Preview
FILED: NEW YORK COUNTY CLERK 02/17/2015 10:26 PM INDEX NO. 651079/2011
NYSCEF DOC. NO. 356 RECEIVED NYSCEF: 02/17/2015
PRELIMINARY STATEMENT
This action arises from Defendant Herrick Feinstein’s (“Herrick”) representation of
Plaintiff Arbor Realty Funding LLC (“Arbor”) in April and May 2007. During those months,
Arbor made a series of short-term loans aggregating about $70 million (the “Loans”) to the
developer (the “Borrower”) of a residential condominium tower (the “Building”) on East 51st
Street in Manhattan (the “Project”). Herrick assured Arbor that the Building could be
constructed in accordance with all applicable zoning regulations “as-of-right.”
Arbor relied on this advice, and closed on the Loans, only to learn that the advice was
wrong. Many months after Arbor made the Loans, the Herrick lawyer who was most responsible
for the faulty zoning analysis confessed:
Although Herrick calls this a renewal motion pursuant to CPLR 2221(e), Herrick pays
but grudging lip service to the actual language of the Rule, which requires a movant to present
“new facts” that would “change the prior determination.” CPLR 2221(e)(2). On this motion,
Herrick presents no facts that are actually “new,” it practically ignores the Court’s prior
determination, and it does not show how the “new” facts should change the prior determination.
The supposed “new facts” are contained in the minutes of a May 10, 2007, meeting of
Arbor’s Structured Loan Committee (the “Minutes”). There are no facts in those Minutes that
are “new” because the Minutes are a truncated, two-page presentation based upon Arbor’s much
more extensive 34-page May 4, 2007 Underwriting Memorandum, on which Herrick relied
extensively on the original motion.
On the original motion, the Court determined that Arbor did not intentionally spoliate
documents, and that Arbor’s failure to preserve documents after its preservation obligation
attached was caused by the negligent application of Arbor’s routine policies relating to electronic
documents and departing employees. There was no gross negligence or intentional spoliation.
Herrick’s brief looks nothing like a renewal motion; it regurgitates old arguments that the
Court rejected previously, and most tellingly, it does not even begin to show how the new facts
warrant a change in the Court’s determination that Arbor’s level of culpability was no more than
negligent.
This renewal motion, with no new facts, and no effort to show that the supposedly new
facts warrant a change in the Court’s prior determination is “completely without merit,” and a
transparent effort to “prolong the resolution of this litigation” within the meaning of Part 130 of
the Rules of the Chief Administrator. That is why this Court should deny Herrick’s renewal
motion, and award Arbor attorneys’ fees and costs pursuant to Part 130.
BACKGROUND
The Prior Motion
On the prior motion, Arbor established through an uncontroverted documentary record
that (i) Herrick advised Arbor, before it made any of the Loans in April and May 2007, that the
Project could be built “as of right” in accordance with applicable zoning regulations, and that it
“works, zoning wise” (Arbor Opp’n Br.1 at 4-6, citing Lederman Aff. ¶¶ 6, 8-9, Ex. 1 at
AR65197 and Ex. 2 at AR 005419; Kovarik ¶¶ 6-9; Villani ¶¶ 8-9); (ii) Arbor relied on that
advice before closing on the Loans (Arbor Opp’n Br. at 4-5, citing Villani Aff. ¶¶ 10-11;
Lederman Aff. ¶¶ 11-12; Kovarik Aff. ¶¶ 10-12); (iii) Herrick understood that Arbor was relying
1
Arbor is not repeating the arguments it made on the prior motion, but it is appending its brief from that
motion for the Court’s convenience. References to the “Arbor Opp’n Br.” are to Plaintiff’s Memorandum of Law in
Opposition to Herrick’s Original Motion for Spoliation Sanctions, dated July 18, 2014.
2
on that advice (Arbor Opp’n Br. at 5-6, citing Syracuse Opp’n Aff.,2 Ex. 3 at HF005750 and Ex.
4 at HF077898) ; (iv) Herrick’s advice was wrong (Arbor Opp’n Br. at 6, citing Villani Aff. ¶¶
15-21; Syracuse Opp’n Aff., Exs. 5-8 and Ex. 15 [Parley Aff. ¶¶ 2-3, 9-17); and (v) the Herrick
lawyer most responsible for the zoning analysis, upon learning that other professionals disagreed
with his view,
the City’s Commissioner of Buildings announced that the Project had
been approved in error. (Arbor Opp’n Br. at 6-7, citing Syracuse Opp’n Aff., Ex. 12 at
HF040729, and Exs. 13-14, 25-26.)
Arbor also showed that it had no obligation to preserve any documents until June 2008,
when Arbor engaged the Kaye Scholer firm to advise itabout Herrick’s zoning advice (Arbor
Opp’n Br. at 7, citing Rubin Aff. ¶¶ 8-9), an assertion with which Herrick agrees (see Herrick
Renewal Br. 3 at 7; Ludmerer Aff., Ex. 1 (Argument Tr. at 4:19-5:19; 6:3-10.)).
Arbor demonstrated that, although several of its employees were involved in the due
diligence and related activities for the Loans, only Ivan Kaufman and Fred Weber would have
had the authority to close them if Herrick had communicated that the zoning analysis was
mistaken or aggressive. (Arbor Opp’n Br. at 8-11, 19-21.)
Finally, Arbor established, with the imprimatur of the independent experts at KPMG, that
the electronic document deletions that Herrick complains about occurred (a) prior to June 2008
(Arbor Opp’n Br. at 12), when Arbor had no obligation to preserve documents, or (b) pursuant to
Arbor’s routine IT or employment practices that Arbor inadvertently did not shut down. Id.
2
References to the “Syracuse Opp’n Aff.” are to the Affirmation of Vincent J. Syracuse, dated July 18,
2014, Docket No. 226-262, 264, in Opposition to Herrick’s Original Motion for Spoliation Sanctions.
3
References to the “Herrick Renewal Br.” are to the Memorandum of Law in Support of Herrick, Feinstein
LLP’s Motion for Leave to Renew Its Motion for Spoliation Sanctions Against Arbor Realty Funding, LLC, dated
January 26, 2015.
3
These included: (i) an automatic retention/destruction policy that deleted emails from all
employees’ Inbox and Sent Items folders after 189 days (Id. at 8-12, 20-21, citing Murphy Aff.
