Court Opinion

ID: 5846245
Source: CourtListenerOpinion
Date Created: 2022-01-12 23:46:42.064767+00
Date Added: 2024-06-11T08:43:55.867046
License: Public Domain

Murphy, P.J.
(dissenting). Absent a showing of special circumstances by the plaintiffs, normal priority of examination should be accorded to the defendant (CPLR 3106, subd [a]; Bassine v Bassine, 35 AD2d 945). Although the defendant only submitted a memorandum of law in opposition to plaintiffs’ motion for priority (an answer with counterclaim was later served), the basic question presented upon this appeal is whether plaintiffs carried their evidentiary burden of showing special circumstances. Essentially, plaintiffs contend in their brief that they are entitled to priority because of their fiduciary relationship with the defendant and his exclusive knowledge of the facts. (Weisinger v Berfond, 16 Mise 2d 755.) There is no dispute that there is a fiduciary relationship between the parties in these real estate ventures. Thus, the more limited question presented is whether the defendant has exclusive knowledge of the facts. The plaintiffs served an unverified complaint detailing various acts of wrongdoing on the part of the defendant. In *773view of the specific charges in this extended complaint, it is not readily apparent that the plaintiffs lacked total knowledge about the partnerships. Moreover, certain passages in the complaint would seem to contradict this stance. For example, plaintiffs allege that defendant breached his fiduciary duty by refusing to permit them to inspect the partnership books and records. However, plaintiffs earlier allege, upon information and belief, that defendant incorrectly maintained the partnership records by treating all income distributions to them as reductions of their capital. While the plaintiffs do not state the source of their information and belief as to defendant’s incorrect record keeping, it is evident from this very allegation that they were not totally unaware of the operations and records of the partnerships. Plaintiffs’ attorney also submitted an affidavit in support of the motion. While he argues that the defendant has exclusive knowledge of the facts, his hearsay - affidavit is of no probative value in this regard. The plaintiffs themselves should have submitted affidavits attesting to their total ignorance as to the operations and records of the partnerships. In the absence of any affidavits from the plaintiffs, there is no reason to believe that they are naive laymen rather than sophisticated businessmen. Since the plaintiffs did not carry their evidentiary burden of showing special circumstances, the order of the Supreme Court, New York County, granting plaintiffs priority of examination, should be reversed and the motion should be denied.
Ross, J.
(concurring in dissent). I agree with the dissenting opinion of Presiding Justice Murphy, but make the additional observation that the plaintiffs are not neophytes in these real estate transactions. These parties have been involved in a partnership arrangement for over 10 years and the plaintiffs have invested sums of money in excess of one million dollars. The assertion that plaintiffs are “unsophisticated investors” is simply not borne out by the facts before us.