| Harry Weiss, Inc. v Moskowitz |
| 2013 NY Slip Op 03927 [106 AD3d 668] |
| May 30, 2013 |
| Appellate Division, First Department |
| Harry Weiss, Inc., Appellant, et al.,Plaintiff, v Mendez Moskowitz et al., Respondents, et al., Defendants. (And aThird-Party Action.) |
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Paul J. Solda, New York, for respondents.
Order, Supreme Court, New York County (Joan M. Kenney, J.), entered September17, 2012, which granted defendants-respondents' motion for spoliation sanctions to theextent of precluding plaintiff from offering any evidence and/or testimony at trial inopposition to defendants' defenses and counterclaims, unanimously affirmed, with costs.
In this action, plaintiff diamond dealer alleges, among other things, that its broker,defendant Mendez Moskowitz and his company defendant BMW Diamonds, Inc., neverintended to pay for diamonds it acquired from plaintiff. Defendants counterclaimed,alleging, among other things, that plaintiff failed to pay commissions to defendants.
More than two years into this litigation, plaintiff's bookkeeper revealed at hisdeposition for the first time that certain electronic files that were created to trackdefendants' commissions were either "lost" or "deleted" at the end of 2007 and 2008,after a copy of the file had been printed. The bookkeeper further testified that he createdand kept all of plaintiff's records on one computer, which had been in use for the last tenyears. A month later, when defendants' attorney sought to forensically examine thecomputer to determine if any of the deleted files could be restored, plaintiff's bookkeeperclaimed, for the first time, that the computer was "broken" and had been thrown away inlate 2009 or early 2010, after the commencement of this action. Thereafter, thebookkeeper testified that numerous documents supporting plaintiff's claim thatdefendants were not entitled to commissions could not be produced because they werestored only on the discarded computer.
Spoliation sanctions were appropriate based on plaintiff's disposal of the computer.[*2]Plaintiff was put on notice of its obligation to"preserve all relevant records, electronic or otherwise," at the very latest, in July 2009,when it received defendants' answer asserting counterclaims for commissions (VOOM HD Holdings LLC vEchoStar Satellite L.L.C., 93 AD3d 33, 41 [1st Dept 2012]).
Plaintiff's conduct evinces a higher degree of culpability than mere negligence (see Ahroner v Israel DiscountBank of N.Y., 79 AD3d 481, 482 [1st Dept 2010]). Indeed, the record showsthat, despite numerous court orders and the court's assignment of a special referee tosupervise discovery, plaintiff delayed discovery and did not disclose to defendants that ithad discarded the subject computer for almost two years, notwithstanding that suchdisclosure was specifically requested by defendants. Further, the testimony of plaintiff'sbookkeeper that a litigation hold, either written or oral, was never issued directing him topreserve electronic data, supports a finding that plaintiff's disposal of the subjectcomputer was, at the very least, grossly negligent (see VOOM, 93 AD3d at 45).
Defendants established that plaintiff's spoliation of critical evidence compromiseddefendants' ability to prosecute their counterclaims (Baldwin v Gerard Ave., LLC, 58 AD3d 484, 485 [1st Dept2009]). Accordingly, the court did not abuse its discretion in determining that preclusionwas an appropriate spoliation sanction.
Plaintiff's contention that its disposal of the subject computer did not causedefendants any prejudice because many of the files were printed prior to its disposal andhad subsequently been produced to defendants is contradicted by the depositiontestimony of its own bookkeeper. Moreover, converting the files from their native formatto hard-copy form would have resulted in the loss of discoverable metadata (see Matter of Irwin v OnondagaCounty Resource Recovery Agency, 72 AD3d 314, 321-322 [4th Dept 2010];see also Tener v Cremer, 89AD3d 75, 81 [1st Dept 2011]). In addition, by discarding the computer after its dutyto preserve had attached without giving notice to defendants, plaintiff depriveddefendants of the opportunity to have their own expert examine the computer todetermine if the deleted files could be restored (see Tener, 89 AD3d at 79).
Plaintiff never requested an evidentiary hearing before the motion court; therefore,its current claim that it is entitled to a hearing is not preserved for our review (see e.g. DaSilva v C & E Ventures,Inc., 83 AD3d 551 [1st Dept 2011]).
We have considered plaintiff's remaining contentions and find them unavailing.Concur—Sweeny, J.P., Saxe, Moskowitz, Gische and Clark, JJ.