SHORT FORM ORDER

SUPREME COURT - STATE OF NEW YORKCOUNTY OF NASSAU - PART 19

Present: HON. WILLIAM R. LaMARCAJustice

ASTORIA FEDERAL SAVINGS & LOANASSOC., Successor by merger withLong Island Savings Bank, FSB

Motion Sequence # 002 , # 003, # 004#005

Submitted January 10 and

January 24, 2007, respectively.Plaintiff,

-against- INDEX NO: 11934/05

JAMES J. HARTRIDGE,

Defendant.

The following papers were read on this motion:

ARO Non-Part Notice of Motion (# 002)............................................Aff rmation in Oppos ition.................................................................................CUCCI and WILSHIRE Non-Part Amended Notice of Motion(# 003)........CUCCI and WILSHIRE Non-Part Memorandum of Law in Support...........Aff rmation in Oppos ition.................................................................................Castellano Reply Aff rmation............................................................................ 6Reply Memorandum of Law..............................................................................Sur-Reply Affi rmation..................... ...................................................................BEST NEST Non-Part Notice of Motion (# 004)..................................Affirmation in Opposition......................................... ........

... ........ ....................

Reply Affrmation...

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I""""""""""""'" I"""'" I"""" ...

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KARANASOS and SACCO & FILLAS Non-Part Notice of Motion (# 005)..Affirmation in Opposition .........

............. ........... ........... ......... ......... ..................

Reply Affirmation. ..... ....

....... .......................... .............. ... ....... .......... ....... ..........

Requested Relief

Without identifying itself, counsel for non-party ARO CAPITAL , LLC (hereinafter

referred to as "ARO"), purported successor in interest to plaintiff, ASTORIA FEDERAL

SAVINGS & LOAN ASSOC. , successor by merger with LONG ISLAND SAVINGS BANK

FSB (hereinafter referred to as "ASTORIA"), moves (# 002) for an order quashing the

subpoenas served by defendant , JAMES J. HARTRIDGE (hereinafter referred to as

HARTRIDGE"), and for an order disqualifying HARTRIDGE's attorney, Samuel Glass

Esq. , as counsel for the defendant. In companion motions , non-party Matthew Cucci and

Wilshire Investment Group, LLC (hereinafter referred to as "CUCCI" and "WILSHIRE"

move (# 003) for an order quashing the judicial subpoena issued to CUCCI and prohibiting

JPMorgan Chase Bank , N. , (hereinafter referred to as "JPMORGAN"), from disclosing

any information sought by HARTRIDGE and/or quashing the subpoena issued by

HARTRIDGE to JPMORGAN; non-party, BEST NEST REAL TV GROUP , INC. (hereinafter

referred to as "BEST NEST"), moves (# 004) for an order quashing the judicial subpoena

duces tecum served by HARTRIDGE , disqualifying defendant's attorney, Samuel Glass

Esq. , and for costs , disbursements and reasonable attorney s fees on the motion; and non-

party Chris Karanasos and his attorneys , Sacco & Filas , LLP (hereinafter referred to as

KARANASOS" and "SACCO & FILLAS"), move (# 005) for an order quashing the judicial

subpoenas duces tecum served by HARTRIDGE , disqualifying defendant's attorney,

Samuel Glass , Esq. and for costs , disbursements and attorney s fees on the motion.

Counsel for HARTRIDGE opposes all of the motions, which are determined as follows:

Background

This litigation arises from a real property mortgage foreclosure action initiated by

ASTORIA against HARTRIDGE , the then owner of certain property located at 3749 Mill

Road , Seaford, New York. Counsel for HARTRIDGE relates that a Judgment of

Foreclosure and Sale was signed by the Court, on December 14 2005 , in the principal

amount of $33,465. , and the foreclosure sale was held on June 27 , 2006. Plaintiff

ASTORIA, allegedly assigned the mortgage , note and this foreclosure action to ARO just

a few days before the foreclosure sale. Counsel states that , although the Court was filled

with potential bidders on the morning of the sale , ARO was the only bidder who submitted

a bid on the premises, in the nominal sum of $500.00, and ARO was issued a Referee

Deed to the premises the same day of the foreclosure sale. Counsel points out that the

end result was that HARTRIDGE's home , appraised by the Nassau County Assessors

Office to be valued at $445 200. 00 in January 2006 , was sold by ARO to itselffor $500.

and that ARO now seeks a deficiency judgment against HARTRIDGE in the sum of

$48,776.43 (see Referee s Report).

