SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1295
CA 12-00938
PRESENT: SCUDDER, P.J., CENTRA, VALENTINO, WHALEN, AND MARTOCHE, JJ.
AXA EQUITABLE LIFE INSURANCE COMPANY, AXA
NETWORK, LLC AND AXA ADVISORS, LLC,
PLAINTIFFS-RESPONDENTS,
V MEMORANDUM AND ORDER
RICHARD KALINA, PATRICK LYNCH, CARL DATTELLAS,
GARY CRONISER, WILLIAM ZAIKA, CHRISTOPHER KEEGAN
AND DIVERSIFIED WEALTH STRATEGIES, LLC,
DEFENDANTS-APPELLANTS.
(APPEAL NO. 1.)
PADUANO & WEINTRAUB, NEW YORK CITY (LEONARD WEINTRAUB OF COUNSEL), FOR
DEFENDANTS-APPELLANTS.
HANCOCK ESTABROOK, LLP, SYRACUSE (JOHN T. MCCANN OF COUNSEL), FOR
PLAINTIFFS-RESPONDENTS.
Appeal from an order of the Supreme Court, Onondaga County (John
C. Cherundolo, A.J.), entered July 11, 2011. The order, insofar as
appealed from, granted the cross motion of plaintiffs to expedite
discovery.
It is hereby ORDERED that the order insofar as appealed from is
unanimously reversed on the law without costs and the cross motion is
denied.
Memorandum: Plaintiffs, which are financial services firms,
commenced this breach of contract action against the individual
defendants, who are former financial advisors for plaintiffs, and
defendant Diversified Wealth Strategies, LLC, the limited liability
corporation formed by the individual defendants. Defendants moved to
stay the action and to compel arbitration before the Financial
Industry Regulatory Authority (FINRA) on the ground that plaintiff AXA
Advisors, LLC (AXA Advisors) was a FINRA member firm and the
individual defendants were all FINRA representatives, thus rendering
arbitration mandatory. Plaintiffs cross-moved to dismiss the claims
of AXA Advisors pursuant to CPLR 3217 (b) or, in the alternative, for
expedited discovery prior to the submission of those claims to
arbitration. In appeal No. 1, defendants appeal from an order that
granted the motion but also granted the cross motion seeking the
alternative relief of expedited discovery. In appeal No. 2,
defendants appeal from an order denying their motion for leave to
reargue and granting plaintiffs’ cross motion to compel discovery. In
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CA 12-00938
appeal No. 3, defendants appeal from an order denying their motion for
a protective order, granting plaintiffs’ further cross motion to
compel discovery, and sua sponte staying the pending FINRA arbitration
until Supreme Court was satisfied that discovery was completed.
Addressing first appeal No. 1, we agree with defendants that the
court erred in granting the cross motion seeking, in the alternative,
to expedite discovery prior to the submission of claims of AXA
Advisors to arbitration. A court may order disclosure “to aid in
arbitration” (CPLR 3102 [c]), but there must exist “ ‘extraordinary
circumstances’ ” to warrant court-ordered disclosure (De Sapio v
Kohlmeyer, 35 NY2d 402, 406; see Matter of Travelers Indem. Co. v
United Diagnostic Imaging, P.C., 73 AD3d 791, 791-792; Matter of
Goldsborough v New York State Dept. of Correctional Servs., 217 AD2d
546, 547, appeal dismissed 86 NY2d 834). It is contemplated that
disclosure devices will be used sparingly in arbitration and, indeed,
“[t]he availability of disclosure devices is a significant
differentiating factor between judicial and arbitral proceedings” (De
Sapio, 35 NY2d at 406). “The test is necessity rather than
convenience” (Matter of State Farm Mut. Auto. Ins. Co. v Wernick, 90
AD2d 519, 519; see International Components Corp. v Klaiber, 54 AD2d
550, 551). Here, plaintiffs failed to establish extraordinary
circumstances to require discovery prior to arbitration (see Matter of
Progressive Specialty Ins. Co. v Alexis, 90 AD3d 933, 933-934). They
made no showing that the discovery that they are allowed under the
FINRA rules would be inadequate for them to establish their case (see
Travelers Indem. Co., 73 AD3d at 792; International Components Corp.,
54 AD2d at 551).
With respect to appeal No. 2, we dismiss the appeal from the
order insofar as it denied leave to reargue inasmuch as no appeal lies
from such an order (see generally Lindsay v Funtime, Inc., 184 AD2d
1036, 1036; Empire Ins. Co. v Food City, 167 AD2d 983, 984). With
respect to the remainder of the order, we agree with defendants that,
in light of our determination in appeal No. 1, the court erred in
granting the cross motion to compel discovery. We therefore modify
the order in appeal No. 2 accordingly.
With respect to appeal No. 3, plaintiffs contend as a preliminary
matter that the appeal should be dismissed as time-barred. Defendants
had until May 11, 2012 in which to take an appeal, i.e., 35 days after
being served by mail on April 6, 2012 with a copy of the order with
notice of entry (see CPLR 2103 [b] [2]; 5513 [a]). An appeal is taken
by serving the notice of appeal on the opposing party and filing the
notice of appeal (see CPLR 5515 [1]). A complete failure to comply
with CPLR 5515 deprives this Court of jurisdiction to entertain the
appeal (see Dalton v City of Saratoga Springs, 12 AD3d 899, 899).
Where, however, the “appellant either serves or files a timely notice
of appeal . . . , but neglects through mistake or excusable neglect to
do another required act within the time limited, the court . . . may
grant an extension of time for curing the omission” (CPLR 5520 [a]).
Here, the record establishes that the notice of appeal was not filed
until June 1, 2012, and was therefore untimely, but the record does
not indicate when the notice of appeal was served on plaintiffs. The
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record is therefore inadequate to enable us to review plaintiffs’
contention. In light of our determination in appeal No. 1 that
extraordinary circumstances did not exist here, we conclude that the
court erred in granting the cross motion to compel discovery and that
the stay of the pending arbitration should be vacated. Defendants’
motion for a protective order is moot.
Entered: December 21, 2012 Frances E. Cafarell
Clerk of the Court