Preview
FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013
NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
-------- ---------------------------------x
:
PETER STERN and EXPRESS TRADE CAPITAL, Index No. 653476/13
INC., : (Hagler, J.)
Plaintiffs, : AFFIRMATION OF
LON J. SEIDMAN IN
-against- : OPPOSITION TO
DEFENDANTS'
MOTION
OLEG ARDACHEV, AIR CARGO SERVICES L.L.C., : TO COMPEL
DELEX INC., DELEX AIR CARGO, LLC, a Delaware
limited liability company, and DELEX AIR CARGO, :
LLC, a Washington limited liability company,
Defendants.
-----------------------------------------X
LON J. SEIDMAN, an attorney duly admitted to the courts of the State of New York,
hereby affirms the following to be true under the penalties of perjury:
1. I am a partner of Diamond McCarthy LLP, counsel to plaintiffs, and am familiar
with the facts set forth below.
defendants'
2. I submit this Affirmation in opposition to the motion to compel
discovery.
Preliminary Statement
plaintiffs'
3. On June 11, 2018, the Court granted motion for leave to file two
successor liability claims.
4. The Court explained that itsDecision to allow the successor liability claims was
defendants'
based on the deposition testimony that the defendant Air Cargo Services ("ACS")
stopped conducting business and that, the day afterwards, the defendant Delex Air Cargo
Services ("Delex ACS") continued to operate ACS's business with ACS's same employees and
same customers, thereby leaving defendant ACS an empty shell.
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5. In response to the new claims, the defendants served a new round of discovery
requests, which seek to re-take discovery of issues that were addressed in discovery several years
ago, and which mostly do not concern the new claims.
defendants'
6. Although the latest round of discovery requests are objectionable, the
overriding answer is that the plaintiffs have already produced all responsive documents, other
plaintiffs'
than the tax returns.
defendants'
7. With respect to the issue of tax returns, the motion is baseless because
it:(a) fails to acknowledge the controlling legal standard to compel disclosure of tax returns, (b)
plaintiffs'
fails to show how the tax returns are indispensable in this action, and (c) fails to show
that the information sought is not available from other sources.
defendants'
8. For these reasons, and as further explained below, the motion to
compel shouldbe denied.
Background Facts
Plaintiffs'
The Sale of 50% Ownership in ACS
defendants'
1. This action alleges the breach of an agreement to purchase plaintiff's
50% ownership interest in ACS.
2. The defendants claim in defense that despite substantial evidence of a sale
agreemeñt - evidence in the compañy's tax and from the company's
including returns, testimony
outside accountant -- no agreement to sell 50% of ACS was ever reached.
3. The defendants claim that the plaintiff continues to own 50% of ACS.
defeñdañts'
4. A major problem with the theory is that the defendants arranged it so
that ACS is no longer in business and so that a 50% ownership of ACS has no value.
2
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5. As explained below, there is evidence that the defendants denuded ACS, and
continued ACS's business through another defendant company with substantially the same name,
i.e.,defendant Delex ACS.
The Deposition Evidence that Defcndant Delex ACS is the Successor to ACS
6. In November, 2017, plaintiffs conducted the deposition of ACS's former
bookkeeper, Ilana Lisichkina.
7. Ms. Lisichkina was ACS's bookkeeper until ACS stopped conducting business
and she is now the bookkeeper for Delex ACS.
8. Ms. Lisichkina testified that Delex ACS operates the business that was previously
operated by ACS.
9. Specifically, Ms. Lisichkina testified that the day after ACS stopped itsbusiness
operations, Delex ACS continued to operate ACS's business with ACS's same employees, and
same customers. (A true and correct excerpt from Ms. Lisichikina's deposition transcript is
annexed as Exhibit A.)
10. Defendant Ardachev, the person in control of ACS and the person now in control
of Delex ACS, was present at the deposition of Ms. Lisichkina and testified two days later that
he could not identify anything incorrect about Ms. Lisichkina's testimony. Mr. Ardachev also
confirmed that Delex ACS took over ACS's business. (A true and correct excerpt from Mr.
