DORE v. ALLSTATE INDEMNITY COMPANY (1999)

In an action to recover the proceeds of an automobile insurance policy, the defendant Allstate Indemnity Company appeals from an order of the Supreme Court, Dutchess County (Bernhard, J.), dated April 30, 1998, which denied its motion pursuant to CPLR 3126 to strike the complaint insofar as asserted against it.

ORDERED that the order is reversed, with costs, the motion is granted, the complaint insofar as asserted against the defendant Allstate Indemnity Company is stricken, and the action against the remaining defendant is severed, unless the plaintiff complies with the demand of Allstate Indemnity Company for discovery and inspection of the specified income tax returns, bank account information, and employment records;  and it is further,

ORDERED that the plaintiff's time to comply with the demand for discovery and inspection is extended until 30 days after service upon her of a copy of this decision and order, with notice of entry.

 The demand of the defendant Allstate Indemnity Company (hereinafter Allstate) for discovery and inspection of the income tax returns of the plaintiff and her son was proper.   Generally, a party seeking the production of tax returns must make a strong showing of necessity (see, Abbene v. Griffin, 208 A.D.2d 483, 616 N.Y.S.2d 1015;  Zimmer v. Cathedral School of St. Mary & St. Paul, 204 A.D.2d 538, 611 N.Y.S.2d 911;  Consentino v. Schwartz, 155 A.D.2d 640, 548 N.Y.S.2d 232;  Mayo, Lynch & Assoc. v. Fine, 123 A.D.2d 607, 506 N.Y.S.2d 771).   Here, since the plaintiff seeks to recover under an insurance policy from Allstate and there are indicia of fraud, special circumstances are present to warrant the disclosure of income tax returns (see, 2423 Mermaid Realty Corp. v. New York Property Ins. Underwriting Assn., 142 A.D.2d 124, 131-134, 534 N.Y.S.2d 999;  Four Aces Jewelry Corp. v. Smith, 256 A.D.2d 42, 680 N.Y.S.2d 539;  David Leinoff, Inc. v. 208 W. 29th St. Assocs., 243 A.D.2d 418, 420, 663 N.Y.S.2d 554;   Leon Sylvester, Inc. v. Aetna Cas. & Sur. Co., 189 A.D.2d 730, 592 N.Y.S.2d 741).   The reasoning underlying this principle is that evidence of an insured's financial condition, including personal income tax returns, is admissible with regard to the issue of whether the insured had a motive to destroy the insured property and collect the insurance proceeds (see, 2423 Mermaid Realty Corp. v. New York Property Ins. Underwriting Assn., supra, at 131-134, 534 N.Y.S.2d 999;  Hirsch v. Sentry Ins., 208 A.D.2d 680, 617 N.Y.S.2d 512;  David Leinoff, Inc. v. 208 W. 29th St. Assocs., supra, at 420, 663 N.Y.S.2d 554;  see also, Torian v. Reliance Ins. Co., 171 A.D.2d 971, 567 N.Y.S.2d 913).

 The demand for specified bank account information and employment records was proper as it was material and necessary to the defense of the action (see, CPLR 3101[a];  Allen v. Crowell-Collier Pub. Co., 21 N.Y.2d 403, 406, 288 N.Y.S.2d 449, 235 N.E.2d 430;  Conway v. Bayley Seton Hosp., 104 A.D.2d 1018, 1019, 480 N.Y.S.2d 943;  Anderson v. Seigel, 255 A.D.2d 409, 680 N.Y.S.2d 587).

MEMORANDUM BY THE COURT.