On December 22, 2023, Justice Chan of the New York County Commercial Division issued a decision in SH575 Holdings LLC v. Richmond Stuyvesant Holdings, LLC, 2023 NY Slip Op. 34525(U), holding that despite the dismissal of claims against then, defendants should nonetheless be sanctioned for discovery misconduct, explaining:
Dismissing the complaint does not resolve plaintiffs sanctions motions. CPLR 3126 (3) provides that if a party refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed pursuant to this article, the court may make such orders with regard to the failure or refusal as are just, including an order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or any part thereof, or rendering a judgment by default against the disobedient party.
While striking the pleading is the remedy in plaintiffs motions for sanctions, given that the complaint against the Caller Defendants is dismissed, plaintiffs motions to strike are denied. However, this is not to say that the Caller Defendants’ repeated failures to comply with court orders should be condoned. The court has previously sanctioned the Caller Defendants for violating court orders by missing discovery deadlines thrice and failing to produce any ESI, offering no excuse until after plaintiff filed for sanctions. Yet even after sanctions and the court’s repeated warnings that further violations could lead to further sanctions, the Caller Defendants have continued their pattern of ignoring court orders. If the credibility of court orders and the integrity of our judicial system are to be maintained, a litigant cannot ignore court orders with impunity. Accordingly, the court therefore finds good cause to award reasonable attorneys fees and costs. A monetary sanction of an award of reasonable attorneys’ fees and costs is appropriate under CPLR 3126 to compensate counsel for time expended related to a failure to provided discovery.
(Internal quotations and citations omitted).