Philadelphia Skyline

The "e" in e-mail Stands for Evidence. In what is being called a landmark ruling, a New York State Supreme Court judge determined that the Corcoran Group failed to produce e-mails in a case where the residential giant allegedly sold a flood-prone condominium unit to a couple in Brooklyn.

Einstein and Boyd v. 357 LLC and the Corcoran Group, etal.
(Supreme Court, NY County, 10/21/2009)

In a decision with significant impact on e-discovery practices in New York State, the State Supreme Court has sanctioned The Corcoran Group, a national real estate brokerage, for "willfully" misleading a Brooklyn couple into buying a defective, water-leaking "lemon" apartment - and then failing to protect or produce potentially damaging email evidence when the couple sued. The ruling by Manhattan Supreme Court Justice Charles E. Ramos arose out of the discovery stage of a lawsuit in which the purchasers, a married couple with two young children, alleged that Corcoran, the sponsors, developers and others had fraudulently schemed to sell them a "lemon" apartment by concealing that the unit would flood severely with every rainstorm. The family was forced to move out of the apartment after a short time into rented quarters, but remains obligated to make mortgage and condominium payments on the unsalable unit. The case extends the existing standards for the protection of evidence in a lawsuit to electronically stored information for the first time in New York State. This is a landmark case. It establishes for the first time that in New York State, parties in a lawsuit must preserve and protect electronic documents just as if they were on paper. Attorneys and their clients can no longer remain in the 'typewriter era' and ignore the obligation in a lawsuit to avoid the destruction of potentially damaging electronically stored evidence. This case is a victory for computer-era common sense. Justice Ramos imposed sanctions against Corcoran and its attorneys for several violations, including:
  • Failing to suspend its routine document deletion and destruction policy when the lawsuit began
  • Failure to produce damaging electronically stored information (ESI) even while producing self-serving emails.
  • Failure by Corcoran's IT director and counsel to tell brokers involved in the suit to stop deleting emails and other potentially relevant ESI.
Among the emails which the defendants failed to produce, according to the lawsuit, was one revealing that on rainy days, Corcoran would cancel appointments to show the unit to prospective buyers. " ... This court sanctions the Corcoran Defendants by finding that they are deemed to have known of the water infiltration problem and to have willfully misled the Plaintiffs by concealing that condition from them during the sales process," wrote Justice Ramos in a 31 page opinion. In his opinion, Justice Ramos observed that New York State law had not previously addressed the obligation of attorneys and parties to preserve electronic evidence. He said that the failure to observe proper evidence protection procedures, upon the start of litigation, was "grossly negligent." The case involves the 2007 purchase of a ground-level and partially subgrade duplex apartment in a Park Slope condominium by a married couple. Named in the suit with Corcoran were three of its brokers, the developer, sponsors, and vendors and others. The defendants were ordered to pay for the purchasers' legal and other costs. The underlying lawsuit will continue in Supreme Court.  Link to Full Text of Decision

Corcoran Sanctioned for Failure to Preserve E-mail for Discovery
New York Law Journal, November 17, 2009
Noeleen G. Walder

"Jay B. Itkowitz, who represented the condominium's buyers, called the ruling "groundbreaking."  He said in an interview that the ruling was the first in the state to send the "critical message" that "when you are sued or know you are going to be have to take immediate and significant steps to preserve electronic evidence.""  Read more...

E-mail Shows Couple's Suit vs. Corcoran Group Holds Water, Judge Says 
Daily News, November 17, 2009
By Scott Shifrel

"The "e" in e-mail stands for evidence...  [Corcoran] shouldn't have put the apartment on the market," said Jay Itkowitz, the couple's lawyer."  Read more...

State Supreme Court Rules Corcoran "negligent" with E-Mails in Bklyn Condo Sale
The Real Deal
By David Jones

""This case adopts the basic federal standard of the obligation to preserve electronic evidence into the state court system," said Jay Itkowitz, attorney for the plaintiffs. "Under federal case law, once you know you're about to get sued, the obligation to preserve or protect electronic evidence comes into play.""  Read More...

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