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181 SOUTH FRANKLIN ASSOCIATES, INC., appellant, v. Y R ASSOCIATES, INC., ET AL., respondents.

DECISION ORDER

ORDERED that the order is modified, on the law, by deleting the provision thereof granting the motion of the defendants William M. Lieber, Joseph Ross, and Century Coverage Corp., for summary judgment dismissing the complaint insofar as asserted against them and substituting therefor a provision denying the motion as premature, with leave to renew at the conclusion of discovery; as so modified, the order is affirmed, without costs or disbursements, and the complaint is reinstated insofar as asserted against those defendants.

The plaintiff entered into a lease and a lease modification (hereinafter the agreements) with the defendant YR Associates, Inc. (hereinafter YR) whereby YR agreed to lease certain premises for a period of 10 years. Upon the alleged breach of the agreements, the plaintiff commenced this action against YR, William M. Lieber, Joseph Ross, and Century Coverage Corp. (hereinafter Century). Lieber and Ross are officers, directors, and shareholders of YR and Century. Century used and occupied the subject premises. The plaintiff, in effect, sought to "pierce the corporate veil" of YR and hold Lieber, Ross, and Century liable for damages allegedly due under the agreements. Lieber, Ross, and Century moved for summary judgment dismissing the complaint insofar as asserted against them. The plaintiff cross-moved, inter alia, to strike the defendants' answer for failure to appear at depositions. The Supreme Court granted the motion and denied the cross motion.

Lieber, Ross, and Century failed to establish their entitlement to judgment as a matter of law ( see Winegrad v. New York Univ. Med. Ctr., 64 N.Y.2d 851; Zuckerman v. City of New York, 49 N.Y.2d 557) . The motion was made before the plaintiff had an opportunity to conduct discovery, and there are essential issues of fact within the exclusive knowledge of Lieber, Ross, and Century ( see Morris v. Hochman, 296 A.D.2d 481, 482). Thus, their motion for summary judgment was premature and should have been denied ( see CPLR 3212[f]).

However, the Supreme Court providently exercised its discretion in denying the plaintiff's cross motion, inter alia, to strike the defendants' answer. The penalty of striking an answer is extreme and should only be imposed after "a clear showing that the failure to comply with discovery demands is willful, contumacious, or in bad faith" ( Herrera v. City of New York, 238 A.D.2d 475, 476; see Hinds v. Price Club, 2 A.D.3d 585). Here, the plaintiff did not demonstrate that the defendants' failure to appear at depositions was willful, contumacious, or in bad faith.

ALTMAN, J.P., FLORIO, SMITH and RIVERA, JJ., concur.

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181 S. FRANKLIN ASSOCS. INC. v. Y R A
(Apr 19, 2004)