Counsel for HARTRIDGE states that, subsequent to the foreclosure sale , it was

learned from Joseph Johns , a bidder who attended the sale and who intended to bid on

the foreclosed property, that he and other bidders were approached at the sale site by

CUCCI , who recommended that they not bid on the premises because there was a high

senior mortgage on the premises , and that the sale was being made subject to that

mortgage. Counsel states that, in fact, there was no senior mortgage on the premises and

that CUCCI was acting as an agent of ARO at the sale and made false representations to

potential bidders in order to make the sale uninviting so the potential bidders would refrain

from bidding, allowing ARO to purchase the property for a nominal price , which is exactly

what occurred.

It appears that a month later, ARO conveyed the premises to KARANASOS

brother- in- law of an ARO member, Evangelos Pollatos , for the sum of $175 000.00.

order to complete the sale , KARANASOS put down $50 000. 00 and gave a mortgage to

BEST NEST in the amount of $125 000. 00. Counsel for HARTRIDGE contends that this

conveyance to KARANSOS and mortgage to BEST NEST were shams to establish the

appearance that bonafide purchasers have rights in the subject premises.

By Order to Show Cause , dated August 7 2006 , HARTRIDGE moved inter alia

to set aside the recent foreclosure sale of the premises, and to vacate the Referee s deed

to ARO , as well as the deed from ARO to KARANASOS and the mortgage to BEST NEST.

He alleged that substantial irregularities at the foreclosure sale prevented competitive

bidding on his home which deprived him of any surplus on the residence. By Short Form

Order, dated October 27 2006 (Palmieri , J. ), the Court determined the motion and found

that "(b)ecause there are sharp issues offact upon which the decision rests , a hearing shall

be held ... . The Court framed the issues , as follows:

At issue here is whether the sale was properly conducted and if not, whethersuch failure was a mere irregularity, which should not cause the sale to bevacated or of such magnitude that the sale should be set aside. Specificallyat issue is what were the terms of the sale as announced by the referee tothe public , whether there was any misconduct on the part of plaintiff, Aro , thereal party in interest, or any persons acting on their behalf, whether therewas any other misconduct by persons present which might have affected theintegrity of the sale , whether the bid price was so inadequate as to shock theconscience of the Court even in the absence of misconduct or error, thestatus of Karanasos and Best Nest in relation to the above describedtransaction and what remedies should apply.

Counsel for HARTRIDGE states that in preparation for the hearing, all of the

subpoenas issued herein seek information that is material and relevant to the issues before

the Court. The subpoena served on ARO and its principal , Evangelos Pollatos , seeks

documents pertaining to the formation of ARO , which would reflect whether CUCCI has a

financial interest in ARO , documents pertaining to ARO's purchase of the mortgage

documents pertaining to the sale of the property and the issuance of the Referee s Deed

and documents pertaining to the sale of the premises to KARANASOS. The subpoenas

served on JPMORGAN , seeks bank records pertaining to CUCCI and a company he owns

WILSHIRE , which are limited in scope and specifically identify the records requested. The

records being subpoenaed from CUCCI seek agreements and documents concerning the

premises , the financial transactions (check bank records , etc) pertaining to the alleged

purchase of the assignment of the note, mortgage and this action , the financial

transactions (checks, bank records, etc.) pertaining to the sale of the premises to

KARANASOS, and the notes generated at the foreclosure sale and phone records , which

are limited in time from January 1 , 2006 , through October 1 , 2006. The subpoena served

on BEST NEST seeks documents pertaining to the formation of BEST NEST to determine

if any of the other parties (CUCCI , POLLATOS , KARANOSOS , etc. ) have any financial

interest in BEST NEST, and documents pertaining to the mortgage on the premises and

the loan BEST NEST allegedly made to the alleged good faith purchaser, KARANASOS.