Ardachev's deposition transcript is annexed as Exhibit B.)
11. In fact, ACS is an empty shell.
12. ACS conducts no business and has no assets, as shown by ACS's tax returns.
(True and correct copies of the federal tax return for ACS for years êñdiñg 2014-2016, as
provided by the company's accountant, are annexed collectively as Exhibit C.)
3
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The Amended Complaint
defendants'
13. Based on the deposition evidence, on January 24, 2018, plaintiffs
filed a motion for leave to file an ameñded complaint which asserts claims against Delex ACS
for successor liability. (See NYSCEF DOC. NO. 134)
14. The defendants opposed the motion for leave to amend. (See NYSCEF DOC.
NO. 141).
15. On June 11, 2018, the Court held argument on the motion for leave to amend and
plaintiffs'
granted motion.
defendants'
16. The Court noted in its Decision on the record that the own deposition
testimony supported the new claims. (A true and correct copy of the transcript of the heariñg and
Decision is annexed as Exhibit D.)
17. A copy of the Amended Complaint, which was deemed filed by the Court's June
11, 2018 Decision, is annexed as Exhibit E.
Defendants'
The New Discovery Requests
18. On June 18, 2018, the defendants served additional discovery requests in response
to the amended complaint.
defeñdañts'
19. Many ifnot most of the latest discovery requests seek to re-hash and
re-take discovery of issues which were addressed in discovery long ago, and which do not
concern the new claims.
20. On August 15, 2018, the plaintiffs responded to the additional discovery requests
and asserted objections.
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The Discovery Dispute and Lack of a Meet and Confer
defendants'
21. On August 22, 2018, at 4:08 pm, counsel sent me an email disputing
the objections and demanding a production of documents within two business days, i.e.,on or
defendants'
before Saturday August 25. (A copy of counsel's email is annexed as Exhibit F).
22. Prior to August 25, and prior to this motion being filed on August 27, I was
unable to confer with the plaintiffs and ask whether--even if the objections that plaintiffs
maintain were properly asserted were to be voluntarily withdrawn--there existed any additional
defendants'
documents responsive to the additional discovery requests that were not already
produced (other than tax returns).
"no." plaintiffs'
23. I have since been able to confirm that the answer is Putting aside
tax returns, there are no additional responsive documents to oroduce in this action.
plaintiffs'
24. Moreover, to the extent this motion seeks to compel production of tax
returns, the motion is baseless.
25. As further explained below, this motion should be denied in itsentirety.
T-he Motion to Campel Should Be Denied
Plaintiffs'
A. All of Documcñts Related to the Claims in this
Action Have Already Been Pr6duced
plaintiffs'
26. First, again putting aside tax returns, which are addressed at Point B
olaintiffs'
below, allof responsive documents have already been produced.
27. Plaintiff Peter Stern, the President of plaintiff Express Trade Capital, has provided
an affidavit that all responsive documents have previously been produced. (See Peter
attesting
Stern Affidavit sworn to on September 18, 2018.)
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B. The Defendants Have Failed to Satisfy the Heighteñêd Requirement
for Disclosure of Tax Returns
plaintiffs'
28. Next, to the extent this motion coñcerñs tax returns, the motion is
meritless because defendants have: (a) failed to acknowledge the legal standard under
controlling
plaintiffs'
New York law to compel disclosure of tax returns, (b) failed to show how the tax
returns are indispensable to this litigation, and (c) failed to show that the information sought is
not available from other sources.
29. The First Department treats discovery requests for tax returns with heightened
"disfavored,"
scrutiny. Indeed, disclosure of tax returns is expressly and the requesting party is
"required to establish that the information contained in the returns they seek is 'indispensable to
sources."'
th[el litigation and unavailable from other Nanbar Realty Corp. v. Pater Realty Co.,
(13
661 N.Y.S.2d 216, 219, 242 A.D.2d 208, 29 Dep't 1997) (citing Briton v. Knott Hotels
(1st
Corp., 489 N.Y.S.2d 186, 111 A.D.2d 62 Dep't 1985) (emphasis added). See also Gama
(1st
Aviation, Inc. v. Sandton Capital Partners, LP, 978 N.Y.S.2d 185, 113 A.D.3d 456 pe ,t
2014) (holding itwas reversible error to grant motion compelling disclosure of tax returns; "with
respect to the requested tax returns, defendants failed to show that there is an indisoensable need
for them ...") (Emphasis added).
