1461-1469 Third Ave. Owner LLC v Lux Group

Holdings Ltd.

2024 NY Slip Op 32586(U)

July 25, 2024

Supreme Court, New York County

Docket Number: Index No. 652652/2022

Judge: Nancy M. Bannon

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
NYSCEF DOC. NO. 125 

INDEX NO. 652652/2022 

RECEIVED NYSCEF: 07/26/2024 

PRESENT: 

SUPREME COURT OF THE STATE OF NEW YORK 

NEW YORK COUNTY 

HON. NANCY M. BANNON PART 

Justice 

61M 

---------------------------------------------------------------------------------X INDEX NO. 652652/2022 

1461-1469 THIRD AVE. OWNER LLC, 

Plaintiff, 

-vLUX GROUP HOLDINGS LTD. and RON SHEMESH 

Defendants. 

---------------------------------------------------------------------------------X 

MOTION DATE 05/29/2024 

MOTION SEQ. NO. 002 

DECISION + ORDER ON 

MOTION 

The following e-filed documents, listed by NYSCEF document number (Motion 002) 81, 82, 83, 84, 85, 

86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 

110,111,112,113, 

were read on this motion to/for DISCOVERY 

I. BACKGROUND 

In this breach of contract action arising from the construction of a 35-story residential 

condominium building in Manhattan, the plaintiff property owner alleges that the defendant 

contractor, a home furnishing manufacturing company which specializes in kitchen cabinets and 

bathroom vanities, and its principal, Ron Shemesh, were terminated from the project for 

performing in an unworkmanlike and untimely manner, causing $5 million in damages. The 

defendants answered and asserted seven counterclaims seeking damages in excess of $2 

million. 1 

By an order dated September 19, 2023, the court (Ostrager, J. [Ret.]) granted, in part, a 

motion by the plaintiff to dismiss six of the defendants' counterclaims (MOT SEQ 001). This left, 

for purposes of discovery, the plaintiff's claims for breach of contract and fraud, and the 

1 On September 5, 2023, the plaintiff commenced a separate breach of contract action against the 

construction manager for the project, Leeding Builders Group LLC, which remains pending in this court 

under Index No. 654322/2023, awaiting assignment to a judge. It appears that no discovery has been 

conducted in that case. 

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defendants' counterclaims for breach of contract, unjust enrichment, wrongful termination of the 

contract, violation of the New York Prompt Payment Act and violation of the New York Trust 

Fund Act. Discovery has been ongoing for two years. 

On May 20, 2024, the defendants moved for an order (1) compelling plaintiff to provide 

them with a copy of all documents concerning the project maintained by Procure Technologies, 

Inc. (Procure), a database and central repository of construction documents; (2) compelling the 

plaintiff to produce for depositions, non-parties Miki Naftali, Chair and CEO of Naftali Group, an 

affiliate of plaintiff and project developer which employees 45 people, and Danielle Naftali, 

Naftali Group's executive Vice-President of Marketing and Design, and (3) extending the Note of 

Issue filing deadline to afford the defendants' expert time to review the Procure documents. The 

plaintiff opposes the motion. 

In the meantime, by a status conference order dated July 11, 2024, the court, inter alia, 

directed (1) the depositions of two non-party entities, ltalkraft LLC and Tiger Cabinets, Inc., 

contractors hired by the plaintiff to finish the defendants' work, within 30 days; (2) that 

defendants were to serve their expert report on or before September 20, 2024; (3) that the final 

Note of Issue filing deadline was extended to October 9, 2024, and (4) that the plaintiff was to 

produce the monthly reports testified to by Jason Zuech, a Naftali Group employee, at his 

deposition, within ten days of that order. 

The court notes that the defendants' motion is defective in that counsel made legal 

arguments in an affirmation rather than in a memorandum of law. However, the court, in its 

discretion, will not deny the entire motion on this ground alone, as urged by the plaintiff. See 

CPLR 2001. Nor does the court accept sur-replies on motions without leave of court, not 

granted here. The court accepts the sur-reply filed by the defendants only to the extent that it 

includes a withdrawal of that part of the motion that seeks to depose Danielle Naftali in this 

action. Counsel shall be guided accordingly going forward. 

II. DISCUSSION 

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(a). 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 

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sharpening the issues and reducing delay and prolixity. See Kapon v Koch, 23 NY3d 32 (2014). 

In light the remaining claims to be litigated, and this being a major New York construction 

project, discovery is not unexpectedly broad. However, it is not without limits. 

The branch of the defendants' motion that seeks an order compelling the defendant to 

provide all Procure documents is denied, without prejudice, as the request is overly broad. 

