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The Rogak Report: 29 Jun 2009 ** No Fault - Fraudulent Incorporation **

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  • insurancelawyer
    Message 1 of 1 , Jun 29, 2009



      Cambridge Med., P.C. a/a/o Ligia Mendoza v. Adirondack Insurance Exchange
      2009 NY Slip Op 51305(U)
      Decided on June 29, 2009
      Civil Court Of The City Of New York, New York County
      Singh, J.
      Edited by Lawrence N. Rogak

      In this no-fault suit, the insurer served discovery demands, including a deposition notice. Plaintiff failed to comply with the demands. Defendant then moved to compel the testimony of plaintiff's alleged owner, Eileen S. Debbi, M.D., and to require plaintiff to answer the interrogatories and provide documentation regarding the ownership/operation of the plaintiff. Cambridge Medical opposed the motion and applied for a protective order pursuant to CPLR 3103.

      "Defendant contends that Dr. Debbi is not the owner of Cambridge Medical. It believes that the real owner is one Mark Levitan, who is a non-physician and the owner of Nissa Management, Inc. Movant supports its application with an examination under oath taken of Dr. Debbi on March 8, 2007, in an unrelated proceeding. Dr. Debbi was questioned about Cambridge Medical. Adirondack contends that Dr. Debbi refused to respond to most of the questions at the EUO regarding management agreements and lease agreements, although she provided just enough testimony to indicate that she had little control over the daily operations of Cambridge Medical; had no knowledge of the plaintiff's finances; and that Cambridge Medical was to a large extent controlled by Mark Levitan of Nissa Management, Inc."

      "Plaintiff opposes, contending that defendant has failed to show good cause for the deposition. It maintains that defendant's allegation that Cambridge Medical is fraudulently incorporated lacks any support and is based on speculation, conjecture and surmise. Plaintiff maintains that the defendant simply used Dr. Debbi's EUO testimony and chose portions of the testimony to distort and make it appear that there were issues with plaintiff's corporation. Accordingly, the deposition is being sought to harass and to delay trial."

      "Plaintiff chose to commence an action in the Civil Court and is bound by Article 31 of the CPLR, which grants as of right discovery in all civil plenary proceedings. Specifically, CPLR 3101(a) provides that there shall be full disclosure of all matters material and necessary in the prosecution or defense of an action.  The terms 'material and necessary' are to be
      interpreted liberally to require disclosure upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason."

      "Once an action is commenced, any party may take the testimony of any person by deposition upon oral or written questions [CPLR 3106(a)]. Parties may ask broad questions to ascertain the truth or to bring out relevant evidence that may assist in the prosecution or defense of the action. Notice on a corporate party may not specify the individual to be examined, as initially the corporation may decide who it will produce. Employees who have knowledge are subject to being deposed."

      "The fact that the action was brought under the no-fault law is irrelevant to the demand for a deposition. The no-fault regulations govern, inter alia, the payment of claims and defenses to reimbursement. The 'good cause' standard cited by plaintiff concerns a carrier's right to delay payment of claims in order to conduct investigations [11 N.Y.C.R.R. 65-3.39(c)]. It does not limit a party's right to discovery sought in good faith pursuant to Article 31 of the CPLR."

      "Defendant has a good-faith basis to question Dr. Debbi. The EUO of Dr. Debbi was conducted in 2007. She appeared to know little about the medical operation of Cambridge Medical and the medical personnel who worked at the office. It may well be that plaintiff is correct that there was no management agreement with Nissa Management, Inc., and that Mark Levitan was simply an employee of plaintiff. However, defendant is entitled to question Dr. Debbi under oath to ascertain the ownership status of Cambridge Medical."

      "Accordingly, the motion by defendant to compel the production of Dr. Debbi for examination before trial and to respond in a complete and meaningful way to defendant's discovery demands is granted. Plaintiff shall: 1) provide full and complete answers to the interrogatories and provide documentation to defendant regarding the ownership/operation of the plaintiff within twenty (20) days of the date of this order; and 2) produce Dr. Debbi for deposition within forty-five (45) days of the date of this order.  Plaintiff's application for a protective order is denied."

      Larry Rogak

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