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Landlord Loses Back Rent Case Due to E-Discovery Violations Including Failure to Hire Tech Vendor

May 2015

Itkowitz PLLC has obtained the dismissal of a landlord’s case for back rent in Supreme Court after the owner repeatedly refused to comply with demands to produce e-discovery (disclosure of electronically stored information, such as emails).   

The case originated when the tenant felt compelled to leave an apartment for which he was paying $16,995.00 per month.  He notified the owner he would be leaving and asked the owner to cooperate with the tenant’s efforts to replace the tenancy.  The tenant alleged the owner told him he would hold the tenant fully responsible for the lease obligations.  The tenant found a number of potential tenants who were interested in taking over the apartment but the owner refused to cooperate.  In fact, the tenant alleged that the owner and the managing agent interfered with the tenant’s efforts to find a replacement tenant.

After the tenant departed, the owner sued the tenant for $89,975.00 in alleged unpaid rent plus interest and attorney fees.  In defending the lawsuit, the tenant alleged the landlord failed and refused to mitigate his damages by promptly re-renting the apartment and intentionally interfered with the tenant’s efforts to find a suitable replacement tenant.

The tenant then served discovery demands requesting email disclosure of communications between the managing agent and the owner and building staff since it was alleged that the doormen were directed not to allow the apartment to be shown to potential tenants and brokers.  The Landlord refused to provide email disclosure. 

The owner based his refusal on claims that the owner had no email, which was refuted by communications between the tenant and the owner, and on the ground that the Landlord had no affiliation with the managing agent and did not have to produce email from the managing agent.

Itkowitz PLLC sought and obtained a number of court orders directing the owner to produce electronically stored information (“ESI”), the means and methods used to store such ESI by the owner and managing agent including a description of all electronic equipment so utilized, and to employ a technology vendor to copy such information from the owner and managing agent’s various devices.  The owner’s counsel only produced a small number of paper email.

In short, the owner and counsel failed to comply with orders to (i) retain a forensic specialist to perform a search of the owner and managing agent’s ESI (ii) confer with Tenant’s counsel to produce a list of “search terms” for the ESI; (iii) divulge information on the method of ESI storage (iv) produce the ESI in the electronic format specified by counsel and (v) to produce all communications between the owner and third parties regarding potential tenants and/or subtenants for the premises.

In attempting to explain its refusal to provide the ESI, counsel for the owner explained to the that the demand for the “hard drives” of the managing agent would include information from other projects, “would create privacy violations”, and that the “retention of a forensic electronically stored information specialist would be unreasonably expensive”.

Upon the repeated failure to produce the required communications, the Court dismissed the complaint with prejudice because, “The plaintiff has willfully refused to engage in electronic discovery in violation of the preliminary conference order, dated March 20, 2013, the order resolving the motion to vacate a note of issue dated December 4, 2013, and finally the order resolving the motion for sanction and non-compliance with defendant’s discovery demands, dated October 2, 2014 which contained the conditional sanction of striking the complaint in the event of non-compliance by the deadline of October 24, 2014.”

The Court concluded: “In view of the fact that most business-related information is currently stored electronically, the Court can no longer accept conclusory assertions of undue burden or prohibitive costs as justification for withholding discovery.  Electronic discovery has become the norm in civil commercial litigation, and the parties should expect to incur reasonable costs of such disclosure when they commence an action in New York State Supreme Court.  Non-compliance with a series of court orders, on the other hand, should never be the norm.”

Full text of decision coming soon.


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