¶¶ 2-4; Ludmerer Aff., Ex. 26 [Spagnoletti Aff., Ex. 20 [KPMG Report at 3-4, 11, 19-20]; and
Ex. 25 [KPMG Tr. at 40:15-42:25]), and (ii)the departing employee policies, which reimaged
their computer hard drives and erased their email accounts (Arbor Opp’n Br. at 8-12); and (iii)
the recycling of computer backup tapes every four weeks. Id.
The Court’s Prior Determination
The Court rejected nearly every Herrick argument and reached the following conclusions:
April and May 2007 was the key time period for this transaction. This is “when this deal
was being put together.” (Ludmerer Aff., Ex. 1 [Argument Transcript at 51:19-21.) “This deal,
and what they [Arbor] were going to do, and what they [were] relying on, what everyone was
looking at occurred, really triggered back in 2007.” (Id. at 51:23-25.) “2007 is the ultimate
decision here on the loan.” (Id. at 70:23-24).
Even though Ivan Kaufman had contemporaneously deleted his April/May 2007 emails,
that did not constitute spoliation because, at that time, there was no obligation to preserve them.4
(Id. at 71:3-16.) Indeed, it was Kaufman’s practice to routinely delete all his emails. (Arbor
Opp’n Br. at 9, citing Kaufman Aff. ¶¶ 8-9.)
The Court next found that Arbor’s failure to preserve the emails of all other employees
was no more than “ordinary negligence.” (Id. at 78:9-10, 12-13; 78:25-79:6; 92:8-10.) It was
4
Although the Court did not say so explicitly,the same conclusion applies to the emails that were
subjected, prior to June 2008, to Arbor’s automatic retention/destruction policy. Any email created prior to
December 2007 that remained in an employee’s Inbox or Sent Items folder for 189 days would have been deleted
automatically before Arbor had any obligation to preserve them. (Arbor Opp’n Br. at 12, citing Ludmerer Aff., Ex.
26 [Spagnoletti Aff., Ex. 20 [KPMG Report at 3-4, 11, 19-20]; and Ex. 25 [KPMG Tr. at 40:15-42:25]; Murphy Aff.
¶¶ 2-4.)
4
ordinary negligence because Arbor had inadvertently failed to turn off its regular practices of
reimaging the hard drives of departing employees, and erasing their email accounts, and
recycling backup tapes.
I have concluded that it’s ordinary[] [n]egligence, the synapses didn’t connect, but
it’s ordinary [negligence]. It was the regular standard. It was the regular
departure procedure, nothing that rises to the level of anything more than ordinary
[negligence].
(Id. at 78:26 – 79:6.) Because the Court held that Arbor had not acted with gross negligence, or
with intent, the Court held that there was no basis on which to presume that the unpreserved
documents would have supported Herrick’s defense that Arbor did not rely on its zoning advice.
(Id. at 84:21 – 85:10.)
Consequently, the Court denied Herrick’s motion to strike Arbor’s complaint. Herrick
would only be “entitled to an adverse inference [charge] at trial, PJI 1:77 against Plaintiff as to
the emails and related documents not produced as a result of the automatic deletion and
employee departure policies at Arbor.” (Id. at 91:8-15). Pursuant to that charge, Herrick will
have the opportunity to argue to the jury that those documents would have been “important or
significant,” and the jury will be permitted to “conclude that if [those documents] had been
produced [they] would not have supported [Herrick’s] position on the issue of” whether Arbor
relied upon Herrick’s zoning advice, and “would not contradict the evidence offered by Herrick
on the question.” (PJI 1:77.) 5
The Court also denied Herrick’s application for fees on the motion (Ludmerer Aff., Ex. 1
[Argument Transcript at 94:25 – 95:2-9, 22-23]), and it declined to stay discovery during an
5
Garrett Gourlay and Garret Gourlay Architect, PLLC, defendants in a related action (Index No.
601122/10) that has been consolidated with this one, cross-moved in this action for the same relief that Herrick
sought, and moved for such relief in the other action. In this action, the Court denied the cross-motion because
Gourlay was not a party. See Ludmerer Aff., Ex. 34. In the Gourlay action, the Court rejected the motion: “Now,
Gourlay; let me just say. You’re getting nothing. You cannot come in here with hands that unclean and ask for any
relief, any.I just can’t. * * * Gourlay shall not get an adverse inference.” (Ludmerer Aff., Ex. 1 [Argument Tr. at
89:23-26 and 90:14-15.])
5
appeal: “This is why I don’t give stays, because the First Department views a stay by the trial
judge as indicia of insecurity about the decision. I have none.” (Id. at 97:10-15.)
* * *
Nothing in Herrick’s motion papers justify disturbing the Court’s prior determination,
ARGUMENT
I. THE COURT SHOULD DENY HERRICK’S MOTION BECAUSE THERE
ARE NO NEW FACTS THAT WOULD CHANGE THE COURT’S PRIOR
DETERMINATION.
This motion to renew is governed by CPLR 2221(e), which requires the moving party to
present “new facts” that would “change the prior determination.” CPLR 2221(e)(2). Where, as
here, the supposedly new facts are duplicative of facts the Court previously rejected, or where
they otherwise do not warrant a different result, the renewal motion must be denied. See, e.g.,
William P. Pahl Equip. Corp. v. Kassis, 182 A.D.2d 22, 27-28 (1st Dep’t 1992) (affirming denial
of renewal motion where the new facts were the same ones plaintiffs presented on the prior
motion); N.Y.C. v. Am. Pipe & Tank Lining Co., 94 A.D.3d 566, 567 (1st Dep’t 2012) (affirming
denial of renewal motion because the new facts “would not have changed the prior
determination”).
Although Herrick’s memorandum pays lip service to CPLR 2221(e), their arguments
ignore this Court’s “prior determination,” and they fail to show how the supposedly “new facts”
should change that determination.
