Professional Documents
Culture Documents
'PART, 3
Justice
MOTION DATE
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MOTION $EO.NO. 0, , v , ,
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Notice of Motion/ Order to Show Cause - Affldavlta Exhibits ...
Answering Affidavlta - Erhlblts
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CrOqG-Motion: Yes No
Upon the foregoing papera, It Is ordered that thla motlor!
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LI REFERENCE^
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW Y0RK:COMMERCIAL DIVISION
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Defendants,
and
THE 357 FOURTH STREET CONDOMINIUM,
Charles E d w a r d Ramos, J . S . C . :
FINDINGS OF FACT
This action arises out of the allegedly defective design,
construction, development, and deceptive marketing of a
. ....
involved with the sale of the allegedly defective condominium
unit, the Plaintiffs have stated claims of fraudulent inducement,
fraudulent concealment, and negligent misrepresentation, as well
as violations of N e w York's Consumer Protection Act, N.Y. Gen.
2
Plaintiffs themselves had already produced to the defendants,
3
Exhibit "6" to the Kroll Report).
Based on the Corcoran Defendants' conceded non-production of
the May 3 , 2007 email, which this Court finds to be clearly
relevant to the instant litigation, this Court ordered that the
Corcoran Defendants produce their hard drives. ( I d . at 8:13 -
9:3).
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or alternatively to compel compliance with such defendants'
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for the Corcoran Defendants represented that “there are two
devices in question.” (Id. at 11:11-12).
two hard drives, and this Court noted that “the representation
has been made those hard drives have exactly what is on the
server with regard to the these particular people. N o w , there are
no other devices that we are concerned with?” Id. at 15:ll-20.
Counsel f o r t.he Corcoran Defendants stated, “NO other devices,
the s e r v e r and t h e two computers.” (Id. at 15:21-22 [emphasis
added] ) .
Following t h e proceedings on February 19, 2009, the
Plaintiffs retained the services of Kroll OnTrack to perform a
forensic search and analysis of the data on t h e two h a r d drives
produced by t h e Corcoran Defendants. Kroll’s findings a r e
summarized in a report dated April 7, 2009, sworn to by Emmanuel
Velasco, a Computer Forensics Expert (the “Kroll R e p o r t ” ) . (The
Kroll Report was submitted by the Plaintiffa as an affidavit of
direct testimony, pursuant to this Court‘s Non-Jury Trial Rule 1
for evidentiary hearings and non-jury trials.) T h e Kroll Report
indicates that the hard drives contained no current .pat or .ost
files (Outlook Personal Folders and Outlook Offline Folders,
respectively) for Pacelli; moreover, the hard drives contained no
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using a list of keywords provided by the Plaintiffs. (Kroll
Report, p . 3 - 5 ) .
7
extract and produce documents responsive to the keyword list to
In his May 14, 2009 affidavit, Mr. Thomas asserts that for
“[elmails sent or received by Corcoran agents from or
at their respective offices are all processed in the
first instance through a central server . . . At t h e
inception of the case captioned above I was advised to
retain and produce all emails to and from the Corcoran
agents and brokers dealing w i t h t h e sale of a
condominium apartment to the plaintiffs herein. I
accordingly extracted from o u r central server the 24
pages of emails [produced by the Corcoran Defendants in
October 20081 . . . No email relating to the subject matter
of this litigation was omitted, and none was deleted.”
(Thomas Aff., May 14, 2008, 7 7 2 - 3 [emphasis in
original1 ) .
Mr. Thomas further stated that “I produced for inspection by
8
By his affidavit, Mr. Pacelli stated that the fact that one
particular e m a i l was not produced "would mean that it was sent
from my home computer, which also reflects "@corcoran.com" as the
sending address." (Pacelli Aff., at 1 4). Coats and Gatz
similarly stated that the fact that certain emails were not
produced indicate that those emails were sent from home
(Id. at 31:9-11; 3 2 ~ 1 0 - 1 6 ) .
9
As f o r emails sent to or from Corcoran accounts, whether
from home or from office computers, Thomas testified during the
hearing that all such emails should be directed to the central
server, which in turn stores a copy and sends another copy to the
user's local hard drive. (Id. at 37:24 - 38:13). Thomas also
testified that emails sent from a BlackBerry, Treo, or Windows
Smart Phone should be sent to t h e central server as well. (Id.
at 52:6-12). Moreover, an email sent from another email account,
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f o r manually deleting emails in the user‘s discretion, and in the
20).
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monthly "snapshot" b a c k u p s of the server, that the daily and
weekly backup tapes are reused, and that the monthly tapes a r e
preserved indefinitely. (Id. a t 59:18 - 60:lO; 77:7-9; 77:17-23;
With respect to the hard drives, Thomas did not review their
contents; indeed, he testified that nobody on his staff reviewed
the hard drives to confirm t h a t any of the 24 or so pages of
emails that previously had been produced in hard copy were on the
hard drives. (Id. at 68:16-22). He confirmed that in October
Report, notwithstanding the fact that they were sent from the
12
evidence as Plaintiffs' Exhibit " 2 , ' ) . (Id. at 69:23 - 70:17;
71:2 - 72:20).
