Take caution not to destroy documentation when litigation is on the horizon!  When litigation is reasonably anticipated, the parties have an affirmative obligation to ensure that documentation is not negligently or willfully destroyed.  Failing to retain relevant documentation can lead to the preclusion of evidence necessary to make your case, as it did in Hameroff & Son, LLC.v. Plank, LLC.

In Hameroff, Hameroff had a dispute with Plank over a project and the parties attempted to resolve the dispute through a Stipulation of Settlement.  From May through June, the parties attempted to implement a settlement.  Plank paid Hameroff $90,000 and Plank corrected a punch list of items contained in the settlement.  In July 2009, the parties reached an impasse and could not reach a settlement.  Plank was informed by Hameroff’s Counsel as early as July of 2009 that litigation was forthcoming.

On December 7, 2010, Hameroff’s Counsel sent a demand for Plank’s contract administrator, Carl Holsberger, and several other representatives’ emails involved with the project in dispute.  After failure to cooperate with the demand, Hameroff filed a motion to compel discovery responses  and the Court issued an order directing Plank to serve the responses within 20 days on August 30, 2011.

The court determined that Holsberger’s emails in question were necessary to determine whether the stipulation of settlement executed on May 15, 2009 was a substituted agreement or an executory accord.  In order to gauge whether Hameroff could pursue a cause of action under the original contract, further evidence was needed concerning the Stipulation of Settlement.

On January 12, 2012, Plank finally gave Hameroff’s Counsel the opportunity to review Holsberger’s files.  However, when Counsel got to Plank’s offices the boxes of documents he was given were labeled “1 of 3” and “3 of 3”.  In addition, counsel was informed that none of Holseberger’s emails were provided for review.  Holsberger claimed that in accordance with standard practice, he discarded the emails at the conclusion of the project in dispute.  After a series of failed attempts to get Plank to respond to Hameroff’s discovery demands, Hameroff sought an order of preclusion.

The court found there was evidence to suggest that Holsbergerer was not being truthful when he claimed he destroyed the emails in good faith.  For instance, Holsbergerer had submitted several emails to Hameroff’s former attorney as late as March 9, 2010 concerning the project.  One of the emails sent by Plank was dated June 4, 2009 and discussed the Stipulation of Settlement.  The court found these emails sent by Holsberger showed that Holsbergerer did not in fact destroy the emails in question in accordance with his standard practice because he produced the emails after the project was already completed.

Furthermore, the documentation submitted by Holsberger matches documentation submitted with an affidavit submitted by Holsberger on May 11, 2011 in support of the earlier motion.  The May 5, 2009 email submitted with the affidavit for the earlier motion bears the date May 11, 2011, which indicated when the email was retrieved.  The other emails submitted with the affidavit also bore the date May 11, 2011 at the bottom of the emails.  Thus illustrating that the emails were retrievable as late as May 11, 2011, way after the project in dispute was completed.

The court ultimately found the documentation refuted Holsberger’s contention that the emails were destroyed in good faith, rather that Plank’s failure to produce the emails was “willful and contumacious.”  The court was also troubled that Plank had not produced their drafts of the pleadings filed in City Court prepared by Holsberger.  The court found that since Holsberger was not a licensed attorney the pleadings were not protected by attorney-client privilege and should have been produced.

The court ultimately granted Hameroff’s order of preclusion, which precluded Plank from offering any documentation or testimony of Holsberger or any other employee that addressed the May 15, 2009 Stipulation Agreement.  In addition, Hameroff was awarded costs and attorney fees incurred on the motion.

Perhaps Plank’s rights under the substituted agreement would have been more favorable for Plank in court as opposed to Hameroff pursuing claims under the original contract.  However, had Plank complied with the discovery demands and the discovery order they would have had the opportunity to explore their options concerning the Stipulation of Settlement.  Plank had an obligation to hold and preserve relevant documents in light of the dispute with Hameroff.   Let this be a lesson that the court does not take kindly to willful destruction of documents when litigation looms near.

Tracy Azinge is a student at Seton Hall University School of Law (Class of 2013), and focuses her studies in the area of Intellectual Property.  Tracy is currently participating in the Civil Litigation Clinic.  After graduation, Tracy will clerk for Judge Coleman in Essex County Family Court.  Tracy has worked as a legal intern for Wyndham Worldwide Corporation located in Parsippany, NJ and Bright and Sponder located in Princeton, NJ.  Additionally, Tracy is currently working as a Law Clerk at the Law Offices of McCurrie, McCurrie, & McCurrie.