Summary
The Appellate Division, Second Department affirmed an order denying defendants’ motion for a protective order barring disclosure of their personal tax returns. The court held that the defendants were bound by a so-ordered stipulation requiring production of federal and state tax returns and had not shown grounds to invalidate the stipulation or that their former attorney lacked authority to enter it.
Topics
Practice areas
Questions Presented
- Whether the defendants were entitled to a protective order under CPLR 3103(a) barring disclosure of their personal federal and state tax returns despite a so-ordered stipulation requiring their production.
- Whether the defendants demonstrated sufficient grounds to invalidate the so-ordered stipulation, including fraud, collusion, mistake, accident, or lack of attorney authority.
Holdings
- A so-ordered stipulation is binding on the parties and must be enforced absent sufficient cause to invalidate it; the defendants failed to demonstrate such cause, so the stipulation requiring production of their federal and state tax returns was enforceable.
- The defendants failed to demonstrate that their former attorney lacked authority to enter the so-ordered stipulation on their behalf.
Key quotations
“A so-ordered stipulation is a contract between the parties thereto and as such, is binding on them” (447)
“Parties by their stipulations may in many ways make the law for any legal proceeding to which they are parties, which not only binds them, but which the courts are bound to enforce” (453)
Factual background
In a breach-of-contract and breach-of-fiduciary-duty action, the plaintiff sought production of documents from the defendants. In a so-ordered stipulation dated December 22, 2021, the defendants agreed to produce federal and state tax returns filed by or on their behalf for tax years 2012 through the present. The defendants subsequently sought a protective order under CPLR 3103(a), asserting that their personal tax returns should not be disclosed, but they did not establish grounds to invalidate the stipulation or show that their former attorney lacked authority to enter it.
Procedural history
The plaintiff commenced the action in November 2019. After the plaintiff moved to compel document production, the parties entered a so-ordered stipulation requiring the defendants to produce federal and state tax returns for tax years 2012 through the present. The defendants later moved for a protective order barring disclosure, but the Supreme Court, Queens County, denied the motion. The Appellate Division affirmed.