6
8
Not only are the Minutes a two-page version of the 34-page Underwriting Memorandum,
but Herrick now makes the very same arguments in its renewal motion about the Minutes that it
made previously in itsoriginal motion about the Underwriting Memorandum. For example, in
Herrick’s original moving brief, it argued that the Underwriting Memorandum supported
Herrick’s contention that Arbor neither requested nor relied on any zoning analysis by Herrick
because the Underwriting Memorandum focused on issues other than zoning and did not discuss
the zoning issues. (Ludmerer Aff., Ex. 17 [Herrick’s Orig. Br. at 20].)8 Herrick repeated this
argument in its Reply Brief (id., Ex. 16 [at 23]), and at oral argument (id., Ex. 1 [Argument
Transcript at 10-11].)
Now, Herrick makes exactly the same argument about the Minutes. The Minutes, they
say, focus upon the “factors Arbor considered when deciding whether to fund the loans,” and
none of those factors “had anything to do with zoning; indeed, the minutes do not mention
zoning.” (Herrick Renewal Br. at 2; emphasis in original; see also pp. 3 and 20.)
Because the Minutes contain nothing that is not already in the Underwriting
Memorandum, and because Herrick’s arguments about the Minutes are a reprise of their prior
arguments about the Underwriting Memorandum, they are not “new facts” within the meaning of
8
Actually, as Arbor showed on the Original Motion, the Underwriting Memorandum devoted nearly two
full pages to zoning issues, primarily relating to Floor Area Ratio (Arbor Opp’n Br. at 17-18, citing Ludmerer Aff.
Ex. 26 [Spagnoletti Aff., Ex. 21 at AR000529-30]), but these had nothing to do with the zoning issues which
Herrick failedto identifyfor Arbor. Arbor Opp’n Br. at 18, citing Syracuse Opp’n Aff., Ex. 5 [Parley Aff.];
Lederman Renewal Aff. ¶¶ 3-5, 8. In other words, the Underwriting Memorandum shows that Arbor was focused
on zoning issues that remained open, but not on the issues that Herrick said were resolved.
9
CPLR 2221(e). See N.Y.C., 94 A.D.3d at 567; William P. Pahl Equip. Corp., 182 A.D.2d at 27-
28.
B. The Minutes Do Not Support Herrick’s Arguments About Reliance.
Herrick contends that it is not liable to Arbor because Arbor did not rely upon Herrick’s
zoning advice, and Herrick says that the Minutes support this defense. See Herrick’s Renewal
Br. at 2, 19-23. To begin with, this defense is absurd in view of the contemporaneous, pre-
closing documents produced by both parties showing that Arbor insisted upon receiving
Herrick’s zoning advice, Arbor relied upon it,and Herrick knew that Arbor was relying on it.
See Arbor Opp’n Br. at 4-7. Moreover, Arbor’s affidavits on the original motion asserted that
zoning mattered so much to Arbor that Arbor would not have closed the Loans unless Arbor was
satisfied that the zoning was as-of-right. See Ludmerer Ex. 4 [Kovarik Aff. ¶¶ 5-8, 10-12]; Ex. 3
[Lederman Aff. ¶¶ 5-13; Exs. 1-2]; Ex. 12 [Kaufman Aff. ¶¶ 3-6]; Ex. 33 [Weber Aff. ¶¶ 5-7].
Nothing in the Minutes contradicts this proof. Herrick says that, because the Minutes do
not discuss zoning, therefore, Arbor did not care about zoning. In fact, the absence of a zoning
discussion at the loan committee meeting just confirms what Arbor has said about zoning all
along: once Herrick assured Arbor, on April 27 and thereafter, that the Project could be built as-
of-right, zoning ceased to be an open issue to Arbor. As Harvey Lederman, Arbor’s former VP –
Underwriting and one of the signatories to the Underwriting Memorandum, explains in his
accompanying affidavit, Arbor’s risk analysis was limited to known issues and material risks that
were still unsettled. See Lederman Renewal Aff. ¶¶ 3-5, 8. When Herrick assured Arbor that the
Project could be built as-of-right (id.), Arbor ceased to view it as a risk worthy of inclusion in the
Underwriting Memorandum or of discussion at the loan committee meeting. Id.
10
The Minutes surely do not corroborate the reply affirmation of Sheldon Chanales
submitted on the original motion. That affirmation told a story about a supposed conversation
Chanales had with Fred Weber of Arbor before the closings, in which Chanales allegedly told
Weber that the Borrower’s zoning interpretations were “aggressive,” and in which Weber
supposedly responded that Arbor did not care because there was adequate collateral for the
Loans. See Herrick Renewal Br. at 22-23.
That story is pure fiction that is inconsistent with a substantial pile of contemporaneous
documents, and Weber flatly denies it: “I did not have any such conversation with Mr.
Chanales.” Weber Renewal Aff.9 ¶ 3.
Neither Chanales’ attorney time records for April and May 2007, nor Herrick’s phone
records, support Chanales’ story. The attorney time records contain no indication of any
communication between Chanales and Weber. See Syracuse Supp. Aff., Docket No. 303, at Ex.
36. Similarly, Herrick’s telephone records show that, between April 24, 2007 and May 8,
2007 – when the bulk of the Loans were funded – Chanales never once called Weber. Syracuse
Renewal Aff.10 ¶ 6, Ex. 5.
Fred Weber’s calendar entries also contradict Chanales’ story. They do not reflect any
communications with Chanales (or anyone else at Herrick) in 2007, although they include
numerous entries in 2008 and 2009 that show both internal communications at Arbor and
conference calls and meetings with Herrick relating to the Project. See Syracuse Supp. Aff.,
Docket No. 303, Ex. 37.
9
References to the “Weber Renewal Aff.” are to the Affidavit of Fred Weber In Opposition to Herrick’s
Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to February 13, 2015.
10
References to the “Syracuse Renewal Aff.” are to the Affirmation of Vincent J. Syracuse In Opposition
to Herrick’s Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to February 17, 2015.
11
Moreover, crucial documents that Chanales wrote (and did not write) are inconsistent
with his story. First, Chanales never memorialized his supposed conversation with Weber. Put
more starkly, Chanales supposedly just warned a client who was about to lend $70 million
dollars for a real estate project with “aggressive” zoning, the client said that he was willing to
roll the dice, and Chanales did not write a confirming letter to Weber, or to Arbor’s CEO or to its
general counsel, or send one of them a short e-mail, or even prepare an internal memo to the
files. Next, when Chanales finally did send an email to Arbor’s general counsel, on Christmas
Eve, 2008,
but Chanales never mentioned the story about his conversation with Fred Weber.
Syracuse Renewal Aff., Ex. 10.
