Partnership breakups are characterized by counsel as business divorces for a good reason – the venom that permeates some of the cases is largely unrivaled (excepting, of course, matrimonial practice). A hurdle arises when irrelevant anger is included in a pleading and counsel is compelled to address the allegation head-on.
Imagine the standard business break-up litigation. Plaintiff asserts the garden variety claims, including breach of fiduciary duty, breach of the corporation’s shareholder agreement, etc. In an attempt to portray his soon-to-be-ex in a poor light, plaintiff also adds that his partner, a casual art collector, recently purchased a painting, but arranged for delivery to his sister’s New Hampshire home in a putative effort to avoid sales tax on the purchase.
The allegation, if true, is obviously damning. Assuming arguendo there is a basis for denying the claim, the conflicting pleadings will lead to discovery demands seeking to confirm the allegation, which simply serves to postpone resolution of the issue. What’s a savvy defense attorney to do?
CPLR 3024(b) provides an option. Specifically, within 20 days after service of the challenged pleading, (( CPLR 3024(c).)) “a party may move to strike any scandalous or prejudicial matter unnecessarily inserted in the pleading.” ((CPLR 3024(b).)) As Professor Siegel notes in his Practice Commentaries:
Many apt allegations are scandalous and prejudicial both: the accusation of adultery in a matrimonial action, theft in a conversion action, fraud in a suit for breach of trust, rape in an action for assault. … The showing required under subdivision (b) is not merely that the matter objected to is “scandalous” or “prejudicial”, but that it is unnecessarily inserted in the pleading. The “unnecessarily” is the key word. ((Siegel, David, Practice Commentaries, C3024:4.))
When Is An Allegation “Unnecessary”?
The First Department’s Soumayah v. Minnelli ((41 A.D.3d 390, 839 N.Y.S.2d 79 (1st Dep’t 2007).)) provides guidance for discerning when an allegation warrants CPLR 3024(b) intervention. In Soumayah, a former employee initiated an action against his former employer for, inter alia, quantum meruit. Plaintiff alleged in his Complaint that the defendant asked plaintiff how much money he wanted not to initiate a threatened lawsuit, and thereafter defendant asked the plaintiff to reconsider pursuing such an action. The Appellate Division noted that in reviewing a CPLR 3024(b) motion, the issue is whether the scandalous or prejudicial allegations are relevant to a cause of action:
relevancy is still the best key to whether matter is ‘unnecessarily’ pleaded, and the best key to relevancy is whether it would be admissible in evidence at the trial … In general, we may conclude that ‘unnecessarily’ means ‘irrelevant.’ We should test this by the rules of evidence and draw the rule accordingly. Generally speaking, if the item would be admissible at the trial under the evidentiary rules of relevancy, its inclusion in the pleading, whether or not it constitutes ideal pleading, would not justify a motion to strike under CPLR 3024(b).
Applying that principle to the facts at bar, the Soumayah Court ruled that the allegations that the defendant asked the plaintiff how much money he wanted not to initiate suit, and later asked him to reconsider suing her, were not relevant to the plaintiff’s claims, finding that any such statements by the defendant would constitute an inadmissible offer to compromise pursuant to CPLR 4547. The lesson to be learned from this Appellate Division decision is that despite the fact that the allegation was not terribly “scandalous”, a mainstream evidentiary objection served as the foundation for the CPLR 3024(b) motion.
A more extreme allegation was asserted in Baychester Shopping Center, Inc. v. Llorente. ((175 Misc.2d 739, 669 N.Y.S.2d 460 (N.Y. Sup. Ct. 1997).)) There, the defendant incorporated by reference in his answer copies of various newspaper articles about defendants on the counterclaims, including a May 1, 1995 New York Post article claiming that the counterclaim defendants were among the ten worst landlords in New York City that year. The Court agreed with the movant that the articles constituted scandalous or prejudicial material unnecessarily inserted in the Answer and granted the CPLR 3024(b) motion to strike. The Baychester Shopping Center Court relied upon the fact that not one of the articles submitted mentioned defendant specifically, and the instances described in the newspaper articles occurred before the defendant moved into his room, essentially relying upon a bright-line relevancy objection.
Two Second Department cases are likewise compelling. The May 2008 decision in Plaza at Patterson L.L.C. v. Clover Lake Holdings, Inc., ((51 A.D. 931, 856 N.Y.S.2d 877 (2nd Dep’t 2008).)) reversed a Westchester Supreme Court Order denying a motion to strike scandalous pleadings from respondents’ verified answer and counterclaims. In Plaza at Patterson, the Second Department ruled that it was error for the Supreme Court to deny the 3024(b) motion when the respondents incorporated in their pleading references to collateral matters relative to the petitioners’ corporate principals “that are unrelated to the instant litigation. These matters should be stricken from the respondents’ verified answer and counterclaims as both unnecessary to the viability of the counterclaims, and as prejudicial to the petitioners.” The Second Department’s ruling in J.C. Mfg., Inc. v. N.P.I. Elec., Inc. ((178 A.D.2d 505, 577 N.Y.S.2d 145 (2nd Dep’t 1991).)) is even more cautious because it affirmed a trial court ruling striking certain paragraphs from a pleading despite the fact that the Court acknowledged that the allegations may be admissible at trial. Accordingly, although admissibility is still unresolved, the offending allegations are out for the time being.
Practice & Procedure
If the allegations are truly unnecessary and scandalous, counsel may consider reviewing the standards for filings under seal pursuant to 22 NYCRR 216.1 when contemplating the CPLR 3024(b) motion. In the alternative, assuming that a motion is granted and the motion was not made under seal, it is prudent to request that the Court remove the subject pleading from the Court file. Finally, no appeal as of right arises from the Court’s decision on a 3024(b) motion. ((Wilson v. DiCaprio, 278 A.D.2d 25, 717 N.Y.S.2d 174 (1st Dep’t 2000).))