 As limited by the Court’s November 4, 2020 order. 10 through October 3, 2017 3 (¶16). In particular, these issues are relevant to, among other things, the calculation of the additional premiums, notification to Defendant of the additional premiums owed, and Defendant’s failure to pay the additional premiums. 34. Defendant did not provide a single document in response to these demands. Instead, to the extent Defendant responded at all, Defendant referred to documents filed on the docket some of which come from Atlantic Casualty’s files, some of which come from the files of the surplus lines broker involved in placing the policy and none of which come from Defendant’s files. These documents are not sufficient to respond to Atlantic Casualty’s demands. 35. In fact, Defendant’s second responses are very similar to Defendant’s initial responses which were at issue in Atlantic Casualty’s prior motion and which the Court previously found insufficient to comply with Atlantic Casualty’s demands. 36. Since Defendant has failed to provide any substantive responses to Atlantic Casualty’s Notice for Discovery and Inspection and has disregarded a specific order directing Defendant to do so, it is respectfully requested that this Court issue an appropriate sanction pursuant to CPLR 3126. C. Defendant Has Failed to Provide Information Which is Material and Necessary to this Matter 37. Although the Court has already ordered that Defendant respond to the interrogatories at issue in this motion, in an excess of caution, we nonetheless once again demonstrate that those interrogatories seek information which is material and necessary to this matter. 38. The following are the interrogatories at issue in this motion: 3 See footnote 2. 11 (1) Identify all persons who provided any information or documents used to draft responses to these interrogatories. (2) Identify all persons whom You believe possess knowledge of the facts relevant to the subject matter of this case, and for each such person, summarize the knowledge which You believe he or she possesses. (3) Identify all fact witnesses You intend to rely upon at the time of any dispositive motion, hearing or trial of this matter. (5) Identify each address at which Eastern Fruit & Vegetables, Inc. regularly received mail from June 2, 2017 through the date this lawsuit was commenced. (6) Identify all payments You made in connection with the Policy and/or the Audit. (7) Identify all documents and information You provided to Overland Solutions and/or any other person in connection with the Audit. (8) Set forth Eastern Fruit & Vegetables Inc.’s gross receipts for the following periods and identify all documents and/or other information relied upon you in calculating its gross receipts for each period: a. April 17, 2014 to April 17, 2015; b. April 17, 2015 to April 17, 2016; c. April 17, 2016 to April 17, 2017 d. April 17, 2016 to April 17, 2017; and e. May 1, 2016 to May 1, 2017. (9) Set forth when You first received copies of each of the Policies. (100 Identify each communication or correspondence between You and any of the following people or entities: a. Atlantic Casualty; b. Morstan; c. Andreoli; and/or d. Overland Solutions. (11) Identify each communication or correspondence, relating to and/or referencing: a. The Policy; and/or b. The Audit. (12) Set forth the basis for your affirmative defense that Atlantic Casualty is estopped from asserting this action and the rules and principals of equity. 12 (13) Set forth the basis for your claim that Atlantic Casualty was “doing business” in the State of New York. Where possible, identify each act or transaction by which you claim Atlantic Casualty did business in New York. Where you are not able to identify particular acts or transactions, provide as much detail as possible, including identifying the general nature of the acts and/or transactions and the time period(s) during which you claim those acts and/or transactions took place. Interrogatories, Prior Motion Exhibit C. 39. As noted above, paragraphs 1, 2 and 3 ask that Defendant identify the persons who provided information and documents used to draft the responses to the interrogatories and to identify persons who possess knowledge of facts relevant to the lawsuit and the persons whose testimony Defendant intends to rely upon. These interrogatories clearly seek information relevant to this matter, as they seek to identify persons who have relevant knowledge. The responses point to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. These are not responsive to the interrogatories. 40. Paragraph 5 asks for the address at which Defendant regularly received mail. We served Defendant with a request to admit that Defendant received the letters advising Defendant of the outstanding premium. That request for admission was a subject of the Prior Motion. However, the Court did not direct Defendant to respond those paragraphs of the request for admission. To ensure that Atlantic Casualty will be able to establish Defendant’s receipt of such letters (as well as address other relevant issues), Atlantic’s interrogatories asked that Defendant identify its addresses. In response, Defendant points to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to 13 Morstan and the cover letter from Morstan enclosing the subpoena response. These are not responsive to the interrogatories. 41. Paragraph 6 asks Defendant to identify payments made by Defendant in connection with the Policies and/or the Audit. Defendant’s response points to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. None of those documents even reference the amounts of premiums paid by Defendant. These are clearly not responsive to the interrogatories. 42. Paragraph 7 asks that Defendant identify all documents and information Defendant provided to Overland Solutions in connection with the Audit. These documents are relevant to establishing Defendant’s gross earnings on which the premiums were based and, therefore, are relevant to calculating the premium for the Policies. In response to this interrogatory, Defendant points to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. Since none of these even existed at the time of the Audit, it is respectfully submitted that this response is non-responsive to Atlantic Casualty’s interrogatory. 43. Paragraph 8 requests Defendant’s gross receipts for the periods from April 17, 2016 to April 17, 2017 and from April 2017 to October 3, 2017. 4 As discussed above, these documents are relevant to calculating the premiums owed. Defendant’s response points to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the 4 As noted above, we understand this interrogatory to be limited by the Court’s November 4, 2020 order. 