In Kooper v Kooper, --- N.Y.S.2d ----, 2010 WL 1912142 (N.Y.A.D. 2 Dept.) the appeal considered the principles governing the discovery of documents from nonparties pursuant to CPLR 3101(a)(4). It provides that the party seeking disclosure must give notice stating "the circumstances or reasons such disclosure is sought or required" from the nonparty. The question before the court was whether a party must establish the existence of "special circumstances" warranting discovery from a nonparty in order to successfully oppose a motion to quash a subpoena duces tecum served on that nonparty? Justice Angiolillo, in the opinion for the court, noted that many of the cases of the Second Department continued to apply that standard after CPLR 3101(a)(4) was amended to remove the requirement that discovery from a nonparty be obtained only "where the court on motion determines that there are adequate special circumstances." and concluded: “We hereby disapprove the further application of the "special circumstances" standard in this context.”
On July 18, 2008, the defendant served subpoenas duces tecum on five nonparty financial institutions, demanding production of documents related to any accounts held by the plaintiff, and on July 21, 2008, the defendant served an amended subpoena on one of the five institutions. The following notice appeared on the face of each subpoena: "The circumstances or reasons said disclosure is sought or required are to identify and value certain marital property, which is material and necessary in the prosecution or defense of this action." Copies of the six subpoenas were served on the plaintiff. After the wife refused to withdraw the six subpoenas duces tecum served on nonparty financial institutions, the husband moved to quash the subpoenas, and the wife filed a cross-motion to compel the husband to comply with discovery demands, for an award of interim counsel fees, and to direct the husband to pay the wife one-half of the proceeds from the rental of the parties' vacation home. The Supreme Court granted the husband's motion to quash on the ground that the defendant had failed to tender a sufficient explanation why the discovery from nonparties was necessary and denied wife's cross-motion in its entirety.
On appeal the Appellate Division noted that subsequent document production by three of the five nonparty financial institutions rendered part of defendant’s appeal academic. It turned to defendant's contention that the Supreme Court improperly granted plaintiff's motion to quash the subpoenas she served on the two remaining nonparty financial institutions, American Express and Principal Trust Company, f/k/a Delaware Charter Guarantee & Trust Company.
The court pointed out that disclosure in New York civil actions is guided by the principle of "full disclosure of all matter material and necessary in the prosecution or defense of an action.” (CPLR 3101). The phrase "material and necessary" is "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" ( citing Allen v. Crowell-Collier Publ. Co., 21 N.Y.2d 403). The Court of Appeals' interpretation of "material and necessary" in Allen has been understood "to mean nothing more or less than 'relevant'.
To withstand a challenge to a discovery request, therefore, the party seeking discovery must first satisfy the threshold requirement that the disclosure sought is "material and necessary," whether the request is directed to a party or non-party. If a request for discovery from a nonparty is challenged solely on the ground that it exceeds the permissible scope of matters material and necessary in the prosecution or defense of the action, a motion to quash is properly denied if that threshold requirement is satisfied, or properly granted if the discovery sought is not material and necessary.
The Court held that in this action for a divorce and ancillary relief in which the parties seek, inter alia, the equitable distribution of marital assets, "the entire financial history of the marriage is open for examination," and "[broad pretrial disclosure enabling both spouses to obtain necessary information regarding the value and nature of the marital assets is deemed critical if the trial court is to properly distribute the marital assets.” The two subpoenas at issue sought financial records including periodic statements for any accounts in the plaintiff's name for the time period of "January 1, 2002 to the present." The court found that this information was material and necessary as an aid to the parties in determining the value and nature of the marital assets and an aid to the trial court in properly distributing those assets. Since the defendant met the threshold requirement, an order quashing the subpoenas could not be premised on the ground that the requested disclosure was not material or necessary to the prosecution or defense of this action.
Beyond the requirement of materiality and necessity which defines the scope of permissible discovery, a disclosure request directed to a nonparty implicates considerations in addition to those governing discovery from a party. The Court noted that CPLR 3101, entitled "Scope of Disclosure," sets forth general requirements applicable to all discovery. At one time, CPLR 3101 allowed disclosure as against a nonparty only "where the court on motion determines that there are adequate special circumstances. In 1984, the Legislature amended CPLR 3101(a)(4) to eliminate the "on motion" and "special circumstances" language, substituting therefor the requirement that such disclosure be obtained "upon notice stating the circumstances or reasons such disclosure is sought or required.” The 1984 amendment, however, did not change the requirement that a party obtain "[a] court order upon a showing of special circumstances" when further disclosure is sought concerning the expected testimony of an expert witness; this is the sole remaining subsection with the "special circumstances" language. After the 1984 amendment, CPLR 3120, which specifically governs document production, continued to require a court order for discovery from a nonparty. Subdivision (b) of that Rule required the party seeking disclosure to obtain the order upon motion with notice to adverse parties and the nonparty from whom disclosure was sought. In 2002, the Legislature amended CPLR 3120, dispensing with the need to make a motion and requiring CPLR 3120, as amended in 2002, requires only service of a subpoena duces tecum for the production of documents in the custody and control of a nonparty witness. The 2002 amendment brought nonparty document production into line with the procedure for compelling a nonparty witness to produce documents during the nonparty's deposition, which requires service of a subpoena without a motion or court order.
