Opinion
2231/04.
May 14, 2007.
Ingber Ingber, Esqs., Attorneys for Plaintiffs, Monticello, New York.
Keith G. Ingber, Esq., of Counsel, Marvin Newberg, Esq., Attorney for Defendant Kim's Mountain Gift Corp., Monticello, New York.
In this action to permanently enjoin defendants Inland Southeast Thompson, LLC and Kim Hine d/b/a Kim's Mountain Gift Corp. from the display and sale of greeting cards, defendant Kim Hine moves for an order pursuant to CPLR 3124 and 3126, compelling plaintiff to comply with defendant Kim's demands for discovery and inspection and demand for interrogatories or, in the alternative, for this Court to make an appropriate order pursuant to CPLR 3126 as a penalty for plaintiff's failure to comply with this Court's prior discovery orders.
Defendant Kim's Mountain Gift Corp. Is sued under the misnomer of Kim Hine d/b/a Kim's Gifts.
Plaintiff opposes the motion on the grounds that notwithstanding defendant's assertions to the contrary, it has provided either full responses to most of the interrogatories propounded by the defendant Kim, has advised said defendant that further discovery is necessary to respond, or objected on the ground that the interrogatories were overly broad and/or seeks to discover confidential business information or trade secrets. Plaintiff also objected to certain of defendant's demands for discovery and inspection in that they are insufficiently particularized as to what information is demanded, the relevance of such information to the instant litigation, and whether defendant has attempted to obtain such information in a less intrusive manner.
Although the disclosure provisions of the Civil Practice Law and Rules are to be liberally construed ( see CPLR 3101[a]), the trial court, because of its obvious familiarity with the matter at hand, has broad discretion to supervise the discovery process and is in the best position to determine what is material and necessary as that phrase is used in CPLR 3101[a] ( see Kozuch v Certified Ambulance Group, Inc., 301 AD2d 840).
Conceding that plaintiff did, indeed, respond to certain of defendant's interrogatories, defendant, nonetheless, still seeks responses to Interrogatory Nos. 10 and 15. As to defendant's Notice for Discovery and Inspection, plaintiff failed to respond to items, 1,2,5,6,7,9,10 and 13 and objected to same.
Prefatorily, plaintiff unsuccessfully argues that this Court's previous denial of a similar application to compel discovery by defendant Inland Southeast Thompson Monticello, LLC as being, among other things, overly broad, should result in a similar disposition in the instant motion. Contrary to plaintiff's contention, this Court concurs with defendant that the Court's prior decision has no relevance to Kim's motion to compel discovery. As properly pointed out by defendant, the action between plaintiff and Inland is a claim by plaintiff tenant against its landlord for breach of the lease. The action between plaintiff and defendant Kim, both tenants of defendant Inland, includes plaintiff's claim for damages for a violation of the restrictive covenant as well as a counterclaim by Kim as against plaintiff for unfair competition and infringement of common law trademark.
Next, as relevant to plaintiff's demands for damages stemming from the alleged violation by defendants of the restrictive covenant, defendant Kim requested plaintiff to "(s)et forth in detail, including but not limited to business records, including financial statements, sales records, federal and state tax returns for the years 2004 to present, showing the adverse effect on Plaintiff's retail sales. . . " (Interrogatory No. 10).As is alleged in plaintiff's verified complaint, plaintiff claims that "the maintenance of 36 feet of rack space by Defendant Kim not only has an adverse effect on Plaintiff's retail sales, but also jeopardizes Plaintiff's volume agreement with its major supplier" (Verified Complaint, ¶ 21).
Defendant's Interrogatory No. 15 requests that plaintiff describe "each and every product and/or product line, which Plaintiff currently offers for sale in its expanded lease space at the subject mall, which it did not offer for sale at its smaller, prior leased space, prior to Plaintiff's moving its store in the subject mall in and about March 2003". Plaintiff objects to disclosure of this information because it involves "confidential business information and trade secrets".
