Michael Malekan v. Albert Malekan et al.
Attorneys and Parties
Brief Summary
Commercial real estate limited liability company (LLC) dispute over the scope of nonparty discovery subpoenas to a bank and an accountant.
Denied defendants' motion to quash or limit subpoenas served on JPMorgan Chase Bank and Lipton & Associates LLP, effectively allowing broad production.
Modified to limit the temporal scope (July 28, 2017 to production), narrow Lipton's production to 1826 AMJ Management LLC transactions only with the nominal defendant LLCs, and require a confidentiality agreement; otherwise affirmed.
The subpoenas satisfied CPLR 3101(a)(4) [requires only minimal notice to nonparties sufficient to allow the subpoena to be challenged], and plaintiff's nonconclusory allegations—such as Albert allegedly directing Vida Mona Leah LLC to issue a $5,000 check in an unauthorized acquisition effort—supported relevance. However, scope and privacy concerns, along with party concessions, warranted tailoring the subpoenas and imposing confidentiality.
Background
Plaintiff Michael Malekan sues over disputed management/valuation of real estate interests held through nominal defendants 466-26 Soho LLC, 75-26 Soho LLC, Dayan 26-552, LLC, and 466-26 Delaware LLC. He alleges that defendant Albert Malekan engaged in improper conduct and misappropriation, including using his wholly owned entity, Vida Mona Leah LLC, to facilitate unauthorized transactions related to the properties at issue. Plaintiff issued nonparty subpoenas to JPMorgan Chase Bank and to the accountant, Lipton & Associates LLP, seeking financial records for Vida Mona Leah LLC and 1826 AMJ Management LLC. Defendants moved to quash or limit the subpoenas.
Lower Court Decision
The Supreme Court, New York County, denied defendants' motion to quash/limit the nonparty subpoenas, permitting broad production as noticed from January 1, 2016, including Vida Mona Leah LLC and 1826 AMJ Management LLC materials.
Appellate Division Reversal
The Appellate Division held the subpoenas met the minimal notice standard under CPLR 3101(a)(4) and that defendants did not show the requests were utterly irrelevant, futile, or an impermissible fishing expedition. It refused to quash subpoenas for Vida Mona Leah LLC financials given the pleaded $5,000 check allegation supporting relevance. The court modified the order to: (1) limit production to July 28, 2017 through the time of production; (2) limit Lipton's production concerning 1826 AMJ Management LLC to transactions between 1826 AMJ and the nominal defendants (466-26 Soho LLC, 75-26 Soho LLC, Dayan 26-552, LLC, and 466-26 Delaware LLC), excluding other Albert-owned entities; and (3) require the parties to enter into a confidentiality agreement. In all other respects, the denial of the motion to quash/limit was affirmed.
Legal Significance
Confirms that nonparty discovery of related-entity financial records in an LLC dispute is permissible where plaintiff offers nonconclusory allegations supporting relevance; CPLR 3101(a)(4) requires only minimal notice. Appellate courts will tailor subpoena scope by time frame, counterparties, and confidentiality to balance relevance and privacy while preventing fishing expeditions.
Nonparty subpoenas to a bank and accountant were upheld under CPLR 3101(a)(4), but narrowed to relevant entities, transactions, and dates, with confidentiality protections—showing courts will allow targeted discovery into related entities when grounded in specific allegations of misuse.