Court Denies Motion to Compel Because Discovery Sought Not Material and Necessary

On August 12, 2019, Justice Cohen of the New York County Commercial Division issued a decision in GCS Second Ave. Owner LLC v. Merchants Hospitality Inc., 2019 NY Slip Op. 32418(U), denying a motion to compel because the discovery sought was not material and necessary, explaining:

The documents belatedly requested by Defendants are not material and necessary in the prosecution or defense of this action. The Court of Appeals has explained that the words material and necessary are to be interpreted liberally. However, a party is not entitled to uncontrolled and unfettered disclosure. The proper test is one of usefulness and reason. The determination whether information is material and necessary hinges upon whether it will assist preparation for trial by sharpening the issues and reducing delay and prolixity. Additionally, the request for this information must be appropriately tailored and reasonably calculated to yield relevant information. In sum, the right to disclosure, although broad, is not unlimited.

The Court notes that Defendants have not complied with the letter (or spirit) of the Court's discovery rules. As explained above, the Court granted two extensions of the discovery schedule, with the final end date for all discovery being February 15, 2019. Defendants had ample time to complete depositions and document discovery in advance of the deadline, but instead chose to wait until the deadline to serve follow-up demands after Mr. Duncan's deposition. And then, it waited two weeks after a conference with the Court's law clerk to narrow the request. And then, it filed the instant motion without giving the other side a chance to respond to the demands and failed to comply with dispute resolution procedure of Rule 14. In the circumstances, the Court finds that Defendants' revised requests were untimely. However, as noted in the text, the motion would be denied even if the disclosure had been requested in a timely manner.

Defendant's request for information about five unrelated loans and agreements with non-parties, which are not at issue in this case, will not sharpen the issues. The demands span the course of thirty-three years, and production of these documents will not reduce delay and prolixity, but rather increase it.

Defendants apparently seek to establish a pattern or standard of lending agreements that Peter Duncan and GCS have previously entered into to attempt to illustrate that the Agreement at issue has deviated from GCS's usual pattern. However, Mr. Duncan's and GCS's dealings with non-parties in other transactions are not relevant to determining what the parties intended in the contract in this case. The point of this case is to determine the meaning of the contract between the parties to the case, not to probe into contracts one of the parties may have entered into with other parties in other transactions.

(Internal quotations and citations omitted).

A big part of complex commercial litigation is giving, receiving and evaluating evidence (this is called "discovery"). The scope of discovery in New York is broad, but as this decision shows, it is not unlimited. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client has a question regarding discovery obligations (and what to do if a litigant is not honoring those obligations).