District Court Rejects Total Dismissal of Claims, Orders Partial Dismissal and $75,000 in Monetary Sanctions for Egregious Discovery Violations

Bray & Gillespie Mgmt., LLC v. Lexington Ins. Co., 2009 WL 5218035 (M.D. Fla. Aug. 3, 2009);  Bray & Gillespie Mgmt., LLC v. Lexington Ins. Co., 2010 WL 55595 (M.D. Fla. Jan. 5, 2010)

Following her finding that “[Bray & Gillespie], through counsel, acted willfully and in bad faith in violation of the Federal Rules of Civil Procedure and this court’s orders” by failing to make reasonable efforts to search for and produce documents in response to court orders and by making repeated misrepresentations to the court, among other things, the Magistrate Judge recommended that the plaintiff’s claims be stricken and that the case be dismissed with prejudice.  (For additional details of plaintiff’s discovery abuses, click here to be taken to a summary of a prior opinion in this case.)  On review of that recommendation, the District Court Judge found total dismissal of all the plaintiff’s claims “an excessive remedy” and instead ordered the dismissal of all claims for damages arising from the alleged interruption of business at the Treasure Island Property and for the plaintiff to pay $75,000 to the defendant for expenses incurred in pursuit of its motion for sanctions.

In its opinion, the District Court acknowledged the egregious nature of plaintiff’s and plaintiff’s counsel’s many discovery failings.  Despite these many violations, however, the court found the sanction of total dismissal of all claims “excessive” and chose instead to dismiss only the claims related to the Treasure Island Property, the property for which the late discovered evidence was relevant.  Declining to adopt the Magistrate’s recommendation, the District Court found the defendant’s contention that the plaintiff’s failure to produce the Treasure Island evidence prevented the defendant from interviewing persons who could describe the condition of the Resort “unpersuasive” where the defendant admitted that certain relevant individuals had been “available to Defendant since the inception of litigation” and had not been interviewed.  Also, the defendant’s appraisers had access to the relevant property throughout the relevant time period and took photos of the property to support the defendant’s case.  The court also noted that the plaintiff’s conduct “has only related to the production of folios for the Treasure Island Property” and that “[t]o speculate without any evidentiary support that Plaintiff’s conduct in this area undermines the integrity of all discovery provided in the case is not appropriate.”

Contemplating a range of alternative sanctions from disallowing the plaintiff’s use of the folio evidence to the recommended dismissal of all claims (and denying the plaintiff’s motion for an extension of time for additional productions), the court determined the dismissal of the plaintiff’s claims related only to the Treasure Island Property was appropriate.  Additionally, the court ordered the plaintiff to pay defendant $75,000 “for expenses reasonably incurred …in pursuit of [the] underlying motion.  The court noted that “the amount may not suffice to cover all reasonable expenses incurred by Defendant” but that in combination with the dismissal sanction, the sanctions were “sufficient for the conduct at issue.”