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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK___________________ ----------------------------X

SONIA M. TOLEDO, Index No. 653234/2017

(Mot. Seq. #2)

Plaintiff,

Assigned to:-against- Hon. David. B. Cohen

NISHA SABHARWAL, MOHIT SABHARWAL, PADMA Return Date: 1/11/2019

DEOGUN, VASTRA INC., PEACOCK THRONE LLC, OMVASTRA LLC, OM VASTRA MIAMI LLC,

Defendants.______________________________ --------------------- X

DEFENDANTS' REPLY MEMORANDUM OF LAW IN FURTHERSUPPORT OF MOTION FOR A PROTECTIVE ORDER AND/OR TO

QUASH SUBPOENA AND TO REARGUE MOTION TO DISMISS

CERTILMAN BALIN ADLER & HYMAN, LLP

Attorneys for Defendants

90 Merrick Avenue,9th

East Meadow, New York 11554

516-296-7000

OF COUNSEL:

John H. Gionis, Esq.

Jaspreet S. Mayall, Esq.

Nicole L. Milone, Esq.

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FILED: NEW YORK COUNTY CLERK 01/09/2019 04:31 PM INDEX NO. 653234/2017

NYSCEF DOC. NO. 56 RECEIVED NYSCEF: 01/09/2019

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TABLEOF CONTENTS

Preliminary Statement............................................................................................................1

Argument...............................................................................................................................3

Point I...............................................................................................................................3

Defendants Have Standing to Challenge the Subpoena.............................................3

A. Defendants Are Explicitly Permitted to Seek a Protective Order............3

B. Defendants Should Have Standing to Move to Quash the Subpoena......4

Point II.............................................................................................................................7

A Protective Order to Quash or Limit the Subpoena Should Issue...........................7

Point III............................................................................................................................8

The Motion to Reargue Should be Granted...............................................................8

Conclusion.............................................................................................................................11

.1

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PRELIMINARY STATEMENT

This reply memorandum of law is submitted in further support ofDefendants'

motion for

a protective order denying the use of the Capital One Subpoena, to quash or modify the Subpoena

and to reargueDefendants'

motion to dismiss certain claims brought by Plaintiff against the Entity

Defendants, which if granted would render the Subpoena moot in anyevent.1

In addition to missing the essential arguments inDefendants'

motion, Plaintiff s opposition

is replete with blatantly unsupported and scandalous allegations made against the Defendants,

asserting them as if proven true, in a transparently deliberate attempt to sway this Court in

Plaintiff's favor. Plaintiff claims that if Defendants had nothing to hide, they would be happy to

have the bank turn over all of their private, confidential bank records for the past seven years,

regardless of the relevancy to this action or their privacy interests. The absurdity of this claim

aside, that is not the standard for reviewing subpoenas on a motion for protective order/to quash.

Plaintiff s lame attempts at painting Defendants in a negative light knows no end - yet it is the

Plaintiff who used the Defendants for their social connections and is the one that is liable for failing

to pay for her purchases, as Defendants have set forth in their counterclaim. Plaintiff s preemptive

lawsuit was clearly brought to avoid rendering her remaining payments to Defendants after she

admittedly learned of a similar (and also baseless) lawsuit brought against the Defendants.

Plaintiff aims to further harass the Defendants by way of her all-encompassing Capital One

Subpoena, which this Court must not permit. Moreover, Defendants have standing to bring this

motion for a protective order to quash and/or limit the Subpoena -notwithstanding Plaintiff s

baseless claims to the contrary.

Further,Defendants'

motion to reargue the motion to dismiss must be granted as Plaintiff's

I All capitalized terms used herein shall have the meaning set forth in the moving papers, unless otherwise noted.

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Complaint utterly fails to meet various pleading requirements and simply fails to state a claim

against at least two of the Entity Defendants. There is simply no injury alleged to have been

suffered by Plaintiff in the Complaint by way of any purported "alterego"

status of the Entity

Defendants - in particular OVM and OVL.

In short,Defendants'

motion must be granted in its entirety thus preventing Plaintiff from

misusing the subpoena and bringing baseless claims against Defendants.

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ARGUMENT

POINT I

DEFENDANTS HAVE STANDING TO CHALLENGE THE SUBPOENA

Plaintiff argues that this Court may not hearDefendants'

motion for a protective order per

CPLR 3103(a) and/or to quash the Subpoena per CPLR 2304 because Defendants lack standing to

challenge a subpoena served on the non-party Capital One Bank. Plaintiff presents an incomplete

and inaccurate depiction of the state of the law in New York with regard to challenging non-party

subpoenas served upon one's financial institution. First, Defendants clearly have standing to

challenge the Subpoena by way of a protective order per CPLR 3103(a) - this is certain. Second,

Defendants may be permitted to move to quash the subpoena - as the rule regarding standing to

move to quash is not as cut and dry as Plaintiff makes it seem.

