First Department affirms denial of second stay of civil action due to related criminal proceeding 

In Cohen v Gordon & Silber, PC, _AD3d_, 2023 NY Slip Op 02968 (1st Dept. 2023), plaintiff sought a stay of the civil action pending resolution of a related criminal action.  The First Department set forth the criteria to be considered in deciding whether or not to grant the application:

In rendering a decision on such an application, the court will consider a number of factors, including whether a defendant intends to “invoke his or her constitutional right against self-incrimination” (Mook v Homesafe Am., Inc., 144 AD3d 1116, 1117, 41 N.Y.S.3d 759 [2d Dept 2016], quoting Britt v International Bus Servs., 255 AD2d 143, 679 N.Y.S.2d 616 [1st Dept 1998]). Although the intention to invoke the right against self-incrimination is a compelling factor, a court is not obliged to stay a civil proceeding simply because a related criminal matter is pending (see Fortress Credit Opportunities I LP v Netschi, 59 AD3d 250, 250, 873 N.Y.S.2d 562 [1st Dept 2009]; Access Capital v DeCicco, 302 AD2d 48, 51, 752 N.Y.S.2d 658 [1st Dept 2002]).

Cohen v Gordon & Silber, PC, _AD3d_, 2023 NY Slip Op 02968 (1st Dept. 2023)

This was not the first-time plaintiff had sought to stay the civil action:

The court imposed a stay before the one at issue on this appeal, but made that stay contingent on defendant’s filing of his criminal motion by a date certain and declined to vacate the note of issue. Plaintiff admits he failed to file the criminal motion by the date certain, instead filing the motion one week after that date.

Cohen v Gordon & Silber, PC, _AD3d_, 2023 NY Slip Op 02968 (1st Dept. 2023)

However, neither the motion or appellate court rested the denial of the request for a second stay on the untimely filing:

Supreme Court made clear that it was denying the second stay application for several reasons, only one of which pertained to the delayed motion filing in the criminal matter. For example, plaintiff did not make the second application for a stay until after he was deposed and after he had already certified in the note of issue that discovery was complete (cf. Mook, 144 AD3d at 117). Furthermore, as Supreme Court noted, the motion to dismiss the criminal case was only a partial motion to dismiss, raising the possibility that the criminal case could continue for years and deprive defendants of their right to a reasonably timely disposition of the civil case.

Cohen v Gordon & Silber, PC, _AD3d_, 2023 NY Slip Op 02968 (1st Dept. 2023)

Perhaps the most interesting part of the decision involved a prior preclusion order:

Plaintiff’s assertion that he would be deprived of a defense in the absence of a stay, is unavailing in light of the court’s previous order precluding plaintiff from testifying on any matter for which he had invoked his Fifth Amendment privilege at his deposition — a ruling that plaintiff did not appeal. As a result, there is no merit to plaintiff’s suggestion that once the criminal case is over, he will be free to answer questions in the civil matter.

Cohen v Gordon & Silber, PC, _AD3d_, 2023 NY Slip Op 02968 (1st Dept. 2023)

Decision Date: June 6, 2023

Practical Practice Point

Navigating the assertion of the Fifth Amendment privilege in New York State civil actions is a fraught exercise, often requiring exquisite balancing on the part of both attorney and client.

CPLR 4501 provides for a privilege against self-incrimination in civil proceedings:

A competent witness shall not be excused from answering a relevant question, on the ground only that the answer may tend to establish that he owes a debt or is otherwise subject to a civil suit. This section does not require a witness to give an answer which will tend to accuse himself of a crime or to expose him to a penalty or forfeiture, nor does it vary any other rule respecting the examination of a witness.

In looking at case annotations for this Practical Practice Point we stumbled upon an interesting trial level decision from 1974, Slater v Slater, 78 Misc 2d 13, 15 (Sup Ct, Queens County 1974), which serendipitously led to other cases illustrating important, but less frequently discussed aspects of the privilege.  First, Slater:

This court recognizes that the privilege protects not only answers which alone could support a criminal conviction, but all responses which could feed the chain of evidence needed to prosecute. ( Hoffmanv.United States, 341 U.S. 479, supra.) Moreover, the one who claims the privilege may invoke it when he has reasonable cause to fear the danger of incrimination, but in this regard he must make a showing of a “real danger”.  “Mere imaginary possibility of prosecution” is insufficient to stave off the direction to respond. ( Rogersv.United States, 340 U.S. 367, 375.) Although the witness may not be compelled to say more than that which asserts the privilege, “It is for the court to say whether his silence is justified”. ( Hoffmanv.United States, supra, p. 486.) In the judicial determination of whether silence is indeed justified, each case must be controlled by its own facts and, as such, general rules cannot be devised to articulate the specific “real danger” that must be shown by the claimant. Here, the defendant “is not exonerated from answering merely because he declares that in so doing he would incriminate himself — his say-so does not of itself establish the hazard of incrimination”. (Hoffmanv.United States, supra, p. 486.)

