Volt Electric NYC Corp. v. A.M.E. Inc.

Background

Volt Electric NYC Corp. sued A.M.E., Inc. and Hemant R. Patel over construction work at the Jewish Theological Seminary. Volt alleged that it performed its work but did not receive the full amount owed under its subcontract. Volt asserted claims for breach of contract, unjust enrichment, account stated, and breach of trust. A.M.E. alleged that Volt failed to perform all of its contractual obligations, causing delays, and asserted counterclaims involving breach of trust, negligent construction defects, breach of the covenant of good faith, and lost profits caused by delay.

Volt served subpoenas on two nonparties, Henick-Lane, Inc. and Gilbane Building Company. The subpoenas, as narrowed, sought: (1) A.M.E.’s contract with Henick-Lane or Gilbane; (2) A.M.E.’s payment applications to either company; (3) documents showing payments by either company to A.M.E.; and (4) delay-claim notices related to electrical work.

Arguments

A.M.E. and Patel moved to quash the subpoenas under Federal Rule of Civil Procedure 45. They argued that the requests were irrelevant, duplicative of discovery directed to them, and intended to harass them. They also argued that they had standing—the legal ability to challenge the subpoenas—because the requests implicated privacy interests in financial documents related to the project.

Volt argued that the documents were relevant to its claim that A.M.E. violated Article 3-A of the New York Lien Law, which requires contractors to hold certain project funds in trust until specified payments, including payments to subcontractors, are made. Volt also argued that the delay notices were relevant to A.M.E.’s counterclaims for delay damages. Volt noted that A.M.E. and Patel had not produced similar documents requested months earlier.

Court’s analysis

The court explained that a party generally cannot challenge a subpoena issued to a nonparty based only on relevance or undue burden. Exceptions may apply when the party has a personal privacy right, privilege, or proprietary interest in the requested materials.

The court held that A.M.E. and Patel had not shown such an interest. It stated that financial information belonging to a commercial entity is not ordinarily covered by the personal-privacy exception and that defendants had offered only a conclusory assertion that the documents were private and confidential.

The court then addressed the merits of the subpoena challenge in the alternative. It found the requested contracts relevant because they could show how much money A.M.E. expected to receive and hold in trust. The payment applications could show the amount of trust funds A.M.E. requested, and payment records could show the amount of trust funds A.M.E. received. The delay notices were relevant to A.M.E.’s counterclaims for damages caused by project delays.

The court also ruled that New York Lien Law § 75(3), which governs books and records that a contractor must keep, does not establish the full scope of permissible discovery in litigation. Although the subpoenas overlapped somewhat with Volt’s requests to A.M.E. and Patel, the court found that they were not unreasonably duplicative because defendants had not produced responsive documents during the more than four months since Volt first requested similar records. Defendants did not argue that producing the narrowed documents would unduly burden Gilbane or Henick-Lane.

Disposition

The court denied defendants’ motions to quash. The opinion did not rule on the ultimate merits of Volt’s claims or A.M.E.’s counterclaims; it resolved the parties’ dispute over subpoenas issued to nonparties.