Leon Sylvester, Inc. v. Aetna Casualty & Surety Co. ( 1993 )

Order, Supreme Court, New York County (Shirley Fingerhood, J.), entered July 1, 1991, which granted plaintiff’s motion to strike only to the extent of striking items 5 and 6 of defendant’s notice of discovery and inspection dated May 13, 1991, unanimously modified, on the law and the facts and in the exercise of discretion, to the extent of denying plaintiff’s motion to strike the demands for the 1986 and 1987 personal State and Federal income tax returns of the principals of plaintiff corporation, William Falow and Howard Thaler. As so modified, the order is otherwise affirmed, without costs.

Where plaintiff, a closely held corporation, seeks to recover the $160,000 face value of a fire insurance policy covering premises owned by it and defendant insurer raises the defense of arson, special circumstances are presented warranting the disclosure of the personal income tax returns of its two named principals inasmuch as their financial condition is clearly relevant and material to defendant in its investigation of plaintiff’s claim (see, 2423 Mermaid Realty Corp. v New York Prop. Ins. Underwriting Assn., 142 AD2d 124, 132, lv denied 74 NY2d 607), particularly where they exercise 90% control and the third principal is the corporation’s fictitious namesake. However, in light of the fact that the fire occurred on December 5, 1987, disclosure of their 1988 tax returns appears unwarranted. Concur—Wallach, J. P., Kupferman, Kassal and Rubin, JJ.