DG&A Management Services, LLC v. Securities Industry Ass'n Compliance & Legal Division

CPLR 3124. Plaintiff opposed the application and cross-moved to compel production of certain documents that it had previously demanded. Supreme Court, agreeing that financial documents demonstrating the actual costs incurred by plaintiff in providing services to defendant were relevant in ascertaining the reasonable value of the services plaintiff rendered, granted defendant’s motion to compel and ordered plaintiff to disclose the financial information requested with the exception of the tax returns of two of plaintiffs managing partners.^[1] Plaintiff now appeals from so much of Supreme Court’s amended order as granted defendant’s motion.^[2]

We affirm. It is well settled that a trial court is vested with broad discretion in overseeing the discovery and disclosure process, and “[o]nly a clear abuse of that discretion will justify our intervention” (McMahon v Aviette Agency, 301 AD2d 820 , 821 [2003]; see Lue v Finkelstein & Partners, LLP, 67 AD3d 1187 , 1188 [2009]; Matter of Scaccia, 66 AD3d 1247 , 1249 [2009]). Where, as a here, a party fails to timely object to the discovery demand (see CPLR 3122 [a]), our review “is limited to determining whether the requested material is privileged under CPLR 3101 or the demand is palpably improper” (Saratoga Harness 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., 30 AD3d 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 a whole, we cannot say that defendant’s demand was palpably improper. As noted previously, the remaining causes of action at issue sound in quantum meruit and unjust enrichment and, in both instances, the proper measure of plaintiffs damages is the reasonable value of the services performed for defendant (see Snyder v Bronfman, 13 NY3d 504 , 508 [2009]; Frank v Feiss, 266 AD2d 825 , 826 [1999]; Collins Tuttle & Co. v Leucadia, Inc., 153 AD2d 526 , 527 [1989]). According to plaintiff, computation of that sum. is most appropriately made by reference to the American Society of Association Executives Operating Ratio Report (12th ed), which utilizes financial ratios to permit an organization such as plaintiff to assess its performance vis-á-vis other organizations

of similar size, scope and type by analyzing a lengthy list of revenue and expense components, including, among other things, costs incurred for salaries, benefits, taxes, occupancy, telephone, office equipment and supplies, postage and travel. Utilizing these industry ratios, plaintiff estimated the reasonable value of the services provided during the relevant time period to be in excess of $1.6 million.^[3]

As Supreme Court aptly observed, however, the fact that plaintiff has elected to employ this particular methodology “does not foreclose other avenues of proof.” Moreover, even though plaintiff admittedly is not seeking to recover the actual cost of providing services to defendant, we agree that it has placed its actual costs in issue by utilizing the ratio methodology. Further, inasmuch as plaintiff has averred that it “did not maintain income and expense statements, a general ledger, balance sheet, audit reports, statements of cash flow, or similar financial statements,” we cannot say that Supreme Court abused its discretion in granting defendant access to, among other things, plaintiffs bank and credit card records.

We reach a similar conclusion with regard to Supreme Court’s directive that plaintiff disclose its tax returns. To be sure, “tax returns are generally not discoverable in the absence of a strong showing that the information is indispensable to the claim and cannot be obtained from other sources” (Saratoga Harness Racing v Roemer, 274 AD2d at 889 ; see Pugliese v Mondello, 57 AD3d 637 , 640 [2008]; Latture v Smith, 304 AD2d 534 , 536 [2003]). In light of plaintiffs failure to maintain any relevant financial statements, we are satisfied that defendant made the requisite showing here and, hence, Supreme Court did not abuse its discretion in ordering disclosure of the sought-after tax returns. Plaintiffs remaining arguments, to the extent not specifically addressed, have been examined and found to be lacking in merit.

Cardona, P.J., Peters, Rose and Stein, JJ., concur. Ordered that the amended order is affirmed, with costs.