The subpoena served on KARANASOS and the attorneys who represented him in the

purchase of the residence , SACCO & FILLAS , seek documents concerning KARANASOS'

purchase of the premises , what persons or entities received the proceeds of sale from the

sale to KARANASOS , and what information KARANASOS had in his possession prior to

his receiving the deed. Counsel for HARTRIDGE states that these documents are relevant

to show the inter-relationship of these parties and whether KARANASOS had knowledge

of the events detailed above , which would deprive him of the good faith purchaser defense.

Generally, all of the non-party movants seek to quash the subpoenas on the ground

that they are a "fishing expedition , a tool to harass the movants , over broad , irrelevant

oppressive , frivolous, and not likely to lead to relevant information. In particular , ARO and

Pollatos state that the documents sought are proprietary and confidential and have nothing

to do with the allegation that CUCCI interfered with the foreclosure sale. CUCCI claims

that the bank records sought from JPMORGAN demonstrates a patently improper use of

subpoena power as Mr. CUCCI's personal financial statements and banking records , and

those of his company, WILSHIRE , are protected bank records , particularly in light of the

fast rise of identity theft and the need to protect an individual's private information. Also

counsel for CUCCI claims that the subpoenas are facially defective in that they fail to

comply with CPLR 92301 which requires that "(a) trial subpoena duces tecum shall state

on its face that all papers or other items delivered to the court pursuant to such subpoena

shall be accompanied by a copy of such subpoena . BEST NEST contends that the

subpoena is facially defective pursuant to CPLR 92301 , that service of the subpoena was

improper and that a subpoena cannot be directed to a corporation and must identify who

at the corporation must attend, that BEST NEST was not present at the sale and that the

documents requested can be obtained from the County Clerk. KARANASOS and SACCO

& FILLAS assert that the subpoenas are facially defective pursuant to CPLR 92301 , that

SACCO & FILLAS were not properly served as no managing or general agent of the

business partnership was served and no subpoenas were mailed to either of the two (2)

partners at their respective homes pursuant to CPLR 9310 (b)(c) or (d), thatthe documents

are protected by the attorney client privilege under CPLR 94503 and that there is no

evidence to show that either KARANOSOS or his attorneys misled prospective buyers at

the foreclosure sale or that KARANOSOS is anything other that a bonafide purchaser for

value.

With respect to those movants who seek to have defendant's attorney, Samuel

Glass , Esq. disqualified , they claim that they plan to call him as a witness at the scheduled

hearing and that he cannot "as a matter of law" continue to represent the defendant. In the

alternative, they claim that, because Mr. Glass is also the attorney for Joseph Johns, a

prospective bidder at the public foreclosure sale, there is a conflict of interest in his

continued representation of defendant and Johns in the event that the foreclosure sale is

set aside in that both parties wil most likely be bidding at a newly scheduled sale.

In opposition to the motions , counsel for HARTRIDGE asserts that all of the

subpoenas seek documents and testimony relevant to the issues framed by Justice

Palmieri in the order directing a hearing. Counsel states that the standard to be applied

on a motion to quash a subpoena duces tecum is whether the requested information is

utterly irrelevant to any proper inquiry (Ayubo v Eastman Kodak Co. Inc 158 AD2d 641

551 NYS2d 944 (2 Dept. 1990)) and contends that none of the movants have met their

burden of showing that the requested records are irrelevant and the motion must be

denied. (Velez v Hunts Point Mult-Service Center Inc. 29 AD3d 104 811 NYS2d 5

Dept. 2006)).

