Hameroff & Sons, LLC v Plank, LLC
Annotate this CaseDecided on August 13, 2012
Supreme Court, Albany County
Hameroff and Sons, LLC, Plaintiff,
against
Plank, LLC and JOHN ROTH, Defendants.
4196-10
LAW OFFICE OF JOHN HOGGAN, PLLC
Attorneys for Plaintiff
(John D. Hoggan, Jr., Esq., of Counsel)
90 State Street, 10th Floor
Albany, New York 12207
LAW OFFICE OF LANCE R. HARTWICH
Attorney for Defendants
(Lance R. Hartwich, Esq., of Counsel)
376 Broadway, 2nd Floor
Schenectady, New York12305
Michael C. Lynch, J.
By Decision and Order (Lynch, J.) dated August 30, 2011, the Court, inter alia, granted plaintiff's cross motion to compel discovery responses and directed defendant to serve its responses within twenty (20) days of service.[FN1]
By Notice of Motion originally returnable April 13, 2012, plaintiff seeks an order of preclusion pursuant to CPLR 3126 premised on defendant's alleged failure to repond to the discovery demands. Defendant has opposed the application. After a series of Court conferences with counsel failed to resolve the [*2]impasse, the extended submissions (as listed below) are now closed and the Court will address the motion on the merits.The core of the discovery dispute is that defendant has failed to provide the e-mails of its contract administrator, Carl Holsberger, and several other representatives in response to plaintiff's demand dated December 7, 2010 (see Exhibit "A" attached to motion). The submissions confirm that plaintiff's counsel was finally accorded the opportunity to inspect defendant's documents at defendant's offices on January 26, 2012. In his follow-up correspondence, plaintiff's counsel explained as follows:
"When I arrived at Plank's offices, I was provided two banker's boxes
partially full of documents by Carl Holsberger. These boxes were marked as
Box 1 of 3 and Box 3 of 3. Carl Holsberger indicated that he had not provided
any of his e-mails...At the start of the document review, Carl Holsberger
acknowledged that he had failed to produce his e-mails. My review also
confirmed that Plank had failed to produce the e-mails of any other employee
or agent of Plank other than Robert Romano" (Exhibit "F" attached to motion).
In response, Mr. Holsberger attests that he destroyed his e-mails at the conclusion of the project in accord with his standard business practice. Defendant does not otherwise refute the point that it only provided the e-mails of Romano, who left employment in 2008, i.e. prior to completion of the project and before the negotiation of the May, 2009 stipulation of settlement.
In the Court's August 30, 2011 Decision and Order (Lynch, J.), the Court determined that a question of fact existed as to whether the stipulation of settlement executed on May 15, 2009 constituted a substituted agreement or an executory accord. If the settlement agreement was an executory accord and defendant breached same, the plaintiff "may choose to pursue a cause of action for breach of the original contract or assert its rights under the executory accord" (Id p. 5). In this action, plaintiff seeks to pursue its claim under the original contract.
In Voom HD Holdings, LLC v. Echostar Satellite, LLC (93 AD3d 33 [2nd Dept.]), the Court adopted the standard enunciated in Zubalake v. UBS Warburg, LLC (220 FRD 212 [SDNY 2003; Pension Comm. of Univ of Montreal Plan v. Banc of Am Sec, 685 F Supp2d 456 [SDNY 2010]) defining the duty of a party with respect to electronic discovery, as follows: "Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold' to ensure the preservation of relevant documents" (Zubalake, 220 FRD at 218). "A party seeking sanctions based on the spoliation of evidence must demonstrate: (1) that the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the [*3]records were destroyed with a culpable state of mind'; and finally (3) that the destroyed evidence was relevant to the party's claim or defense such that the trier of fact could find that the evidence would support that claim or defense" (Voom HD Holdings, supra, slip opn at p. 10). For spoliation purposes, a "culpable state of mind...includes ordinary negligence" (Id.). That standard applies here.
From the Court's perspective, the missing e-mails may well be relevant to the correct characterization of the May 15, 2009 Stipulation of Settlement. Defendant has completely failed to produce any documents relevant to the events surrounding the May 15, 2009 Stipulation of Settlement.
As discussed in the Court's prior decision, efforts were undertaken by both parties to implement the settlement in May-June, 2009. Plaintiff documented that a payment of $90,000 was made and defendant's sole member, John Roth, represented that defendant began to correct the punch list items before an impasse was reached. As early as July, 2009, plaintiff's counsel put defendant on notice that litigation would ensue (see Exhibit "F" annexed to June 27, 2012 affirmation of John Hoggan, Esq.).