30. Once the above standard is applied here, itis clear this motion should be denied.
Plaintiffs'
(i) Tax Returns are Not Indispensable to the Litigation
31. First, with respect to the requirement that tax returns be shown to be indispensable
to the litigation, the defendants make no such showing. The defendants simply recite conclusory
boilerplate. The defendants state at paragraph 7 of their August 27, 2018 Affirmation (the
"Bondar Aff.") as follows: "Defendants contend that these documents [the tax returns] constitute
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material and useful information reasonably calculated to lead to the of admissible
discovery
..."
evidence Moreover, this is incorrect boilerplate.
useful"
32. Defendants recite the "material and standard for general discovery, but the
correct standard to obtain disclosure of tax returns under New York law is far more stringent, as
explaiñed above. This heightened standard requires a showing--not just a recital--that the tax
"indispensable"
returns are to the litigation.
33. Similarly, the defendants allege in conclusory fashion at paragraph 11 that
plaintiffs' plaintiffs'
tax returns are "imperative to ascertain the extent of liability claims and
damages." 11).1
their measure of (Bondar Aff. ¶
34. Again, however, the defendants offer no support, and no explanation, as to how or
plaintiffs' "imperative"
why the tax returns are to anything.
plaintiffs'
35. In fact, the tax returns have nothing to do with the merits of the
plaintiffs' plaintiffs'
claims or damages. To review: in this action, the plaintiffs claim that
defendant Ardachev owes Stern in excess of $500,000 because Stern sold Ardachev 50% of the
ownership of ACS. Alternatively, the complaint asserts that if there was no such contract to
purchase Stern's 50%, Stern remains a 50% owner of Delex ACS because the defendants
discontinued the operations of ACS and continued those same business operations through the
defendant Delex ACS.
36. Thus, the issues in this action are (A) whether Ardâehey owes the agreed upon
price2
purchase for the 50% ownership interest, and/or alternatively (B) if there was no contract
1 17--
The defendants make a similar statement at paragraph this time without using the conclusory label
"imperative," --
but again reciting the incorrect legal standard where they state: "Defendants require these
plaintiffs'
de:ümeñts toascertain the extent of itspatentialliabilityand gain a measure of claimed damages and
evidence.'"
they are 'reasonably calculated to lead to the relevant Again, this allegationdoes not come close to
plaintiffs'
establishingthat the tax returnsare indispensable to thislitigà tien
2
Itis undisputed thatno portionof thepurchase pricewas everpaid.
7
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for the purchase and sale of 50% of the ownership of ACS, whether Delex ACS is the successor
to ACS such that plaintiff Peter Stern remains a 50% owner of Delex ACS.
Plaintiffs'
37. tax returns have no bearing on those issues.
defendants' - plaintiffs'
38. The irony of this motion is that itis the tax returns not the
- that have a bearing on damages. In fact, ifdefendant Delex ACS is ultimately found to be the
legal successor to ACS, then Delex ACS's tax returns and Ardachev's tax returns will be at the
center of the calculation of how much Peter Stern is owed by the defendants on account of Mr.
Stern's past years of 50% ownership of Delex ACS.
(ii) Any Tax-Related Information is Available from the ACS Tax Returns
39. Second, the motion should be denied because the defendants have failed to satisfy
the second prong of the heightened legal standard, i.e.,that the information sought is not
available from other sources.
