Arturo Arita v FDS Associates, LLC; FDS Associates, LLC v The City of New York
Attorneys and Parties
Brief Summary
Personal injury litigation; whether a party may amend to add fraud-based defenses and obtain post-note-of-issue discovery based on collateral allegations in a federal Racketeer Influenced and Corrupt Organizations Act (RICO) action.
Denied the City’s motion to amend its answer to add fraud and fraud-on-the-court defenses, to strike the note of issue for further discovery, and to stay pending summary judgment motions.
Modified to permit limited additional discovery from plaintiff while keeping the case on the trial calendar; otherwise affirmed. The request to stay summary judgment was moot.
A federal RICO complaint naming plaintiff’s attorneys and certain medical providers did not justify adding fraud defenses, but supported narrowly tailored discovery into what plaintiff knew about those allegations; such discovery may proceed post-note under 22 NYCRR 202.21(d) [rule permitting post-note-of-issue discovery in the court's discretion].
Background
Plaintiff Arturo Arita sued FDS Associates, LLC for personal injuries. FDS, as third-party plaintiff, impleaded The City of New York. The City moved to amend its answer to add affirmative defenses of fraud and fraud on the court based on a federal Racketeer Influenced and Corrupt Organizations Act (RICO) complaint naming plaintiff’s counsel and some medical providers, to strike the note of issue to conduct further discovery, and to stay pending summary judgment motions. The Supreme Court, Bronx County, denied the motion in full.
Lower Court Decision
The motion court denied leave to amend to add fraud-based defenses, denied striking the note of issue for additional discovery, and denied a stay of summary judgment motions.
Appellate Division Reversal
The Appellate Division unanimously modified the order to permit limited post-note discovery: a deposition of plaintiff confined to his knowledge, if any, of the facts underlying the federal RICO allegations against his attorneys and medical providers, and production of any documents identified through that deposition. This discovery may proceed while the case remains on the trial calendar under 22 NYCRR 202.21(d) [rule permitting post-note-of-issue discovery in the court's discretion]. The denial of leave to amend to add fraud and fraud-on-the-court defenses was affirmed. The request to stay plaintiff’s summary judgment motion was deemed moot because a decision had already been rendered on that motion.
Legal Significance
The decision clarifies that the mere existence of a collateral federal RICO action against a plaintiff’s counsel or medical providers does not, without more, warrant amending an answer to add fraud-based defenses. However, courts may allow narrowly tailored, post-note-of-issue discovery focused on a plaintiff’s knowledge of such alleged misconduct, consistent with discretionary authority under court rules to manage discovery while maintaining the trial calendar.
Speculative fraud defenses predicated on third-party RICO allegations will be rejected, but courts may permit limited, targeted post-note discovery into a plaintiff’s knowledge of those allegations without derailing the case from the trial calendar.