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FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018
NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
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Atlantic Casualty Insurance Company, : Index No. 510798/2018
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Plaintiff, :
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-against- :
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Eastern Fruit & Vegetables, Inc., :
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Defendant. :
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NON-PARTY HULL & CO. OF NY, INC.’S MEMORANDUM
OF LAW IN OPPOSITION TO DEFENDANT EASTERN
FRUIT & VEGETABLES, INC.’S MOTION TO COMPEL
Thomas J. Cahill
Alun W. Griffiths
DUANE MORRIS LLP
230 Park Avenue, Suite 1130
New York, NY 10169
(212) 818-9200
(212) 818-9606 (fax)
Attorneys for Non-Party Hull & Co. of NY, Inc.
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Non-party Hull & Company of New York (“Hull”) respectfully submits this
memorandum of law in opposition to the June 18, 2021 motion to compel submitted by
defendant Eastern Fruit & Vegetables, Inc., (“Eastern Fruit”), including the June 18, 2021
affirmation of Eastern Fruit’s counsel L. Blake Morris (the “Morris Affirmation”), in which
Eastern Fruit seeks enforcement of a June 7, 2021 subpoena duces tecum (the “June 7
Subpoena”) issued to Hull.
PRELIMINARY STATEMENT
By this motion, Eastern Fruit seeks to compel the production of certain confidential
contracts and other business records from non-party Hull – despite the fact that these records are
fundamentally irrelevant to facts at issue in this litigation and well beyond the scope of
permissible discovery under New York Law.
This litigation centers on a narrow issue, to wit: whether plaintiff Atlantic Casualty
Insurance Company (“Atlantic”) is entitled to recover for non-payment of premiums Eastern
Fruit allegedly owed to Atlantic under two commercial general liability insurance policies (the
“Policies”) issued by Atlantic. Hull was the surplus line broker for the placements of the two
policies. The records that Eastern Fruit seeks from Hull, however, pertain not to the premium
payments at issue but rather to different matters -- Hull’s 2017 purchase of assets from the
Morstan General Agency (“Morstan”) and all of Atlantic’s agreements with Hull for the years
2016 through 2018 that relate to business in New York. Production of these are in no way
necessary for Eastern Fruit’s defense in this matter and non-party Hull should not be burdened
with this production. For this reason and others – including the burden and cost of production
and the unnecessary intrusion upon private business dealings which production would entail --
Hull timely served particularized responses and objections to the Subpoena, in full compliance
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with the CPLR. See CPLR 3122(a) (subpoenaed party seeking to object to production shall serve
particularized objections within twenty days of service of the subpoena).
Now, notwithstanding the irrelevance of the discovery it seeks, Eastern Fruit has chosen
to burden the Court with the instant motion to compel. Unsurprisingly, however, Eastern Fruit is
entirely unable to articulate any colorable basis for the Court to compel production of the records
Eastern Fruit seeks. Indeed, the central “rationale” for production Eastern Fruit identifies -- set
forth in two confusing sentences in the Morris Affirmation -- is apparently that the requested
records might somehow show that Hull’s acquisition of Morstan assets caused a “lapse” or a
“gap” in Hull’s or Morstan’s license as a New York insurance broker. Morris Affirmation ¶6.
According to contentions Eastern Fruit has made to counsel and in other submissions to the
Court, the supposed license “gap” somehow would be sufficient to excuse Eastern Fruit from
premium payment obligations to Atlantic.
In fact, Eastern Fruit’s “argument” provides no basis whatsoever for the Court to compel
discovery from non-party Hull. As an initial matter, Eastern Fruit’s contention that the contract
and other business records it seeks could evidence “a potential gap” in licensing coverage is
nothing more than rank speculation – and Eastern Fruit’s attempt to obtain this discovery
constitutes the type of fishing expedition that should not be permitted by the Court. Manley v
New York City Hous. Auth., 190 AD2d 600, 601 (1st Dept 1993) (discovery demands based on
hypothetical speculation not permitted under New York law.)
In any event, the purported justification for seeking non-party discovery from Hull -- that
an alleged lapse in an surplus lines broker’s license relieves an insured of its contractual
obligation to make premium payments -- is legally baseless, having been consistently rejected
by New York courts. See e.g. 3405 Putnam Realty Corp. v Chubb Custom Ins. Co., 14 AD3d
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310, 310 (1st Dept 2005) (rejecting argument that unlicensed status of insurer and insurance
broker excused insured party from making premium payments). Moreover, this very Court,
Order of April 13, 2021 (the “April 13 Order), dismissed the two affirmative defenses (the
second and the sixth) that Eastern Fruit claimed sought to raise it contentions regarding a
purported licensing lapse, thus vitiating arguments as to the relevance of non-party discovery
from Hull.
Wholly unable to demonstrate the relevance of the discovery it seeks, Eastern Fruit also
attempts to argue that Hull did not follow the proper procedure for preserving its objections –
contending that Hull supposedly should have formally requested withdrawal of the subpoena and
then made a motion to quash. See Morris Affirmation, ¶7. However, this is not the law in New
York. On the contrary, CPLR 3122 plainly provides that a subpoenaed non-party may respond
to a subpoena by serving particularized objections within twenty days of service – a requirement
that Hull fully satisfied with the particularized objections to the Subpoena it served here. In fact,
back on April 14, 2021, Hull had previously served these same substantive objections to an
improperly served but otherwise identical Eastern Fruit subpoena.
