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INDEX NO.

652721/2014

FILED: NEW YORK COUNTY CLERK 04/15/2015 03:59 PM


NYSCEF DOC. NO. 130

RECEIVED NYSCEF: 04/15/2015

SUPREME COURT OF THE STATE OF NEW YORK


COUNTY OF NEW YORK
Index No: 652721/2014

FCRC MODULAR, LLC and FC MODULAR,


LLC (formerly known as FC+SKANSKA
MODULAR, LLC)

IAS Part 39
Hon. Judge Saliann Scarpulla

Plaintiffs,
-againstSKANSKA MODULAR LLC and RICHARD
A. KENNEDY,

ORAL ARGUMENT REQUESTED

Defendants.

SKANSKA MODULAR LLC and RICHARD


A. KENNEDY,
Third-Party Plaintiffs
-against
FOREST CITY RATNER COMPANIES,
LLC, FOREST CITY ENTERPRISES, INC.,
JOHN DOES 1-10 AND JANE DOE,
Third-Party Defendants
X

DEFENDANTS/THIRD-PARTY PLAINTIFFS'
MEMORANDUM OF LAW IN SUPPORT OF THEIR
MOTION FOR CIVIL CONTEMPT OF COURT

Peckar & Abramson, P.C.


Attorneys for Defendants/
Third-Party Plaintiffs
41 Madison Avenue, 20th Floor
New York, NY 10010
(212) 382-0909

TABLE OF CONTENTS
Page

PRELIMINARY STATEMENT

STATEMENT OF FACTS

LEGAL ARGUMENT

POINT I

GREENLAND AND BERLIN ROSEN SHOULD BE HELD IN CIVIL


CONTEMPT OF COURT BECAUSE NEITHER TIMELY OR VALIDLY
OBJECTED NOR PRODUCED DOCUMENTS IN RESPONSE TO THE
SUBPOENA.
POINT II
AN ORDER SHOULD BE ENTERED FINING BERLIN ROSEN AND
GREENLAND AND HOLDING THEM JOINTLY AND SEVERALLY
LIABLE FOR DEFENDANTS' COSTS AND ATTORNEYS' FEES
INCURRED ON THIS APPLICATION.
CONCLUSION

2
7

7
9

TABLE OF AUTHORITIES
Page(s)
Cases
Bankers Trust Co. v. Braten,
194 A.D.2d 378 (1st Dept. 1993)

Bennett Bros. Inc. v. Floyd Bennett Farmers Mkt. Corp.,


16 A.D.2d 897 (1st Dept. 1962)

8, 9

Children's Village v. Greenburgh Eleven Teachers' Union Federation of


Teachers, et al.,
249 A.D.2d 435 (2d Dept. 1998)

Matter of Dept. of Envtl. Protection of City of New York v. Dept. of Envtl.


Conserv. Of State of New York,
70 N.Y.2d 233 (1987)

Gertz v. Richards,
233 A.D.2d 366 (2d Dept. 1996)

Great Neck Pennysaver v. Central Nassau Pubs.,


65 A.D.2d 616

Quantum Heating Servs., Inc. v. Austern,


121 A.D.2d 437 (2d Dept. 1986)

Reuters Ltd. v. Dow Jones Telerate, Inc.,


231 A.D.2d 337 (1st Dept. 1997)

Rosenman Colin Freund Lewis & Cohen v. Edelman,


165 A.D.2d 706 (1st Dept. 1990)

3, 8

State of New York v. Unique Ideas,


44 N.Y.2d 345 (1978)

7, 8

Various Tenants of 446-448 West 167th Street v. New York City Dept. of
Housing Preserv. and Develop.,
152 Misc.2d 221, 588 N.Y.S.2d 840 (1st Dept. 1992)

Velez v. Hunts Point Multi-Serv. Ctr., Inc.,


29 A.D.3d 104 (1st Dept. 2006)

Yalkowsky v. Yalkowsky,
93 A.D.2d 834 (2d Dept. 1983)

3, 6

ii

Statutes
3

N.Y. Judiciary Law, Article 19, 753(A)(5)

8, 9

N.Y. Judiciary Law 773


Other Authorities
CPLR 2301

CPLR 2308 (a)

3
2, 3, 4

CPLR 3120
CPLR 3122 (a)

CPLR 3211(d)

CPLR 3214 (b)

