State v. 158th St. & Riverside Drive Hous. Co.

• Decision Date: 29 November 2012
• Citation: 956 N.Y.S.2d 196,100 A.D.3d 1293,2012 N.Y. Slip Op. 08194
• Court: New York Supreme Court — Appellate Division
• Parties: STATE of New York, Respondent, v. 158TH STREET & RIVERSIDE DRIVE HOUSING COMPANY, INC., Defendant, and A.M.G. Properties Company, et al., Appellants.

100 A.D.3d 1293

956 N.Y.S.2d 196

2012 N.Y. Slip Op. 08194

STATE of New York, Respondent,

v. 158TH STREET & RIVERSIDE DRIVE HOUSING COMPANY, INC., Defendant,andA.M.G. Properties Company, et al., Appellants.

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

Nov. 29, 2012.

Couch White, LLP, Albany (Michael T. Wallender of counsel), for appellants.

Eric T. Schneiderman, Attorney General, Albany (Kathleen M. Arnold of counsel), for respondent.

Before: ROSE, J.P., SPAIN, MALONE JR., GARRY and EGAN JR., JJ.

ROSE, J.P.

Appeals (1) from an order of the Supreme Court (Teresi, J.), entered January 12, 2011 in Albany County, which, among other things, denied a motion by defendants A.M.G. Properties Company, Fanny Grunberg & Associates, LLC and Fanny Grunberg for summary judgment dismissing the complaint against them, (2) from a judgment of said court (O'Connor, J.), entered March 4, 2011 in Albany County, upon a verdict rendered in favor of plaintiff, and (3) from an order of said court (O'Connor, J.), entered November 17, 2011 in Albany County, which denied a motion by defendants A.M.G. Properties Company, Fanny Grunberg & Associates, LLC and Fanny Grunberg to, among other things, set aside the verdict.

Plaintiff commenced this action pursuant to Navigation Law article 12 in 1999, seeking to recover costs associated with the remediation of two oil spills in the City of New York. The first spill was discovered in 1997 in the crawl space under River Terrace Apartments, owned by defendant 158th Street & Riverside Drive Housing Company, Inc. The second spill was discovered when a water main break caused water to flow down an alleyway between River Terrace Apartments and an apartment building located at 779 Riverside Drive, owned by defendants A.M.G. Properties Company, Fanny Grunberg & Associates, LLC and Fanny Grunberg (hereinafter collectively referred to as defendants). Plaintiff alleged that the source of each spill was, at least in part, a fuel tank system located at 779 Riverside Drive. Following joinder of issue and discovery, the parties' cross motions for summary judgment were denied by Supreme Court (Teresi, J.) and, after trial, the jury returned a verdict in plaintiff's favor, awarding plaintiff the costs of remediation in the amount of $792,200.98 and assessing penalties aggregating $857,500.¹ Supreme Court (O'Connor, J.) denied defendants' posttrial motion to set aside the verdict. Defendants appeal from the denial of their motion for summary judgment, the judgment entered against them and the order denying their posttrial motion.²

Defendants contend that the action should have been dismissed at the summary judgment stage because plaintiff failed to preserve the sort of background documents normally generated by a contractor hired by the Department of Environmental Conservation (hereinafter DEC) to assist in the remediation and investigation of the source of the oil spills. Although the contractor's reports to DEC had previously been disclosed, it was not until 2010 that defendants sought any field notes or other background documentation from plaintiff that they believed would have been generated by the contractor. The contractor reported, however, that it had retained its files associated with the project for seven years and then destroyed them as part of its record retention policy. Supreme Court (Teresi, J.), in denying defendants' motion for dismissal of the complaint, concluded that defendants failed to establish the existence of any specific documents or that plaintiff's conduct was in bad faith, willful or contumacious. On appeal, defendants do not allege bad faith. Instead, they claim that plaintiff should have imposed a litigation hold on its contractor to preserve any documents produced in connection with its response to the oil spills, arguing that plaintiff should have anticipated that the documents would be needed by them in connection with the litigation. Defendants assert that they were, at a minimum, entitled to an adverse inference charge at trial.

The decision to impose sanctions for the spoliation of evidence is within the sound discretion of the trial court and will not be disturbed absent a clear abuse of discretion ( see Merrill v. Elmira Hgts. Cent. School Dist., 77 A.D.3d 1165, 1166, 909 N.Y.S.2d 208 [2010];Miller v. Weyerhaeuser Co., 3 A.D.3d 627, 628, 771 N.Y.S.2d 200 [2004],lv. dismissed3 N.Y.3d 701, 785 N.Y.S.2d 28, 818 N.E.2d 670 [2004],appeal dismissed5 N.Y.3d 822, 804 N.Y.S.2d 32, 837 N.E.2d 732 [2005] ). “[C]ourts will look to the extent that the spoliation of evidence may prejudice a party and whether a dismissal will be necessary as a matter of elementary fairness” ( Miller v. Weyerhaeuser Co., 3 A.D.3d at 628, 771 N.Y.S.2d 200 [internal quotation marks and citations omitted] ). An adverse inference charge is not warranted in the absence of a showing that the documents in question ever actually existed, that they were under the opposing party's control and that there is no reasonable explanation for failing to produce them ( see Jean–Pierre v. Touro Coll., 40 A.D.3d 819, 820, 836 N.Y.S.2d 283 [2007];Wilkie v. New York City Health & Hosps. Corp., 274 A.D.2d 474, 474, 711 N.Y.S.2d 29 [2000],lv. denied96 N.Y.2d 705, 723 N.Y.S.2d 132, 746 N.E.2d 187 [2000] ).