14 pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. If this response was intended to confirm that the gross receipts reflected in the audit summary are accurate gross receipts for the relevant period of time, then no further response is needed. However, since the response is not explicit, it is not clear whether this is a fair reading of the response. To the extent that the response is unclear, it is respectfully submitted that the response is inappropriate and insufficient. 44. Paragraph 9 asks Defendant to identify when Defendant first received copies of each of the Policies. As discussed above, this was requested because Defendant denies receipt of the Policies prior to the audit. Defendant responded by pointing to documents filed on the docket, including the Atlantic Casualty audit summary, the audit endorsements, the pleadings in this matter, affidavits of service, Defendant’s memorandum of law, the surplus lines affidavits, a subpoena to Morstan and the cover letter from Morstan enclosing the subpoena response. None of these identify when Defendant received the Policies and, as a result, these are insufficient to respond to Atlantic Casualty’s interrogatory. 45. Interrogatory 10 asks Defendant to identify communications between Defendant and any of the following: Atlantic Casualty, Morstan (the surplus lines broker), Andreoli (Defendant’s retail broker) and Overland Solutions (the auditor). As discussed above, these are relevant to address issues relating to, among other things, Defendant’s receipt of the Policies, Defendant’s receipt of premium notices, Defendant’s receipt of amendatory endorsements regarding the additional premium, payment of premiums, issues relating to the audit, issues relating to the audit premium, and issues relating to Defendant’s gross earnings used to calculate the audit premium. Defendant’s reference to documents filed on the docket, in particular, the 15 subpoena served on Morstan, Morstan’s subpoena response, and Morstan’s cover letter enclosing the subpoena response, are not responsive to this interrogatory. 46. Interrogatory 11 asks Defendant to identify communications regarding the Policies and/or the Audit. As discussed above, this is relevant to address issues relating to, among other things, Defendant’s receipt of the Policies, Defendant’s receipt of premium notices, Defendant’s receipt of amendatory endorsements regarding the additional premium, payment of premiums, issues relating to the audit, issues relating to the audit premium, and issues relating to Defendant’s gross earnings used to calculate the audit premium. Defendant’s reference to documents filed on the docket, in particular, the subpoena served on Morstan, Morstan’s subpoena response, and Morstan’s cover letter enclosing the subpoena response, are not responsive to this interrogatory. 47. Interrogatory 12 asks Defendant to set forth the basis for its affirmative defense that Atlantic Casualty is estopped from asserting this action and that the rules and principals of equity apply. Clearly, the information requested is relevant, since it is specifically intended to identify the basis for one of Defendant’s affirmative defenses. In response, Defendant refers to memoranda of law which it previously filed in this matter. One might conclude from this response that Defendant intends its estoppel defense (i.e. Defendant’s Seventh Affirmative Defense) to be limited to its argument under Business Corporation Law § 1312(a). However, as demonstrated in the Affirmation of Blake Morris submitted in connection with Defendant’s motion to dismiss, the only affirmative defenses Defendant claims are based upon Business Corporation Law § 1312(a) are the second, fourth and sixth defenses. See, Affirmation, Exhibit 10 at ¶¶15-17. As a result, citing these memoranda of law in response to Atlantic Casualty’s interrogatory regarding Defendant’s Seventh Affirmative Defense is non-responsive. 16 48. In paragraph 13 we ask Defendant to specify each act or transaction by which Defendant claims Atlantic Casualty did business in New York or, where not able to identify particular acts or transactions to provide as much detail as possible, including identifying the general nature of the acts and/or transactions and the periods of time when Defendant claims those acts and/or transactions took place. Defendant responded by once again pointing to two memoranda of law which it filed on the docket. Since memoranda of law, by their very nature, are intended to discuss the law, and since the memoranda of law to which Defendant points, do not identify any of the facts which Atlantic Casualty seeks, it is clear that the response provided does not respond to Atlantic Casualty’s interrogatory. 49. Since Defendant has failed to provide any substantive responses to Atlantic Casualty’s Interrogatories and has disregarded a specific order directing Defendant to do so, it is respectfully requested that this Court issue an appropriate sanction pursuant to CPLR 3126. D. Striking a Pleading Pursuant to CPLR 3126 is Warranted Where, as Here, Defendant has Willfully Disobeyed a Court Order 50. CPLR 3126 provides that: If any party, or a person who at the time a deposition is taken or an examination or inspection is made is an officer, director, member, employee or agent of a party or otherwise under a party’s control, refuses to obey an order for disclosure or wilfully 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, among them: 1. an order that the issues to which the information is relevant shall be deemed resolved for purposes of the action in accordance with the claims of the party obtaining the order; or 2. an order prohibiting the disobedient party from supporting or opposing designated claims or defenses, from producing in evidence designated things or items of testimony, or from introducing any evidence of the physical, mental or blood condition sought to be determined, or from using certain witnesses; or 17 3. 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. 51. The striking of a pleading is warranted where a party’s conduct has been willful and contumacious. “Where a party in these circumstances disobeys a court order and by his conduct frustrates the disclosure scheme provided by the CPLR, dismissal of the [pleading] is within the broad discretion of the trial court (citations omitted).” (Zletz v Wetanson, 67 NY2d 711, 713 [1986]). 52. In Zeltz, the Court of Appeals upheld the striking of a plaintiff’s pleading where a plaintiff has acted similar to the Defendant in this lawsuit. In particular, in affirming the striking of plaintiff’s pleading, the Court explained