Nine months later, in September 2009, a Herrick employee prepared an internal summary
among George Wolf (Herrick’s Administrator), and
Ivan Kaufman, Fred Weber, and Paul Elenio of Arbor. See Syracuse Renewal Aff. ¶ 6, Ex. 6.
Although the participants apparently discussed
the summary made no reference to any supposed pre-closing call from Chanales stating
that the Borrower’s zoning positions were aggressive. Id.11
In short, Chanales’ story is untrue, and the Minutes do not support it.
C. The Other Arbor Employees Were Not Materially Involved in the Project.
Herrick now argues that Arbor should have collected and produced documents from
every single one of the individuals who attended the May 10, 2007 loan committee meeting.
This argument is wrong because Arbor had no obligation to preserve their documents, and
11
Herrick finds some nefarious plot in the timing of the production of the Minutes. The Syracuse
Renewal Affirmation puts that point to rest. See Syracuse Renewal Aff. ¶¶ 2-5.
12
because those documents were subject to the same routine policies that affected all other Arbor
employees, the 189-day auto-deletion policy and the departing employee policy that erased email
accounts and hard drives.
Of course, in 2010, Arbor did designate five attendees of that meeting as document
custodians. They were individuals whom Arbor and its counsel determined were materially
involved with the issues raised by the anticipated claims and defenses: Fred Weber; Paul Elenio;
John Kovarik; Sal Villani; and Harvey Lederman. Arbor collected their responsive documents
and produced them to Herrick, together with responsive documents Arbor collected from thirteen
other individuals who were not at the loan committee meeting, but whom Arbor and its counsel
selected based upon the same criteria as the other five. See Syracuse Renewal Aff. ¶¶ 8-10,
n.1.12 Herrick argues that, in addition, Arbor should have collected documents from Maria
Elefante, Kristen Farha, Mark Fogel, Ron Gaither, Ryan Lebrecht, and Chris Read.13 Of these,
the only one who had any connection with the decision-making process for the Loans was Ron
Gaither (see Lederman Renewal Aff. ¶¶ 9-10) , but he left Arbor in 2008, eighteen months before
Arbor or its counsel even began the document collection process in May 2010, and his
documents were deleted pursuant to the departing employee policy.
1. There Was No Obligation To Preserve.
As a threshold matter, Arbor had no obligation to preserve the documents of these
additional employees. The accompanying Syracuse Affirmation describes the manner by which
12
These individuals’ electronic documents were subject to the same routine IT and employment practice
policies that affected allother Arbor employees – the 189-day auto-deletion policy and the departing employee
policy that erased email accounts and hard drives. See supra at 3-4.
13
Herrick’s papers contend thatGene Kilgore was among the Arbor employees who attended the loan
committee meeting, and whose documents Arbor should have collected (Herrick Renewal Br. at 9, 17); however, the
Minutes show otherwise. See Lederman Renewal Aff. ¶ 11, Ex. 2.
13
Arbor and its counsel identified the Arbor employees whose documents should be collected, and
the basis for their selection was the good faith belief that these were the people who were
materially involved with the issues raised by the anticipated claims and defenses. This process
resulted in the collection of documents from seventeen people at Arbor, including five who
attended the loan committee meeting. See Syracuse Renewal Aff. ¶¶ 8-10, n.1.
Herrick’s argument that Arbor should have collected documents from all the other
employees who attended that meeting is wrong on the law, and belied by Herrick’s own actions.
In Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003), Judge Scheindlin
rejected the contention that “a corporation, upon recognizing the threat of litigation, [must]
preserve every shred of paper, every e-mail or electronic document, and every backup tape.” Id.
The “duty to preserve extends to those employees likely to have relevant information – the ‘key
players’ in the case.” Id., at 218. See The Sedona Conference, Commentary on Legal Holds:
The Trigger and The Process, 11 Sedona Conf. J. 265, 279 (Fall 2010), available at
http://www.thesedonaconference. org/content/miscFiles/legal_holds_sept_2010.pdf):
Guideline 6. The duty to preserve involves reasonable and good faith
efforts, taken as soon as is practicable and applied proportionately, to identify
and, as necessary, notify persons likely to have relevant information to preserve
the information. . . . The obligation to preserve ESI requires reasonableness and
good faith efforts, but it is “unreasonable to expect parties to take every
conceivable step to preserve all potentially relevant data.” The organization
should consider the sources of information within its “possession, custody, and
control” that are likely to include relevant, unique information.
Id. (emphasis added); Report of the E-Discovery Committee of the Commercial and Federal
Litigation Section of the New York State Bar Association, Best Practices In E-Discovery In New
York State and Federal Courts, at 5 (December 2012, approved April 2013), available at
http://www.nysba.org/Sections/Commercial_Federal_Litigation/ComFed_Display_Tabs/Reports/
Ediscovery_Final5_2013_pdf.html (same).
14
Herrick’s only basis for arguing that Arbor should have collected and produced the
documents of the other employees was their attendance at this one loan committee meeting,
coupled with important-sounding job titles. See Herrick Renewal Br. at 3, 8-10, 16-18. Of
course, Herrick could have taken their depositions to ascertain what roles they really played, but
Herrick had no interest in the actual facts. Moreover, ever since Arbor produced documents to
Herrick in July 2011, Herrick has known which employees Arbor selected for this purpose
because Arbor produced its documents with custodian metadata. Furthermore, because of
Herrick’s representation of Arbor in this transaction, and in several others that preceded it,
Herrick knew Arbor’s employees, knew what their roles were (including who the decision-
makers were), and knew which ones were involved in each transaction. (See Syracuse Renewal
Aff. ¶ 9; Connolly Aff.14 ¶ 5.)
Arbor’s document production confirms that Herrick knew these people. Their names
appear on nearly two thousand documents that Arbor originally produced, many of which show
Herrick lawyers in email correspondence with them. (Syracuse Renewal Aff. ¶ 13.) And
Herrick’s own production includes nearly 400 documents with their names. Id. If any of these
individuals had any real involvement in this matter, Herrick would have known of that
involvement, and they would have sought their documents years ago, as they did with Christy
Cropanese and John Natalone, two other Arbor employees whom Herrick believed to be
involved in the Loans. Id. ¶¶ 9 and 13.