40. Indeed, the defendants do have other sources to obtain any information potentially
relevant to tax returns. For example, to the extent the defendants want know whether, after the
parties'
date of the sale contract, the plaintiffs continued to receive an economic benefit on
account of a continued ownership interest in ACS, the defendants already have this information
in the AC$ tax returns. In fact, the ACS tax returns contain the information about partner profit
distributions and partner accounts. The ACS tax returns have already been produced. (True and
correct copies of the ACS federal tax returns for years 2009 through 2013 are annexed
collectively as Exhibit G.) The ACS tax returns show that there has been no such benefit
received by plaintiffs since 2009. (See id.) Furthermore, the ACS outside accountant and tax
preparer, Mr. Doug Milo, has sworn that that the plaintiffs ceased receiving any profit
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distribution when Ardachev purchased the 50% ownership interest in 2009. (See annexed
Exhibit H).
41. Thus, any potentially relevant information is available from other sources. For
this additional reason, the motion should be denied.
C. There is No Basis to Require Plaintiffs to Further Amplify Their
Recently Filed Pleading
42. Finally, there is no basis to require the plaintiffs to further amplify their two new
particulars.3
claims through yet another bill of
43. There are three reasons why the motion to compel further amplification of the
new claims via a bill of particulars should be denied.
plaintiffs'
44. First, the sworn verification to the bill of particulars has been provided.
(See annexed Exhibit I.)
plaintiffs'
45. Second, the Court held at the last hearing that the new claims for
defendants'
successor liability are adequately stated, and adequately supported, based on the own
deposition testimony. (See Ex. D at pp. 10-14).
46. Third, the bill of particulars that the plaintiffs recently provided does adequately
explain that the basis for the new claims for successor liability is "the sworn testimony provided
Hish."4
by the defendants in this action and sworn statements from non-party Arthur
3
Plaintiffsprovided a verified billof particulars
in thisaction years ago, and then provided a second billof
particulars inAugust, 2018.
4
Exhibit I. A true and correct copy of thesworn stateinentof non-party Arthur Hish, which also supports the
successor liabilityclaims isannexed as Exhibit J.
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Conclusion
defendants'
47. For all the
foregoiñg reasons, the motion to compel should be denied
in its entirety, with prejudice.
Dated: New York, New York
September 21, 2018
LO . MAN
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Preview
FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------- ---------------------------------x : PETER STERN and EXPRESS TRADE CAPITAL, Index No. 653476/13 INC., : (Hagler, J.) Plaintiffs, : AFFIRMATION OF LON J. SEIDMAN IN -against- : OPPOSITION TO DEFENDANTS' MOTION OLEG ARDACHEV, AIR CARGO SERVICES L.L.C., : TO COMPEL DELEX INC., DELEX AIR CARGO, LLC, a Delaware limited liability company, and DELEX AIR CARGO, : LLC, a Washington limited liability company, Defendants. -----------------------------------------X LON J. SEIDMAN, an attorney duly admitted to the courts of the State of New York, hereby affirms the following to be true under the penalties of perjury: 1. I am a partner of Diamond McCarthy LLP, counsel to plaintiffs, and am familiar with the facts set forth below. defendants' 2. I submit this Affirmation in opposition to the motion to compel discovery. Preliminary Statement plaintiffs' 3. On June 11, 2018, the Court granted motion for leave to file two successor liability claims. 4. The Court explained that itsDecision to allow the successor liability claims was defendants' based on the deposition testimony that the defendant Air Cargo Services ("ACS") stopped conducting business and that, the day afterwards, the defendant Delex Air Cargo Services ("Delex ACS") continued to operate ACS's business with ACS's same employees and same customers, thereby leaving defendant ACS an empty shell. 