Thus, Eastern Fruit’s procedural arguments are as meritless as its arguments as to
relevance and there are plainly no grounds for compelling Eastern Fruit to comply with the June
7 Subpoena. Accordingly, it is respectfully submitted that Eastern Fruit’s motion to compel
should be denied in its entirety with costs awarded to non-party Hull.
Factual Background
Facts underlying this motion are set forth in the June 28, 2021 Affirmation of Thomas J.
Cahill (the “Cahill Affirmation”).
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A. The Litigation
Plaintiff Atlantic commenced this action by summons and complaint filed on May 24,
2018, naming Eastern Fruit as defendant. A copy of the complaint is annexed to the Cahill
affirmation as Exhibit A. In the complaint, Atlantic seeks recovery for premiums Eastern Fruit
allegedly owed under the Policy, commercial general liability policies covering the effective
dates April 17, 2016 through April 17 2018. See Exhibit A.
Defendant Eastern Fruit filed its Answer to the Complaint on June 29, 2018. A copy of
the Answer is annexed to the Cahill affirmation as Exhibit B. In the Answer, Eastern Fruit raised
seven affirmative defenses, two of which – the second and the sixth – are germane to the instant
motion, insofar as Eastern Fruit apparently maintains that these defenses pertain to its purported
rationale for obtaining discovery from Hull.
The second affirmative defense alleges as follows:
Plaintiff is not licensed by the New York State Department of Finance to issue
insurance policies in the State of New York, and failed to allege any other
licensure or authority in any other jurisdiction.
See Exhibit B
The sixth affirmative defense alleges as follows:
Incapacity to commence and maintain this action.
Id.
To our understanding, Eastern Fruit has contended in submissions to this Court -- and in
communications with counsel for Hull, as further discussed below -- that the second and sixth
affirmative defenses pertain to Eastern Fruit’s contention that if surplus lines broker Hull or its
predecessor Morstan did not have a current license and a particular agreement with Hull, then
Eastern Fruit would be excused from payment obligations. Cahill Affirmation, ¶14.
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B. The March 19 Subpoena
On March 19, 2021, Eastern Fruit issued a “Judicial Subpoena Duces Tecum” directed to
Hull (hereinafter the “March 19 Subpoena”). A copy of the March 19 Subpoena is annexed to
the Cahill Affirmation as Exhibit C. The March 19 Subpoena sought production of:
records of the asset sale from Morstan General Agency, Inc. to Hull &
Co. of NY, Inc.; and all the contracts between Hull & Co. of NY, Inc.
and Atlantic Casualty Insurance Company relating to business conducted
in New York State for the years 2016, 2017, and 2018 now in your
custody, and all other evidences and writings, which you have in your
custody or power, concerning the above referenced case.
See Exhibit C.
Notably, the March 19 Subpoena contained no notice stating the “circumstances or
reasons” why the discovery was sought, as required by CPLR 3101(a)(4).
Eastern Fruit failed to serve the March 19 Subpoena on Hull in New York in accordance
with the service protocols set forth in the CPLR and instead merely mailed a copy to Hull’s
parent corporation, Brown & Brown, located in Daytona Beach Florida. Cahill Affirmation ¶11.
Thus, the March 19 Subpoena was jurisdictionally defective and unenforceable.
Although the March 19 Subpoena was unenforceable and a nullity, Hull nonetheless
prepared particularized Objections and Responses to the March 19 Subpoena which it served on
Eastern Fruit’s counsel on April 14, 2021. A copy of Hull’s Objections and Responses to the
March 19 Subpoena is annexed to the Cahill affirmation as Exhibit D.
In addition to rejecting the March 19 Subpoena as jurisdictionally defective, Hull’s
Responses and Objections included multiple substantive objections to the First Subpoena’s
requests – including, inter alia, the lack of relevance of the material sought, the unwarranted
burdens production imposed upon Hull, the attempt to obtain discovery beyond the scope of the
CPLR and the proprietary and confidential nature of the business records sought. See Exhibit D.
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Following Hull’s service of its Responses and Objections, counsel for Hull
communicated with counsel for Eastern Fruit. In response to Hull’s inquiries regarding the
rationale for the requested discovery, Eastern Fruit forwarded copies of legal memoranda setting
forth its contentions related to the second and sixth affirmative defenses. See Cahill Affirmation
14.
C. The April 13 Order
On April 13, 2021, following a series of motions and cross-motions by Atlantic and
Eastern Fruit respectively, the Court issued the April 13 Order which, inter alia, dismissed
Eastern Fruit’s second and sixth affirmative defenses. A copy of the Court’s April 13, 2021
Order is annexed to the Cahill affirmation as Exhibit E. In so doing, the Court removed from
this case the two affirmative defenses that Eastern Fruit had specifically identified as pertaining
to it requests to Hull through the subpoena.
D. The June 7 Subpoena
At this juncture, with the Court having dismissed the only two affirmative defenses upon
which Hull-related discovery could even arguably be predicated, there was plainly no basis for
Eastern Fruit to continue its pursuit of documents from Hull under its stated rationale for seeking
the discovery.
