Motion to Stay Prosecution or Discovery Not Available to Avoid Criminal Prosecution

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When a Defendant Defrauds an Insurer and Negligently Allows an Employee to Die on the Job has no Relationship to the Claim of Property Owners who sued for Damages

In Rebecca Chi Wai Lam, Xue Ming Pan, Cui Mei Li, Hua Hui Lin and Kit Lai Lin Chee v. 993 60th Street Realty Inc., Xin Long Dai, Ground to Sky City Builders Corp., S M TAM Architect, PLLC, WSC Group LLC, “John and Jane Does 1-10” and “XYZ Corporations 1-10”, 2020 NY Slip Op 51144(U), 514453/2018, Supreme Court, Kings County (October 5, 2020) property owners sued builders who damaged their property. Since an employee of the builders died and they committed a panoply of crimes in addition to damaging the property of the plaintiffs, they sought an order staying trial and discovery since they intended to assert their Fifth Amendment right to remain silent.

FACTS

Defendants claim that the principals of each entity, as well as WSC itself, were indicted by a grand jury empaneled at the request of the Kings County District Attorney’s Office on November 15, 2019. They claimed that two men are the only people with knowledge of the facts and circumstances who can be produced for a deposition or to testify at trial, and that each of them intends to invoke his Fifth Amendment right against self-incrimination at both the deposition and at the trial of this action.

This is an action brought by the individuals who own three adjacent homes for damages to their homes arising from excavation work which was allegedly performed by movants for defendant property owner for a project at the rear of plaintiffs’ homes, on the other side of the block. A worker was killed when a masonry wall collapsed on top of him.

A motion to stay a civil action pending resolution of a related criminal action is directed to the sound discretion of the trial court.  A compelling factor is a situation where a defendant will invoke his or her constitutional right against self-incrimination. The United States or New York State Constitutions do not prevent the court from exercising its discretion to stay proceedings in a civil action until a related criminal dispute is resolved.

ANALYSIS

The homeowners are not wealthy. Their homeowners’ insurance refused to pay their claims. They want the damage to their homes repaired, and they claim they would be prejudiced if they have to wait until the criminal proceeding is over, particularly as the state is in the midst of the Covid-19 pandemic and jury trials are backlogged.

There are nine criminal defendants who were indicted. The motion is denied with regard to GTS, as there is no pending criminal proceeding against it or its principals or employees.

WSC and its two principals (as well as six other named defendants, which include Wilson Garcia, a foreman who worked for WSC) were indicted for crimes, but not all of them were indicted for each of the crimes, that included but was not limited to: Manslaughter in the Second Degree; Criminally Negligent Homicide; Insurance Fraud in the Third Degree; and a panoply of other crimes.

The “victims” of the crimes charged in the indictment are not the plaintiffs.

The one crime that can be said to “overlap” with this action, however, where one of the plaintiffs is the alleged victim, is the Sixth Count, for criminal mischief (a misdemeanor). Mr. Lin is one of the five plaintiffs in this action. Criminal mischief is usually charged for offenses such as “keying” the car of a former friend, throwing a brick through a window, etc. It is not ordinarily used for construction work.

While there are multiple charges of offering a false instrument for filing with respect to the Bay Ridge project they do not directly relate to this lawsuit. These charges relate to filing false certificates of correction after violations were issued, and concern worker safety, such as falsely certifying that there was a fire guard, a construction superintendent present, proper fencing, and the safeguarding persons and property at the worksite.

The court concludes, therefore, that the one count applicable to (one of) the plaintiffs, criminal mischief, a misdemeanor, is not enough of an “overlap” to stay this action.

The primary reason for this is that the plaintiffs’ cause of action here does not require movants’ testimony as it is a strict liability tort. The only defendants who remain here are the property owner, who did not put in any papers in connection with this motion, and the movants.  The owner may be vicariously liable, but WSC is the only defendant that performed the excavation work at the site who is named in the caption.

The term “recklessly” as used in this definition has its own special meaning in our law. A person RECKLESSLY damages property of another in an amount exceeding two hundred fifty dollars when that person does so by engaging in conduct which creates or contributes to a substantial and unjustifiable risk that such damage will occur, and when he or she is aware of and consciously disregards that risk, and when the risk is of such nature and degree that disregarding it constitutes a gross deviation from the standard of conduct that a reasonable person would observe in the situation.

Thus, while a stay would cause inconvenience and delay to the plaintiffs, the failure to grant the stay would not cause the defendant WSC to suffer the severe prejudice of being deprived of a defense. This is because there is no defense to the liability portion of plaintiffs’ claim, other than, for example, that the wrong defendant was named, as the defendant did not do the excavation work.

Since a prior determination in the criminal proceeding would not have collateral estoppel effect in this action and would not simplify the issues to be proved at trial.

ZALMA OPINION

The Fifth Amendment of the U.S. Constitution protects a person from being compelled to incriminate himself to a crime. It is not an unlimited right. It does not apply to facts that have nothing to do with the crimes for which he was indicted. Since the plaintiffs are only suing for damage done to their property, not the conduct that resulted in the criminal indictments, including homicide and insurance fraud, the motion was properly denied.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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