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Michael Distefano and Nicole Distefano v. Law Offices of Barbara H.

March 29, 2013


The opinion of the court was delivered by: A. Kathleen Tomlinson, Magistrate Judge:


This case was initiated as an adversary proceeding in a Chapter 11 bankruptcy filed by Michael Distefano and Nicole Distefano ("Plaintiffs" or the "Distefanos") in the United States Bankruptcy Court for the Eastern District of New York. The proceeding was withdrawn from the Bankruptcy Court on August 23, 2010. See Compl. [DE 1-4]. In the Complaint, Plaintiffs assert claims for breach of contract, negligence/legal malpractice, and breach of fiduciary duty/duty of care against Defendants Barabara H. Katsos and the Law Offices of Barbara H. Katsos ("Defendants" or "Katsos"). Id.

According to the Complaint, Michael Distefano and non-party Frank Treglia are owners of SharpImage Enterprises LLC ("SharpImage").*fn1 Id. ¶¶ 12. SharpImage is the franchisee of three Cold Stone Creamery, Inc. ("Cold Stone") ice cream parlors (the "Franchises"). Id. ¶ 13. In October of 2006, the Franchises began experiencing financial difficulties due to an extended power blackout in July of 2006 and were having problems meeting their obligations to their creditors. Id. ¶ 15. As a result, Michael Distefano sought legal advice from Barbara Katsos and eventually retained her. Id. ¶¶ 16-17. Plaintiffs allege that Katsos negligently and ineffectively advised the Distefanos to establish an irrevocable trust (the "Distefano Trust") in order to protect Michael Distefano's personal assets from the creditors of SharpImage. Id. ¶ 11. Plaintiffs further allege that Katsos' advice not to negotiate with Michael Distefano's and SharpImage's creditors alienated one of the creditors, Telerent Leasing Corporation ("Telerent"), causing Telerent to sue the Distefanos, SharpImage, and Treglia (the "Telerent Lawsuit"). Id. ¶¶ 23-24. As a result of Katsos' alleged negligent representation in the Telerent Lawsuit, Plaintiffs claim to have incurred substantial losses which ultimately led to Plaintiffs filing for bankruptcy. Id. ¶¶ 25-28. Plaintiffs assert additional acts of professional negligence, including (1) Katsos' representation of Frank Treglia without obtaining a waiver of conflict of interest from Plaintiffs, id. ¶¶ 29-36, (2) Katsos' failure to pursue an insurance claim on behalf of Plaintiffs for their losses resulting from the July 2006 power blackout, id. ¶¶ 37-39, and (3) Katsos' failure to take action to prevent Cold Stone from terminating the Franchises, id. ¶¶ 40-48.

This Order addresses Plaintiffs' Motion to Compel [DE 21] and Defendants' Motion to Compel [DE 23]. Plaintiffs' motion for sanctions will be addressed in a separate Order.

A. Plaintiffs' Motion to Compel

Before addressing the merits of Plaintiffs' motion, the Court first points out an issue regarding the form of the motion. In a February 17, 2012 Civil Conference Minute Order, the Court waived its three-page limitation for the motion so that Plaintiffs could comply with Local Rule 37.1 and set forth the text of the discovery demands and responses at issue. See DE 13. Plaintiffs' twenty-three page, single spaced motion does not comply with the spirit of that Order.

Most of the excess pages were used to argue Plaintiffs' position, not set forth the verbatim discovery demands and responses. This approach is particularly troublesome since Plaintiffs did not cite a single case in support of their arguments in the entire twenty-three pages. Notwithstanding these deficiencies, the Court will address the merits of the motion.

1. "Possible" Failure to Comply with Paragraph 6 of the Court's February 27,

2012 Order

On February 17, 2012, the Court ordered Defendants to produce certain confidential documents to Plaintiff's counsel on an "attorney's eyes only" basis within one week. DE 13. Defendants did not produce any documents within that time frame and Plaintiff seeks confirmation that no responsive documents exist. DE 21 at 2. In response, Defendants state that the only documents withheld were privileged documents for which a log was provided. DE 22 at

2. Thus, the Court will take no further action with respect to this request at this time.

2. Defendants' Rule 26(a) Disclosures

Defendants have served Initial Disclosures pursuant to Rule 26(a) as well as supplemental disclosures. Plaintiffs state that "[n]otably absent [from the disclosures] are persons with whom Defendants may have spoken with respect to setting up the trusts that are the subject of many of the malpractice claims" and "persons representing creditors that Defendants may have spoken to." DE 21 at 3. Therefore, Plaintiffs seek to have Defendants "revisit" their disclosures. In response, Defendants state that "[i]n regards to other potential witnesses to whom plaintiff discusses, defendants have previously adopted plaintiffs witnesses from plaintiffs' initial disclosures." DE 22 at 2. This response does not address Plaintiffs' concern. The Court is therefore ordering Defendants' counsel to confirm the completeness of the Rule 26(a) Initial Disclosures with his client and supplement the disclosures if necessary. Defendants are also directed to supplement the disclosures with the telephone numbers and addresses for the individual witnesses listed in the Rule 26(a) disclosures. See Fed. R. Civ. P. 26(a)(1)(A)(I).

Plaintiffs also take issue with Defendants' addition of certain family members of Michael Distefano and Plaintiffs' attorney, Richard L. Rosen, to the disclosures. Plaintiffs state that these late additions are "harassing in nature" and they seek sanctions in the form of an order barring Defendants from using any testimony or information from these witnesses in support of their claim, or, in the alternative, seek leave to file "a protective order with respect to any discovery from the newly added witnesses." DE 21 at 3.

A court may prohibit a party "from introducing designated matters into evidence" as a sanction for failure to comply with a court order. Fed. R. Civ. P. 37(b)(2)(A)(ii). Such an order would be inappropriate in these circumstances. First, Plaintiffs have not demonstrated that Defendants violated an Order of this Court. Indeed, it may be the case that Defendants were merely complying with their duty to supplement their Rule 26(a) disclosures when "the party learns that in some material respect the disclosure or response is incomplete or incorrect."

Fed. R. Civ. P. 26(e)(1). Indeed, there is some indication in Defendants' response that the witnesses were added in light of information not known to Defendants when they served their Initial Disclosures. DE 22 at 1-2. In any event, Plaintiffs have not demonstrated bad faith on the part of the Defendants or prejudice to their case which would justify the imposition of what courts have described as a "'harsh' remedy to be 'imposed only in rare situations.'" Kosher Sports, Inc. v. Queens Ballpark Co., LLC, No. 10-CV-2618, 2011 WL 3471508, at *14 (E.D.N.Y. Aug. 5, 2011) (quoting Update Art, Inc. v. Modiin Publ'g Ltd., 843 F.2d 67, 71 (2d Cir. 1988)); see Lujan v. Cabana Mgmt., Inc., 284 F.R.D. 50, 68 (E.D.N.Y. 2012).

Plaintiffs also request an Order directing Defendants to state the subjects on which the disclosed witnesses possess information and imposing sanctions for their failure to provide this information. Pursuant to Rule 26(a)(1)(A)(I), a party must disclose all individuals likely to have discoverable information "along with the subjects of that information." The Court therefore directs Defendants to supplement their disclosures to ...

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