Nonetheless, on June 7, 2021, Eastern Fruit issued a new Subpoena (the “June 7
Subpoena”). A copy of the June 7 Subpoena is annexed to the Cahill affirmation as Exhibit F.
Like the March 19 Subpoena, the June 7 Subpoena failed to contain any statement stating the
circumstances and reasons why the discovery was sought, as required by CPLR 3101(a)(4)
Moreover, the June 7 Subpoena sought production of the identical records sought by the
March 19 Subpoena – i.e. contracts between Hull and Morstan and records pertaining to Hull’s
acquisition of Morstan assets -- even though any rationale Eastern Fruit may have had for
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demanding such records was mooted by the April 13 Order. See Exhibit F. Eastern Fruit
identified no new supposed basis for the issuance of this Subpoena to replace the alleged
relevance to the Eastern Fruit second and sixth affirmative defenses that Eastern Fruit previously
contended supported the subpoena.
On June 8, 2021, Hull served Responses and Objections to the June 7 Subpoena. A copy
of Hull’s Responses and Objections to the June 7 Subpoena is annexed to the Cahill Affirmation
as Exhibit G. Once again, Hull set forth particularized objections to the Subpoena’s requests,
including objections based on, inter alia, lack of relevance of the material sought, the
unwarranted burdens production imposed upon Hull, the attempt to obtain discovery beyond the
scope of the CPLR and the proprietary and confidential nature of the business records sought.
See Exhibit G.
Following service of Hull’s Objections, Eastern Fruit made no further attempt to
communicate with Hull and instead served the instant motion to compel.
DISCUSSION
I.
EASTERN FRUIT FAILS TO IDENTIFY COLORABLE GROUNDS
FOR OBTAINING NONPARTY DISCOVERY FROM HULL
As fully set forth below, Eastern Fruit’s motion fails to identify any colorable basis for
the Court to compel Hull to comply with the Subpoena: Eastern Fruit makes no showing that the
requested discovery has any relevance to facts at issue and its contention that Hull did not follow
the CPLR’s procedures for objecting to subpoenas duces tecum is flat out false.
A. The Discovery Eastern Fruit Seeks from Hull Has No Relevance to the
Litigation
While the scope of discovery is broad, it is not unlimited. Kavanaugh v Ogden Allied
Maintenance Corp., 92 NY2d 952, 954 (1998). As Eastern Fruit itself acknowledges, non-party
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disclosure is warranted only in connection with “facts bearing on the controversy which will
assist preparation for trial by sharpening the issues and reducing delay and prolixity.” Morris
Affirmation, ¶5, citing Kapon v. Koch 23 NY3d 32 (2014).
Here, the non-party discovery Eastern Fruit seeks from Hull in no way satisfies this
standard. The central rationale Eastern Fruit attempts to offer for seeking Hull’s records -- the
highly speculative contention that there “could have been a gap” or a “lapse” in New York
licensing resulting from Hull’s purchase of Morstan assets, see Morris Affirmation ¶6 -- provides
no justification whatsoever for compelling production of Hull’s records.
As an initial matter, Eastern Fruit’s contention that there was a lapse or gap in satisfying
licensing requirements is nothing more than rank speculation (in fact there was no such lapse in
licensing). Nor does Eastern Fruit explain why the production of confidential contracts and other
business records related to Hull’s purchase of Morstan assets are likely to contain information
concerning Hull’s licensing history. In fact, it is blatantly apparent that the discovery Eastern
Fruit seeks is not a good faith attempt to obtain discovery relevant to the instant matter but rather
simply an impermissible fishing expedition. Manley 190 AD2d at 601. This by itself is
sufficient to warrant denial of Eastern Fruit’s motion.
Moreover, the legal argument upon which Eastern Fruit’s discovery demand is predicated
– that a lapse in complying with licensing requirements is an excuse for non-payment of
premiums – is itself baseless. Indeed, New York courts have consistently rejected the argument
Eastern Fruit attempts to raise here, squarely holding that the licensing status of the broker which
procured or sold an insurance policy has no bearing on the insured’s obligation to make premium
payments. See Putnam Realty 14 AD3d at 310; see also Certain Underwriters at Lloyd's v
Plasmanet Inc., 2002 US Dist LEXIS 14190 (SDNY 2002)
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Just as importantly, this very Court in its April 13 Order, has dismissed the two
affirmative defenses – the second and the sixth – in connection with which Eastern Fruit sought
to raise its argument that a purported licensing lapse excuses an insured from making premium
payments. Thus, as the Court has already ruled that the affirmative defenses underlying Eastern
Fruit’s rationale for seeking the requested non-party discovery are no longer a part of the case,
there can be no viable basis for compelling production from Hull. Indeed, Eastern Fruit’s
willingness to issue the June 7 Subpoena and proceed with this motion to compel even after the
Court’s April 13 ruling speaks volumes about Eastern Fruit’s blatant disregard of basic discovery
protocols in connection with this matter and, at a minimum, warrants an award of costs to non-
party Hull.
Eastern Fruit also makes a conclusory assertion that agreements between Hull and
Atlantic are somehow necessary to the litigation over the premium amount owed by Eastern Fruit
merely because Atlantic is required to use an instate insurance broker. Morris Affirmation ¶6.