Since the settlement failed, the punch list was not completed and litigation was threatened, the Court finds Mr. Holsberger's explanation that he simply destroyed all of his project e-mails as a standard practice completely implausible and violative of the Zubalake preservation standard. Worse yet, plaintiff has actually documented that Mr. Holsberger had retained copies of his project e-mails through, at a minimum, March 9, 2010, when he e-mailed copies of project e-mails to plaintiff's former counsel, Harold Gordon (see Exhibit "C" attached to the June 27, 2012 Affirmation of John Hoggan, Esq.). It is important to recognize that one of the attached e-mails was a June 4, 2009 communication from Mr. Holsberger to Attorney Gordon discussing the Stipulation of Settlement (Id). This documentation confirms that Mr. Holsberger retained his e-mails from the relevant settlement period as late as March 2010. Notably, defendant commenced the Schenectady City Court action seeking to enforce the stipulation two weeks later by summons and complaint dated March 23, 2010 (see Exhibit "E" attached to the June 27, 2012 affirmation of John Hoggan, Esq.).
The documentation also matches the March 9, 2010 e-mail to Attorney Gordon with the May 5, 2009 e-mail attached to Mr. Holsberger's May 11, 2011 affidavit submitted on the earlier motion (see Exhibit "B" attached to the June 27, 2012 affirmation of John Hoggan, Esq.). That May 5, 2009 e-mail bears the date of May 11, 2011 in the bottom left margin, and includes a notation that the information was derived in 2011 from "ESET NOD 32 ANTIVIRUS" - the same [*4]notation included on Mr. Holsberger's March 9, 2010 e-mail to Attorney Gordon (compare Exhibits "B" and "C" attached to John Hoggan's June 27, 2012 Affirmation). This documentation refutes Mr. Holsberger's explanation that he destroyed the e-mails in good faith, leading this Court to conclude that his response was misleading and defendant's failure to produce Mr. Holsberger's e-mails was willful and contumacious.
Compounding the problem is that defendant has failed to provide any explanation for the failure to provide any drafts of the pleadings filed in the City Court action prepared by Mr. Holsberger as well as the failure to produce the e-mails of Mr. Roth and other employees pertinent to the time the stipulation was negotiated. Since Mr. Holsberger is not a licensed attorney, the draft pleadings are not protected by the attorney-client privilege.
This Court, as evidenced by the procedural history of this discovery dispute outlined in plaintiff's papers, has accorded defendant repeated opportunities to respond to plaintiff's document demands - and yet defendant has not only failed to comply, but has relied upon the false explanations provided in Mr. Holsberger's affirmations listed below.
Given the above, the Court hereby grants plaintiff's motion to the extent of precluding defendant from offering any documentation or the testimony of Mr. Holsberger, Mr. Roth or any other employee or former employee concerning the May 15, 2009 Stipulation of Settlement upon the trial of this action with respect to both defendant's counterclaim and/or its defense to plaintiff's complaint (see CPLR 3126[2]; Kihl v. Pfeffer, 94 NY2d 118, 122). Moreover, under the circumstances described, the plaintiff is hereby awarded costs and reasonable attorney fees incurred on the motion (see Rules of the Chief Administrator §130-1.1). Plaintiff's counsel is directed to submit an affirmation of services by September 15, 2012; any reply must be submitted by October 1, 2012.
This memorandum represents the Decision and Order of this Court. The original Decision and Order is being mailed to the attorney for plaintiff. The original papers are being sent to the Albany County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.
DATED:August 13, 2012
Albany, New York [*5]
________________________________________
Hon. Michael C. Lynch
Justice of the Supreme Court
Papers Considered:
1.Notice of Motion initially returnable April 13, 2012, with Affirmation of John
Hoggan, Esq. dated March 27, 2011 and Exhibits "A" - "I";
2.Affirmation of Lance Hartwich, Esq. dated April 5, 2012;
3.Reply Affirmation of John Hoggan, Esq. dated April 12, 2012 with Exhibits "A";
4.May 15, 2012 letter by Attorney Hoggan to Attorney Hartwich;
5.Affidavit of Carl Holsberger dated May 17, 2012;
6.May 25, 2012 letter by Attorney Hoggan to Attorney Hartwich;
7.Affidavit of Carl Holsberger, Esq. dated June 1, 2012;
8.Affirmation of John Hoggan, Esq. dated June 6, 2012 with Exhibits "A" - "D";
9.June 15, 2012 letter from Attorney Hartwich with Affidavit of Carl Holsberger
dated June 15, 2012; and
10.Affirmation of John Hoggan, Esq. dated June 27, 2012, with Exhibits "A" - "I" [Exhibit "C" being the Affirmation of Harold Gordon, Esq. dated June 26, 2012].
Footnotes
Footnote 1:In that decision, the Court dismissed the claim against the individual defendant, John Roth.
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