Commercial Div. Rule 11 (d)

iii

PRELIMINARY STATEMENT
Despite having more than four months' notice of the subpoenas duces tecum
("Subpoenas"), non-parties Berlin Rosen Ltd. ("Berlin Rosen") and Greenland US Holding, Inc.
a/k/a Greenland Group Co., Greenland Company USA, and Greenland US ("Greenland") failed
to timely communicate their objections to the Subpoenas and, even when those late objections
were submitted, they were improper and imposed arbitrary conditions upon if and when Berlin
Rosen and Greenland might produce responsive documents. This is effectively ignoring a
judicial subpoena and is contumacious behavior. The proffered objections from Greenland and
Berlin Rosen, which are virtually identical though they are represented by different counsel, state
that documents will only be produced after a recently-filed motion by Plaintiffs to dismiss
Defendants'/Third-party Plaintiffs' Counterclaim and Third-party Complaint is decided and, if
that motion is denied, Greenland and Berlin Rosen may then produce documents "if no party is
able to produce the requested documents in party document discovery." There is no basis in law
for these improper objections and they do not excuse Greenland's and Berlin Rosen's failure to
produce documents.
These meritless objections are impairing and impeding Defendants'/Third-party
Plaintiffs' rights in this action and, particularly, their ability to obtain further support for the
counterclaims and other information which could be used to oppose the motion to dismiss that
was made by Plaintiffs/Third-party Defendants. Simultaneously, Plaintiffs' counsel has taken
the position that all party discovery has been stayed by virtue of the now-pending motion to
dismiss such that Defendants will not be receiving formal discovery in response to the requests

propounded in October 2014, until after the motion is decided. Thus, Defendants' rights to
discovery are being blocked at every turn and the case is at a stand-still.
Given the nature of the objections, the positions taken, and the history of communications
between Plaintiffs' and Defendants' counsel regarding the Subpoenas, it is evident that
Greenland and Berlin Rosen have cooperated and are complicit with Plaintiffs in thwarting
access to relevant documents in an effort to delay the litigation, prejudice Defendants' case, and
deny them access to information which could be used to oppose Plaintiffs' motion to dismiss
(though, that motion is meritless in its own right). Accordingly, for the reasons which follow,
Berlin Rosen and Greenland should be found in civil contempt of court, be ordered to
immediately produce responsive documents, be fined a statutory penalty of $250 each, and be
held jointly and severally liable for the costs and attorneys' fees incurred by Defendants in
securing their compliance with the Subpoenas.
STATEMENT OF FACTS
The accompanying Affirmation of Peter E. Moran, Esq. ("Moran Affirmation") sets forth
the relevant facts for purposes of this application. The statements and defined terms used in the
Moran Affirmation are incorporated herein by reference.
LEGAL ARGUMENT
POINT I
GREENLAND AND BERLIN ROSEN SHOULD BE HELD IN CIVIL CONTEMPT OF
COURT BECAUSE NEITHER TIMELY OR VALIDLY OBJECTED NOR PRODUCED
DOCUMENTS IN RESPONSE TO THE SUBPOENA.

After the commencement of an action, a party may serve on a non-party a subpoena


duces tecum seeking discovery as to any documents or things in that non-party's possession.
CPLR 3120 (1)(i), 2301. There are no limitations under the rules upon the timing of when

non-party discovery may be sought in relation to party discovery, and CPLR 3120 provides
that a subpoena duces tecum can issue any time "after commencement of the action." CPLR
3120 (1). The recipient of the subpoena has twenty (20) days from service of the subpoena to
respond with objections, if any. CPLR 3122 (a). A failure to comply with a judicial subpoena
duces tecum is a contempt of court. CPLR 2308 (a). Under Section 753 of Article 19 of the
New York Judiciary Law ("Judiciary Law 753"), entitled "Powers of courts to punish for civil
contempts," this Court has the power to punish a non-party for civil contempt of a subpoena:
A. A court of record has power to punish, by fine and
imprisonment, or either, a neglect or violation of duty, or other
misconduct, by which a right or remedy of a party to a civil action
or special proceeding, pending in the court may be defeated,
impaired, impeded, or prejudiced, in any of the following cases:
***

