Upon the following papers numbered 1 to8 read on this motion by defendant to dismiss the complaint or for relief in the alternative

Amended notice of motion, supporting affidavits/affirmations 1,2,3,4 ;

Notice of cross motion5,6;

Affidavits/affirmations in opposition7 (defendant) ; Replying Affidavits/affirmations;

OtherExhibits 8;

(and after hearing counsel in support of and opposed to the motion) it is,

ORDERED that the dismissal portion of defendant's motion is denied, and its application to strike the case from the calendar is moot, this action never having been placed on the calendar. Plaintiff's cross motion is denied.

In this action to recover first party no fault benefits (Insurance Law §§ 5101 et seq.), in addition to demanding dismissal or striking from the calendar, defendant seeks disclosure with respect to its defense that plaintiff is not wholly owned by licensed professionals, the fraudulent incorporation defense (see State Farm Mut. Auto Ins. Co. v. Mallela, 4 NY3d 313). With its answer, defendant served disclosure demands for plaintiff to produce its owner for an examination before trial, to furnish written interrogatories, and to produce documents specified in a demand for discovery and inspection. Plaintiff's owner did not appear for examination, and plaintiff never responded to the demand for the production of documents. Defendant seeks an order directing plaintiff to produce them and to direct plaintiff's owner to appear at an examination before trial. These portions of defendant's motion are granted.

Plaintiff was required, but failed, to challenge the propriety of defendant's notice for discovery and inspection pursuant to CPLR 3120 within twenty-five days of its service (CPLR 3120, 2103(b)(2)). However, it opposes defendant's motion on the grounds that defendant has failed adequately to plead its fraudulent incorporation defense and that defendant's demands are overly broad. It cross-moves for a protective order and for an order compelling discovery.

Because plaintiff failed to object to defendant's demands, it is obligated to produce the documentation sought except as to matters which are palpably improper or privileged. Palpably improper matters include defenses which defendant is precluded from raising (New Era Acupuncture, P.C. [Basil] v. State Farm Mut. Auto Ins. Co., 24 Misc 3d 134(A), 2009 NY Slip Op 51396(U), *2 [Appellate Term, Ninth and Tenth Judicial Districts]), as well as demands that are overly broad (see Holness v. Chrysler Corp., 220 AD2d 721; Zambelis v. Nicholas, 92 AD2d 936).

Contrary to plaintiff's assertion, a defendant is not required to plead a defense predicated upon fraudulent incorporation with particularity pursuant to CPLR 3016(b) (Radiology Today, P.C. [Pile] v. GEICO Gen. Ins. Co. (32 Misc 3d 4,7 [Appellate Term, Second, Eleventh, and Thirteenth Judicial Districts]). Defendant has adequately raised this affirmative defense by pleading it in its answer. In addition, although plaintiff correctly notes that conclusory allegations are insufficient to obtain discovery with respect to a Mallela-based defense (see Radiology Today, P.C. [Pile] v. GEICO Gen. Ins. Co., supra at 7; but see One Beacon Ins. Group, LLC v. Midland Med. Care, P.C. 54 AD3d 738,740), defendant's motion papers are sufficient to demonstrate it possesses a potentially meritorious Mallela-based defense.

Consequently, defendant's motion is granted to the extent plaintiff is to produce the written agreements for management services it made with any entity, its lease or other agreement pursuant to which it occupies its premises, billing agreements, equipment leases, and factoring agreements. Defendant's demands for plaintiff's financial and banking documents from 2010 also are granted (One Beacon Ins. Group, LLC v. Midland Med. Care, 54 AD3d 738, supra; Q-B Jewish Med. Rehabilitation, P.C. [Lyalmiyeva] v. Allstate Ins. Co., 32 Misc 3d 139(A), 2011 NY Slip Op 51551(U), *2 [Appellate Term, Second, Eleventh, and Thirteenth Judicial Districts]). Special circumstances having been shown to exist, plaintiff also is to produce its corporate income tax returns from 2010 to the present (New Era Acupuncture [Basil] v. State Farm Mut. Auto Ins. Co., supra at *3). However, defendant's demands for the income tax returns of plaintiff's owner

Garden Medical Diagnostics, P.C. [James]

v. Progressive Casualty Ins. Co.

Index Number SMC 6038-11

Order on Motion [*2]

Judge Hackeling

Page 3 of 3

are denied. Such returns are not discoverable absent a strong showing that their disclosure is indispensable to a claim or defense and cannot be obtained from other sources (Altidor v. State-Wide Ins. Co., 22 AD3d 435, 435-436). Defendant has not made the required showing. Plaintiff is to make the specified disclosures within twenty-one days of the date of this order.

Defendant also has shown its notice for the examination before trial of plaintiff's owner satisfied the requirements of CPLR 3106(d). Plaintiff has failed to avail itself of the procedures outlined in the same subsection for sending another person. Consequently, that portion of defendant's motion in which it demands to take the deposition of the individual named in its notice is granted. The deposition is to be held at 10 a.m., June 27, 2012 at the Fourth District Courthouse.

Plaintiff's cross motion to take the deposition of an employee of defendant is denied, plaintiff having failed to comply with the notice requirements of CPLR 3107 before demanding this relief. As noted earlier, its demand for a protective order also is denied.

Hon. C. Stephen Hackeling

Dated: 5-30-12J.D.C.