Herrick has never sought the documents of any of the individuals about whom they are
complaining now. Herrick never served a single interrogatory about them, or noticed their
14
References to the “Connolly Aff.” are to the Affidavit of William Connolly In Opposition to Herrick’s
Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to on February 12, 2015.
15
depositions. Id. ¶ 11. Herrick’s insistence that Arbor should nonetheless have collected their
documents is another example of Herrick’s bad faith.
2. Arbor’s Failure To Collect Was Not Gross Negligence.
Moreover, even if Arbor did have an obligation to preserve the documents of these
employees, that would not change the Court’s prior determination that Arbor acted with ordinary
negligence, as opposed to gross negligence. This follows because, as Herrick acknowledged
(Herrick Renewal Br. at 17), these employees’ emails were subject to Arbor’s 189-day automatic
deletion policy, and all their electronic documents were subject to the same departing employee
policies that Arbor neglected to shut down because the Arbor “synapses didn’t connect.”
D. Herrick’s Other Arguments Are Improper.
Herrick makes two other arguments, neither of which has any apparent relevance to this
renewal motion, and neither of which has any merit. The first argument is that Arbor assigned
the Loans in 2008 to a related entity, and thus Arbor has no standing to sue Herrick. The second
argument is that the documents that Arbor has been unable to produce prevent Herrick from
proving the supposedly limited “scope of Herrick’s engagement.”
Herrick’s argument that Arbor assigned the loans in 2008 to ARSR, a related entity (see
Herrick Renewal Br. at 5 and 24-25), is bizarre. It is not disputed that, in April 2010, Arbor sold
the Loans at a huge loss to HFZ. Herrick knows that to be true because Herrick represented
Arbor in that transaction. See Connolly Aff. ¶ 4-5. In this litigation, Herrick admitted this fact
in its Answer (see id. ¶ 6, Ex. 1), and in its statement of undisputed facts submitted in connection
with its summary judgment motion (id., Ex. 2). Those judicial admissions – which are based
upon Herrick’s actual knowledge – are conclusive, and estop Herrick from taking a contrary
16
position. Figueiredo v. New Palace Painters Supply Co., 39 A.D.3d 363, 364 (1st Dep’t 2007)
(admission in defendant’s answer is formal judicial admission of the fact alleged by the
adversary and takes the place of evidence); Richard T. Farrell, PRINCE, RICHARDSON ON
EVIDENCE § 8-215, at 523-24 (11th ed. 1995).
If Arbor sold the loans in 2010, as Herrick admits it did, Arbor could not possibly have
assigned those same loans to ARSR in 2008. That is one reason why this argument is so totally
devoid of merit.
Moreover, this argument has nothing to do with the Minutes, and itcould have been
raised on the original motion. As such, it is not properly interposed now. Eddine v. Federated
Dep’t Stores, Inc., 72 A.D.3d 487, 487-88 (1st Dep’t 2010) (renewal properly denied where
defendant failed to provide a reasonable explanation for not presenting such material on its prior
motion).
Herrick’s argument that deleted emails prevent Herrick from proving the “scope of
Herrick’s engagement” (Herrick Renewal Br. at 23) is similarly bizarre. It was Herrick’s
obligation to have an engagement letter. 22 NYCRR §1215.1(b)(1) requires lawyers to have
engagement letters that “shall address” the “scope of the legal services to be provided.” If
Herrick is unhappy that it lacks a document demonstrating the scope of its engagement, it has
only itself to blame. In addition, there is no connection between this argument and the Minutes,
Herrick makes no effort to show why it could not have raised this argument in its original
motion, and it is barred by Eddine supra.
These arguments are further evidence of Herrick’s bad faith.
17
E. Herrick Makes No Effort To Show That The Supposed New
Facts Warrant A Change In The Court’s Prior Determination.
Finally, and most significantly for a renewal motion governed by CPLR 2221(e)(2),
Herrick does not even attempt to show that the supposed “new facts” warrant any change in the
Court’s “prior determination.” Even if Herrick had made the attempt, it could not possibly
succeed because the supposed new facts have nothing to do with any one of the Court’s findings
on the original motion, that:
x April/May 2007 was the key time period, when Arbor was making its ultimate
decisions about the Loan (Ludmerer Aff., Ex. 1 [Argument Tr. at 51:19-21, 23-25; 70:23-
24]);
x Ivan Kaufman’s practice of deleting e-mails prior to June 2008 was not
spoliation because there was no obligation to preserve them at that time (id. at 71:3-16);
or
x Arbor’s failure to suspend its normal practices concerning the email accounts
and hard drives of departing employees and the recycling of its back-up tapes was
negligent, and not grossly negligent or intentional. (Id. at 78:9-10, 12-13; 78:26 – 79:6;
84:21 – 85:10.)
II. HERRICK’S MOTION IS DEFICIENT AS A MATTER OF LAW.
There is a separate and independent ground for denying this motion, and that is Herrick’s
failure to comply with CPLR 2214(c), which required Herrick, as the moving party, either to
supply the Court with a complete set of the papers that were submitted on the original motion, or
at least (because this is an e-filed case) to specify in its motion papers the docket numbers on the
18
e-filing system of all those papers. Herrick did not comply with CPLR 2214(c). See Syracuse
Renewal Aff. ¶¶ 15-17.
A party’s failure to provide such documents (or docket numbers) on a renewal motion
makes the motion defective. Biscone v. JetBlue Airways Corp., 103 A.D.3d 158, 177-79 (2d
Dep’t 2012), app. dismissed, 20 N.Y.3d 1084 (2013) (denial of motion to renew where the
movant did not provide papers from the original motion); In re MetLife, Inc. Shareholder Litig.
2014 WL 2151718, at *1 (Sup. Ct. N.Y. Co. May 16, 2014) (Scarpulla, J.) (plaintiffs failed to
submit “the moving and opposition papers” on the “underlying motion to dismiss. This alone is
sufficient to deny leave to reargue”).
III. ARBOR IS ENTITLED TO PART 130 COSTS AND ATTORNEYS’ FEES
AGAINST HERRICK FOR ITS FRIVOLOUS MOTION.
Herrick’s renewal motion is frivolous within the meaning of 22 NYCRR §130-1.1[a]
and [c] for two separate reasons: Herrick’s motion is “completely without merit in law or fact
and cannot be supported by a reasonable argument for an extension, modification, or reversal of
existing law”; and Herrick made the motion “primarily to delay or prolong the resolution of the
litigation.”
