Andrew Carothers, M.D., P.C. v GEICO Indem. Co. (2008 NY Slip Op 51756(U))

Reported in New York Official Reports at Andrew Carothers, M.D., P.C. v GEICO Indem. Co. (2008 NY Slip Op 51756(U))

Appeal from orders of the Civil Court of the City of New York, Kings County (Jack M. Battaglia, J.), entered May 24, 2006 and August 24, 2006. The order entered May 24, 2006, insofar as appealed from as limited by the brief, denied those branches of defendant’s motion which sought leave to amend its answer to assert two additional affirmative defenses and sought an order compelling plaintiff to produce witnesses for depositions. The order entered August 24, 2006, insofar as appealed from as limited by the brief, awarded “summary judgment” to plaintiff, by deeming as established for all purposes in the action that plaintiff was the real party in interest (see 13 Misc 3d 549).

Order entered May 24, 2006, insofar as appealed from, modified by vacating so much of the order as denied the branches of defendant’s motion which sought leave to amend the answer to assert defendant’s proposed tenth affirmative defense and to compel plaintiff to produce Andrew Carothers for a deposition and said branches of defendant’s motion are granted. Andrew Carothers is directed to appear for a deposition within 45 days of the date of the order entered hereon or at such other time as the parties may agree upon but in no event later than 60 days thereafter; as so modified, order affirmed without costs.

Order entered August 24, 2006, insofar as appealed from, reversed without costs and the finding that it is established for all purposes in the action that plaintiff is the real party in interest vacated. [*2]

In this action by a provider to recover assigned first-party no-fault benefits,
defendant initially moved, insofar as relevant to this appeal, for leave to amend its answer to assert two additional affirmative defenses alleging that plaintiff was fraudulently organized in violation of the applicable provisions of the Insurance Law pertaining to no-fault claims and the associated regulations (see State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313, 322 [2005]), and that plaintiff lacks standing as a consequence of plaintiff’s fraudulent assignment of its right to be reimbursed for assigned no-fault benefits. Defendant also sought an order compelling plaintiff to produce its owner, Andrew Carothers, as well as Hillel Scherr, Tom Oszcolpolski and Neal Magnus, for depositions. Plaintiff opposed the motion, and, by order entered May 24, 2006, the court below denied these branches of the motion. The court further directed that if defendant wished to make a motion for summary judgment on the issue of whether plaintiff was the real party in interest, defendant had to do so no later than June 30, 2006. Thereafter, defendant moved for dismissal pursuant to CPLR 3211 (a) (3) on the ground that plaintiff had no standing to sue since it had assigned all right, title, and interest in its no-fault claims to Medtrx Capital, LLC. Plaintiff opposed the motion. The court treated defendant’s motion as one for summary judgment and, by order entered August 24, 2006, denied said motion. However, the court also awarded “summary judgment” to plaintiff, insofar as it deemed established for all purposes in the action that plaintiff was the real party in interest (see CPLR 3212 [g]). Defendant appeals, as limited by its brief, from so much of the May 24, 2006 order as denied those branches of its motion which sought leave to amend its answer and sought an order to compel depositions, and from so much of the August 24, 2006 order as awarded plaintiff “summary judgment.”

In regard to the May 24, 2006 order, leave to amend a pleading should generally be granted freely where there is no significant prejudice or surprise to the opposing party, and where the evidence submitted in support of the motion indicates that the amendment may have merit (see CPLR 3025 [b]; Edenwald Contr. Co. v City of New York, 60 NY2d 957, 959 [1983]; Ingrami v Rover, 45 AD3d 806, 808 [2007]). Although the court must examine the merits of a proposed amendment, since leave to amend should not be granted where the proposed amendment is totally without merit or palpably insufficient as a matter of law (see Ingrami at 808; Hill v 2016 Realty Assoc., 42 AD3d 432, 433 [2007]), contrary to the determination of the court below, defendant was not required “to make a showing of good cause” as to its suspicion that plaintiff was engaged in fraudulent conduct. The reference in State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d at 322) to a showing of good cause is not applicable to a motion for leave to amend a pleading.

Upon a review of the motion papers, it cannot be said that defendant’s proposed tenth affirmative defense, which asserts that plaintiff fraudulently organized its business in violation of the No-Fault Law and regulations, is totally without merit or palpably insufficient as a matter of law. Moreover, nothing in plaintiff’s opposition papers demonstrate how plaintiff would be prejudiced or surprised as a result of the proposed amendment (see CPLR 3025 [b]; McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]). Consequently, defendant should have been allowed to amend its answer to assert the foregoing affirmative defense. The court below, however, properly did not allow defendant to amend its answer to assert its proposed eleventh affirmative defense, i.e., that plaintiff “lacks standing to bring these actions,” because it “fraudulently assigned No-Fault benefits to Medtrx,” since this [*3]defense is duplicative of defendant’s second affirmative defense, which already asserts that plaintiff lacks standing to sue.

Defendant sought to compel plaintiff to produce Dr. Andrew Carothers, Hillel Scherr, Tom Oszcolpolski and Neal Magnus for depositions on the ground that “the requested discovery goes to the matter of the corporate structure of the plaintiff.” It is clear that any testimony from Carothers, as the owner of plaintiff and the provider of the services rendered, is likely to be material and necessary (see CPLR 3101). Plaintiff failed to move for a protective order to limit or prohibit the testimony of Carothers, and otherwise failed to present a cogent argument as to why Carothers should not be deposed. Thus, the branch of defendant’s motion seeking an order compelling plaintiff to produce Carothers for a deposition should have been granted. Since it appears that Scherr, Oszcolpolski and Magnus are not officers, directors, members or employees of plaintiff, plaintiff cannot be compelled to produce them for depositions (see e.g. Schneider v Melmarkets, Inc., 289 AD2d 470 [2001]; Zappolo v Putnam Hosp. Ctr., 117 AD2d 597 [1986]).

In regard to the August 24, 2006 order, plaintiff’s submissions in opposition to defendant’s motion for summary judgment do not demonstrate as a matter of law that its interest in the accounts was necessarily both substantial and real. In light of our determination that defendant is entitled to depose Carothers, defendant may ascertain facts which further establish defendant’s defenses that plaintiff either lacks standing or is ineligible for reimbursement of no-fault benefits under State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 317 [2005], supra). Accordingly, so much of the August 24, 2006 order as awarded “summary judgment” to plaintiff, insofar as it deemed established for all purposes in the action that plaintiff was the real party in interest (see CPLR 3212 [g]), is reversed and such finding is vacated.

Defendant’s remaining contentions are unpreserved for appellate review, lack merit, or are academic.

Pesce, P.J., Weston Patterson and Golia, JJ., concur.