Defendant’s Decision To Attend His Deposition and Invoke the Fifth Forfeited Right To A Stay to Preserve His Civil Defenses

On February 5, 2024, Justice Andrew Borrok denied a defendant’s motion for a stay and granted a plaintiff’s motion to dismiss the defendant’s counterclaims and defenses based on the defendant’s invocation of the Fifth Amendment during his deposition in the case. The decision in ATX Debt Fund 2, LLC v. Natin Paul, et al, Index No. 650728/2020, noted that the defendant, Natin Paul, faced parallel criminal proceedings at the time he was deposed for this civil case. Paul invoked the Fifth Amendment more than 400 times during that deposition, including in response to questions that the Court characterized as “unquestionably material and necessary to the maintenance of his counterclaims and affirmative defenses in this case.” In a bid to preserve his counterclaims and defenses, despite refusing to answer these questions, Paul moved for a stay in the civil action. The Court denied the stay and suggested that Paul should have sought a stay before attending his deposition, explaining in part:

Significantly, Mr. Paul has already been deposed in this case and never sought a stay. Accordingly, Mr. Paul has by his own litigation strategy undermined any claim of irreparable harm or unfair prejudice or the idea that he should not be compelled to attend a deposition because without his testimony he can not assert his counterclaims or defenses such that no stay now is appropriate. Thus, the motion seeking stay is denied and the plaintiffs motion seeking dismissal of the counterclaims and defenses is granted.

The attorneys at Schlam Stone & Dolan frequently litigate cases involving parallel proceedings, both civil and criminal. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.