A. Herrick’s Motion is “Completely Without Merit.”
On three prior occasions, Arbor explained to Herrick that the Minutes, which form the
entire basis for its renewal motion, are nothing more than a truncated version of the Underwriting
Memorandum on which Herrick relied on the original motion; they are not “new facts” within
the meaning of CPLR 2221(e)(2), much less new facts that could “change” the Court’s “prior
determination.” Arbor explained all this to Herrick by email on October 9, 2014, in its letter to
19
the Court on October 27, 2014, and in its presentation to the Court on October 27, 2014. See
Syracuse Renewal Aff. ¶ 7, Exs.7-8; Ludmerer Aff., Ex. 11 [Tr. at 61:16-22].
The October 27 letter stated:
The loan committee minutes are not a “critical document.” The minutes
add no substance whatever to the Underwriting Memorandum, which predicated
many of the arguments Herrick made in their spoliation motion, all of which [the
Court] rejected.
Syracuse Renewal Aff., Ex. 8, at 1.
Nevertheless, Herrick moved to renew, but itmade no effort to show that the Minutes
were “new facts,” or how the Minutes should change the Court’s prior rulings, or to respond to
the assertions Arbor previously made about them. Instead, Herrick recycled its old arguments
that were based upon the Underwriting Memorandum, and several others that revealed its bad
faith. These facts establish the frivolity of Herrick’s motion. Wesselmann v. Int’l Images, 259
A.D.2d 448, 450 (1st Dep’t 1999) (affirming sanctions where the thrust of plaintiff’s re-argument
motion “was a rehash of arguments that the [motion] court previously refused to entertain”);
First Deposit Nat’l Bank v. Van Allen, 277 A.D.2d 858, 859-60 (3d Dep’t 2000) (affirming
imposition of sanctions where defendant made no effort to controvert the prima facie evidence
presented by plaintiff, and where the defenses interposed by defendant were strikingly similar to
ones that the Court rejected in a prior action).
Preview
FILED: NEW YORK COUNTY CLERK 02/17/2015 10:26 PM INDEX NO. 651079/2011 NYSCEF DOC. NO. 356 RECEIVED NYSCEF: 02/17/2015 PRELIMINARY STATEMENT This action arises from Defendant Herrick Feinstein’s (“Herrick”) representation of Plaintiff Arbor Realty Funding LLC (“Arbor”) in April and May 2007. During those months, Arbor made a series of short-term loans aggregating about $70 million (the “Loans”) to the developer (the “Borrower”) of a residential condominium tower (the “Building”) on East 51st Street in Manhattan (the “Project”). Herrick assured Arbor that the Building could be constructed in accordance with all applicable zoning regulations “as-of-right.” Arbor relied on this advice, and closed on the Loans, only to learn that the advice was wrong. Many months after Arbor made the Loans, the Herrick lawyer who was most responsible for the faulty zoning analysis confessed: Although Herrick calls this a renewal motion pursuant to CPLR 2221(e), Herrick pays but grudging lip service to the actual language of the Rule, which requires a movant to present “new facts” that would “change the prior determination.” CPLR 2221(e)(2). On this motion, Herrick presents no facts that are actually “new,” it practically ignores the Court’s prior determination, and it does not show how the “new” facts should change the prior determination. The supposed “new facts” are contained in the minutes of a May 10, 2007, meeting of Arbor’s Structured Loan Committee (the “Minutes”). There are no facts in those Minutes that are “new” because the Minutes are a truncated, two-page presentation based upon Arbor’s much more extensive 34-page May 4, 2007 Underwriting Memorandum, on which Herrick relied extensively on the original motion. On the original motion, the Court determined that Arbor did not intentionally spoliate documents, and that Arbor’s failure to preserve documents after its preservation obligation attached was caused by the negligent application of Arbor’s routine policies relating to electronic documents and departing employees. There was no gross negligence or intentional spoliation. Herrick’s brief looks nothing like a renewal motion; it regurgitates old arguments that the Court rejected previously, and most tellingly, it does not even begin to show how the new facts warrant a change in the Court’s determination that Arbor’s level of culpability was no more than negligent. This renewal motion, with no new facts, and no effort to show that the supposedly new facts warrant a change in the Court’s prior determination is “completely without merit,” and a transparent effort to “prolong the resolution of this litigation” within the meaning of Part 130 of the Rules of the Chief Administrator. That is why this Court should deny Herrick’s renewal motion, and award Arbor attorneys’ fees and costs pursuant to Part 130. BACKGROUND The Prior Motion On the prior motion, Arbor established through an uncontroverted documentary record that (i) Herrick advised Arbor, before it made any of the Loans in April and May 2007, that the Project could be built “as of right” in accordance with applicable zoning regulations, and that it “works, zoning wise” (Arbor Opp’n Br.1 at 4-6, citing Lederman Aff. ¶¶ 6, 8-9, Ex. 1 at AR65197 and Ex. 2 at AR 005419; Kovarik ¶¶ 6-9; Villani ¶¶ 8-9); (ii) Arbor relied on that advice before closing on the Loans (Arbor Opp’n Br. at 4-5, citing Villani Aff. ¶¶ 10-11; Lederman Aff. ¶¶ 11-12; Kovarik Aff. ¶¶ 10-12); (iii) Herrick understood that Arbor was relying 1 Arbor is not repeating the arguments it made on the prior motion, but it is appending its brief from that motion for the Court’s convenience. References to the “Arbor Opp’n Br.” are to Plaintiff’s Memorandum of Law in Opposition to Herrick’s Original Motion for Spoliation Sanctions, dated July 18, 2014. 