A. Defendants Are Explicitly Permitted to Seek a Protective Order

"CPLR 3103(a) not only permits a non-party witness to seek a protective order, 'but also

permits any party opposing the disclosure to make themotion...'"

Nexray Med. Imaging PC v.

Allstate Ins. Co., 39 Misc. 3d 1237(A), 972 N.Y.S.2d 144 (Dist. Ct. 2013). The First Department

has explicitly recognized a party's right to move for a protective order to quash a subpoena issued

upon a non-party seeking the party's personal financial information (in this case, employment

records detaining salary/benefits). Velez v. Hunts Point Multi-Serv. Ctr., Inc., 29 A.D.3d 104, 107,

811 N.Y.S.2d 5, 7 (1st Dep't 2006) (denying motion to quash on grounds other than standing).

Further, trial courts have routinely recognized the right of a party to move for a protective

order preventing the disclosure of their private, personal information via bank records or telephone

records directly from the non-party companies via subpoena. Phoenix Grantor Tr. v. Exclusive

Hosp., LLC, 59 Misc. 3d 1231(A) (N.Y. Sup. Ct. 2018) (holding that any party opposing disclosure

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sought by non-party subpoena may seek a protective order); People v. Lomma, 35 Misc. 3d 395,

937 N.Y.S.2d 833 (Sup. Ct. 2012) (granting application for protective order to limit disclosure of

subpoenaed material despite holding that party had no standing to move to quash subpoena for

bank records); People v. Weiss, 176 Misc. 2d 496, 498-99, 671 N.Y.S.2d 604, 607 (Sup. Ct. 1998)

(holding that party had standing to challenge non-party subpoena for telephone records via

protective order). Indeed, as the court recognized in People v. Weiss, the non-party has the ability

to seek preclusion of subpoenaed documents via motion to quash, but has no interest in doing so;

and the party whose records are sought has the interest, but not the power to do so via motion to

quash - thus a protective order must issue. 176 Misc. 2d at 498-99.

B. Defendants Should Have Standing to Move to Ouash the Subaseñã

The First Department in Norkin v. Hoey, 181 A.D.2d 248, 586 N.Y.S.2d 926 (1stDep't

1992), a case heavily relied upon by Plaintiff in her opposition, recognized the inherent unfairness

in holding that one has no standing to move to quash a subpoena seeking disclosure of private,

confidential financial information from one's bank, and even included a call for legislative action

to resolve the "sensitive issues implicated in thisarea."

181 A.D.2d at 254. Indeed, the Norkin

holding was expressly limited to the specific context at issue (i.e. the debtor-creditor relationship),

the First Department being careful not to issue an overly broad holding that would render any

challenges to non-party subpoenas for bank records impossible: "whatever expectations of

confidentiality may inhere in the traditional relationship between bank and depositor, such

expectations are wholly lacking in the context of the debtor-creditor loan relationship and,

consequently, petitioners would not e able to claim any recognizable confidentiality interest in

such records even under the most liberal authorities in thisState."

181 A.D.2d at 255. The Norkin

holding was further limited to the circumstances present in that particular case: "[w]hile there may

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be circumstances where a bank customer will be able to demonstrate that there existed such a

relationship of confidentiality between the customer and the bank that the customer should be

construed as having a sufficient interest in the records of his or her accounts to warrant standing

to challenge a subpoena to the bank for the production of those records, petitioners here have fallen

farshort..."

Id. Thus, Norkin does not represent such a bold and sweeping declaration that no

party has standing to seek to quash a non-party subpoena served upon a bank seeking production

of what are otherwise private, confidential bank records.

Indeed, as predicted by Norkin, there have been lawsuits filed against a bank for having

complied with a subpoena for one's bank records, alleging this constitutes some breach of contract

or negligent tort in disclosure of one's private, confidential information. Daniels v. J P. Morgan

Chase Bank, 2011 WL 4443599, 2011 N.Y. Slip Op. 32492(U). Although the court in Daniels

dismissed the claims against the bank, finding in that particular instance disclosure was not a

breach of contract or tort by the bank, this decision thoroughly analyzes the state of New York law

with regard to one's standing to challenge subpoenas for bank records. The Daniels court found:

As noted in Norkin, a few New York courts have implied that a

depositor (as opposed to a loan customer) may have standing to

object to a subpoena of his or her bank account information in the

context of a wholly civil proceeding between private

parties. See Matter of Norkin, 181 AD2d at 254; Siskin v. 221

Sullivan St. Realty Corp., 162 A.D.2d 356; In re Estate of

Rutherford, 26 Misc.3d 1235(A). In fact, in the case at bar, plaintiffs

were not denied standing to contest the Subpoena on their own

behalf. Their motion to quash was heard by Magistrate Dwyer. Still,

a depositor's standing to challenge a subpoena seeking third-partybank records, and accordingly, the existence of an underlying

privacy interest in those records, has not been affirmatively declared

in this State

Id

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Although New York law has not yet affirmatively recognized one's right to privacy in their

own financial records for the purposes of affording standing to an individual to move to quash a

subpoena issued to their non-party fimancial institution, this Court is not without recourse to hear

Defendants'instant motion. As outlined above, the motion for a protective order is explicitly

permitted. Further, the motion to quash should be heard as well given that a debtor-creditor

relationship between bank and customer is not at issue here, as it was in Norkin, and the privacy

interests of a depositor in protecting disclosure of their financial deposits and withdrawals should

control here.

The cases relied upon by Plaintiff do not hold to the contrary. In AQ Asset Mgmt. LLC v.

Levine, 111 A.D.3d 245, 974 N.Y.S.2d 332 (1st Dep't 2013), the First Department affirmed the

motion court's order quashing the subpoena seeking bank records stating that although movant

had no standing to move to quash (in dicta), that does not strip the court of its power to control and

order discovery. 111 A.D.3d at 260. People v. Lomma, 35 Misc. 3d 395, supra, explicitly

permitted a motion for a protective order despite holding that movant had no standing to move to

quash the subpoena for bank records - an important facet of the case conveniently overlooked by

Plaintiff. Pl. Mem. 18. Indeed although Plaintiff relies upon various criminal cases to support

their claimed lack of standing argument, this civil context requires a different standard of review,

as recognized even by the Norkin case. Pl. Mem. 16-19.

Thus, New York courts are not without any basis to permit a request to quash a subpoena

seeking access to one's personal, private bank records in a context such as this.

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POINT II

A PROTECTIVE ORDER TO QUASH OR LIMIT THE SUBPOENA SHOULD ISSUE

Plaintiff alleges that the disclosure sought by the Capital One Subpoena is not "utterly

irrelevant to any proper inquiry"2however, Plaintiff admits that the Subpoena seeks information

from any and all accounts of the Defendants with the bank above and beyond those accounts which

Plaintiff knows her own checks were deposited into, despite having no knowledge or even any

allegations with respect to the relevance of any other bank accounts to this action. Pl. Mem. 23.

Moreover, Plaintiff fails to address the well-settled rule with regard to subpoenas that Defendants

put forth in their motion papers: that subpoenas are not permitted to be used to determine the

existence of evidence for discovery but rather must seek individual, specific documents. People v.

Robinson, 87 A.D.2d 877, 878, 449 N.Y.S.2d 321, 322 (2d Dep't 1982) (appellate division

reversed lower court's decision denying motion to quash where subpoena sought production of

broad description of insurance records in order to permit counsel to peruse them to find something

helpful to client's case, with no specific document in mind); see also Morano v. Slattery Skanska,

Inc., 18 Misc. 3d 464, 469, 846 N.Y.S.2d 881, 884 (Sup. Ct. 2007). A similar rule applies when

one is seeking a protective order - where the subpoena is not "sufficiently tailored to the financial

issues in theaction..."

even where the records sought are of "dubiousrelevance"

a protective order

should issue. Jaffe v. Jaffe, 91 A.D.3d 551, 554, 940 N.Y.S.2d 1, 4 (1st Dep't 2012). Plaintiff's

Capital One Subpoena does not meet these standards and her opposition does nothing to save this

overly broad fishing expedition of a subpoena.

2 Plaintiff, repeatedly in its opposition, throws cheap jabs at Defendants'moving papers claiming that Defendants do

not even mention certain controlling standards of review, namely the Kapon v. Koch, 23 N.Y.3d 32, 11 N.E.3d 709

(2014) "utterly irrelevant to any proper inquiry" standard. Pl. Mem. 2, 20. However, Plaintiff must not have read

thoroughly because both that standard and that case are mentioned in Defendants' motion papers. Def. Mem. 8, 9-10

("Courts permit subpoenas where the proponent 'can show that the materials sought are not utterly irrelevant to the

matter at hand...'").

