Client and Counsel Jointly and Severally Liable for Monetary Sanctions Based on Inadequate Search for and Untimely Production of ESI; Evidentiary Sanctions Also Recommended
R & R Sails Inc. v. Ins. Co. of Pa., 251 F.R.D. 520 (S.D. Cal. 2008)
After a fire destroyed plaintiff’s manufacturing facility, defendant paid plaintiff for loss of property, but plaintiff claimed that the value of all lost property exceeded the amount paid. Plaintiff also sought further payment under the insurance contract for loss of income, business interruption and extra expenses. Plaintiff sued to enforce the contract, and also alleged bad faith in the handling of the claim.
In discovery, plaintiff noted that "conspicuously absent" from defendant’s production of documents were "electronic or handwritten daily activity records/logs which are generally kept with an adjuster’s notes and telephone call records.” Defendant insisted that the documents did not exist. During a discovery conference on the matter, the court expressed doubt as to the records’ nonexistence and ordered defendant either to produce the requested documents or submit a sworn declaration that the records did not exist. Defendant thereafter submitted a sworn declaration from its senior property claims examiner (Lombardo) stating that "[t]here were no daily activity logs or telephone record logs that were created or maintained in connection with plaintiff’s claim."