J-A19014-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
SOLARA VENTURES IV, LLC, IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
PNC BANK, NATIONAL ASSOCIATION,
SUCCESSOR-IN-INTEREST TO NATIONAL
CITY BANK,
Appellee No. 1212 WDA 2013
Appeal from the Judgment Entered September 11, 2013
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD 10-009270
BEFORE: BENDER, P.J.E., OLSON, J., and FITZGERALD, J.*
MEMORANDUM BY BENDER, P.J.E.: FILED AUGUST 07, 2014
Appellant, Solara Ventures IV, LLC, appeals from the judgment
entered September 11, 2013, against Appellant and in favor of PNC Bank,
National Association, Successor-in-Interest to National City Bank (PNC), for
$70,000. At issue are three orders: the first, entered January 29, 2013,
imposed sanctions against Appellant for discovery violations, and the
remaining two, entered July 23, 2013, dismissed this action and awarded
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*
Former Justice specially assigned to the Superior Court.
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Appellant is a real estate developer.1 In 2007, Appellant commenced a
development project in the city of Pittsburgh known as the Otto Milk Factory
Condominiums (the Project). Appellant secured financing for the Project
through National City Bank. Subsequently, Appellant sought additional
financing to cover higher than expected construction costs. According to
Appellant, National City Bank assured Appellant that additional financing was
forthcoming. However, National City Bank was acquired by PNC, which
thereafter declined Appellant further financing. Appellant obtained financing
from a third party and completed the Project.
In May 2010, Appellant commenced this litigation, asserting breach of
The parties began the discovery process, and in October 2010, PNC
requested electronically-stored information from Appellant.
Thereafter, in a dispute ongoing for more than two years, Appellant
offered a series of inconsistent, seemingly contradictory reasons for its
le, in December
2010, Appellant suggested that a computer virus had rendered such
electronically-stored information irretrievable but claimed the computer hard
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1
ute
certain actions taken by Mr. Benoff to Appellant.
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drives had been preserved for inspection. See
Sanctions, Exhibit 2, at 4. Later, in April 2011, Appellant indicated that the
virus-
the computer hard drives were not preserved. See id., Exhibit 3, at 2.
In March 2012, Appellant informed PNC that (1) a virus had not
impacted its ability to retrieve email correspondence; (2) it had compiled
maintained a copy of the discs for inspection. See id., Exhibit 6, at 3
(document paginated incorrectly). In April 2012, Appellant testified via
deposition that it did not maintain historical emails relevant to the Project
sfer email from
an old computer onto a new one; (2) Appellant had purchased at least one
new computer since the Project began; (3) Appellant did not archive old
- See id.,
Exhibit 1, at 200-06. Also in April 2012, Appellant reiterated that it had
See id., Exhibit 7, at 2. Thereafter, in May
2012, Appellant produced the two discs, previously mentioned, containing
approximately 740 emails. None of the emails produced predated the
commencement of this litigation. Nevertheless, Appellant had attached
historical emails, contemporaneous with the Project, to his complaint.
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In July 2012, PNC filed a motion seeking sanctions based upon
spoliation of evidence. Appellant responded in August 2012, advising the
trial court that (1) Appellant had engaged a technical services company to
email application; (2) the emails were neither organized nor indexed; and
(3) Appellant had reviewed the emails and selected approximately 2,100
emails for production. See
for Spoliation Sanctions, at 2-4. The period in which this email
correspondence occurred is not clear from the record.
Following at least one hearing and extensive briefing, the trial court
See Trial Court Order (01/29/2013). The
bad faith required an adverse inference.
motion.2 As a further sanction, the court directed Appellant to make
available to PNC the approximately 41,000 emails retrieved from Appellan
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2
Thereafter, PNC submitted documentation supporting its request for
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secure these documents at the same time counsel informed Appellant of the
mails available to PNC.
Appellant did not file a motion for reconsideration, nor did Appellant
substance of the order but failed to either secure the 41,000 emails or make
them available to PNC. Thereafter, Appellant filed an interlocutory appeal,
which was quashed by this Court. See Order of the Superior Court, 322
WDA 2013 (05/20/2013).
In February 2013, PNC moved for further sanctions, again seeking
-compliance with
motion, Appellant asserted, for the first time, that a portion of the 41,000
emails were subject to the attorney-client privilege.
