Harry Weiss, Inc. v. Moskowitz

• Decision Date: 30 May 2013
• Citation: 2013 N.Y. Slip Op. 03927,106 A.D.3d 668,966 N.Y.S.2d 76
• Parties: HARRY WEISS, INC., Plaintiff–Appellant, E.W. International Diamonds, Inc., Plaintiff, v. Mendez MOSKOWITZ, et al., Defendants–Respondents, Saul Bawabah, doing business as B.B. Jewelry, et al., Defendants. [And a Third–Party Action]
• Court: New York Supreme Court — Appellate Division

106 A.D.3d 668

966 N.Y.S.2d 76

2013 N.Y. Slip Op. 03927

HARRY WEISS, INC., Plaintiff–Appellant,E.W. International Diamonds, Inc., Plaintiff,

v. Mendez MOSKOWITZ, et al., Defendants–Respondents,Saul Bawabah, doing business as B.B. Jewelry, et al., Defendants.[And a Third–Party Action]

Supreme Court, Appellate Division, First Department, New York.

May 30, 2013.

Lester Schwab Katz & Dwyer, LLP, New York (Steven B. Prystowsky of counsel), for appellant.

Paul J. Solda, New York, for respondents.

SWEENY, J.P., SAXE, MOSKOWITZ, GISCHE, CLARK, JJ.

Order, Supreme Court, New York County (Joan M. Kenney, J.), entered September 17, 2012, which granted defendants-respondents' motion for spoliation sanctions to the extent of precluding plaintiff from offering any evidence and/or testimony at trial in opposition 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., never intended 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 his deposition for the first time that certain electronic files that were created to track defendants' 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 created and kept all of plaintiff's records on one computer, which had been in use for the last ten years. A month later, when defendants' attorney sought to forensically examine the computer to determine if any of the deleted files could be restored, plaintiff's bookkeeper claimed, for the first time, that the computer was “broken” and had been thrown away in late 2009 or early 2010, after the commencement of this action. Thereafter, the bookkeeper testified that numerous documents supporting plaintiff's claim that defendants were not entitled to commissions could not be produced because they were stored only on the discarded computer.

Spoliation sanctions were appropriate based on plaintiff's disposal of the computer. 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 v. EchoStar Satellite L.L.C., 93 A.D.3d 33, 41, 939 N.Y.S.2d 321 [1st Dept. 2012] ).

Plaintiff's conduct evinces a higher degree of culpability than mere negligence ( see Ahroner v. Israel Discount Bank of N.Y., 79 A.D.3d 481, 482, 913 N.Y.S.2d 181 [1st Dept. 2010] ). Indeed, the record shows that, despite numerous court orders and the court's assignment of a special referee to supervise discovery, plaintiff delayed discovery and did not disclose to defendants that it had discarded the subject computer for almost two years, notwithstanding that such disclosure was specifically requested by defendants. Further, the testimony of plaintiff's bookkeeper that a litigation hold, either written or oral, was never issued directing him to preserve electronic data, supports a finding that plaintiff's disposal of the subject computer was, at the very least,...