Madigan v. Berkeley Capital, LLC

2022 NY Slip Op 03237

Faye T. Madigan, etc., appellant-respondent, v. Berkeley Capital, LLC, et al., defendants, Rosa Bronstein, et al., defendants-respondents, Oceana Holding Corp., respondent-appellant.

No. 2018-13098

Index No. 516351/17

Supreme Court of New York, Second Department

May 18, 2022

Joseph Paukman, Brooklyn, NY, for appellant-respondent.

Law Offices of Daniel S. Steinberg P.C., New York, NY (Melissa A Cohen of counsel), for respondent-appellant.

BETSY BARROS, J.P. REINALDO E. RIVERA JOSEPH J. MALTESE WILLIAM G FORD, JJ.

DECISION & ORDER

In an action, inter alia, to recover damages for fraudulent conveyance, the plaintiff appeals, and the defendant Oceana Holding Corp. cross-appeals, from an order of the Supreme Court, Kings County (Kathy J. King, J.), dated October 22 2018. The order, insofar as appealed from, denied that branch of the plaintiff's motion which was to vacate a stay issued in an order of the same court dated November 6, 2017 and granted those branches of the motion of the defendants Oceana Holding Corp. and Rosa Bronstein which were to quash certain subpoenas and for an award of costs in the sum of $2, 500. The order, insofar as cross-appealed from, denied those branches of the separate motion of the defendants Oceana Holding Corp. and Rosa Bronstein which were to hold the plaintiff's counsel in civil and criminal contempt, for an award of attorney's fees pursuant to 22 NYCRR 130-1.1, for referral to the Grievance Committee, and to disqualify the plaintiff's attorney.

ORDERED that the order dated October 22, 2018, is modified, on the law and in the exercise of discretion, (1) by deleting the provision thereof denying that branch of the motion of the defendants Oceana Holding Corp. and Rosa Bronstein which was to hold the plaintiff's counsel in criminal contempt, and substituting therefor a provision granting that branch of the motion and imposing a criminal sanction in the amount of $10, 000, and (2) by deleting the provision thereof denying that branch of the motion of the defendants Oceana Holding Corp. and Rosa Bronstein which was for an award of attorney's fees pursuant to 22 NYCRR 130-1.1, and substituting therefor a provision granting that branch of the motion; as so modified, the order dated October 22, 2018, is affirmed insofar as appealed and cross-appealed from, with costs to the defendant Oceana Holding Corp., and the matter is remitted to the Supreme Court, Kings County, for a determination of the amount of an award of reasonable attorney's fees in accordance herewith.

In 2001, nonparty Aron Bronstein pleaded guilty to 1 count of conspiracy to commit securities fraud and wire fraud and 13 counts of securities fraud in the United States District Court for the Southern District of New York (hereinafter the Southern District). As part of the disposition of those charges, Bronstein, together with his codefendants, was ordered to pay restitution to the victims of the fraud. The plaintiff's decedent was among those entitled to restitution pursuant to Bronstein's judgment of conviction (hereinafter the criminal judgment).

In 2003, the plaintiff obtained a default judgment against Bronstein in the United States District Court for the Northern District of Georgia (hereinafter the Georgia judgment) in an action seeking civil damages for the same underlying conduct. The plaintiff commenced litigation in the United States District Courts for the Eastern District of New York (hereinafter the Eastern District) and the Southern District in 2016 and 2018, respectively, for the purpose of enforcing the criminal and the Georgia judgments.

In 2017, the plaintiff commenced this action in the Supreme Court, Kings County, against various persons and entities associated with Bronstein, alleging, inter alia, fraudulent conveyance interfering with her ability to enforce the restitution provisions of the criminal judgment. In an order dated November 6, 2017, the Supreme Court granted the motion of the defendants Oceana Holding Corp. (hereinafter Oceana), Rosa Bronstein (hereinafter Rosa), M.R.O.D. Realty Corp., and M & R Brighton Land Corp. to stay the action, and prohibited the domestication of the criminal and Georgia judgments, the issuance of subpoenas in connection with this action or any other action, and enforcement of either judgment. The court also directed the plaintiff to provide to the defendants' counsel, within five days, copies of all subpoenas already issued in connection with the enforcement of those judgments. Notwithstanding those prohibitions, on December 19, 2017, the plaintiff obtained an abstract of the criminal judgment from the Southern District and, on February 6, 2018, registered that abstract in the Supreme Court, Kings County.