The trial court ordered deposition testimony to establish whether
Appellant had complied with the sanctions order. The court expressed its
specific concern that Appellant failed to comply with the provision directing
counsel to take possession of the emails at the same time as counsel
informed Appellant that the emails were to be surrendered to PNC.
deposition that counsel informed Appellant of the sanctions order
approximately one month prior to taking possession of the 41,000 emails.
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See Trial Court Orders
(07/23/2013).
Appellant timely appealed and filed a court-ordered Pa.R.A.P. 1925(b)
statement. The trial court did not issue an opinion.
Appellant raises the following issues on appeal: (1) whether the trial
court erred in dismissing this action
with the sanctions order; and (3) whether the award of $70,000 in
See -6 (edited
for ease of analysis).
following standard:
Generally, imposition of sanctions for a party's failure to comply
with discovery is subject to the discretion of the trial court, as is
the severity of the sanctions imposed. Nevertheless, the court's
discretion is not unfettered: because dismissal is the most
severe sanction, it should be imposed only in extreme
circumstances, and a trial court is required to balance the
equities carefully and dismiss only where the violation of the
discovery rules is willful and the opposing party has been
prejudiced.
Rohm & Haas Co. v. Lin, 992 A.2d 132, 142 (Pa. Super. 2010) (citations
requires a showing of manifest unreasonableness, partiality, ill-will, or such
lack of supp Christian v. Pa. Fin.
Responsibility Assigned Claims Plan, 686 A.2d 1, 5 (Pa. Super. 1996).
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In its first issue raised on appeal, Appellant contends that the trial
court abused its discretion by imposing sanctions. In support of this
(2) the trial court erred by imposing sanctions without an evidentiary
hearing; and (3)
arguments are devoid of merit.
Initially, Appellant argues that the record does not support the trial
hat Appellant misled the court and PNC. We disagree. The
Id.
e
GMH Assocs., Inc. v.
Prudential Realty Grp., 752 A.2d 889, 898 (Pa. Super. 2000). Competent
that Appellant provided contradictory explanations for its repeated failure to
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comply with its discovery obligations. Accordingly, we are bound by the
Appellant also claims that he was entitled to an evidentiary hearing
prior to the imposition of sanctions. Appellant cites in support the long-
standing precedent of Borough of Nanty-Glo v. Am. Sur. Co. of N.Y., 163
A. 523 (Pa. 1932) (reversing judgment entered upon a directed verdict
where movant relied solely upon testimonial evidence), and invokes his right
to due process.
Appellant never requested a hearing from the trial court. Accordingly,
we deem this issue waived. See Pa.R.A.P. 302(a); see, e.g., Irwin Union
Nat. Bank & Trust Co. v. Famous, 4 A.3d 1099, 1103 (Pa. Super. 2010)
(finding waiver where Appellant failed to seek an extension of the discovery
period from the trial court); Brown v. Philadelphia Tribune Co., 668 A.2d
appeal. This is true even if the issues raised on appeal are of constitutional
Appellant offers no support for its contention that Nanty-Glo applies
in the discovery context, and we are aware of none.
Testimonial affidavits of the moving party or his witnesses, not
documentary, even if uncontradicted, will not afford sufficient
basis for the entry of summary judgment, since the credibility of
the testimony is still a matter for the [factfinder].
If, however, the moving party supports its motion for summary
judgment with admissions by the opposing party, Nanty Glo
does not bar entry of summary judgment.
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DeArmitt v. N.Y. Life Ins. Co., 73 A.3d 578, 595 (Pa. Super. 2013)
(citations omitted). Nevertheless, assuming arguendo its application is
appro
admissions. Moreover, such admissions were not limited to oral
testimony or affidavits, but included documentary evidence. Thus, absent
e Nanty-Glo rule is misplaced.
DeArmitt, 73 A.3d at 595.
3
Appellant offers no
relevant authority for its position that due process required the trial court to
afford Appellant an evidentiary hearing, particularly in the absence of a
request for one. See, e.g., Rogal v. Am. Broad. Cos., Inc., 74 F.3d 40,
evi
discern no abuse of discretion.
criticism of Appellant for not inviting PNC to participate in the retrieval of the
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3
Appellant erroneously invokes the Fifth Amendment of the U.S.
Constitution, whereas the Fourteenth Amendment affords the right of due
process in state court.