13
backup tapes, or that emails deleted by users might not appear on
the server. Indeed, the P l a i n t i f f s (and this Court) reasonably
could have r e l i e d upon the February 17 Thomas Affidavit to infer
client t h e riot act" and almost a year after the Document Demand
initially was served. This is the first time that t h e Corcoran
Defendants mentioned their deletion policy either to t h e
Plaintiffs or this C o u r t , notwithstanding the Plaintiffs' June 6,
2008 Document Demand, the Court's June 30, 2008 Conference Order,
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ha[a] electronically to be able to be presented." (Transcript,
15
Thomas did not tell anyone that the backup tapes used by
Corcoran do not capture emails received and then deleted in the
same month prior to the monthly backup. Although Thomas, as the
Director of Information Technology at Corcoran and the individual
tasked with implementing t h e retention policy, is to blame for
failing to communicate with anyone about the deletion policy and
the consequences of maintaining the ordinary-course user
practices with respect to deletions, counsel for t h e Corcoran
Defendants is also to blame for failing to investigate. Thomas
testified that nobody ever discussed with him the company‘s
deletion policy. June 2 , 2009 Tr., at 85:2 - 86:3.
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computers or on any o t h e r devices, or even how many other s u c h
devices exist.
17
produced within Corcoran between each other, Pacelli, Coats and
Gatz . . . We never received any intra-office e-mails..."]) Although
the Corcoran Defendants and their co-defendants produced emails
in which one or more of the Corcoran Defendants were recipients,
other persons and/or parties were invariably recipients to such
emails. The Corcoran Defendants have not produced even a single
exclusively intra-Corcoran email.
The Court additionally finds, upon a preponderance of t h e
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Finally, the C o u r t finds t h a t counsel f o r t h e Corcoran
Defendants made numerous statements t o the Plaintiffs and this
Court t h a t w e r e materially false, including t h e fact is that the
costa.
19
-- .. - .
20
Typically, the duty to preserve evidence attaches as of the
date the action is initiated or when a party knows or should know
that the evidence may be relevant to future litigation. (See,
e . g . ,A r i s t a Records LLC v Usenet.com, Inc., 2009 WL 185992, at
The CPLR and New York case law are silent on the obligations
of parties and their counsel to effectuate a "litigation hold".'
In similar contexts, New York courts have turned to the Federal
Rules of Civil Procedure and the case law interpreting them f o r
guidance. (See, e . g ., D e l t a Financial C o r p . v Madison, 13 Misc3d
604, 608 [N.Y. S u p . Ct. Nassau C t y . 20061; Weillex- v New York
1925579, a t * 7 [SD NY Aug. 11, 20051; see also Zubulake, 229 FRD.
422, 4 3 2 [SD NY 20041) ("[Ilt is not sufficient to notify all
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employees of a litigation hold and expect that the party will
F3d 253, 268 [2d Cir 19991);. see also A r i s t a Records LLC, at * 2 3
[noting that, by contrast, when the destruction of evidence is
merely negligent, the party seeking sanctions must show through
extrinsic evidence that the destroyed evidence was relevant]).
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the destroyed evidence was ‘relevant‘ to the party’s claim or
defense such that a reasonable trier of fact could find that it
would support that claim or defense.” (Zubulake, 229 FRD 422,
430 [SD NY 20041).
23
Defendants delete emails f r o m their inboxes in t h e ordinary
course in order to make room for more emails.
24
.. . ..
The Plaintiffs have established that the Corcoran
accompany you for this apt. We are not available Tuesday but
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c o u l d do Thursday or Friday afternoon." However, the Corcoran
Mishan, Gatz, Sabbagh, and Pacelli, also dated April 16, 2007, at
8:44 A . M . , stating, "The buyers for duplex want to get in to
26
FRD. 121, 122 [SD NY 20081). The April 17, 2007, 8:44 A.M.
email, which was deleted by the Corcoran Defendants and produced
by one of their co-defendants, suggests that since the Corcoran
Defendants cancelled t h e scheduled open house for the Plaintiffs
due to “heavy rain”, a fact not shared with t h e Plaintiffs in
Coats‘ 8 : 0 8 A . M . email, the Corcoran Defendants knew that heavy
rain caused the condominium unit to leak and intentionally or
negligently concealed that fact from the Plaintiffs. The
extrinsic evidence adduced at the hearing clearly establishes a
likelihood that emails in support of the Plaintiffs’ claims were
destroyed due to the Corcoran Defendants‘ failure to implement a
litigation hold.
The Plaintiffs have established that the Corcoran Defendants
should be sanctioned f o r their failure to implement a litigation
hold.
Striking a pleading is appropriate if the movant makes a
clear showing that the failure to comply with discovery
obligations is willful, contumacious, or in bad faith. (See
P a h e n t a v Columbia U n i v e r s i t y , 266 AD2d 90, 91 [lst Dept
27
C o r p . , 305 AD2d 222, 222-23 [ l s t Dept. 20031 citing Hudson V i e w
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first time 18 months into the litigation, however, the Corcoran
Defendants willfully and unnecessarily caused extensive motion
practice and delay without any reasonable justification. In
addition, this Court has found that the utter failure to
implement a litigation hold constitutes a separate discovery
violation warranting sanctions.
During the June 2 , 2009 hearing, counsel for the Corcoran
Defendants asserted that no review of the hard drives' contents
was warranted or "necessary," but rather that the Plaintiffs
needlessly demanded the hard drives, therefore requiring the
Corcoran Defendants to produce them upon this Court's December
10, 2008 Order. (See Transcript, June 2 , 2009, 99:lO-14; 101:11-
12). This argument is without merit.
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drives produced in open court on February 19, 2009, would contain
all emails sent to or from the individual b r o k e r s ’ Corcoran email
accounts. Since this Court had directed production of t h e hard
drives precisely because the Corcoran Defendants had failed to
produce all emails sent to or from such accounts, it inevitably
CONCLUSION
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deemed to have known of the water infiltration problem and to
have willfully misled the Plaintiffs by concealing that condition
from them during t h e sales process.
The Plaintiffs are awarded attorneys’ f e e s and costs in
connection with t h e review of the “hard drives” produced together
with the fee charged by Kroll OnTrack. Plaintiffs are a l s o
CHAaf%.E. RAMOS
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