Here, we find no abuse of discretion in the denial of defendants' motion for summary judgment, inasmuch as defendants failed to establish that they were prejudiced to the extent that they were unable to defend the case ( see Merrill v. Elmira Hgts. Cent. School Dist., 77 A.D.3d at 1166–1167, 909 N.Y.S.2d 208;Hartford Fire Ins. Co. v. Regenerative Bldg. Constr., 271 A.D.2d 862, 864, 706 N.Y.S.2d 236 [2000] ). Moreover, even assuming that there were additional documents that should have been preserved, the failure to give an adverse inference charge was harmless as defendants were allowed to question plaintiff's witnesses about the apparent lack of background documentation for some of the laboratory reports that they relied on and, as part of defendants' summation, to suggest to the jury that they could infer that any missing documents would benefit the defense ( see Gallo v. Ricci, 28 A.D.3d 1110, 1111, 814 N.Y.S.2d 422 [2006],lv. denied7 N.Y.3d 807, 822 N.Y.S.2d 480, 855 N.E.2d 796 [2006] ).

Defendants also contend that Supreme Court (O'Connor, J.) erred by admitting the reports issued by plaintiff's contractors into evidence. Defendants argue that the reports do not qualify as business records because they were not prepared by plaintiff and their admission into evidence improperly allowed plaintiff's experts to base their opinions on hearsay. While we agree that the mere filing of papers received from other entities is insufficient to qualify the documents as business records, such records may be admitted into evidence if the recipient can establish personal knowledge of the maker's business practices and procedures, or that the records provided by the maker were incorporated into the recipient's own records or routinely relied upon by the recipient in its business ( see People v. Cratsley, 86 N.Y.2d 81, 90–91, 629 N.Y.S.2d 992, 653 N.E.2d 1162 [1995];Matter of Carothers v. GEICO Indem. Co., 79 A.D.3d 864, 865, 914 N.Y.S.2d 199 [2010];People v. DiSalvo, 284 A.D.2d 547, 548–549, 727 N.Y.S.2d 146 [2001] ).

Here, plaintiff established that the lab reports, test results and monitoring logs produced by the contractors were incorporated into DEC's own records and routinely relied on by DEC to perform its tasks of remediating the spill and investigating the source of the oil. A DEC representative testified that, while the agency is statutorily charged with responding to oil spills ( seeNavigation Law § 176), it does not have the resources to find the source and perform the clean-up operations. DEC therefore hires outside contractors to perform the work and it directs all aspects of the contractors' activities, including which samples to obtain, test and record. According to plaintiff, the records at issue were generated by the contractors at DEC's direction and DEC was their primary custodian. DEC's representative confirmed that the laboratory test report samples were taken and sent to a state-certified lab at his direction, he chose the type of test to be performed on the samples and he was familiar with the test. Moreover, a DEC representative testified that the reports themselves were made for DEC in the regular course of business of the contractors, it was their regular course of business to create such reports, and they were prepared at or near the time that the samples were taken ( seeCPLR 4518[a]; People v. Kennedy, 68 N.Y.2d 569, 579–580, 510 N.Y.S.2d 853, 503 N.E.2d 501 [1986];People v. Burdick, 72 A.D.3d 1399, 1401, 900 N.Y.S.2d 195 [2010] ).

As the records were the contemporaneous business records generated by the contractors in the performance of their contractual duties and were routinely relied on by DEC in its fulfillment of its responsibility to remediate and investigate the spills, they were properly admitted as business records ( see People v. Cratsley, 86 N.Y.2d at 90–91, 629 N.Y.S.2d 992, 653 N.E.2d 1162;People v. DiSalvo, 284 A.D.2d at 548, 727 N.Y.S.2d 146;Plymouth Rock Fuel Corp. v. Leucadia, Inc., 117 A.D.2d 727, 728, 498 N.Y.S.2d 453 [1986];see also State of New York v. Passalacqua, 19 A.D.3d 786, 788 n., 797 N.Y.S.2d 576 [2005];Navigation Law § 176[1], [2] ). Defendants also make the argument that the records were prepared solely for litigation and should have been excluded as unreliable on that basis as well, but we are not persuaded. While it was foreseeable that the records could be used in litigation, their primary purpose at the time they were generated was to determine the type of oil and its source in order to remediate the spill ( see People v. Guidice, 83 N.Y.2d 630, 635, 612 N.Y.S.2d 350, 634 N.E.2d 951 [1994];People v. Foster, 27 N.Y.2d 47, 52, 313 N.Y.S.2d 384,...