Of course, if this contention was valid, Eastern Fruit would be pursuing these agreements from
plaintiff Atlantic, not non-party Hull. Moreover, as shown above, existing New York case law
does not support Eastern Fruit’s contention. Indeed, Eastern Fruit does not and cannot
demonstrate that the contracts between Hull (and/or Morstan) and Atlantic are germane to the
non-payment of premium issue before the Court.
It must be noted that in addition to the complete lack of relevance of the requested
documents, the June 7 Subpoena is objectionable on multiple other grounds as well, as follows:
• The June 7 Subpoena is facially deficient and unenforceable insofar as it contains
no statement setting forth the circumstances or reasons why this disclosure is
being sought from non-party Hull as required by 3101(a)(4).
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• The June 7 Subpoena is defective and unenforceable because it provides for less
than the 30 days response time required by the CPLR when service is effectuated
via the Secretary of State and the Subpoena is returnable after that date.
• The June 7 Subpoena is unenforceable because it is returnable after the date of the
June 11, 2021 Note of Issue, filed by Atlantic after Eastern Fruit itself had filed a
Demand to File a Note of Issue on March 19, 2021 and Eastern Fruit is entirely
unable to show the unusual or unanticipated circumstances that would warrant
post-Note of Issue discovery. Tirado v Miller, 75 AD3d 153 [2d Dept 2010]
Finally, it should be stressed that Eastern Fruit should never have burdened Hull with this
request to begin with. To the extent it maintains that agreements between plaintiff Atlantic and
non-party Hull are somehow relevant to the case (and it is abundantly clear that they are not)
those contentions should have been raised during discovery with plaintiff Atlantic, and not by
involving non-party Hull in this litigation via the March 19 Subpoena, the June 7 Subpoena and
now this motion to compel with its attendant costs.
In short, there are no colorable grounds for compelling discovery from Hull and Eastern
Fruit’s motion should be denied.
B. Hull’s Response and Objections are Consistent with the Requirements of
CPLR 3120
Unable to demonstrate the relevance of the non-party discovery it seeks from Hull,
Eastern Front makes a desperate attempt to argue that Hull did not follow the CPLR’s protocol in
responding to the June 7 Subpoena. As Eastern Fruit would have it, Hull was somehow required
to formally request withdrawal of the subpoena – and then make a motion to quash pursuant to
CPLR 2304. Morris Affirmation ¶7.
This is a blatant distortion of New York law. In fact, the CPLR’s protocol for preserving
a non-party’s objections to a subpoena duces tecum is clear: the non-party should serve
objections within twenty days of service, particularizing the grounds on which it objects to each
of the subpoenas requests. CPLR 3122. The burden then shifts to the party seeking discovery to
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make a motion to compel if it wishes to challenge the objections. Rubino v. 350 Madison, 39
Misc.3d 450 (Sup. Ct. NY Cty, 2013). While a subpoenaed non-party may elect to make a
motion to quash, there is certainly no requirement that it do so and the service of particularized
objections are sufficient to preserve the subpoenaed non-party’s rights. 1
Here, there is no question that Hull followed the CPLR’s procedure for objecting to a
subpoena duces tecum. Hull served Responses and Objections on June 8, 2021,2 immediately
after learning of Eastern Fruit’s service of a Subpoena. Hull’s Responses and Objections
contained particularized responses as contemplated by the CPLR. See Exh. G. This mirrors the
protocol Hull followed in responding to the March 19 Subpoena, where Hull similarly served
particularized responses and objections.
In sum, Hull fully preserved its objections to the June 7 Subpoena (and the
jurisdictionally defective March 19 Subpoena) and Eastern Fruit’s contentions to the contrary
should be summarily dismissed by the Court.
CONCLUSION
For all of the foregoing reasons, Eastern Fruit’s motion to compel should be denied in its
entirety, with costs awarded to Hull.
Dated: New York, New York
June 29, 2021
DUANE MORRIS LLP
1
The case law cited by Eastern Fruit is wholly inapposite. Two of the cases it cites – Anonymous v.
Axelrod, 459 NYS2d 778 (1st Dept. 1983) and Securities Settlement Corp. v. Johnpoll, 512 NYS2d 814 (1st Dept.
1987) – pre-date the 1993 enactment of the current version of CPLR 3122 and are thus inapplicable. Feig v. Lenox
Hill Hospital 167 Misc.2d 42 (Sup. Ct. NY Cty. 1995) – a trial court case that Eastern Fruit misidentifies as an
appellate decision and for which it provides an incorrect citation – merely references the procedure for requesting
withdrawal of the subpoena and then moving to quash pursuant to CPLR 2304. It in no way holds that this is the
exclusive remedy for a subpoenaed party or vitiates the option of proceeding under CPLR 3122.
2
Given in-person office staffing issues stemming from Covid, Hull did not even know of the service of the
subpoena until Eastern Fruit filed the subpoena with the Court. Thereafter, Hull immediately served objections
matching its prior objections.
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By:_______________________
Thomas J. Cahill
Alun W. Griffiths
230 Park Avenue
New York, New York 10169
(212) 818-9200
Attorneys for Non-Party Hull & Co. of NY, Inc.
