13-0556-cv
Metro v. Arch, et al.,
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH
THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER
MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
13th day of January, two thousand fourteen.
Present: Robert D. Sack,
Peter W. Hall,
Debra Ann Livingston,
Circuit Judges.
____________________________________________________
Metro Foundation Contractors, Inc.,
Plaintiff-Counter-Defendant-Appellant,
v.
13-0556-cv
Arch Insurance Company,
Defendant-Third-Party-Plaintiff-Appellee,
Marco Martelli Associates, Inc,
Third-Party-Defendant-Counter-Claimant-Appellee,
Martelli Real Estate, Inc., Marco Martelli, Madeline Martelli, Ronald Kuhlmann, Patrick J.
Quigley,
Third-Party-Defendants-Appellees.1
____________________________________________________
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The Clerk of the Court is directed to amend the caption accordingly.
FOR APPELLANT: Bryan Ha, White Plains, New York.
FOR APPELLEES: Steven H. Rittmaster (Lawrence S. Novak, on the brief)
Torre, Lentz, Gamell, Gary & Rittmaster, LLP, Jericho,
New York, for Arch Insurance Company.
Joshua D. Olsen, Mastropietro-Frade, LLC, Mineola, New
York, for Marco Martelli Associates, Inc., Martelli Real
Estate, Inc., Madeline Martelli, Ronald Kuhlmann, Patrick
J. Quigley.
_____________________________________________________
Appeal from a judgment of the United States District Court for the Southern District of
New York, (Forrest, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED in part, VACATED in part,
and REMANDED for proceedings consistent with this summary order.
Metro Foundation Contractors, Inc., (“Metro”) appeals the district court’s judgment in
favor of Marco Martelli Associates (“MMA”) on its claims for breach of contract and
indemnification and dismissing Metro’s claims against Arch Insurance Company (“Arch”). On
appeal, Metro argues that the district court erred when it entered judgment in favor of MMA on
MMA’s claims against Metro and that its award of attorney’s fees was excessive. Metro also
argues that the district court abused its discretion when it dismissed Metro’s claims against Arch
based on Metro’s spoliation of evidence. We assume the parties’ familiarity with the underlying
facts and procedural history of the case.
“Imposing sanctions pursuant to Rule 37 is within the discretion of the district court and a
decision to dismiss an action for failure to comply with discovery orders will only be reversed if
the decision constitutes an abuse of that discretion.” World Wide Polymers, Inc. v. Shinkong
Synthetic Fibers Corp., 694 F.3d 155, 159 (2d Cir. 2012) (internal quotation marks omitted).
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In examining a district court's exercise of its discretion pursuant to Rule 37, we evaluate “(1) the
willfulness of the non-compliant party; (2) the efficacy of lesser sanctions; (3) the duration of the
noncompliance; and (4) whether the non-compliant party had been warned that noncompliance
would be sanctioned.” Guggenheim Capital, L.L.C. v. Birnbaum, 722 F.3d 444, 451 (2d Cir.
2013) (internal quotation marks omitted).
Metro contends that it did not willfully disobey the district court’s discovery orders, and
thus, the district court abused its discretion in entering default judgment against Metro on the
claims brought by MMA. Noting Metro’s intransigence, the district court found that Metro had
willfully disobeyed its discovery orders. It stated in pertinent part,
Metro has declined to participate further in discovery and has blatantly disregarded
multiple warnings and orders. . . . The Court has already precluded Metro from relying
on the documents it has continuously and willfully failed to produce. Metro has
suggested that no sanction short of a default judgment on liability that will remedy its
egregious failures to produce documents and its failure to comply with the Court’s orders.
In short, Metro’s conduct is plainly willful.
Joint App. 261-262.
Given Metro’s recalcitrance this finding was not clearly erroneous. See generally Baba
v. Japan Travel Bureau Int’l, Inc., 111 F.3d 2, 5 (2d Cir. 1997) (per curiam) (holding that
plaintiff willfully disregarded the court’s discovery orders for more than a year in the face of
repeated warnings that her actions could result in dismissal); John B. Hull, Inc. v. Waterbury
Petroleum Prods., Inc. 845 F.2d 1172, 1177 (2d Cir. 1988) (affirming dismissal of complaint
where district court issued three orders including two warnings that failure to obey would result
in dismissal).
