A Mallela defense does not have to be pleaded

Lexington Acupuncture, P.C. v General Assur. Co., 2012 NY Slip Op 22047 (App. Term 2d Dept. 2012)

“Here, although defendant never moved to amend its answer to assert a defense based on fraudulent incorporation, it asserted sufficient allegations of fraudulent incorporation. Defendant cited to several cases against a different insurer involving corporations purportedly owned by Ms. Anikeyeva. In some of those cases, the defendant insurer had submitted an affidavit from its investigator which was sufficient to entitle the insurer to discovery on the issue of fraudulent incorporation (see e.g. Lexington Acupuncture, P.C. v State Farm Ins. Co., 12 Misc 3d 90). Defendant included, as part of its motion papers, copies of the investigator affidavits from those cases, which set forth Ms. Anikeyeva’s close connection with individuals and corporations charged with insurance fraud. Since defendant presented adequate allegations of fraudulent incorporation, the Civil Court did not abuse its discretion in granting those branches of defendant’s motion seeking to compel disclosure on that issue and in denying plaintiff’s cross motion for a protective order and the imposition of sanctions (see Kipor Medicine, P.C. v GEICO, 28 Misc 3d 129, 2010 NY Slip Op 51247).”

The concurrence is brutal as were most of Golia’s concurrences this week:

“Similarly, plaintiff cannot reasonably plead surprise in response to the raising of the Mallela defense. As with prejudice, surprise presents no logical or material issue. There exists a rich history of litigation, involving a multitude of cases before the Appellate Term, in which health care facilities allegedly owned by Ms. Anikeyeva have been asked to supply Mallela discovery (e.g. First Help Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 131, 2009 NY Slip Op 51354 ; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136, 2008 NY Slip Op 51529 ; AVA Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 16 Misc 3d 138, 2007 NY Slip Op 51756 ). Indeed, in the cross motion papers submitted in the Civil Court, plaintiff made specific note of an extended history of attempts by defendant herein to discern who the true owner of plaintiff corporation is. As detailed above, several affirmative defenses included in defendant’s answer and interrogatories attached thereto put plaintiff on sufficient notice from the very beginning that Mallela discovery will be sought by defendant. Clearly, “if there is any doubt as to the availability of a defense, the defendant is entitled to every reasonable intendment of its pleading” (Youssef, 24 AD3d at 661).”

My first thought is that a carrier’s copying and pasting prior affidavits and citations to appellate term cases is sufficient to make a Mallela defense showing.  This makes sense.

My second thought is something that I just discussed the other day with someone.  Indeed, many people have commented that it is inappropriate to allege a torrent of affirmative defenses in an answer.  My response is always a citation to cases like this.  This case shows the potential death trap and perhaps malpractice issues that surround the defendant that selectively pleads its affirmative defenses.

This Court could have, and I think should have, denied the motion since the Mallela defense was not pleaded.

The same issue occurred in:

Astoria Wellness Med., P.C. v Autoone Ins. Co., 2012 NY Slip Op 50340(U)(App. Term 2d Dept. 2012)

“Leave to amend pleadings should be freely granted absent prejudice or surprise resulting from the delay (see CPLR 3025 ; Lucido v Mancuso, 49 AD3d 220, 225 ; see also Worthen-Caldwell v Special Touch Home Care Servs., Inc., 78 AD3d 822 ). As plaintiff was neither prejudiced nor surprised by defendant’s delay in asserting the foregoing affirmative [*2]defense, the Civil Court did not improvidently exercise its discretion in granting the branch of defendant’s amended cross motion seeking leave to amend its answer”

And again:

Medical Polis, P.C. v Progressive Specialty Ins. Co., 2012 NY Slip Op 50342(U)(App. Term 2d Dept. 2012)

“Here, although defendant never moved to amend its answer to assert a defense based on fraudulent incorporation…”    In this case, Defendant did not even bother to amend his answer.

But this was a good end to the opinion:

“Defendant included an affidavit from its Senior Special Investigator, who set forth, in detail, plaintiff’s close connection with another medical provider whose owner was convicted of, among other things, fraud and falsifying business records. Since defendant made adequate allegations of fraudulent incorporation, the Civil Court did not abuse its discretion in granting those branches of defendant’s motion seeking to compel disclosure on that issue, and in denying plaintiff’s cross motion for a protective order (see Kipor Medicine, P.C. v GEICO, 28 Misc 3d 129, 2010 NY Slip Op 51247).”

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Legal Update (February 2026): Since this 2012 post, CPLR pleading requirements and procedural rules governing affirmative defenses may have been modified through court rule amendments or legislative changes. Practitioners should verify current CPLR 3025 provisions and recent appellate decisions regarding the pleading requirements for Mallela-type fraudulent incorporation defenses in no-fault cases.