TRANSASIA COMMODITIES INVESTMENT LIMITED v. Jan Berkowitz, Defendant.

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Supreme Court, Appellate Division, First Department, New York.

TRANSASIA COMMODITIES INVESTMENT LIMITED, Plaintiff–Respondent, v. NEWLEAD JMEG, LLC, et al., Defendants–Appellants, Jan Berkowitz, Defendant.

8514N-8514NA

Decided: February 26, 2019

Sweeny, J.P., Manzanet–Daniels, Webber, Oing, Singh, JJ. Coburn & Greenbaum, PLLC, New York (Jonathan Grenbaum of counsel), for appellants. Cozen O'Connor, New York (Melissa F. Brill of counsel), for respondent.

Although a stay is automatic under CPLR 3219(c) on account of the death, removal or disability of an attorney (see Moray v. Koven & Krause, Esqs., 15 N.Y.3d 384, 912 N.Y.S.2d 547, 938 N.E.2d 980 [2010] ), here, the court properly exercised its discretion in denying defendants-appellants a stay of this action when their counsel withdrew due to defendants-appellants' failure to pay accrued counsel's fees over an extended period of time (see generally Sarlo–Pinzur v. Pinzur, 59 A.D.3d 607, 874 N.Y.S.2d 499 [2d Dept. 2009] ).  Affidavits submitted attesting that defendants-appellants were unable to pay, due to alleged financial difficulties, were properly discounted by the court absent substantiation via financial records and where the past conduct of defendants-appellants in frustrating discovery and delaying the action supported the court's determination.  Defendants-appellants' motion to vacate their default was properly denied.  Defendants's failure to timely pay a $ 15,000 court-ordered sanction may be deemed willful, as such recent conduct was consistent with defendants-appellants' pattern of noncompliance with multiple prior discovery orders, as well as their:  (i) deliberate disposal of nearly three years worth of relevant email correspondence between defendants-appellants' controlling principals, (ii) their misleading statements made to the court, (iii) their providing altered documents to plaintiff, and (iv) their assertion of counterclaims founded upon, inter alia, altered documents—which counterclaims were ultimately withdrawn after forensic study of the documents.  Where a party is found to have engaged in a protracted pattern of delay and noncompliance with numerous court orders, willful and contumacious conduct may be inferred, and it is a provident exercise of discretion under such circumstances to reject the party's excuse for such conduct (see e.g. Cipriano v. Rish, 116 A.D.2d 541, 497 N.Y.S.2d 684 [1st Dept. 1986] ).  As defendants-appellants failed to provide an acceptable excuse for their noncompliance with the court's October 19, 2016 order, it is unnecessary to determine whether a meritorious defense exists (see Vasquez v. Lambert Houses Redevelopment Co., 110 A.D.3d 450, 973 N.Y.S.2d 40 [1st Dept. 2013] ).  Moreover, plaintiff has established it would be prejudiced if defendants-appellants' default was vacated, as defendants admittedly erased tens of thousands of relevant emails that were exchanged between defendants' two primary principals during the time period in question (see generally Metral v. Bonifacio, 309 A.D.2d 724, 766 N.Y.S.2d 550 [1st Dept. 2003];  Mutual Mar. Off., Inc. v. Joy Constr. Corp., 39 A.D.3d 417, 835 N.Y.S.2d 88 [1st Dept. 2007] ).

We have considered defendants-appellants' remaining contentions and find them unavailing.