Moreover, counsel for HARTIRIDGE argues that CUCCI does not have standing to

challenge a subpoena issued to a bank seeking the depositors records. U. S. v Miler, 425

US435 , 96 S. Ct. 1619 (1976). The New York Court of Appeals and the various Appellate

Division Departments follow the precedent of U. S. v Miler and have routinely held that the

depositor has no standing to contest the subpoena issued to the bank. See, Cappetta v

Santucci 42 NY2d 1066 399 NYS2d 638 369 NE2d 1172 (C. A. 1977); Norkin v Hoey 181

AD2d 248, 586 NYS2d 92 (1 Dept. 1992); People v Doe 96 AD2d 1018,467 NYS2d 45

Dept. 1983). Bank records of a customer account are the business records of the

banks in which the customer can assert neither ownership nor possession , and the

customer has no legitimate expectation of privacy in the content of original checks , deposit

slips or other documents voluntarily conveyed to banks and exposed to their employees.

Norkin v Hoey, supra. The overwhelming weight of authority holds that a bank customer

has no legitimate cognizable interest nor propriety (sic) or possessory interests in the

records of a third-part bank, and therefore cannot preclude their production GLGllnc.

v Burgher 4 Misc 3d 1028A, 798 NYS2d 344 (Sup. Nassau Co. , 2004).

Counsel for HARTRIDGE maintains that the subpoenas are not defective as the

absence ofthe language requiring delivery of a copy of the subpoena with the subpoenaed

records is a mere irregularity which should be disregarded by the Court. CPLR 92001; Rule

2101 & 93026. CPLR Rule 2101 proves as follows:

A defect in the form of a paper, if a substantial right of a party is notprejudiced , shall be disregard by the Court, and leave to correct shall befreely given. The party on whom a paper is served shall be deemed to havewaived objection to any defect in form unless, within two days , after receiptthereof, he returns the paper to the party serving it with a statement ofparticular objections.

Counsel for HARTRI DGE claims that the purpose of providing a copy of the subpoena with

the records , is to aid the Court Clerk , and no prejudice has been shown.

Counsel for HARTRIDGE also claims that the record reflects that BEST NEST was

properly served with the subpoena and that it's claim that a corporation cannot be served

with a subpoena is unfounded and contrary to the law. See, Standard Fruit Steamship

Co. v Waterfront Commission of New York Harbor, 43 NY2d 11 400 NYS2d 732 , 371

NE2d 453 (C. A. 1977). The Standard Court held that a corporation is required to produce

offcers and employees who have knowledge of the transaction at issue , pursuant to a

subpoena served upon the corporation. However, the Court notes that it appears that

SACCO and FILLAS , a limited partnership, was not served in accordance with CPLR 931

a, which requires service upon any "managing or general agent or general partner of the

firm . When and if proper service of the subpoena is effectuated , it is the Court's view that

the records requested of the law firm were not prepared for litigation , but were prepared

for business purposes and are not privileged. Counsel for HARTRIDGE points out that the

attorney client privilege does not apply to 1) documents disclosed to third parties; 2)

documents generated by third parties; and 3) documents which are of a business rather

than legal nature. Netherby Ltd. v G. V. Trademark Investments Ltd. 261 AD2d 161 689

NYS2d 488 (1 Dept. 1999).

Counsel for HARTRIDGE states that no grounds exist to disqualify him as

defendant's attorney. He argues that he was not involved in the assignment of the

mortgage , the foreclosure sale , issuance of the Referee s Deed , nor the transfer to

KARANOSOS; that he is simply the attorney for the defendant , who appeared in this action

subsequent to the transactions and events which are relevant to this proceeding and that

there is no testimony that he can give that is necessary or relevant at the hearing. Counsel

states that in order to obtain disqualification , movant must demonstrate that 1) counsel'

testimony is necessary to their case; and 2) that counsel's testimony will be prejudicial to

his client. Goldberger v Eisner 21 AD3d 401 799 NYS2d 778 (2 Dept. 2005); Daniel

Gale Associates, Inc. v George 8 AD3d 608 , 779 NYS2d 573 (2 Dept. 2004). Indeed

22 NYCRR91200.21 provides that a lawyer may act as an advocate and also testify if a)

the testimony will relate solely to an uncontested issue; b) the testimony will relate solely

to a matter of formality and there is no reason to believe that substantial evidence will be

offered in opposition to the testimony; c) the testimony wil relate solely to the nature and

value of legal services rendered in the case by the lawyer or the lawyer s firm to the client;

and d) disqualification as an advocate will work a substantial hardship on the client.