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Preview
FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ------------------------------------------------------------------- X “ Atlantic Casualty Insurance Company, : Index No. 510798/2018 : Plaintiff, : : -against- : : Eastern Fruit & Vegetables, Inc., : : Defendant. : ------------------------------------------------------------------- X NON-PARTY HULL & CO. OF NY, INC.’S MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT EASTERN FRUIT & VEGETABLES, INC.’S MOTION TO COMPEL Thomas J. Cahill Alun W. Griffiths DUANE MORRIS LLP 230 Park Avenue, Suite 1130 New York, NY 10169 (212) 818-9200 (212) 818-9606 (fax) Attorneys for Non-Party Hull & Co. of NY, Inc. DM1\12197462.1 1 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 Non-party Hull & Company of New York (“Hull”) respectfully submits this memorandum of law in opposition to the June 18, 2021 motion to compel submitted by defendant Eastern Fruit & Vegetables, Inc., (“Eastern Fruit”), including the June 18, 2021 affirmation of Eastern Fruit’s counsel L. Blake Morris (the “Morris Affirmation”), in which Eastern Fruit seeks enforcement of a June 7, 2021 subpoena duces tecum (the “June 7 Subpoena”) issued to Hull. PRELIMINARY STATEMENT By this motion, Eastern Fruit seeks to compel the production of certain confidential contracts and other business records from non-party Hull – despite the fact that these records are fundamentally irrelevant to facts at issue in this litigation and well beyond the scope of permissible discovery under New York Law. This litigation centers on a narrow issue, to wit: whether plaintiff Atlantic Casualty Insurance Company (“Atlantic”) is entitled to recover for non-payment of premiums Eastern Fruit allegedly owed to Atlantic under two commercial general liability insurance policies (the “Policies”) issued by Atlantic. Hull was the surplus line broker for the placements of the two policies. The records that Eastern Fruit seeks from Hull, however, pertain not to the premium payments at issue but rather to different matters -- Hull’s 2017 purchase of assets from the Morstan General Agency (“Morstan”) and all of Atlantic’s agreements with Hull for the years 2016 through 2018 that relate to business in New York. Production of these are in no way necessary for Eastern Fruit’s defense in this matter and non-party Hull should not be burdened with this production. For this reason and others – including the burden and cost of production and the unnecessary intrusion upon private business dealings which production would entail -- Hull timely served particularized responses and objections to the Subpoena, in full compliance 1 DM1\12197462.1 2 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 with the CPLR. See CPLR 3122(a) (subpoenaed party seeking to object to production shall serve particularized objections within twenty days of service of the subpoena). Now, notwithstanding the irrelevance of the discovery it seeks, Eastern Fruit has chosen to burden the Court with the instant motion to compel. Unsurprisingly, however, Eastern Fruit is entirely unable to articulate any colorable basis for the Court to compel production of the records Eastern Fruit seeks. Indeed, the central “rationale” for production Eastern Fruit identifies -- set forth in two confusing sentences in the Morris Affirmation -- is apparently that the requested records might somehow show that Hull’s acquisition of Morstan assets caused a “lapse” or a “gap” in Hull’s or Morstan’s license as a New York insurance broker. Morris Affirmation ¶6. According to contentions Eastern Fruit has made to counsel and in other submissions to the Court, the supposed license “gap” somehow would be sufficient to excuse Eastern Fruit from premium payment obligations to Atlantic. In fact, Eastern Fruit’s “argument” provides no basis whatsoever for the Court to compel discovery from non-party Hull. As an initial matter, Eastern Fruit’s contention that the contract and other business records it seeks could evidence “a potential gap” in licensing coverage is nothing more than rank speculation – and Eastern Fruit’s attempt to obtain this discovery constitutes the type of fishing expedition that should not be permitted by the Court. Manley v New York City Hous. Auth., 190 AD2d 600, 601 (1st Dept 1993) (discovery demands based on hypothetical speculation not permitted under New York law.) In any event, the purported justification for seeking non-party discovery from Hull -- that an alleged lapse in an surplus lines broker’s license relieves an insured of its contractual obligation to make premium payments -- is legally baseless, having been consistently rejected by New York courts. See e.g. 3405 Putnam Realty Corp. v Chubb Custom Ins. Co., 14 AD3d 2 DM1\12197462.1 3 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 310, 310 (1st Dept 2005) (rejecting argument that unlicensed status of insurer and insurance broker excused insured party from making premium payments). Moreover, this very Court, Order of April 13, 2021 (the “April 13 Order), dismissed the two affirmative defenses (the second and the sixth) that Eastern Fruit claimed sought to raise it contentions regarding a purported licensing lapse, thus vitiating arguments as to the relevance of non-party discovery from Hull. Wholly unable to demonstrate the relevance of the discovery it seeks, Eastern Fruit also attempts to argue that Hull did not follow the proper procedure for preserving its objections – contending that Hull supposedly should have formally requested withdrawal of the subpoena and then made a motion to quash. See Morris Affirmation, ¶7. However, this is not the law in New York. On the contrary, CPLR 3122 plainly provides that a subpoenaed non-party may respond to a subpoena by serving particularized objections within twenty days of service – a requirement that Hull fully satisfied with the particularized objections to the Subpoena it served here. In fact, back on April 14, 2021, Hull had previously served these same substantive objections to an improperly served but otherwise identical Eastern Fruit subpoena. Thus, Eastern Fruit’s procedural arguments are as meritless as its arguments as to relevance and there are plainly no grounds for compelling Eastern Fruit to comply with the June 7 Subpoena. Accordingly, it is respectfully submitted that Eastern Fruit’s motion to compel should be denied in its entirety with costs awarded to non-party Hull. Factual Background Facts underlying this motion are set forth in the June 28, 2021 Affirmation of Thomas J. Cahill (the “Cahill Affirmation”). 