1 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 5. In response to the new claims, the defendants served a new round of discovery requests, which seek to re-take discovery of issues that were addressed in discovery several years ago, and which mostly do not concern the new claims. defendants' 6. Although the latest round of discovery requests are objectionable, the overriding answer is that the plaintiffs have already produced all responsive documents, other plaintiffs' than the tax returns. defendants' 7. With respect to the issue of tax returns, the motion is baseless because it:(a) fails to acknowledge the controlling legal standard to compel disclosure of tax returns, (b) plaintiffs' fails to show how the tax returns are indispensable in this action, and (c) fails to show that the information sought is not available from other sources. defendants' 8. For these reasons, and as further explained below, the motion to compel shouldbe denied. Background Facts Plaintiffs' The Sale of 50% Ownership in ACS defendants' 1. This action alleges the breach of an agreement to purchase plaintiff's 50% ownership interest in ACS. 2. The defendants claim in defense that despite substantial evidence of a sale agreemeñt - evidence in the compañy's tax and from the company's including returns, testimony outside accountant -- no agreement to sell 50% of ACS was ever reached. 3. The defendants claim that the plaintiff continues to own 50% of ACS. defeñdañts' 4. A major problem with the theory is that the defendants arranged it so that ACS is no longer in business and so that a 50% ownership of ACS has no value. 2 2 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 5. As explained below, there is evidence that the defendants denuded ACS, and continued ACS's business through another defendant company with substantially the same name, i.e.,defendant Delex ACS. The Deposition Evidence that Defcndant Delex ACS is the Successor to ACS 6. In November, 2017, plaintiffs conducted the deposition of ACS's former bookkeeper, Ilana Lisichkina. 7. Ms. Lisichkina was ACS's bookkeeper until ACS stopped conducting business and she is now the bookkeeper for Delex ACS. 8. Ms. Lisichkina testified that Delex ACS operates the business that was previously operated by ACS. 9. Specifically, Ms. Lisichkina testified that the day after ACS stopped itsbusiness operations, Delex ACS continued to operate ACS's business with ACS's same employees, and same customers. (A true and correct excerpt from Ms. Lisichikina's deposition transcript is annexed as Exhibit A.) 10. Defendant Ardachev, the person in control of ACS and the person now in control of Delex ACS, was present at the deposition of Ms. Lisichkina and testified two days later that he could not identify anything incorrect about Ms. Lisichkina's testimony. Mr. Ardachev also confirmed that Delex ACS took over ACS's business. (A true and correct excerpt from Mr. Ardachev's deposition transcript is annexed as Exhibit B.) 11. In fact, ACS is an empty shell. 12. ACS conducts no business and has no assets, as shown by ACS's tax returns. (True and correct copies of the federal tax return for ACS for years êñdiñg 2014-2016, as provided by the company's accountant, are annexed collectively as Exhibit C.) 3 3 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 The Amended Complaint defendants' 13. Based on the deposition evidence, on January 24, 2018, plaintiffs filed a motion for leave to file an ameñded complaint which asserts claims against Delex ACS for successor liability. (See NYSCEF DOC. NO. 134) 14. The defendants opposed the motion for leave to amend. (See NYSCEF DOC. NO. 141). 15. On June 11, 2018, the Court held argument on the motion for leave to amend and plaintiffs' granted motion. defendants' 16. The Court noted in its Decision on the record that the own deposition testimony supported the new claims. (A true and correct copy of the transcript of the heariñg and Decision is annexed as Exhibit D.) 17. A copy of the Amended Complaint, which was deemed filed by the Court's June 11, 2018 Decision, is annexed as Exhibit E. Defendants' The New Discovery Requests 18. On June 18, 2018, the defendants served additional discovery requests in response to the amended complaint. defeñdañts' 19. Many ifnot most of the latest discovery requests seek to re-hash and re-take discovery of issues which were addressed in discovery long ago, and which do not concern the new claims. 20. On August 15, 2018, the plaintiffs responded to the additional discovery requests and asserted objections. 4 4 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 The Discovery Dispute and Lack of a Meet and Confer defendants' 21. On August 22, 2018, at 4:08 pm, counsel sent me an email disputing the objections and demanding a production of documents within two business days, i.e.,on or defendants' before Saturday August 25. (A copy of counsel's email is annexed as Exhibit F). 