As to defendant's notice for discovery and inspection, plaintiff objected to Item Nos. 1, 2, 5, 6, 7, 9, 10 and 13. More specifically, the notice requested copies of invoices for the products purchased and consigned by plaintiff for resale for the years 2003 to date; copies of all store records for products received and sold for the years 2003 to date; all agreements or memoranda or correspondence between plaintiff and its suppliers for the years 2003 to date; a copy of the volume agreement between plaintiff and its supplier, Paramount Card Premier Greetings; all income statements, profit and loss statements, balance sheets or other financial statements of the plaintiff for the years 2003 to date; copies of every advertisement or promotional material plaintiff placed in newspapers, trade journals, over the internet, or otherwise regarding the sale of products for the years 2003 to date including all correspondence, faxes, e-mails or other communications between plaintiff and/or its selling agents and employees to any and all newspapers, trade journals, internet advertisers regarding these advertisements and promotional materials; all agreements, memoranda, contracts or other writings between plaintiff, its employees and agents and any third parties regarding plaintiff's advertising or promotional materials with regard to plaintiff's activities and/or sales in the Monticello Mall for the years 2003 to date; and copies of all pleadings, discovery documents, and transcripts regarding any litigation or arbitration or ADR proceedings between plaintiff and anyone regarding plaintiff's lease at the subject mall.
In response, plaintiff objected to Interrogatory No. 10 on the grounds that "it is overly broad, vague, ambiguous and calls for the production of privileged and confidential information". As to Interrogatory No. 15, plaintiff objected to such demand on the premise that "it seeks to discover confidential business information and trade secrets". Likewise, plaintiff objected to certain of the items in defendant's demands for discovery and inspection on the basis that defendant failed to make the necessary showing that the confidential business records sought has some specific application to the case and that other sources are likely to be inaccessible or unproductive ( see Active Fire Sprinkler Corp. v Am. Home Assur. Co., 203 AD2d 218).
Generally, the courts disfavor the disclosure of income taxes without a strong showing that they contain information, unavailable from other sources, particularly germane to the matter in dispute ( see Briand Parenteau, Inc. v Dean Witter Reynolds, Inc., 267 AD2d 576, 577). "A party will not be required to produce income tax returns in a particular action unless the record presents a strong necessity for such disclosure to prove its cause of action or defense" ( Niagara Falls Urban Renewal Agency v Friedman, 55 AD2d 830). However, in instances when one party claims loss of potential income or depreciation of a possession's value as a business deduction, the courts have found that tax records are unique, and that no other evidence or depositions would suffice in proving the moving party's contention ( see Konrad v 136 East 64th Street Corp., 235 AD2d 258, 258).
Here, plaintiff's claim that defendant's alleged violation of its restrictive covenant with its landlord has had an adverse financial impact on plaintiff's retail sales and its volume agreement with its major supplier warrants production of its income tax returns for the period it has put in issue in order to ascertain whether its sales and relationship with its supplier was affected by defendant's alleged wrongdoing. In addition, contrary to plaintiff's argument, the Court finds defendant's disclosure demands, both in regard to the interrogatories and in the demand for discovery and inspection, contains specific items sufficient to comply with existing requirements.
Accordingly, the Court finds that defendant is entitled to the requested records, including plaintiff's business records, financial statements, sales records and tax returns for the period in question.
As to the items requested in Interrogatory No. 15, the Court concurs with defendant that there is nothing confidential or secret about the products and/or product lines plaintiff currently offers in its expanded lease space which it did not offer in or about March 2003, as such items are clearly in view of the
public. Therefore, as these items are material and necessary to establishing not only to Kim's defense of plaintiff's cause of action but to the prosecution of its counterclaim, the Court concludes that such information is discoverable.
Turning to items to which plaintiff objected contained in the notice for discovery and inspection, the Court finds that defendant is entitled to the remaining various discovery demands. As defendant correctly points out, plaintiff itself requested from defendant Kim many items similar to those contained in defendant's notice, including a description and listing which said defendant alleges that plaintiff has copied from the defendant's store and offered for sale in a purported attempt to confuse the public and engage in unfair competition, so that plaintiff cannot successfully argue that such information is shielded, under the cloak of confidentiality and trade secrets, from discovery. In addition, defendant claims that there is no method or manner by which to obtain such information other than from the plaintiff.
Under the circumstances, considering plaintiff's claims and defendant's counterclaims, the Court concludes that defendant in entitled to all of the information which is the subject of the instant motion.
Accordingly, defendant Kim's motion is granted in its entirety. The Court directs that plaintiff provide the responses to interrogatories 10 and 15, of defendant's Demand for Interrogatories dated May 19, 2006, and produce the documents in Items, 1,2, 5,6,7,9 and 10 of defendant's Notice for Discovery and Inspection dated August 1, 2005, within twenty (20) days of service with notice of entry of this Decision and Order. This constitutes the Decision and Order of this Court. All papers, including the original copy of the Decision and Order, are being filed with the Sullivan County Clerk's Office. Counsel are not relieved from the provisions of CPLR 2220 with respect to entry and notice of entry.