2 on that advice (Arbor Opp’n Br. at 5-6, citing Syracuse Opp’n Aff.,2 Ex. 3 at HF005750 and Ex. 4 at HF077898) ; (iv) Herrick’s advice was wrong (Arbor Opp’n Br. at 6, citing Villani Aff. ¶¶ 15-21; Syracuse Opp’n Aff., Exs. 5-8 and Ex. 15 [Parley Aff. ¶¶ 2-3, 9-17); and (v) the Herrick lawyer most responsible for the zoning analysis, upon learning that other professionals disagreed with his view, the City’s Commissioner of Buildings announced that the Project had been approved in error. (Arbor Opp’n Br. at 6-7, citing Syracuse Opp’n Aff., Ex. 12 at HF040729, and Exs. 13-14, 25-26.) Arbor also showed that it had no obligation to preserve any documents until June 2008, when Arbor engaged the Kaye Scholer firm to advise itabout Herrick’s zoning advice (Arbor Opp’n Br. at 7, citing Rubin Aff. ¶¶ 8-9), an assertion with which Herrick agrees (see Herrick Renewal Br. 3 at 7; Ludmerer Aff., Ex. 1 (Argument Tr. at 4:19-5:19; 6:3-10.)). Arbor demonstrated that, although several of its employees were involved in the due diligence and related activities for the Loans, only Ivan Kaufman and Fred Weber would have had the authority to close them if Herrick had communicated that the zoning analysis was mistaken or aggressive. (Arbor Opp’n Br. at 8-11, 19-21.) Finally, Arbor established, with the imprimatur of the independent experts at KPMG, that the electronic document deletions that Herrick complains about occurred (a) prior to June 2008 (Arbor Opp’n Br. at 12), when Arbor had no obligation to preserve documents, or (b) pursuant to Arbor’s routine IT or employment practices that Arbor inadvertently did not shut down. Id. 2 References to the “Syracuse Opp’n Aff.” are to the Affirmation of Vincent J. Syracuse, dated July 18, 2014, Docket No. 226-262, 264, in Opposition to Herrick’s Original Motion for Spoliation Sanctions. 3 References to the “Herrick Renewal Br.” are to the Memorandum of Law in Support of Herrick, Feinstein LLP’s Motion for Leave to Renew Its Motion for Spoliation Sanctions Against Arbor Realty Funding, LLC, dated January 26, 2015. 3 These included: (i) an automatic retention/destruction policy that deleted emails from all employees’ Inbox and Sent Items folders after 189 days (Id. at 8-12, 20-21, citing Murphy Aff. ¶¶ 2-4; Ludmerer Aff., Ex. 26 [Spagnoletti Aff., Ex. 20 [KPMG Report at 3-4, 11, 19-20]; and Ex. 25 [KPMG Tr. at 40:15-42:25]), and (ii)the departing employee policies, which reimaged their computer hard drives and erased their email accounts (Arbor Opp’n Br. at 8-12); and (iii) the recycling of computer backup tapes every four weeks. Id. The Court’s Prior Determination The Court rejected nearly every Herrick argument and reached the following conclusions: April and May 2007 was the key time period for this transaction. This is “when this deal was being put together.” (Ludmerer Aff., Ex. 1 [Argument Transcript at 51:19-21.) “This deal, and what they [Arbor] were going to do, and what they [were] relying on, what everyone was looking at occurred, really triggered back in 2007.” (Id. at 51:23-25.) “2007 is the ultimate decision here on the loan.” (Id. at 70:23-24). Even though Ivan Kaufman had contemporaneously deleted his April/May 2007 emails, that did not constitute spoliation because, at that time, there was no obligation to preserve them.4 (Id. at 71:3-16.) Indeed, it was Kaufman’s practice to routinely delete all his emails. (Arbor Opp’n Br. at 9, citing Kaufman Aff. ¶¶ 8-9.) The Court next found that Arbor’s failure to preserve the emails of all other employees was no more than “ordinary negligence.” (Id. at 78:9-10, 12-13; 78:25-79:6; 92:8-10.) It was 4 Although the Court did not say so explicitly,the same conclusion applies to the emails that were subjected, prior to June 2008, to Arbor’s automatic retention/destruction policy. Any email created prior to December 2007 that remained in an employee’s Inbox or Sent Items folder for 189 days would have been deleted automatically before Arbor had any obligation to preserve them. (Arbor Opp’n Br. at 12, citing Ludmerer Aff., Ex. 26 [Spagnoletti Aff., Ex. 20 [KPMG Report at 3-4, 11, 19-20]; and Ex. 25 [KPMG Tr. at 40:15-42:25]; Murphy Aff. ¶¶ 2-4.) 4 ordinary negligence because Arbor had inadvertently failed to turn off its regular practices of reimaging the hard drives of departing employees, and erasing their email accounts, and recycling backup tapes. I have concluded that it’s ordinary[] [n]egligence, the synapses didn’t connect, but it’s ordinary [negligence]. It was the regular standard. It was the regular departure procedure, nothing that rises to the level of anything more than ordinary [negligence]. (Id. at 78:26 – 79:6.) Because the Court held that Arbor had not acted with gross negligence, or with intent, the Court held that there was no basis on which to presume that the unpreserved documents would have supported Herrick’s defense that Arbor did not rely on its zoning advice. (Id. at 84:21 – 85:10.) Consequently, the Court denied Herrick’s motion to strike Arbor’s complaint. Herrick would only be “entitled to an adverse inference [charge] at trial, PJI 1:77 against Plaintiff as to the emails and related documents not produced as a result of the automatic deletion and employee departure policies at Arbor.” (Id. at 91:8-15). Pursuant to that charge, Herrick will have the opportunity to argue to the jury that those documents would have been “important or significant,” and the jury will be permitted to “conclude that if [those documents] had been produced [they] would not have supported [Herrick’s] position on the issue of” whether Arbor relied upon Herrick’s zoning advice, and “would not contradict the evidence offered by Herrick on the question.” (PJI 1:77.) 5 The Court also denied Herrick’s application for fees on the motion (Ludmerer Aff., Ex. 1 [Argument Transcript at 94:25 – 95:2-9, 22-23]), and it declined to stay discovery during an 5 Garrett Gourlay and Garret Gourlay Architect, PLLC, defendants in a related action (Index No. 601122/10) that has been consolidated with this one, cross-moved in this action for the same relief that Herrick sought, and moved for such relief in the other action. In this action, the Court denied the cross-motion because Gourlay was not a party. See Ludmerer Aff., Ex. 34. In the Gourlay action, the Court rejected the motion: “Now, Gourlay; let me just say. You’re getting nothing. You cannot come in here with hands that unclean and ask for any relief, any.I just can’t. * * * Gourlay shall not get an adverse inference.” (Ludmerer Aff., Ex. 1 [Argument Tr. at 89:23-26 and 90:14-15.]) 