Justice Angiolillo noted that the Second Department has adhered to the view that a subpoena duces tecum served on a nonparty is "facially defective" and unenforceable if it neither contains, nor is accompanied by, a CPLR 3101(a)(4) notice stating the circumstances or reasons such disclosure is sought or required. However, it has indicated, in dicta, that such a facial defect might be remedied and in a case involving facially defective subpoenas that allegedly, dehors the record, were reissued with the required notice, it considered the merits of the showing in opposition to a motion to quash and found it lacking. The Second Department has not had occasion to consider whether a motion to quash for lack of the required notice may be successfully defeated upon an adequate showing of circumstances and reasons for the requested disclosure.
In this case the two subpoenas at issue contained a notice with a statement of circumstances and reasons why the defendant sought the disclosure. The question was whether the “circumstances and reasons” proffered by the defendant were sufficient to withstand the plaintiff's motion to quash.
The Court noted that after the 1984 amendment eliminating the "special circumstances" language, the departments of the Appellate Division differed in their interpretations of the "circumstances and reasons" requirement and the sufficiency of the showing necessary to withstand a challenge to disclosure from a nonparty. In 1988, the Second Department held, in a case involving a nonparty deposition, that the "special circumstances requirement survived the 1984 amendment to CPLR 3101(a)(4)". In light of the elimination from CPLR 3101(a)(4) in 1984 of the “special circumstances” language, the Second Department disapproved of further application of the "special circumstances" standard in its cases, except with respect to the limited area in which it remains in the statutory language, i.e., with regard to certain discovery from expert witnesses. It held that on a motion to quash a subpoena duces tecum or for a protective order, in assessing whether the circumstances or reasons for a particular demand warrant discovery from a nonparty, those circumstances and reasons need not be shown to be "special circumstances."
Looking to the reasoning in its cases to find guidance with respect to the circumstances and reasons which it considered relevant to the inquiry with respect to discovery from a nonparty, the court noted that since Dioguardi, the Court has deemed a party's inability to obtain the requested disclosure from his or her adversary or from independent sources to be a significant factor in determining the propriety of discovery from a nonparty. A motion to quash is, thus, properly granted where the party issuing the subpoena has failed to show that the disclosure sought cannot be obtained from sources other than the nonparty, and properly denied when the party has shown that the evidence cannot be obtained from other sources. The cases have not exclusively relied on this consideration, however, and have weighed other circumstances which may be relevant in the context of the particular case in determining whether discovery from a nonparty is warranted such as a conflict in statements between the plaintiff and nonparty witness; unexplained discontinuance of the action against the witness, formerly a party; and previous inconsistencies in the nonparty's statements. The Court declined to set forth a comprehensive list of circumstances or reasons which would be deemed sufficient to warrant discovery from a nonparty in every case. Circumstances necessarily vary from case to case. The particular circumstances of each case must always weigh in the trial court's consideration of a discovery request and in our review of the trial court's exercise of its discretion. The Court emphasized that its cases have consistently adhered to the principle that "[more than mere relevance and materiality is necessary to warrant disclosure from a nonparty".
Applying these principles to the case at hand, the Court found that the defendant proffered circumstances and reasons in her notice on the face of each subpoena which amounted to no more than a statement that the information would be relevant and material and necessary to the prosecution or defense of the action. In opposition to the plaintiff's motion to quash, the defendant failed to add to this showing, arguing only generally that neither the plaintiff nor the nonparty financial institutions had affirmatively shown prejudice or inconvenience. This proffer was insufficient in the context of this case. The defendant sought discovery from the nonparties prior to expiration of the plaintiff's time to respond to her discovery demands. The defendant conceded that she has since received the plaintiff's voluminous response to her demands, consisting of approximately 27,000 pages of documents. The defendant should have reviewed the material received from the plaintiff to ascertain whether the information sought from the various nonparties was supplied by the plaintiff in his discovery responses. Had that procedure been followed, it may have obviated the need for, or significantly narrowed and focused, the subpoenas served on the nonparties. Accordingly, as the defendant did not make a sufficient showing of the circumstances and reasons discovery from the nonparties was warranted, the Supreme Court providently exercised its discretion in granting the plaintiff's motion to quash the subpoenas served on American Express and Principal Trust Company, f/k/a Delaware Charter Guarantee & Trust Company. The court also found merit, however, in that branch of the defendant's cross motion which was for an award of an interim counsel fee. It held that given the significant disparity in the parties' financial circumstances, the Supreme Court should have granted the defendant's request for counsel fees and directed the plaintiff to pay the defendant an interim counsel fee in the sum of $100,000.
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