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memorandum:
Because of the conflicting responses to the discovery requests,
PNC has never had the opportunity to become involved in the
retrieval process. If there had been a virus, the computer
should be available. If the computer or its hard drive had been
for documents. Even if Mr.
Benoff had only recently learned that it was possible for
documents to be retrieved, PNC should have been told and
invited to participate in the process. Finally, a decision as to
which of the 41,000 emails should be produced was made only
by Mr. Benoff who has not acted in good faith throughout the
discovery process.
Trial Court Memorandum (01/29/2013), at 7.
According to Appellant, Pennsylvania Rule of Civil Procedure 4009.12
in the discovery process.
Rule 4009.12 provides, in relevant part:
Where the documents may be identified only after review of a
larger group of documents, and the burden of identifying the
documents would be substantially the same for the party serving
the request as for the party served, the party served may afford
the party serving the request reasonable opportunity to identify
the documents, to examine or inspect them and to obtain copies.
Pa.R.C.P. 4009.12(a)(2)(i) (emphasis added). Based upon this provision,
Appellant asserts that it had no obligation to include PNC in the email
establishes an abuse of discretion.
um
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discovery obligations pursuant to Rule 4009.12. Rather, the court was
4019, which affords the trial court considerable discretion in crafting an
See Pa.R.C.P.
a party or person otherwise fails to make discovery or to obey an order of
Rohm & Haas Co., 992 A.2d at 142.
Appellant did not proceed through the discovery process in good faith.
For more than two years, it offered contradictory explanations for its failure
to produce electronically-
motion for sanctions, Appell
emails.
See
that Appellant could, or even should, have included PNC in the retrieval
process merely highlights the exasperation with which the court viewed
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In its second issue raised on appeal, Appellant contends the trial court
erred in
the sanctions order. Initially, Appellant challenges the following provisions
of the sanctions order:
[1] Within twenty (20) days [Appellant] shall make available to
oximately 41,000 documents that were
obtain the documents from Mr. Benoff at the same time
these documents will be
See Trial Court Order (01/29/2013), at 2.
most of the documents were not relevant or were subject to attorney-client
privilege. Appellant also argues that the provision directing counsel to
violate the Pennsylvania Rules of Profe
Appellant.
We deem these arguments waived. Appellant did not file a motion to
provisions in a timely manner. See Pa.R.A.P. 302(a). Moreover, Appellant
did not invoke the attorney-client privilege until long after the deadline to
comply had passed. Id.; see also Law Office of Douglas T. Harris, Esq.
v. Phila. Waterfront Partners, LP, 957 A.2d 1223, 1232 (Pa. Super.
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2008) (concluding that a party implicitly waives attorney-client privilege if
counsel does not raise it in a timely manner).4
Appellant also contends that dismissal was premature, citing in
support
Transp., 710 A.2d 23 (Pa. 1998). According to Appellant, in deciding the
availability of a lesser sanction that will protect the opposing party's rights
Schroeder, 710 A.2d at 27. Appellant
contends the trial court failed to do so here.
Schroeder is misplaced. Appellant suggests to
this Court that the trial court dismissed its case merely for its failure to
produce documents. However, Appellant conflates several discrete steps in
court imposed sanctions upon Appellant in January 2013, it specifically
decl
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4
remove any opportunity for Mr. Benoff to destroy records once he learned
that the documents that he had not produced would be made available to
-
discovery. See Trial Court Memorandum (04/11/2013), at 1-2. Thus,
absent waiver, we discern no abuse of discretion.
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-party discovery. See Trial Court Memorandum
(01/29/2013). Thus, the court implicitly found that PNC had suffered little
or no prejudice at that time. Thereafter, in April 2013, the trial court
with the sanctions order was established. In July 2013, following further
that dismissal was premature. Rather, dismissal was the cumulative result
ilures to proceed with discovery in good faith and
successfully deter Appellant from engaging in further dilatory behavior, we
Schroeder, 710 A.2d at 27; see also Rohm & Haas Co., 992 A.2d at 142
(directing a trial court to consider several factors before dismissing a case,
inc
Jacobs v.
Jacobs
award of one-
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discovery violations in an equitable distribution proceeding). Here, pursuant
this request, the trial court declined to award PNC the full amount, awarding
instead $70,000. We discern no abuse of discretion.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/7/2014
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