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Posted: March 12, 2016

Refusal to Testify at Deposition Under Fifth Amendment Not Necessarily Fatal to Defense

On March 1, 2016, Justice Sherwood of the New York County Commercial Division issued a decision in Lipman v. Shapiro, 2016 NY Slip Op. 30358(U), illustrating that notwithstanding the inference that can be drawn from of litigant invoking his Fifth Amendment right not to testify at a deposition, invoking that right is not necessarily fatal to a defense.

In Lipman, the plaintiff and an entity of which the defendant was a manager and member “entered into an agreement whereby plaintiff was entitled to condominium units 15A and 158 (“Units”) of a property being developed by Slazer at 20-22 East 22nd Street (“the Property”) in exchange for plaintiff’s marketing services.” Plaintiff performed his obligations under the agreement. The entity controlled by the defendant did not.

At his deposition, the defendant “refused to answer any questions by pleading his Fifth Amendment right against self-incrimination. The purported basis for [his] refusal to answer questions was that his attorney received a call from the United States Attorney’s Office inquiring about the Property.” Both parties moved for summary judgment. Notwithstanding the defendant’s refusal to answer questions, the court granted the defendant summary judgment, explaining, with respect to the refusal to testify:

[The defendant] was asked at his deposition to read each paragraph of the Complaint and state whether each allegations was true. He instead pled his Fifth Amendment right as to each allegation. Therefore, [the plaintiff] argues that he should be entitled to an adverse inference with respect to each allegation in the Complaint.

Notably, plaintiffs motion relies heavily on allegations in the Complaint, which are by in large not supported by any documentary evidence. It is well-established that a party’s invocation of the Fifth Amendment in a civil or administrative proceeding may form the basis of an adverse factual inference. However, a party’s invocation of its Fifth Amendment rights cannot be the deciding factor of a case. Accordingly, while the Court may draw inferences against defendant, the Court may not use defendant’s silence as the deciding factor and may not simply deem true all of the allegations in the Complaint.

(Internal quotations and citations omitted) (emphasis added). The court went on to hold that the plaintiff had failed to present evidence of the defendant’s liability other than the plaintiff’s own testimony, which was contradicted by documentary evidence. For that reason, the court granted summary judgment in favor of the defendant, dismissing the claims against him.

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