Next Metro argues that the district court abused its discretion by dismissing its claims
against Arch for spoliation of evidence. “Dismissal of a case as a sanction for spoliation of
evidence is reviewed under an abuse of discretion standard.” West v. Goodyear Tire & Rubber
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Co., 167 F.3d 776, 779 (2d Cir. 1999). “Although a district court has broad discretion in crafting
a proper sanction for spoliation, we have explained that the applicable sanction should be molded
to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.”
Id. In particular we have recognized that a sanction should “(1) deter parties from engaging in
spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the
risk; and (3) restore the prejudiced party to the same position he would have been in absent the
wrongful destruction of evidence by the opposing party.” Id. (internal quotation marks omitted).
“Dismissal is appropriate if there is a showing of willfulness, bad faith, or fault on the part of the
sanctioned party.” Id.
Metro maintains that the district court failed to find that Metro acted with the requisite
state of mind warranting dismissal. With respect to Metro’s state of mind, Judge Forrest
observed,
I think that to the extent the standard of spoliation is what it is, and it does require -- there
was an intent component to it here. There was a preservation obligation that was
absolutely clear. The preservation obligation was not met. . . . The finding on the Rule 37
sanction does include my determination as to state of mind.
Joint App. 1127. Here, in determining Metro’s state of mind the district court considered
Metro’s obligation to preserve the relevant documents, its long history in failing to produce the
documents, and its contention that it had lost them. Having reviewed the record, we hold that the
district court’s finding regarding Metro’s state of mind was sufficiently supported and did not
exceed the bounds of its discretion in dismissing Metro’s claims against Arch.
Metro further suggests that the district court failed to consider lesser sanctions before
dismissing its claims. We have previously observed that because dismissal is a “drastic remedy,
it should be imposed only in extreme circumstances, usually after consideration of alternative,
less drastic sanctions.” West, 167 F.3d at 779 (internal quotation marks omitted). Although in
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some circumstances excluding evidence in a party’s case is an appropriate lesser sanction, here,
Judge Koetle’s preclusion of the same documents failed to motivate Metro into producing the
requested documents to MMA. Moreover, such exclusion would only serve to benefit Metro.
Indeed, the record establishes that the documents that Arch sought in discovery from Metro were
central to Arch’s ability to challenge Metro’s claims. Considering Metro’s dilatory behavior and
continual disrespect for district court orders, the court was within its discretion in dismissing
Metro’s claims against Arch.
Metro also contends that the district court erred in awarding $187,804.68 attorneys’ fees.
“Under New York law, a contract that provides for an award of reasonable attorneys’ fees to the
prevailing party in an action to enforce the contract is enforceable if the contractual language is
sufficiently clear.” NetJets Aviation, Inc. v. LHC Comms., LLC, 537 F.3d 168, 175 (2d Cir.
2008). “Where a district court has awarded attorneys’ fees under a valid contractual
authorization, we recognize that it has broad discretion in doing so, and an award of such fees
may be set aside only for abuse of discretion.” U.S. Fid. & Guar. Co. v. Braspetro Oil Servs.
Co., 369 F.3d 34, 74 (2d Cir. 2004) (internal quotation marks omitted). Our review of the record
leads us to conclude that Metro has not established that the district court committed reversible
error in awarding attorney’s fees.
Metro also argues that the judgment for money damages was incorrectly entered in favor
of all of the third-party defendants, rather than MMA alone. We agree. The claims brought
against Metro as part of the answer to Arch’s third-party complaint were brought on behalf of
MMA and not the other third-party defendants. Accordingly, we vacate the district court’s
judgment in favor of all of the third-party defendants on the claims against Metro and remand
with instructions to reenter the judgment in the amount of $187,805.68 in favor of MMA only.
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We have considered all of Metro’s remaining arguments and determine them to be
without merit; accordingly, the district court’s judgment is AFFIRMED in part, VACATED in
part, and REMANDED for proceedings consistent with this summary order.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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