In or about May 2018, the plaintiff moved, inter alia, to vacate the stay issued in the November 6, 2017 order on the ground that she had registered an abstract of the criminal judgment. She then began serving subpoenas duces tecum on Bank of America seeking the defendants' financial information. When Oceana opposed the plaintiff's motion to vacate the stay, the plaintiff responded by attempting to move, via order to show cause, for a declaration that the November 6, 2017 order did not stay enforcement of her December 19, 2017 abstract of the criminal judgment. The Supreme Court declined to sign the order to show cause.

Oceana and Rosa moved, by order to show cause, to enjoin the plaintiff's counsel from issuing subpoenas relating to this action, to quash prior subpoenas issued in connection with this action or any related action, and for an award of costs (hereinafter the first motion of Oceana and Rosa). The order to show cause, signed by the Supreme Court on July 18, 2018, contained, inter alia, interim relief precluding the plaintiff and her counsel from issuing further subpoenas, suspending disclosure pursuant to any subpoenas already issued, and directing the plaintiff to provide a list of all subpoenas served within five days. In a separate order, dated July 25, 2018, the court continued the interim relief contained in the order to show cause and renewed the directive requiring the plaintiff to provide a list of subpoenas, but now within 10 days.

Subsequently, the plaintiff and her counsel served subpoenas duces tecum on certain parties in another action. The plaintiff also moved, in that action, to compel Bank of America to produce subpoenaed documents.

Oceana and Rosa then moved in this action, by order to show cause, to hold the plaintiff and her counsel in civil and criminal contempt; to refer the plaintiff's counsel to the Grievance Committee for discipline; to require the plaintiff's counsel to seek court authorization to issue future subpoenas pending the Grievance Committee's investigation; to disqualify the plaintiff's counsel on the ground of conflict of interest; and for an award of attorney's fees pursuant to 22 NYCRR 130-1.1 (hereinafter the second motion of Oceana and Rosa). In the order to show cause, the Supreme Court again granted interim relief restraining the plaintiff's counsel from issuing subpoenas, staying compliance with outstanding subpoenas, precluding the plaintiff from taking further action to enforce any judgment, and staying all pending actions pending the hearing of the motion.

While the second motion was pending, the plaintiff attempted to move, by separate orders to show cause, for a declaration that the stay in this action did not apply to enforcement of the December 19, 2017 abstract of judgment, and to vacate the order dated November 6, 2017. The Supreme Court declined to sign both orders to show cause. In declining to sign the latter one, the court noted: "Identical requests for relief denied by this court multiple times." Concurrent with the foregoing events, the Eastern District and Southern District also issued various orders restraining the plaintiff and her counsel from serving subpoenas on third parties without court authorization.

In an order dated October 22, 2018, the Supreme Court, inter alia, denied that branch of the plaintiff's motion which was to vacate the stay in the order dated November 6, 2017, granted those branches of the first motion of Oceana and Rosa which were to quash subpoenas issued by the plaintiff's counsel and for an award of costs in the sum of $2, 500, and denied in its entirety the second motion of Oceana and Rosa seeking, inter alia, to hold the plaintiff and her counsel in civil and criminal contempt. The plaintiff appeals from so much of the order as denied her motion to vacate the stay and awarded the defendants costs in the sum of $2, 500. Oceana cross-appeals from so much of the order as denied the second motion of Oceana and Rosa, inter alia, to hold the plaintiff's counsel in civil and criminal contempt. We modify.

Resolution of discovery disputes is a matter within the sound discretion of the motion court (see Von Maack v Wyckoff Hgts. Med. Ctr., 195 A.D.3d 769, 770; 101CO, LLC v Sand Land Corp., 189 A.D.3d 942, 944). "[A]ny matter which may lead to the discovery of admissible proof is discoverable, as is any matter which bears upon a defense, even if the facts themselves are not admissible" (Cajamarca v Osatuk, 163 A.D.3d 619, 620 [internal quotation marks omitted]). Here, since the record supports the Supreme Court's conclusion that the plaintiff's subpoenas served on third parties were improper, the court providently exercised its discretion in denying that branch of the plaintiff's motion which was to vacate the stay in the order dated November 6, 2017.

"A subpoena duces tecum may not be used for the purpose of general discovery or to ascertain the existence of evidence" (Capacity Group of NY, LLC v Duni 186 A.D.3d 1482, 1483; see Bottini v...