3 DM1\12197462.1 4 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 A. The Litigation Plaintiff Atlantic commenced this action by summons and complaint filed on May 24, 2018, naming Eastern Fruit as defendant. A copy of the complaint is annexed to the Cahill affirmation as Exhibit A. In the complaint, Atlantic seeks recovery for premiums Eastern Fruit allegedly owed under the Policy, commercial general liability policies covering the effective dates April 17, 2016 through April 17 2018. See Exhibit A. Defendant Eastern Fruit filed its Answer to the Complaint on June 29, 2018. A copy of the Answer is annexed to the Cahill affirmation as Exhibit B. In the Answer, Eastern Fruit raised seven affirmative defenses, two of which – the second and the sixth – are germane to the instant motion, insofar as Eastern Fruit apparently maintains that these defenses pertain to its purported rationale for obtaining discovery from Hull. The second affirmative defense alleges as follows: Plaintiff is not licensed by the New York State Department of Finance to issue insurance policies in the State of New York, and failed to allege any other licensure or authority in any other jurisdiction. See Exhibit B The sixth affirmative defense alleges as follows: Incapacity to commence and maintain this action. Id. To our understanding, Eastern Fruit has contended in submissions to this Court -- and in communications with counsel for Hull, as further discussed below -- that the second and sixth affirmative defenses pertain to Eastern Fruit’s contention that if surplus lines broker Hull or its predecessor Morstan did not have a current license and a particular agreement with Hull, then Eastern Fruit would be excused from payment obligations. Cahill Affirmation, ¶14. 4 DM1\12197462.1 5 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 B. The March 19 Subpoena On March 19, 2021, Eastern Fruit issued a “Judicial Subpoena Duces Tecum” directed to Hull (hereinafter the “March 19 Subpoena”). A copy of the March 19 Subpoena is annexed to the Cahill Affirmation as Exhibit C. The March 19 Subpoena sought production of: records of the asset sale from Morstan General Agency, Inc. to Hull & Co. of NY, Inc.; and all the contracts between Hull & Co. of NY, Inc. and Atlantic Casualty Insurance Company relating to business conducted in New York State for the years 2016, 2017, and 2018 now in your custody, and all other evidences and writings, which you have in your custody or power, concerning the above referenced case. See Exhibit C. Notably, the March 19 Subpoena contained no notice stating the “circumstances or reasons” why the discovery was sought, as required by CPLR 3101(a)(4). Eastern Fruit failed to serve the March 19 Subpoena on Hull in New York in accordance with the service protocols set forth in the CPLR and instead merely mailed a copy to Hull’s parent corporation, Brown & Brown, located in Daytona Beach Florida. Cahill Affirmation ¶11. Thus, the March 19 Subpoena was jurisdictionally defective and unenforceable. Although the March 19 Subpoena was unenforceable and a nullity, Hull nonetheless prepared particularized Objections and Responses to the March 19 Subpoena which it served on Eastern Fruit’s counsel on April 14, 2021. A copy of Hull’s Objections and Responses to the March 19 Subpoena is annexed to the Cahill affirmation as Exhibit D. In addition to rejecting the March 19 Subpoena as jurisdictionally defective, Hull’s Responses and Objections included multiple substantive objections to the First Subpoena’s requests – including, inter alia, the lack of relevance of the material sought, the unwarranted burdens production imposed upon Hull, the attempt to obtain discovery beyond the scope of the CPLR and the proprietary and confidential nature of the business records sought. See Exhibit D. 5 DM1\12197462.1 6 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 Following Hull’s service of its Responses and Objections, counsel for Hull communicated with counsel for Eastern Fruit. In response to Hull’s inquiries regarding the rationale for the requested discovery, Eastern Fruit forwarded copies of legal memoranda setting forth its contentions related to the second and sixth affirmative defenses. See Cahill Affirmation 14. C. The April 13 Order On April 13, 2021, following a series of motions and cross-motions by Atlantic and Eastern Fruit respectively, the Court issued the April 13 Order which, inter alia, dismissed Eastern Fruit’s second and sixth affirmative defenses. A copy of the Court’s April 13, 2021 Order is annexed to the Cahill affirmation as Exhibit E. In so doing, the Court removed from this case the two affirmative defenses that Eastern Fruit had specifically identified as pertaining to it requests to Hull through the subpoena. D. The June 7 Subpoena At this juncture, with the Court having dismissed the only two affirmative defenses upon which