September 29, Capital One Equipment Finance Corp. v. The OSG Corp., et al. Index No /2017

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1 Joseph Barbiere Member Admitted in NJ and NY Reply to New Jersey Office Writer s Direct Line: Writer s Direct Fax: Writer s jbarbiere@coleschotz.com Court Plaza North 25 Main Street P.O. Box 800 Hackensack, NJ fax New York Delaware Maryland Texas Florida September 29, 2017 Via Electronic Case Filing Via Facsimile Hon. Timothy S. Driscoll, J.S.C. Nassau County Supreme Court 100 Supreme Court Drive Mineola, New York Re: Capital One Equipment Finance Corp. v. The OSG Corp., et al. Index No /2017 Dear Judge Driscoll: This firm represents Defendants The OSG Corp., Roman Sapino, Ruben Giacomozzi, The Roman Sapino 2015 Qualified Personal Residence Trust and Daniel Bratshpis in this matter. Pursuant to Commercial Division Rule 14, we respectfully write to advise the Court about a discovery dispute that the parties have been unable to resolve among themselves after good faith efforts to do so. Specifically, the discovery dispute pertains to two (2) third-party Subpoenas Duces Tecum served by Plaintiff Capital One Equipment Finance Corp. ( CapOne ) upon (i) Medallion Financial Corp. ( Medallion ), and (ii) Melrose Credit Union ( Melrose ) (collectively, the Subpoenas ). The Subpoenas are returnable on October 6, 2017 and October 12, 2017, respectively. Copies of the Subpoenas are annexed hereto for the Court s consideration. As has been expressed to CapOne s counsel, the documents and information requested in the Subpoenas (loan documents, personal financial statements, and state and federal tax returns) are neither material nor necessary to CapOne s prosecution of the claims asserted in this litigation against Mr. Sapino or Mr. Giacomozzi. See, e.g., Hudson City Savings Bank v. 59 Sands Point, LLC, 153 A.D.3d 611 (2d Dept. 2017) (motion to quash should be granted where subpoenaing party fails to establish that the requested disclosure [from a third-party] was material and necessary to its prosecution of this action ); Humphrey v. Kulbaski, 78 A.D.3d 786, (2d Dept. 2010) (affirming grant of motion to quash subpoenas to third-parties where issuant failed to demonstrate requested documents were material and necessary to prosecute its claims). The Subpoenas are likewise overly broad and exceed the permissible scope of discovery. The Subpoenas are instead a transparent attempt by CapOne to harass Mr. Sapino and Mr. Giacomozzi by interfering with their business relationships with Medallion and Melrose, both of which are taxi medallion lenders / v1

2 Cole Schotz P.C. Hon. Timothy S. Driscoll, J.S.C. September 29, 2017 Page 2 CapOne s counsel has argued that the subpoenaed documents are relevant to issues of solvency and the fraudulent conveyance claims asserted in this litigation. As an initial matter, CapOne advances no such claim against Mr. Giacomozzi, so any subpoenaed documents related to Mr. Giacomozzi are entirely immaterial. Further, CapOne s lone fraudulent transfer claim against Mr. Sapino arises out of his legitimate conveyance of the Cliffside Park condominium into a trust for estate planning purposes. That transaction occurred in April So the issue of Mr. Sapino s solvency should therefore pertain, at most, to his financial condition as of April 2015 only. Yet, the Subpoenas demand the production of personal financial statements from 2013 through 2017, and tax returns for an unlimited period of time. The Subpoenas are therefore clearly overbroad and seek documents neither material nor necessary to the prosecution of CapOne s claims. Relevance aside, CapOne also has no basis to subpoena Mr. Sapino s or Mr. Giacomozzi s personal financial statements or state and federal tax returns. Tax returns are not discoverable absent a strong showing that the information is indispensable to a claim and cannot be obtained through less intrusive means. See Pugliese v. Mondello, 57 A.D.3d 637, 640 (2d Dept. 2008) (quoting Latture v. Smith, 304 A.D.2d 534, 536 (2d Dept. 2003)). With respect to the demand for personal financial statements, CapOne can, and should, first demand them from the parties themselves without unnecessarily involving third-parties in the dispute. To that point, Mr. Sapino and Mr. Giacomozzi have provided personal financial records pre-litigation to CapOne throughout the parties business relationship and which CapOne even relied upon in its initial TRO application. For any additional documents, CapOne can obtain them through party discovery, which remains in its infancy while this Court was adjudicating CapOne s motion to dismiss. In fact, earlier this week, the parties participated in a conference call to discuss a proposed discovery schedule. Unless or until CapOne first requests the subpoenaed documents from the parties and the parties refuse to produce them, burdening a third-party is premature and unwarranted. Finally, the Subpoenas are procedurally defective. Pursuant to CPLR 3101(a)(4), subpoenas to a non-party must include notice stating the circumstances or reasons such disclosure is sought or required. CPLR 3101(a)(4). Such notice must be stated either on the face of the subpoena or in a notice accompanying it... lest it be subject to a challenge for facial insufficiency. See Kapon v. Koch, 23 N.Y.3d 32, 39 (2014) (citing CPLR 3101(a)(4) and De Stefano v. MT Health Clubs, Inc., 220 A.D.2d 331, 331 (1995)). Notwithstanding this obligation, the Subpoenas served upon Medallion and Melrose fail to provide any information about the instant litigation, do not attach copies of any pleadings and do not identify the purported rationale underlying the requests. The Subpoenas should therefore be quashed on that basis. The parties are now at an impasse after engaging in good faith efforts to resolve the instant discovery dispute. We therefore respectfully request that the Court intervene by promptly scheduling either a telephone or in-person conference. In the interim, and in light of the upcoming October 6 return date on the Medallion Subpoena, we further request that the Court (i) grant leave to file a motion to quash and/or for a protective order so as to automatically stay the Subpoenas, and/or (ii) enter an Order directing Medallion and Melrose to not respond to the Subpoenas until this Court fully adjudicates this discovery dispute. We thank the Court for its continued time and attention to this matter / v1

3 Cole Schotz P.C. Hon. Timothy S. Driscoll, J.S.C. September 29, 2017 Page 3 Respectfully submitted, COLE SCHOTZ P.C. /s/ Joseph Barbiere Joseph Barbiere Member JB:tmf Attachments cc: All Counsel of Record 55261/ v1

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