22. Prior to August 25, and prior to this motion being filed on August 27, I was unable to confer with the plaintiffs and ask whether--even if the objections that plaintiffs maintain were properly asserted were to be voluntarily withdrawn--there existed any additional defendants' documents responsive to the additional discovery requests that were not already produced (other than tax returns). "no." plaintiffs' 23. I have since been able to confirm that the answer is Putting aside tax returns, there are no additional responsive documents to oroduce in this action. plaintiffs' 24. Moreover, to the extent this motion seeks to compel production of tax returns, the motion is baseless. 25. As further explained below, this motion should be denied in itsentirety. T-he Motion to Campel Should Be Denied Plaintiffs' A. All of Documcñts Related to the Claims in this Action Have Already Been Pr6duced plaintiffs' 26. First, again putting aside tax returns, which are addressed at Point B olaintiffs' below, allof responsive documents have already been produced. 27. Plaintiff Peter Stern, the President of plaintiff Express Trade Capital, has provided an affidavit that all responsive documents have previously been produced. (See Peter attesting Stern Affidavit sworn to on September 18, 2018.) 5 5 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 B. The Defendants Have Failed to Satisfy the Heighteñêd Requirement for Disclosure of Tax Returns plaintiffs' 28. Next, to the extent this motion coñcerñs tax returns, the motion is meritless because defendants have: (a) failed to acknowledge the legal standard under controlling plaintiffs' New York law to compel disclosure of tax returns, (b) failed to show how the tax returns are indispensable to this litigation, and (c) failed to show that the information sought is not available from other sources. 29. The First Department treats discovery requests for tax returns with heightened "disfavored," scrutiny. Indeed, disclosure of tax returns is expressly and the requesting party is "required to establish that the information contained in the returns they seek is 'indispensable to sources."' th[el litigation and unavailable from other Nanbar Realty Corp. v. Pater Realty Co., (13 661 N.Y.S.2d 216, 219, 242 A.D.2d 208, 29 Dep't 1997) (citing Briton v. Knott Hotels (1st Corp., 489 N.Y.S.2d 186, 111 A.D.2d 62 Dep't 1985) (emphasis added). See also Gama (1st Aviation, Inc. v. Sandton Capital Partners, LP, 978 N.Y.S.2d 185, 113 A.D.3d 456 pe ,t 2014) (holding itwas reversible error to grant motion compelling disclosure of tax returns; "with respect to the requested tax returns, defendants failed to show that there is an indisoensable need for them ...") (Emphasis added). 30. Once the above standard is applied here, itis clear this motion should be denied. Plaintiffs' (i) Tax Returns are Not Indispensable to the Litigation 31. First, with respect to the requirement that tax returns be shown to be indispensable to the litigation, the defendants make no such showing. The defendants simply recite conclusory boilerplate. The defendants state at paragraph 7 of their August 27, 2018 Affirmation (the "Bondar Aff.") as follows: "Defendants contend that these documents [the tax returns] constitute 6 6 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 material and useful information reasonably calculated to lead to the of admissible discovery ..." evidence Moreover, this is incorrect boilerplate. useful" 32. Defendants recite the "material and standard for general discovery, but the correct standard to obtain disclosure of tax returns under New York law is far more stringent, as explaiñed above. This heightened standard requires a showing--not just a recital--that the tax "indispensable" returns are to the litigation. 33. Similarly, the defendants allege in conclusory fashion at paragraph 11 that plaintiffs' plaintiffs' tax returns are "imperative to ascertain the extent of liability claims and damages." 11).1 their measure of (Bondar Aff. ¶ 34. Again, however, the defendants offer no support, and no explanation, as to how or plaintiffs' "imperative" why the tax returns are to anything. plaintiffs' 35. In fact, the tax returns have nothing to do with the merits of the plaintiffs' plaintiffs' claims or damages. To review: in this action, the plaintiffs claim that defendant Ardachev owes Stern in excess of $500,000 because Stern sold Ardachev 50% of the ownership of ACS. Alternatively, the complaint asserts that if there was no such contract to purchase Stern's 50%, Stern remains a 50% owner of Delex ACS because the defendants discontinued the operations of ACS and continued those same business operations