Counsel argues that a party s entitlement to be represented in ongoing litigation by counsel

of his choosing is a valued right which should not be abridged absent a clear showing that

disqualification is warranted. Zutler v Drivershield Corp. 15 AD3d 397 , 790 NYS2d 485

Dept. 2005). Counsel points out that HARTRIDGE's Order to Show Cause was filed

in August 2006 , and the hearing, originally scheduled for December 5 2006 , has already

been adjourned. It is counsel's position that movants ' motion to disqualify counsel , coming

close to six (6) months after the initiating Order to Show Cause , is barred by laches and

should be rejected by the Court , as it is clearly an attempt to discomfort HARTRIDGE , who

would be required to retain counsel at this late stage ofthe proceedings , unfamiliar with the

case, at a significant financial hardship. See, Talvy v American Red Cross in Greater New

York 205 AD2d 143 , 618 NYS2d 25 Dept. 1994). It is the Court's judgment that

movants have failed to demonstrate that counsel for defendant's testimony is necessary

to their case orthat said testimony will be prejudicial to his client. Rodriguez v 11414- 1422

Ogden Avenue Realty Corp. 304 AD2d 400, 758 NYS2d 43 (1 sl Dept. 2003); see also

Talvy v American Red Cross in Greater New York, supra. Movants have provided only

speculation in support of their position , which is insufficient to disqualify counsel.

Goldberger v Eisner, supra.

Conclusion

After a careful reading of the submissions herein , the Court credits the analysis of

the defendant HARTRIDGE, except as above noted with respect to service of the

subpoena on SACCO and FILLAS , and finds that the scope of the subpoenas are valid

and reasonably calculated to lead to the discovery of relevant evidence. It is therefore

ORDERED that the motions by ARO, Pollatos , CUCCI , WILSHIRE , BEST NEST

and KARANASOS to quash the subpoenas served upon them are denied; and it is further

ORDERED that the motion by SACCO & FILLAS to quash the subpoena is granted

based upon improper service on the limited partnership; and it is further

ORDERED that ARO, Pollatos, CUCCI, WILSHIRE, BEST NEST and

KARANASOS are directed to comply with the subpoenas and produce the documents

demanded and forward same to the Record Room , Supreme Court-Nassau County, 100

Supreme Court Drive, Mineola, New York, 11501. The hearing is presently scheduled for

April 12 , 2007 in CCP and should proceed without delay; and it is further

ORDERED that the motions to disqualify defendant's counsel , Samuel Glass , Esq.

are denied.

The Court has considered the remaining contentions of movants herein and finds

them to be without merit.

All further requested relief not specifically granted is denied.

This constitutes the decision and order of the Court.

Dated: March 30 , 2007

WILLIAM R. LaMARCA , J.

ENTfiEDAPR 0 6 2001

fWQ OOU et .ee

TO: Adam E. Milkolay, Esq.Attorney for Plaintiff900 Merchants Concourse , Suite 208Westbury, NY 11590

Howard B. Arber, Esq.Attorney for non-party movant Aro Capital , LLC64 Hilton AvenueHempstead , NY 11550

Samuel!. Glass , Esq.Attorney for Defendant James J. Hartridge62 Nichols Court , Suite 302Hempstead , NY 11550

Bainton McCarthy LLCAttorney for non-party movant Matthew Cucci and Wilshire Investment Group LLC26 BroadwayNew York , NY 10004

Lisa Firshing, Esq.Attorney for non-party movant Best Nest Realty Inc.141-07 20 Avenue , Suite 601Whitestone , NY 11357

Sacco & Filas , LLPAttorneys for non-party movant Chris Karanasos141-07 20 Avenue , Suite 506Whitestone , NY 11357

Michael C. Wolkow , Esq.Referee3167 Merrick AvenueOceanside, NY 11572

astoriafederal-hartidge,#02,#03,#04 #05/subpoenas