5. A person subpoenaed as a witness, for refusing or neglecting to


obey the subpoena, or to attend, or to be sworn, or to answer as a
witness.
N. Y. Judiciary Law, Article 19, 753(A)(5).
Thus, a contempt order is properly issued where a witness disobeys a subpoena and
impairs a plaintiff's rights and remedies. See, Rosenman Colin Freund Lewis & Cohen v.
Edelman, 165 A.D.2d 706, 707 (1st Dept. 1990). The First and Second Departments have held
that in order to "hold a party in civil contempt for disobeying a subpoena, lilt is not necessary
that such disobedience be deliberate; rather the mere act of disobedience, regardless of its
motive, is sufficient to sustain a finding of civil contempt if such disobedience defeats, impairs,
impedes or prejudices the rights of a party'." Yalkowsky v. Yalkowsky, 93 A.D.2d 834, 835 (2d
Dept. 1983) (quoting Great Neck Pennysaver v. Central Nassau Pubs., 65 A.D.2d 616, 409
N.Y.S.2d 544 (2d Dept. 1978)); see also, Various Tenants of 446-448 West 167th Street v. New

York City Dept. of Housing Preserv. and Develop., 152 Misc.2d 221, 222, 588 N.Y.S.2d 840,
841 (1st Dept. 1992) (per curiam). A party who does not timely state an objection or move to
quash a subpoena can be held in contempt for non-compliance with the subpoena. Bankers Trust
Co. v. Braten, 194 A.D.2d 378, 379 (1st Dept. 1993); Reuters Ltd. v. Dow Jones Telerate, Inc.,
231 A.D.2d 337, 341 (1st Dept. 1997) ("In the case of judicial subpoenas, including those issued
by an attorney of record in a matter pending before a court, a person who fails to comply with a
judicial subpoena, without making a motion to quash, runs the risk of being held in contempt
based directly on that failure."). The burden is upon the recipient of the subpoena to establish
"that the requested documents and records are utterly irrelevant...." Velez v. Hunts Point MultiServ. Ctr., Inc., 29 A.D.3d 104, 112 (1st Dept. 2006) (citing Gertz v. Richards, 233 A.D.2d 366
(2d Dept. 1996)).
Here, not only were the objections from Berlin Rosen and Greenland technically late,
having been received after the March 16th return date of the Subpoenas (Moran Aff., at

In 34,

36), they are virtually identical to one another in making the same meritless objections and
imposing the same arbitrary conditions upon compliance (id. at 7135, 36). It is obvious that they
were drafted in unison and likely with advice from Plaintiffs, at a minimum as to the contents
and pendency of Plaintiffs' motion to dismiss. Id. at IN 31, 32. Both sets of objections
arbitrarily condition compliance upon:

1) Plaintiffs' pending motion to dismiss the

Counterclaims and Third-party Complaint being denied; and 2) the requested documents not
being produced in party discovery first. Moran Aff., at In 35, 36, Exs. K, L. There is no basis in
law for these positions and none is cited in the objections. As stated above, a party is free to
issue subpoenas at any time after commencement of an action and it need not wait until the
conclusion of party discovery or a decision on a motion to dismiss (CPLR 3120 (1)), especially

when that motion to dismiss was made over four months after the Subpoenas were served and the
only reason it was a "pending" motion at the time of the objections was due to the multiple
extensions of time obtained by Plaintiffs on Greenland and Berlin Rosen's behalf See, Moran
Aff, at 26-30. As discussed below, it is apparent that Berlin Rosen and Greenland are
complicit with Plaintiffs in attempting to hinder Defendants' ability to obtain discovery and
garner evidence in support of their claims.
The documents are clearly relevant to the facts and issues in dispute in the pleadings (and
on the pending motion to dismiss). With respect to Berlin Rosen, the subpoena sought
information related to the Eighth Counterclaim asserted by Mr. Kennedy for libel per se, which
claim relates to the libelous contents of the Press Release disseminated by Berlin Rosen at the
behest of a Forest City-related entity to persons working within Mr. Kennedy's trade and
business. Moran Alf., 11, 14. Specifically, the document demand in the Berlin Rosen
Subpoena sought documents relating to the Press Release and specifically those documents
identifying: (a) its preparation and contents; (b) any person or entity which or whom authorized
Berlin Rosen to issue the Press Release; (c) to whom the Press Release was issued; and (d) all
inquiries made to Berlin Rosen regarding the Press Release and any response(s) made to such
inquiries. Moran Aft-., Ex C. at p. 4. Facts surrounding the creation and issuance of the Press
Release are obviously material to establishing the elements of a libel per se claim and will also
identify the "Jane Doe" defendant who authorized the Press Release. Said information is in the
exclusive possession of Berlin Rosen.
As to the Greenland Subpoena, it seeks information related to covenants and
commitments made in the LLC Agreement whereby Plaintiff FCRC Modular LLC ("FCRC
Modular") promised FC+S a future pipeline of work on the B3 and B4 projects if certain