Hull-related discovery could even arguably be predicated, there was plainly no basis for Eastern Fruit to continue its pursuit of documents from Hull under its stated rationale for seeking the discovery. Nonetheless, on June 7, 2021, Eastern Fruit issued a new Subpoena (the “June 7 Subpoena”). A copy of the June 7 Subpoena is annexed to the Cahill affirmation as Exhibit F. Like the March 19 Subpoena, the June 7 Subpoena failed to contain any statement stating the circumstances and reasons why the discovery was sought, as required by CPLR 3101(a)(4) Moreover, the June 7 Subpoena sought production of the identical records sought by the March 19 Subpoena – i.e. contracts between Hull and Morstan and records pertaining to Hull’s acquisition of Morstan assets -- even though any rationale Eastern Fruit may have had for 6 DM1\12197462.1 7 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 demanding such records was mooted by the April 13 Order. See Exhibit F. Eastern Fruit identified no new supposed basis for the issuance of this Subpoena to replace the alleged relevance to the Eastern Fruit second and sixth affirmative defenses that Eastern Fruit previously contended supported the subpoena. On June 8, 2021, Hull served Responses and Objections to the June 7 Subpoena. A copy of Hull’s Responses and Objections to the June 7 Subpoena is annexed to the Cahill Affirmation as Exhibit G. Once again, Hull set forth particularized objections to the Subpoena’s requests, including objections based on, inter alia, lack of relevance of the material sought, the unwarranted burdens production imposed upon Hull, the attempt to obtain discovery beyond the scope of the CPLR and the proprietary and confidential nature of the business records sought. See Exhibit G. Following service of Hull’s Objections, Eastern Fruit made no further attempt to communicate with Hull and instead served the instant motion to compel. DISCUSSION I. EASTERN FRUIT FAILS TO IDENTIFY COLORABLE GROUNDS FOR OBTAINING NONPARTY DISCOVERY FROM HULL As fully set forth below, Eastern Fruit’s motion fails to identify any colorable basis for the Court to compel Hull to comply with the Subpoena: Eastern Fruit makes no showing that the requested discovery has any relevance to facts at issue and its contention that Hull did not follow the CPLR’s procedures for objecting to subpoenas duces tecum is flat out false. A. The Discovery Eastern Fruit Seeks from Hull Has No Relevance to the Litigation While the scope of discovery is broad, it is not unlimited. Kavanaugh v Ogden Allied Maintenance Corp., 92 NY2d 952, 954 (1998). As Eastern Fruit itself acknowledges, non-party 7 DM1\12197462.1 8 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 disclosure is warranted only in connection with “facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity.” Morris Affirmation, ¶5, citing Kapon v. Koch 23 NY3d 32 (2014). Here, the non-party discovery Eastern Fruit seeks from Hull in no way satisfies this standard. The central rationale Eastern Fruit attempts to offer for seeking Hull’s records -- the highly speculative contention that there “could have been a gap” or a “lapse” in New York licensing resulting from Hull’s purchase of Morstan assets, see Morris Affirmation ¶6 -- provides no justification whatsoever for compelling production of Hull’s records. As an initial matter, Eastern Fruit’s contention that there was a lapse or gap in satisfying licensing requirements is nothing more than rank speculation (in fact there was no such lapse in licensing). Nor does Eastern Fruit explain why the production of confidential contracts and other business records related to Hull’s purchase of Morstan assets are likely to contain information concerning Hull’s licensing history. In fact, it is blatantly apparent that the discovery Eastern Fruit seeks is not a good faith attempt to obtain discovery relevant to the instant matter but rather simply an impermissible fishing expedition. Manley 190 AD2d at 601. This by itself is sufficient to warrant denial of Eastern Fruit’s motion. Moreover, the legal argument upon which Eastern Fruit’s discovery demand is predicated – that a lapse in complying with licensing requirements is an excuse for non-payment of premiums – is itself baseless. Indeed, New York courts have consistently rejected the argument Eastern Fruit attempts to raise here, squarely holding that the licensing status of the broker which procured or sold an insurance policy has no bearing on the insured’s obligation to make premium payments. See Putnam Realty 14 AD3d at 310; see also Certain Underwriters at Lloyd's v Plasmanet Inc., 2002 US Dist LEXIS 14190 (SDNY 2002) 8 DM1\12197462.1 9 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 Just as importantly, this very Court in its April 13 Order, has dismissed the two affirmative defenses – the second and the sixth – in connection with which Eastern Fruit sought to raise its argument that a purported licensing lapse excuses an insured from making premium payments. Thus, as the Court has already ruled that the affirmative defenses underlying Eastern Fruit’s rationale for seeking the requested non-party discovery are no longer a part of the case, there can be no viable basis for compelling production from Hull. Indeed, Eastern Fruit’s willingness to issue the June 7 Subpoena and proceed with this motion to compel even after the Court’s April 13 ruling speaks volumes about Eastern Fruit’s blatant disregard of basic discovery protocols in connection with this matter and, at a minimum, warrants an award of costs to non- party Hull. Eastern Fruit also makes a conclusory assertion that agreements between Hull and Atlantic are somehow necessary to the litigation over the premium amount owed by Eastern Fruit