through the defendant Delex ACS. 36. Thus, the issues in this action are (A) whether Ardâehey owes the agreed upon price2 purchase for the 50% ownership interest, and/or alternatively (B) if there was no contract 1 17-- The defendants make a similar statement at paragraph this time without using the conclusory label "imperative," -- but again reciting the incorrect legal standard where they state: "Defendants require these plaintiffs' de:ümeñts toascertain the extent of itspatentialliabilityand gain a measure of claimed damages and evidence.'" they are 'reasonably calculated to lead to the relevant Again, this allegationdoes not come close to plaintiffs' establishingthat the tax returnsare indispensable to thislitigà tien 2 Itis undisputed thatno portionof thepurchase pricewas everpaid. 7 7 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 for the purchase and sale of 50% of the ownership of ACS, whether Delex ACS is the successor to ACS such that plaintiff Peter Stern remains a 50% owner of Delex ACS. Plaintiffs' 37. tax returns have no bearing on those issues. defendants' - plaintiffs' 38. The irony of this motion is that itis the tax returns not the - that have a bearing on damages. In fact, ifdefendant Delex ACS is ultimately found to be the legal successor to ACS, then Delex ACS's tax returns and Ardachev's tax returns will be at the center of the calculation of how much Peter Stern is owed by the defendants on account of Mr. Stern's past years of 50% ownership of Delex ACS. (ii) Any Tax-Related Information is Available from the ACS Tax Returns 39. Second, the motion should be denied because the defendants have failed to satisfy the second prong of the heightened legal standard, i.e.,that the information sought is not available from other sources. 40. Indeed, the defendants do have other sources to obtain any information potentially relevant to tax returns. For example, to the extent the defendants want know whether, after the parties' date of the sale contract, the plaintiffs continued to receive an economic benefit on account of a continued ownership interest in ACS, the defendants already have this information in the AC$ tax returns. In fact, the ACS tax returns contain the information about partner profit distributions and partner accounts. The ACS tax returns have already been produced. (True and correct copies of the ACS federal tax returns for years 2009 through 2013 are annexed collectively as Exhibit G.) The ACS tax returns show that there has been no such benefit received by plaintiffs since 2009. (See id.) Furthermore, the ACS outside accountant and tax preparer, Mr. Doug Milo, has sworn that that the plaintiffs ceased receiving any profit 8 8 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 distribution when Ardachev purchased the 50% ownership interest in 2009. (See annexed Exhibit H). 41. Thus, any potentially relevant information is available from other sources. For this additional reason, the motion should be denied. C. There is No Basis to Require Plaintiffs to Further Amplify Their Recently Filed Pleading 42. Finally, there is no basis to require the plaintiffs to further amplify their two new particulars.3 claims through yet another bill of 43. There are three reasons why the motion to compel further amplification of the new claims via a bill of particulars should be denied. plaintiffs' 44. First, the sworn verification to the bill of particulars has been provided. (See annexed Exhibit I.) plaintiffs' 45. Second, the Court held at the last hearing that the new claims for defendants' successor liability are adequately stated, and adequately supported, based on the own deposition testimony. (See Ex. D at pp. 10-14). 46. Third, the bill of particulars that the plaintiffs recently provided does adequately explain that the basis for the new claims for successor liability is "the sworn testimony provided Hish."4 by the defendants in this action and sworn statements from non-party Arthur 3 Plaintiffsprovided a verified billof particulars in thisaction years ago, and then provided a second billof particulars inAugust, 2018. 4 Exhibit I. A true and correct copy of thesworn stateinentof non-party Arthur Hish, which also supports the successor liabilityclaims isannexed as Exhibit J. 9 9 of 10 FILED: NEW YORK COUNTY CLERK 09/21/2018 04:43 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 170 RECEIVED NYSCEF: 09/21/2018 Conclusion defendants' 47. For all the foregoiñg reasons, the motion to compel should be denied in its entirety, with prejudice. Dated: New York, New York September 21, 2018 LO . MAN 10 10 of 10