Commercial Division Blog

Posted: October 24, 2022 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Category Commercial Division Justices

Defendant Has Standing to Challenge Subpoena to Non-Party Insurance Company Where Records Relate to Insurance Transactions

On August 25, 2022, Justice Chan of the New York County Commercial Division issued a decision in Ohi Asset (NY) 93rd St., LLC v. Consigli Constr. Co., Inc., 2022 NY Slip Op 32908(U) holding that a defendant had standing to challenge document subpoenas issued to a non-party insurance company where the documents at issue related to the defendant’s financial insurance purchase transactions, stating:

As to the threshold standing issue, "[a] person other than one to whom a subpoena is directed has standing to [*4] move to quash the subpoena where he or she has a proprietary interest in the subject documents or where they involve privileged communications (Hyatt v State Franchise Tax Bd., 105 AD3d 186, 194-195, 962 N.Y.S.2d 282 [2d Dept 2013] [citations and quotation marks omitted]). Defendants have standing to challenge the subpoenas because they have a sufficient interest in the records [**3] sought as these records are related to defendants' financial insurance purchase transactions (see e.g. State Comm'n on Governmental Operations of City of N.Y v Manhattan Water Works, Inc., 10 AD2d 306, 308, 199 N.Y.S.2d 120 [1st Dept 1960] [finding a sufficient interest of a corporation to challenge a subpoena which sought documents constituting the corporate and financial records of the corporation in the possession of a non-party, the corporation's accountant]).

The cases plaintiff cites are unavailing. Defendants' interest is not based on contracts in which defendants are party (38-14 Realty Corp. v New York City Dep't of Consumer Affs., 103 AD2d 804, 804, 477 N.Y.S.2d 999 [1984] [finding no proprietary interest and contrasting to the situation in State Comm'n on Governmental Operations of City of N.Y.). Defendants' standing is based on their sufficient interest in the materials sought, not "the mere fact that the subpoenaed non-party (Alliant) may supply adverse information regarding Consigli" (NYSCEF # 103, ¶ 20, citing New York Republican State Committee v Temporary State Com'n of Investigation, 129 AD2d 840, 513 N.Y.S.2d 853 [3d Dept 1987] and Oncor Commc'ns, Inc. v State, 165 Misc 2d 262 [Sup Ct, NY County 1995], affd 218 AD2d 60, 636 N.Y.S.2d 176 [3d Dept 1996]).

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