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Plaintiff has clearly failed to meet her burden of tailoring the subpoena with specificity so

one can "readily identify the material sought with reasonable precision". Application of Sun-Ray

Cloak Co., 256 A.D. 620, 625, 11 N.Y.S.2d 202, 206-07 (1st Dep't 1939). This is clearly so

because the subpoena seeks every single bank record of the Defendants going back to 2012 - that

the Plaintiff has listed every piece of paper the bank could possibly have regardingDefendants'

accounts on the subpoena itself does not mean that it is sufficiently tailored or somehow less broad

and all-encompassing.

In sum, the Capital One Subl5oena is not relevant to this action and should be quashed in

its entirety and/or a protective order should issue denying the disclosure sought or, at the very

least, limiting the disclosure sought therein.

POINT III

THE MOTION TO REARGUE SHOULD BE GRANTED

This Court's October 11, 2018 Decision and Order overlooked various elements of the

Defendants'motion to dismiss and the controlling law governing that motion, as clearly outlined

in the moving papers, and Plaintiff's opposition fails to demonstrate otherwise.

Namely, Plaintiff has not alleged in her Complaint, and this Court did not analyze in its

decision, the essential element of an alter-ego/piercing the corporate veil theory of liability: that a

showing of a wrongful or unjust act toward plaintiff is required. Morris v. New York State Dep't

of Taxation & Fin., 82 N.Y.2d 135, 141-42, 623 N.E.2d 1157, 1161 (1993). This Court's Decision

recognized this well-settled standard (Exhibit D at p. 3), yet mistakenly held that Plaintiff met that

standard when it had not. The Complaint simply does not allege any "wrongful or unjustact"

toward Plaintiff that caused her injury by any of the Entity Defendants that would support an alter-

ego theory. (See e.g., Complaint) And Plaintiff's opposition does not argue otherwise. Assuming

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the allegations in the Complaint are true with respect to any of the alter-ego theories, as we must

on a motion to dismiss, (e.g., assuming that Defendants operate the corporations with domination

and control and commingle assets), there is still no allegation(s) of how Plaintiff was injured by

these acts. Plaintiff only alleges she was injured by paying too much for jewelry she claims was

fake (an injury that relates to her other, direct claims against the individual defendants)- but that

injury does not stem from any alleged commingling of assets or domination of the entities. For

this reason alone, reargument must be granted and any claims based upon alter ego theory

dismissed in their entirety.

Contrary to Plaintiff's arguments, Pludeman v. N. Leasing Sys., Inc., 10 N.Y.3d 486, 890

N.E.2d 184 (2008) is distinguishable here. Although this Court referred generally to the Pludeman

standards in its Decision (Exhibit D to the moving papers at p. 4), that reference was in the context

of Mohit and Padma and the direct fraud claims against them, not in the alter-ego context of the

Entity Defendants. Moreover, the defendants in Pludeman were in the opposite position of the

Defendants here. Toledo alleges in her Complaint that Nisha sold jewelry to her and seeks to hold

the corporations liable for those alleged fraudulent sales under an alter ego theory of liability. In

Pludeman, the corporation was accused of the fraudulent behavior and the individual defendants

(corporate officers) were alleged to have been liable based on an alter ego theory. 10 N.Y.3d at

486. Plaintiff's over-reliance on Pludeman is thus misplaced. The instant motion demonstrates

why reargument should be granted as the alter ego allegations in the Complaint were severely

lacking in all but conclusory and upon "information andbelief"

claims, and upon reargument these

claims based on an alter ego theory should be dismissed. Morris, supra, controls here, not

Pludeman: a showing of a wrongful or unjust act stemming from the alter ego relationship is

required. 82 N.Y.2d at 141-42.

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Plaintiff reminds this Court that only the claims against OVL and OVM were alleged as

indirect, alter ego theories and that the unjust enrichment claims against PTL and Vastra were

direct claims. Pl. Mem. at 5, ftn. 3. This is because Plaintiff has not alleged any direct dealings

with OVL and OVM in her Complaint - thus her only hope for bringing a claim against them is

an alter ego theory. The lack of any direct dealings between OVL and OVM on the one hand and

Plaintiff on the other only further supportsDefendants'

position that the Complaint fails to state a

claim against these entities. At the very least, this Court should grant reargument and dismiss the

claims against OVL and OVM.

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CONCLUSION

For the reasons set forth above and those more fully set forth inDefendants'

moving papers,

the instant motion should be granted in its entirety, together with such other and further relief as

this Court deems just and proper.

Dated: East Meadow, New York

January 9, 2019

CERTI BALIN LER/& HYMAN, LLP

By:

John H. Gio , Es

Jaspreet S. , Esq.

Nicole L. Milone, Esq.

Attorneys for Defendants

90 Merrick Avenue,9th

East Meadow, New York 11554

(516) 296-7000

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