| Keller v Merchant Capital Portfolios, LLC |
| 2013 NY Slip Op 01163 [103 AD3d 532] |
| February 21, 2013 |
| Appellate Division, First Department |
| Yehuda Keller et al., Appellants, v MerchantCapital Portfolios, LLC, et al., Defendants, and The Comvest Group et al.,Respondents. |
—[*1] Akerman Senterfitt, LLP, New York (Scott M. Kessler of counsel), forrespondents.
Order, Supreme Court, New York County (Martin Shulman, J.), entered on or aboutJanuary 26, 2011, which, to the extent appealed from as limited by the briefs, granted themotion of defendants the Comvest Group, Comvest Investment Partners, CynergyHoldings LLC, Cynergy Data, LLC, and Cynergy Prosperity Plus, LLC, (collectively,Comvest) to dismiss the complaint as against them pursuant to CPLR 3211 (a) (7),unanimously affirmed, without costs. Order, same court and Justice, entered May 22,2012, which, to the extent appealed from as limited by the briefs, denied plaintiffs' crossmotion to enforce a conditional order, same court and Justice, entered April 22, 2011,inter alia, granting plaintiffs' motion for sanctions pursuant to CPLR 3126 to the extentof ordering that if defendants Merchant Capital Portfolios, LLC and MerchantProcessing Services Corp. (collectively, Merchant) failed to produce certain materialswithin 45 days of the issuance of the order, and plaintiffs moved on notice with anaccompanying affirmation detailing Merchants default, then an order striking Merchant'sanswer in its entirety would be entered, denied plaintiffs' cross motion for a defaultjudgment pursuant to CPLR 3215, and denied plaintiffs' cross motion for sanctionspursuant to 22 NYCRR 130-1.1, unanimously modified, on the law, to enforce theconditional order and strike Merchant's answer in its entirety, and otherwise affirmed,without costs.
Although Comvest did not serve its cross motion to dismiss within the time frameprovided by CPLR 2215, such failure may be excused where, as here, plaintiffs have notshown prejudice resulting from the delay (see Walker v Metro-North Commuter R.R., 11 AD3d 339,340 [1st Dept 2004]), and plaintiffs had sufficient opportunity to respond to Comvest'sarguments (Andejo Corp. vSouth St. Seaport Ltd. Partnership, 40 AD3d 407, 408 [1st Dept 2007]).
Plaintiffs' cross motion for a default judgment against Merchant pursuant to CPLR3215 was appropriately denied, since the court had previously addressed Merchant'suntimely service and directed plaintiffs to accept the late answer, and plaintiffs did nottake an appeal from such order.[*2]
However, the court erred, as a matter of law, indenying plaintiffs' cross motion to enforce the conditional order striking Merchant'sanswer since Merchant did not produce the specified materials within the identified timeperiod, and did not establish both a reasonable excuse for its failure to timely produce thespecified materials and the existence of a meritorious claim or defense (see Gibbs v St. BarnabasHosp., 16 NY3d 74, 80 [2010]). In this context, where a conditional order hadpreviously been entered based on the court's findings that a party had caused delay andfailed to comply with the court's discovery orders, the court was not required to find thatMerchant's conduct in failing to comply with the conditional order was "willful"(id. at 82-83).
Alternatively, Merchant's failure to timely comply with three court orders directing itto produce certain materials—one of which was a conditional order striking itsanswer if Merchant did not comply within 45 days—warrants an inference ofwillful noncompliance (seePerez v City of New York, 95 AD3d 675, 677 [1st Dept 2012], citing Bryant v New York City Hous.Auth., 69 AD3d 488 [1st Dept 2010]; Henry Rosenfeld, Inc. v Bower &Gardner, 161 AD2d 374, 375 [1990]). Concur—Friedman, J.P., Sweeny,Renwick, Freedman and Román, JJ.