merely because Atlantic is required to use an instate insurance broker. Morris Affirmation ¶6. Of course, if this contention was valid, Eastern Fruit would be pursuing these agreements from plaintiff Atlantic, not non-party Hull. Moreover, as shown above, existing New York case law does not support Eastern Fruit’s contention. Indeed, Eastern Fruit does not and cannot demonstrate that the contracts between Hull (and/or Morstan) and Atlantic are germane to the non-payment of premium issue before the Court. It must be noted that in addition to the complete lack of relevance of the requested documents, the June 7 Subpoena is objectionable on multiple other grounds as well, as follows: • The June 7 Subpoena is facially deficient and unenforceable insofar as it contains no statement setting forth the circumstances or reasons why this disclosure is being sought from non-party Hull as required by 3101(a)(4). 9 DM1\12197462.1 10 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 • The June 7 Subpoena is defective and unenforceable because it provides for less than the 30 days response time required by the CPLR when service is effectuated via the Secretary of State and the Subpoena is returnable after that date. • The June 7 Subpoena is unenforceable because it is returnable after the date of the June 11, 2021 Note of Issue, filed by Atlantic after Eastern Fruit itself had filed a Demand to File a Note of Issue on March 19, 2021 and Eastern Fruit is entirely unable to show the unusual or unanticipated circumstances that would warrant post-Note of Issue discovery. Tirado v Miller, 75 AD3d 153 [2d Dept 2010] Finally, it should be stressed that Eastern Fruit should never have burdened Hull with this request to begin with. To the extent it maintains that agreements between plaintiff Atlantic and non-party Hull are somehow relevant to the case (and it is abundantly clear that they are not) those contentions should have been raised during discovery with plaintiff Atlantic, and not by involving non-party Hull in this litigation via the March 19 Subpoena, the June 7 Subpoena and now this motion to compel with its attendant costs. In short, there are no colorable grounds for compelling discovery from Hull and Eastern Fruit’s motion should be denied. B. Hull’s Response and Objections are Consistent with the Requirements of CPLR 3120 Unable to demonstrate the relevance of the non-party discovery it seeks from Hull, Eastern Front makes a desperate attempt to argue that Hull did not follow the CPLR’s protocol in responding to the June 7 Subpoena. As Eastern Fruit would have it, Hull was somehow required to formally request withdrawal of the subpoena – and then make a motion to quash pursuant to CPLR 2304. Morris Affirmation ¶7. This is a blatant distortion of New York law. In fact, the CPLR’s protocol for preserving a non-party’s objections to a subpoena duces tecum is clear: the non-party should serve objections within twenty days of service, particularizing the grounds on which it objects to each of the subpoenas requests. CPLR 3122. The burden then shifts to the party seeking discovery to 10 DM1\12197462.1 11 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 make a motion to compel if it wishes to challenge the objections. Rubino v. 350 Madison, 39 Misc.3d 450 (Sup. Ct. NY Cty, 2013). While a subpoenaed non-party may elect to make a motion to quash, there is certainly no requirement that it do so and the service of particularized objections are sufficient to preserve the subpoenaed non-party’s rights. 1 Here, there is no question that Hull followed the CPLR’s procedure for objecting to a subpoena duces tecum. Hull served Responses and Objections on June 8, 2021,2 immediately after learning of Eastern Fruit’s service of a Subpoena. Hull’s Responses and Objections contained particularized responses as contemplated by the CPLR. See Exh. G. This mirrors the protocol Hull followed in responding to the March 19 Subpoena, where Hull similarly served particularized responses and objections. In sum, Hull fully preserved its objections to the June 7 Subpoena (and the jurisdictionally defective March 19 Subpoena) and Eastern Fruit’s contentions to the contrary should be summarily dismissed by the Court. CONCLUSION For all of the foregoing reasons, Eastern Fruit’s motion to compel should be denied in its entirety, with costs awarded to Hull. Dated: New York, New York June 29, 2021 DUANE MORRIS LLP 1 The case law cited by Eastern Fruit is wholly inapposite. Two of the cases it cites – Anonymous v. Axelrod, 459 NYS2d 778 (1st Dept. 1983) and Securities Settlement Corp. v. Johnpoll, 512 NYS2d 814 (1st Dept. 1987) – pre-date the 1993 enactment of the current version of CPLR 3122 and are thus inapplicable. Feig v. Lenox Hill Hospital 167 Misc.2d 42 (Sup. Ct. NY Cty. 1995) – a trial court case that Eastern Fruit misidentifies as an appellate decision and for which it provides an incorrect citation – merely references the procedure for requesting withdrawal of the subpoena and then moving to quash pursuant to CPLR 2304. It in no way holds that this is the exclusive remedy for a subpoenaed party or vitiates the option of proceeding under CPLR 3122. 2 Given in-person office staffing issues stemming from Covid, Hull did not even know of the service of the subpoena until Eastern Fruit filed the subpoena with the Court. Thereafter, Hull immediately served objections matching its prior objections. 11 DM1\12197462.1 12 of 13 FILED: KINGS COUNTY CLERK 06/29/2021 05:55 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 06/29/2021 By:_______________________ Thomas J. Cahill Alun W. Griffiths 230 Park Avenue New York, New York 10169 (212) 818-9200 Attorneys for Non-Party Hull & Co. of NY, Inc. 12 DM1\12197462.1 13 of 13