| DG&A Mgt. Servs., LLC v Securities Indus. Assn. Compliance & LegalDiv. |
| 2010 NY Slip Op 07865 [78 AD3d 1316] |
| November 4, 2010 |
| Appellate Division, Third Department |
| DG&A Management Services, LLC, Appellant, v Securities IndustryAssociation Compliance and Legal Division, Respondent, et al., Defendant. |
—[*1] Bond, Schoeneck & King, P.L.L.C., Albany (Stuart F. Klein of counsel), forrespondent.
Malone Jr., J. Appeal from that part of an amended order of the Supreme Court (McNamara, J.),entered April 13, 2010 in Albany County, which granted a motion by defendant Securities IndustryAssociation Compliance and Legal Division to compel certain discovery from plaintiff.
Beginning in 1989, and during a number of years thereafter, plaintiff entered into a series ofcontracts with defendant Securities Industry Association Compliance and Legal Division (hereinafterdefendant) pursuant to the terms of which plaintiff agreed to provide management and associatedservices to administer defendant's various programs and seminars. Following the expiration of the finalcontract on December 31, 2004, and while negotiations of a new contract were ongoing, plaintiffcontinued to provide services to and receive compensation from defendant. In October 2005, plaintiffand defendant entered into a single-purpose agreement covering defendant's March 2006 annualseminar. Shortly thereafter, however, defendant notified plaintiff that it no longer would need plaintiff'sservices; it had retained defendant Intermedia Production Group, Ltd. to, among other things,coordinate the 2006 seminar.[*2]
Plaintiff thereafter commenced this action against defendant,among others, alleging numerous causes of action sounding in contract and quasi contract and seekingto recover for services actually rendered (or which were to be rendered) between January 1, 2005 andDecember 31, 2006. Supreme Court dismissed certain of the causes of action and, upon appeal, weaffirmed (DG & A Mgt. Servs., LLC vSecurities Indus. Assn. Compliance & Legal Div., 52 AD3d 922 [2008]), leaving plaintiffwith, insofar as is relevant here, two remaining claims against defendant—one for quantum meruitand the other for unjust enrichment.
Discovery ensued and defendant ultimately served plaintiff with a second demand for documentsseeking disclosure of various financial documents and information—specifically, financialstatements, balance sheets, audit reports and tax returns of plaintiff and its managing partnersencompassing calendar years 2004 through 2007. When plaintiff failed to comply with the demand,defendant moved to compel disclosure pursuant to CPLR 3124. Plaintiff opposed the application andcross-moved to compel production of certain documents that it had previously demanded. SupremeCourt, agreeing that financial documents demonstrating the actual costs incurred by plaintiff in providingservices to defendant were relevant in ascertaining the reasonable value of the services plaintiffrendered, granted defendant's motion to compel and ordered plaintiff to disclose the financialinformation requested with the exception of the tax returns of two of plaintiff's managingpartners.[FN1]Plaintiff now appeals from so much of Supreme Court's amended order as granted defendant'smotion.[FN2]
We affirm. It is well settled that a trial court is vested with broad discretion in overseeing thediscovery and disclosure process, and "[o]nly a clear abuse of that discretion will justify ourintervention" (McMahon v Aviette Agency, 301 AD2d 820, 821 [2003]; see Lue v Finkelstein & Partners, LLP, 67AD3d 1187, 1188 [2009]; Matter ofScaccia, 66 AD3d 1247, 1249 [2009]). Where, as a here, a party fails to timely object to thediscovery demand (see CPLR 3122 [a]), our review "is limited to determining whether therequested material is privileged under CPLR 3101 or the demand is palpably improper" (SaratogaHarness Racing v Roemer, 274 AD2d 887, 888 [2000]; see Jefferson v State of New York, 60 AD3d 1215, 1215 [2009]; Coville v Ryder Truck Rental, Inc., 30AD3d 744, 745 [2006]; McMahon v Aviette Agency, 301 AD2d at 821), i.e.,"irrelevant, overbroad and burdensome" (Jefferson v State of New York, 60 AD3d at 1215[internal quotation marks and citations omitted]).
Here, no assertion of privilege has been made and, based upon our review of the record as awhole, we cannot say that defendant's demand was palpably improper. As noted previously, theremaining causes of action at issue sound in quantum meruit and unjust enrichment and, in bothinstances, the proper measure of plaintiff's damages is the reasonable value of the services performedfor defendant (see Snyder v Bronfman,13 NY3d 504, 508 [2009]; Frank v Feiss, 266 AD2d 825, 826 [1999]; CollinsTuttle & Co. v Leucadia, Inc., 153 AD2d 526, 527 [1989]). According to plaintiff, computation ofthat sum is most appropriately made by reference to the American Society of Association ExecutivesOperating Ratio Report (12th ed), which utilizes financial ratios to permit an [*3]organization such as plaintiff to assess its performance vis-Á-visother organizations of similar size, scope and type by analyzing a lengthy list of revenue and expensecomponents, including, among other things, costs incurred for salaries, benefits, taxes, occupancy,telephone, office equipment and supplies, postage and travel. Utilizing these industry ratios, plaintiffestimated the reasonable value of the services provided during the relevant time period to be in excessof $1.6 million.[FN3]
As Supreme Court aptly observed, however, the fact that plaintiff has elected to employ thisparticular methodology "does not foreclose other avenues of proof." Moreover, even though plaintiffadmittedly is not seeking to recover the actual cost of providing services to defendant, we agree that ithas placed its actual costs in issue by utilizing the ratio methodology. Further, inasmuch as plaintiff hasaverred that it "did not maintain income and expense statements, a general ledger, balance sheet, auditreports, statements of cash flow, or similar financial statements," we cannot say that Supreme Courtabused its discretion in granting defendant access to, among other things, plaintiff's bank and credit cardrecords.
We reach a similar conclusion with regard to Supreme Court's directive that plaintiff disclose its taxreturns. To be sure, "tax returns are generally not discoverable in the absence of a strong showing thatthe information is indispensable to the claim and cannot be obtained from other sources" (SaratogaHarness Racing v Roemer, 274 AD2d at 889; see Pugliese v Mondello, 57 AD3d 637, 640 [2008]; Latture vSmith, 304 AD2d 534, 536 [2003]). In light of plaintiff's failure to maintain any relevant financialstatements, we are satisfied that defendant made the requisite showing here and, hence, Supreme Courtdid not abuse its discretion in ordering disclosure of the sought-after tax returns. Plaintiff's remainingarguments, to the extent not specifically addressed, have been examined and found to be lacking inmerit.
Cardona, P.J., Peters, Rose and Stein, JJ., concur. Ordered that the amended order is affirmed,with costs.
Footnote 1: Although Supreme Court alsopartially granted plaintiff's cross motion, defendant has not appealed from Supreme Court's amendedorder.
Footnote 2: This Court granted plaintiff'ssubsequent motion for a stay pending appeal.
Footnote 3: By comparison, the record indicatedthat defendant paid plaintiff $548,260 for the two-year period ending December 31, 2004 andapproximately $480,000 for management services provided to defendant during calendar year 2005.