Ignoring Discovery Requirements is Risky Business in New York State Courts
Historically, and I stress “historically,” New York State Court orders compelling discovery were not received with great concern. In fact, it usually took three of them before there were serious consequences. Things have been changing, and, if you doubt it, read Wilson v. Galicia Construction & Restoration Corp., which was decided by the Court of Appeals in April. The court has spoken: discovery orders must be obeyed. The decision upholds a judgment of $700,000 against a defendant whose answer was stricken as a sanction for resisting discovery, even though the defendant had what appeared to be a strong fraud defense against the claim.
Wilson was a personal injury claim. Plaintiff alleged that he was injured by an object that fell from a scaffold into his eye. The company that erected the scaffold and multiple others were named as defendants. The scaffold company resisted discovery, and the trial court issued an order directing that discovery requests were due by a date certain or the scaffold company’s answer would be automatically stricken. The answer was stricken.
One month later, in response to a discovery request from another party, plaintiff produced the object that injured his eye. It was an air-gun pellet that, apparently, had been fired into plaintiff's eye, rather than falling from the scaffold. In other words, the facts supporting liability in the complaint were incorrect. All of the defendants, except for the scaffold company, were dismissed.
Over the next few years, the scaffold company tried to vacate the order striking its answer for several reasons. It argued “justifiable excuse” without success. It argued that the underlying claim should be dismissed because it was fraudulent. This failed on the grounds that the sanction was a result of the scaffold company’s own behavior, not the plaintiff’s.
In the Court of Appeals, the scaffold company also argued that plaintiff had not satisfied the statutory requirements for proof after a default. The court ruled that the argument was not preserved and did not reach it – and noted the unfairness to plaintiff if the court did rule in the scaffold company's favor. Two judges dissented on the grounds that evidence of fraud by plaintiff was compelling and it was an abuse of discretion for the trial court not to address it in order to preserve the integrity of the judicial system.
Seven hundred thousand dollars is a huge sanction. One might be tempted to argue that the court of appeals thought that resisting discovery was a strategic decision that should be punished. Or, that the court might have ruled otherwise if the argument was preserved. Or, that the dissent is correct. No matter. Powerful message delivered by the court. The days of delay are over, and ignoring the message can be very expensive. The $700,000 judgment represents a reduction of the trial court's award of more than $1,000,000.