A trail of cases citing Slater led first to a Second Department decision (always nice to have appellate authority), Flushing Natl. Bank v Transamerica Ins. Co., 135 AD2d 486, 487 (2d Dept 1987), which expanded on the holding:

Nevertheless, under the circumstances, Shankman should have been compelled to raise his privilege at the deposition with regard to each question to be asked and with respect to each document required to be produced by him (see, State of New York v Carey Resources, supra). Whether the privilege should be sustained is to be governed by “the implications of the question, in the setting in which it is asked” ( Hoffman v United States, supra, at 486; see, Steinbrecher v Wapnick, supra). “The privilege may only be asserted when the witness has a reasonable cause to apprehend danger from a direct answer (see, Hoffman v United States [supra, at] 486; State of New York v Skibinski, 87 AD2d 974; Southbridge Finishing Co. v Golding, 208 Misc 846, 852, affd 2 AD2d 882). While the witness is generally the best judge of whether an answer may tend to be incriminating ( People v Arroyo, 46 NY2d 928, 930; Matter of Grae, 282 NY 428, 434; People ex rel. Taylor v Forbes, 143 NY 219, 230-231; Triangle Pub. v Ferrare [4 AD2d 591] 593), when the danger of incrimination is not readily apparent, the witness may be required to establish a factual predicate ( People v Priori, 164 NY 459, 465; United States v Roundtree, 420 F2d 845; 8 Wigmore, Evidence [McNaughton rev, 1961], § 2271)” ( State of New York v Carey Resources, supra, at 509).

Therefore, the appellant’s motion is granted to the extent indicated. At the deposition, as noted, Shankman may invoke his privilege against self-incrimination, and the parties, if they be so advised, may seek appropriate rulings from the Supreme Court concerning any invocation of the privilege against self-incrimination by Shankman (see, Slater v Slater, 78 Misc 2d 13, 16; see also, Matter of Lieb v Henry, 99 AD2d 757; State of New York v Carey Resources, supra).

Which in turn led to Carver Fed. Sav. Bank v Shaker Gardens, Inc., 167 AD3d 1337, 1342-1344 (3d Dept. 2018) (always nice to have recent appellate authority) which addressed some of the more nuanced issues connected to asserting the privilege:

Where, as here, “the danger of incrimination is not readily apparent, the witness [should] be required to establish a factual predicate” for the invocation of the privilege (State of New York v Carey Resources, 97 AD2d at 509; accord Matter of Astor, 62 AD3d 867, 869, 879 NYS2d 560 [2009]; see Flushing Natl. Bank v Transamerica Ins. Co., 135 AD2d 486, 487, 521 NYS2d 727 [1987]). Defendant made no such showing, instead merely making a broad, undifferentiated assertion of the Fifth Amendment privilege as to each and every question asked, as well as to all documents requested, on the basis of sweeping and unsubstantiated assertions of counsel. Such a blanket invocation of the privilege—even as to questions as innocuous as defendant’s marital status and whether he has any children or owns his home—simply cannot be sustained on this record (see Chase Manhattan Bank, Natl. Assn. v Federal Chandros, 148 AD2d 567, 568, 539 NYS2d 36 [1989] [concluding, on an application to hold a judgment debtor in contempt for failing to comply with a subpoena, that “a blanket refusal to answer questions based upon the Fifth Amendment privilege against self-incrimination cannot be sustained absent unique circumstances”]; Bank of Am., N.A. v Veluchamy, 643 F3d 185, 187 [7th Cir 2011] [same]; United States v Hatchett, 862 F2d 1249, 1251 [6th Cir 1988] [same]; Capitol Prods. Corp. v Hernon, 457 F2d at 542-543 [same]; Huber v Arck Credit Co., LLC, 2016 US Dist LEXIS 14299 at *18-21, 2016 WL 482955 at *5-6; see also Matter of Astor, 62 AD3d at 869; State of New York v Carey Resources, 97 AD2d at 509).