conditions were satisfied. Id. at 15, 16 and Ex. B thereto. As alleged, the decision has been
announced prematurely that the B3 work will not be given to FC+S and/or that B4 will also be
built conventionally, not modularly, before the time provided in the LLC Agreement for making
those decisions has occurred. Id. at 18. The decisions as to how B3 and B4 are to be built (and
by which entity) is material to proving Defendants' 2nd, 3rd, 4th 5th, and 6th Counterclaims/Thirdparty claims which, inter alia, allege a breach/repudiation of the promises contained in the LLC
Agreement for this future work, and/or assert actionable fraud or misrepresentation relating to
the denial of this promised work to FC+S. Id. at I 15, 20, 21, and Ex. B thereto. From
information publically available and disclosed by Forest City and its corporate parent, Forest
City Enterprises, Inc. ("FCE"), Greenland has acquired a 70% controlling interest in the Atlantic
Yards development (of which B3 and B4 are a part). Id. at

in 17, 19. Greenland presumably

controls the rights in the B3 and B4 buildings, and it is likely that Greenland possesses
information concerning the decision that was made for B3 not to be built modularly and/or as to
the manner in which B4 is to be built. Id. at 15, 19. Amongst other things, the Greenland
Subpoena seeks to discover documents relating to the creation of the joint venture between
Greenland and the Forest City developer entity, information as to the B3 and B4 buildings, how
B3 and B4 are to be built (conventionally or modularly) and by which entities, and the rights of
FC+S to construct B3 and/or B4. Id. at 24 and Ex. E. thereto. The subpoenas are otherwise
entirely proper and should be complied with immediately.
Effectively, Greenland and Berlin Rosen have chosen to disregard their obligations under
the Subpoenas, which is contumacious behavior in and of itself, whether done purposely in
concert with Plaintiffs (their business associates) or otherwise (see, e.g., Yalkowsky v.
Yalkowsky, 93 A.D.2d 834, 835 (2d Dept. 1983)), and have, instead, interposed identical

meritless objections and arbitrary conditions upon their compliance. Their improper conduct has
the result, purposeful or otherwise, of advancing Plaintiffs' position on the pending motion to
dismiss and prejudicing Defendants by depriving them of discovery which could be used in
further opposition to the motion to dismiss. CPLR 3211(d). When Berlin Rosen's and
Greenland's actions are coupled with Plaintiffs' stated position that all party discovery has now
been stayed, pursuant to CPLR 3214 (b), by virtue of the pending motion to dismissl and
Plaintiffs will not be responding at this time to Defendants' written discovery requests from
October 2014 (Moran Aff., at 31), it becomes apparent that the non-parties are acting in concert
with Plaintiff to deny access to discovery and to prejudice Defendants' rights to prosecute their
claim and oppose the motion to dismiss. Defendants' rights to discovery are being blocked at
every turn.
Thus, Berlin Rosen and Greenland's failure to comply with the Subpoenas is a civil
contempt of the court, whether done purposely or negligently, and the court should enter the
appropriate order sanctioning them and ordering their immediate compliance.
POINT II

AN ORDER SHOULD BE ENTERED FINING BERLIN ROSEN AND GREENLAND


AND HOLDING THEM JOINTLY AND SEVERALLY LIABLE FOR DEFENDANTS'
COSTS AND ATTORNEYS' FEES INCURRED ON THIS APPLICATION.

Civil contempt fines are remedial in nature and are assessed to indemnify the aggrieved
party. See, State of New York v. Unique Ideas, 44 N.Y.2d 345, 349 (1978). The penalty
imposed is designed not to punish, but to "compensate the injured private party or to coerce
compliance with the court's mandate or both." Matter of Dept. of Envtl. Protection of City of
1 Commercial Division Rule 11 (d) states "The court will determine, upon application of counsel, whether discovery
will be stayed, pursuant to CPLR 3214(b), pending the determination of any dispositive motion." Despite Plaintiffs'
stated position, Defendants know of no such application for a stay of discovery having been made.