Indeed, the defendants seek to obtain Procure log-in credentials to allow access to all files on 

Procure related to the subject project. While some documents would likely be material and 

necessary, the defendants are not entitled to a fishing expedition. Moreover, prior conference 

orders state that all document discovery was conducted and completed, or waived, and the 

defendants fail to adequately explain the untimeliness of this document demand. However, it 

follows Procure's objections to a subpoena. 

On or about April 19, 2024, the defendants served a subpoena on Procure apparently 

seeking the same documents. Procure's counsel responded with general and specific objections 

on May 20, 2024. The first general objection is that the "materials sought by the subpoena are 

available from other sources that are more convenient, less burdensome, or less expensive, 

including Owner." Procure also objected on ground of the subpoena being overly broad, 

ambiguous and improperly seeking confidential information as per its confidentiality agreement 

with clients. Procure explained that its clientele create all documents stored on its cloud-based 

platform and the clients control access to those records. The instant motion was filed the same 

day Procure responded with those objections. Although Procure has not moved to quash the 

subpoena, its objections, echoed by the plaintiff, have merit. 

The defendants served many subpoenas in this case, including one on non-party Miki 

Naftali, and he did not comply. The branch of the motion that seeks an order compelling the 

plaintiff to produce non-party Miki Naftali for a deposition is denied as the defendants have not 

show entitlement to that relief. It is well settled that a subpoena may not be used as a tool of 

harassment or for a proverbial "fishing expedition to ascertain the existence of evidence." 

Reuters Ltd. v Dow Jones Telerate, Inc., 231 AD2d 337, 342 (1 st Dept. 1997); see Law Firm of 

Ravi Batra, P.C. v Rabinowich, 77 AD3d 532 (1 st Dept. 2010). Moreover, "[w]here disclosure is 

sought against a nonparty, more stringent requirements are imposed on the party seeking 

disclosure." Velez v Hunts Point Multi-Serv. Ctr., Inc,. 29 AD3d 104, 108 (1 st Dept. 2006). The 

defendants support their application only with several emails on which Nafatali was either a 

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sender, recipient or just copied. Naftali then submitted an affirmation in opposition in which he 

describes his position in Naftali Group and his connection to the subject project and alleges, 

inter alia, that he was not involved in day-to-day marketing, design or construction aspects of 

the project such that his testimony would be of no value. Indeed, as noted in the July 11, 2024, 

status conference order, eleven depositions had already been completed, including two of 

Naftali Group employees, and the two depositions of ltalkraft and Tiger Cabinets, the companies 

the plaintiff hired to replace the defendant were to continue. However, given his position as CEO 

of Naftali Group and his knowledge, albeit limited, of the plaintiff's decision to terminate the 

defendant from the project and any damages incurred as a result, as indicated in his affidavit, 

the defendants have shown "good cause" to serve limited interrogatories, in accordance with 

Rule 11-a of the Commercial Division rules and CPLR article 31, to be limited to those issues 

only and limited to ten separate interrogatories, including subparts. 

The branch of the motion seeking to extent the Note of Issue filing deadline is granted to 

the extent that the deadline is extended to October 9, 2024, per the court's status conference 

order dated July 11, 2024. As the branch of the motion seeking to compel production of the 

Procure documents is denied, the defendant's expert will not need time to review them. 

Nonetheless, the deadline extension granted in the July 11, 2024, order remains in effect. Any 

further issue may be raised the next conference, scheduled for October 3, 2024. 

The defendants' remaining contentions have been considered and rejected. Any relief 

not expressly granted herein is denied. The parties are encouraged to explore settlement. 

Ill. CONCLUSION 

Accordingly, upon the foregoing papers, it is 

ORDERED that the defendants' motion is granted to the extent that (1) the Note of Issue 

filing deadline is extended to October 9, 2024, as per the court's status conference order dated 

July 11, 2024, and (2) the defendants may serve interrogatories on Miki Naftali, in accordance 

with Rule 11-a of the Commercial Division rules and CPLR article 31, to be limited to the issue 

of his knowledge of the plaintiff's decision to terminate the defendant from the project and any 

damages incurred as a result, and limited to ten separate interrogatories, including subparts, on 

or before August 15, 2024, and Miki Naftali shall respond on or before September 16, 2024, and 

the motion is otherwise denied, and it is further 

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ORDERED that the parties shall appear for a status conference on October 3, 2024, at 

11 :00 a.m., as previously scheduled. 

This constitutes the Decision and Order of the court. 

7/25/2024 

~cJNONS 4CC 

DATE 

CHECK ONE: 

NANCY M. BANNON, J.S.C. 

□ CASE DISPOSED 

□ GRANTED 

0 NON-FINAL DISPOSITION 

□ DENIED 0 GRANTED IN PART 

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Motion No. 002 

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□ OTHER 

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