Under these circumstances, “in order to effectively invoke the protections of the Fifth Amendment, [a defendant] must make a particularized objection to each discovery request” (Chase Manhattan Bank v Federal Chandros, 148 AD2d at 568; accord Matter of Astor, 62 AD3d at 869; see Matter of Lieb v Henry, 99 AD2d 757, 758, 471 NYS2d 674 [1984]; State of New York v Carey Resources, 97 AD2d at 509; Capitol Prods. Corp. v Hernon, 457 F2d at 543). The proper procedure, therefore, is to remit the matter to Supreme Court “to conduct an in camera inquiry to assess the validity of the assertion of the privilege upon such particularized objections” (State of New York v Carey Resources, 97 AD2d at 509; see Matter of Astor, 62 AD3d at 869; Matter of Lieb v Henry, 99 AD2d at 758; Capitol Products Corporation v Hernon, 457 F2d at 544). With request to the subpoenaed documents, defendant must establish a “factual predicate” by submitting the documents for an in camera inspection and/or “compiling a privilege log in order to aid the court in its assessment of a privilege claim and enable it to undertake in camera review” (Matter of Astor, 62 AD3d at 869-870 [internal quotations marks, brackets and citation omitted]; see Matter of Subpoena Duces Tecum to Jane Doe, 99 NY2d 434, 442, 787 NE2d 618, 757 NYS2d 507 [2003]; Ren Zheng Zheng v Bermeo, 114 AD3d 743, 745, 980 NYS2d 541 [2014]; Matter of Lieb v Henry, 99 AD2d at 758).

For the same reasons, we conclude that Supreme Court’s order denying plaintiff’s motion to compel as to Chava Nelkenbaum must be reversed and the matter remitted for an in camera inquiry to test the validity of her invocation of the Fifth Amendment privilege as to each of the questions asked and each of the documents demanded of her. To the extent that Chava Nelkenbaum invoked the spousal privilege as a basis for refusing to answer certain questions propounded at the deposition or to produce documents responsive to the subpoena, we note that the privilege “attaches only to those statements made in confidence and ‘that are induced by the marital relation and prompted by the affection, confidence and loyalty engendered by such relationship’ ” (People v Fediuk, 66 NY2d 881, 883, 489 NE2d 732, 498 NYS2d 763 [1985], quoting Matter of Vanderbilt [Rosner—Hickey], 57 NY2d 66, 73, 439 NE2d 378, 453 NYS2d 662 [1982]; see People v Mills, 1 NY3d 269, 276, 804 NE2d 392, 772 NYS2d 228 [2003]). Further, this privilege does not attach to “ordinary conversations relating to matters of business” (Johnson v Johnson, 25 AD2d 672, 673, 268 NYS2d 403 [1966] [internal quotation marks and citation omitted]; see People v Melski, 10 NY2d 78, 80, 176 NE2d 81, 217 NYS2d 65 [1961] [spousal privilege does not attach “where the communication involved ordinary business matters”]; Parkhurst v Berdell, 110 NY 386, 394, 18 NE 123, 15 Civ Proc R 354, 18 NY St 193 [1888]; Securities Settlement Corp. v Johnpoll, 128 AD2d 429, 431, 512 NYS2d 814 [1987], lv dismissed 70 NY2d 693, 512 NE2d 554, 518 NYS2d 1028 [1987]), nor does it apply “when the substance of [the] communication . . . is revealed to third parties” (Matter of Vanderbilt [Rosner—Hickey], 57 NY2d at 74). Supreme Court did not reach the issue of whether the spousal privilege was properly invoked by Chava Nelkenbaum, having ruled that she properly asserted her Fifth Amendment privilege in response to all inquiries put to her during her deposition and all documents demanded in the subpoena, and the record before us is insufficient to evaluate the merits of the claimed privilege.

Finally, we find no basis upon which to disturb Supreme Court’s decision to seal the two letters proffered by defendant’s counsel as well as the transcript of the in camera conference (see 22 NYCRR 216.1).

We will certainly have the opportunity to return to the privilege against self-incrimination an address some of the fundamental foundation issues, but could not resist visiting these more esoteric issues.