New York v. Dept. of Envtl. Conserv. Of State of New York, 70 N.Y.2d 233, 239 (1987) (per
curiam). Judiciary Law 773 governs the imposition of fines for civil contempt of court and
provides, in relevant part:
If an actual loss or injury has been caused to a party to an action or special
proceeding, by reason of the misconduct proved against the offender..., a
fine, sufficient to indemnify the aggrieved party, must be imposed upon
the offender, and collected, and paid over to the aggrieved party, under the
direction of the court....
***

Where it is not shown that such an actual loss or injury has been caused, a
fine may be imposed, not exceeding the amount of the complainant's costs
and expenses, and two hundred and fifty dollars in addition thereto, and
must be collected and paid, in like manner. A corporation may be fined as
prescribed in this section.
N.Y. Judiciary Law 773. Thus, where there are no actual damages sustained as a result of the
contumacious act, the statutory fine "may not exceed the amount of the complainant's costs and
expenses plus $250." State of New York v. Unique Ideas, supra, 44 N.Y.2d at 349. In the
absence of actual damages in a civil contempt proceeding, the imposition of a fine that includes
reasonable legal fees as part of the statutorily recoverable costs and expenses is proper. See
Quantum Heating Servs., Inc. v. Austern, 121 A.D.2d 437, 438 (2d Dept. 1986); Bennett Bros.
Inc. v. Floyd Bennett Farmers Mkt. Corp., 16 A.D.2d 897, 897 (1St Dept. 1962) (per curiam);
Rosenman Colin Freund Lewis & Cohen v. Edelman, 165 A.D.2d 706, 707 (1st Dept. 1990) (an
award of reasonable attorneys' fees incurred as a result of the non-party's contempt of a
subpoena duces tecum is proper). Attorneys' fees incurred are a "direct product of the contempt
proceeding" and are recoverable. Children's Village v. Greenburgh Eleven Teachers' Union
Federation of Teachers, et al., 249 A.D.2d 435, 435-36 (2d Dept. 1998). Moreover, the amount
of costs and attorneys' fees to be awarded "may be reasonably estimated on the papers and

proceedings before the court and need not be precisely proved." Bennett Bros., supra, 16 A.D.2d
at 897.
While Defendants have suffered no actual damages on account of Berlin Rosen's and
Greenland's failure to comply with the Subpoenas, as set forth in Point I, supra, Berlin Rosen's
and Greenland's behavior is still contumacious. They should each be fined the statutory penalty
of $250 provided under New York Judiciary Law 773 for their separate violations of their
respective subpoenas. In addition, given Defendants' efforts in obtaining the requested
documents subsequent to service of the Subpoena, this Court should award Defendants the costs
and attorneys' fees associated with this application and both Berlin Rosen and Greenland should
be held jointly and severally liable for payment of said costs and attorneys' fees. At the
appropriate time, Defendants' costs and attorneys' fees will be computed in accordance with the
procedure directed by the court.
CONCLUSION
For the foregoing reasons, Defendants request that the Court enter an order: a) holding
Berlin Rosen and Greenland in civil contempt of court for failure to obey a judicial subpoena
duces tecum; b) requiring that Berlin Rosen and Greenland produce forthwith all documents
responsive to the Subpoenas at the New York office of Peckar & Abramson PC within ten (10)
days of entry of the Order; c) awarding Defendants/Third-party Plaintiffs their costs and
attorney's fees reasonably expended in pursuit of Berlin Rosen's and Greenland's compliance
with the Subpoenas, together with a statutory penalty of two hundred fifty dollars ($250) each

against Berlin Rosen and Greenland; d) ordering that Berlin Rosen and Greenland be jointly and
severally liable for payment of Defendants' costs and attorneys' fees incurred; and e) ordering
such other and further relief as this Court deems just and proper.

Dated: April 15, 2015


New York, New York

Respectfully submitted,

/s/ Peter E. Moran


Bruce D. Meller, Esq.
Peter E. Moran, Esq.
PECKAR & ABRAMSON, P.C.
41 Madison Avenue, 20th Floor
New York, NY 10010
Telephone: (212) 382-0909
Co-Counsel for Skanska Modular LLC
And Counsel for Richard A. Kennedy
K&L GATES LLP
599 Lexington Avenue
New York, NY 10022-6030
Telephone: (212) 536-3900
Co-Counsel for Skanska Modular LLC

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