5 appeal: “This is why I don’t give stays, because the First Department views a stay by the trial judge as indicia of insecurity about the decision. I have none.” (Id. at 97:10-15.) * * * Nothing in Herrick’s motion papers justify disturbing the Court’s prior determination, ARGUMENT I. THE COURT SHOULD DENY HERRICK’S MOTION BECAUSE THERE ARE NO NEW FACTS THAT WOULD CHANGE THE COURT’S PRIOR DETERMINATION. This motion to renew is governed by CPLR 2221(e), which requires the moving party to present “new facts” that would “change the prior determination.” CPLR 2221(e)(2). Where, as here, the supposedly new facts are duplicative of facts the Court previously rejected, or where they otherwise do not warrant a different result, the renewal motion must be denied. See, e.g., William P. Pahl Equip. Corp. v. Kassis, 182 A.D.2d 22, 27-28 (1st Dep’t 1992) (affirming denial of renewal motion where the new facts were the same ones plaintiffs presented on the prior motion); N.Y.C. v. Am. Pipe & Tank Lining Co., 94 A.D.3d 566, 567 (1st Dep’t 2012) (affirming denial of renewal motion because the new facts “would not have changed the prior determination”). Although Herrick’s memorandum pays lip service to CPLR 2221(e), their arguments ignore this Court’s “prior determination,” and they fail to show how the supposedly “new facts” should change that determination. 6 8 Not only are the Minutes a two-page version of the 34-page Underwriting Memorandum, but Herrick now makes the very same arguments in its renewal motion about the Minutes that it made previously in itsoriginal motion about the Underwriting Memorandum. For example, in Herrick’s original moving brief, it argued that the Underwriting Memorandum supported Herrick’s contention that Arbor neither requested nor relied on any zoning analysis by Herrick because the Underwriting Memorandum focused on issues other than zoning and did not discuss the zoning issues. (Ludmerer Aff., Ex. 17 [Herrick’s Orig. Br. at 20].)8 Herrick repeated this argument in its Reply Brief (id., Ex. 16 [at 23]), and at oral argument (id., Ex. 1 [Argument Transcript at 10-11].) Now, Herrick makes exactly the same argument about the Minutes. The Minutes, they say, focus upon the “factors Arbor considered when deciding whether to fund the loans,” and none of those factors “had anything to do with zoning; indeed, the minutes do not mention zoning.” (Herrick Renewal Br. at 2; emphasis in original; see also pp. 3 and 20.) Because the Minutes contain nothing that is not already in the Underwriting Memorandum, and because Herrick’s arguments about the Minutes are a reprise of their prior arguments about the Underwriting Memorandum, they are not “new facts” within the meaning of 8 Actually, as Arbor showed on the Original Motion, the Underwriting Memorandum devoted nearly two full pages to zoning issues, primarily relating to Floor Area Ratio (Arbor Opp’n Br. at 17-18, citing Ludmerer Aff. Ex. 26 [Spagnoletti Aff., Ex. 21 at AR000529-30]), but these had nothing to do with the zoning issues which Herrick failedto identifyfor Arbor. Arbor Opp’n Br. at 18, citing Syracuse Opp’n Aff., Ex. 5 [Parley Aff.]; Lederman Renewal Aff. ¶¶ 3-5, 8. In other words, the Underwriting Memorandum shows that Arbor was focused on zoning issues that remained open, but not on the issues that Herrick said were resolved. 9 CPLR 2221(e). See N.Y.C., 94 A.D.3d at 567; William P. Pahl Equip. Corp., 182 A.D.2d at 27- 28. B. The Minutes Do Not Support Herrick’s Arguments About Reliance. Herrick contends that it is not liable to Arbor because Arbor did not rely upon Herrick’s zoning advice, and Herrick says that the Minutes support this defense. See Herrick’s Renewal Br. at 2, 19-23. To begin with, this defense is absurd in view of the contemporaneous, pre- closing documents produced by both parties showing that Arbor insisted upon receiving Herrick’s zoning advice, Arbor relied upon it,and Herrick knew that Arbor was relying on it. See Arbor Opp’n Br. at 4-7. Moreover, Arbor’s affidavits on the original motion asserted that zoning mattered so much to Arbor that Arbor would not have closed the Loans unless Arbor was satisfied that the zoning was as-of-right. See Ludmerer Ex. 4 [Kovarik Aff. ¶¶ 5-8, 10-12]; Ex. 3 [Lederman Aff. ¶¶ 5-13; Exs. 1-2]; Ex. 12 [Kaufman Aff. ¶¶ 3-6]; Ex. 33 [Weber Aff. ¶¶ 5-7]. Nothing in the Minutes contradicts this proof. Herrick says that, because the Minutes do not discuss zoning, therefore, Arbor did not care about zoning. In fact, the absence of a zoning discussion at the loan committee meeting just confirms what Arbor has said about zoning all along: once Herrick assured Arbor, on April 27 and thereafter, that the Project could be built as- of-right, zoning ceased to be an open issue to Arbor. As Harvey Lederman, Arbor’s former VP – Underwriting and one of the signatories to the Underwriting Memorandum, explains in his accompanying affidavit, Arbor’s risk analysis was limited to known issues and material risks that were still unsettled. See Lederman Renewal Aff. ¶¶ 3-5, 8. When Herrick assured Arbor that the Project could be built as-of-right (id.), Arbor ceased to view it as a risk worthy of inclusion in the Underwriting Memorandum or of discussion at the loan committee meeting. Id. 10 The Minutes surely do not corroborate the reply affirmation of Sheldon Chanales submitted on the original motion. That affirmation told a story about a supposed conversation Chanales had with Fred Weber of Arbor before the closings, in which Chanales allegedly told Weber that the Borrower’s zoning interpretations were “aggressive,” and in which Weber supposedly responded that Arbor did not care because there was adequate collateral for the Loans. See Herrick Renewal Br. at 22-23. That story is pure fiction that is inconsistent with a substantial pile of contemporaneous documents, and Weber flatly denies it: “I did not have any such conversation with Mr. Chanales.” Weber Renewal Aff.9 ¶ 3. Neither Chanales’ attorney time records for April and May 2007, nor Herrick’s phone records, support Chanales’ story. The attorney time records contain no indication of any communication between Chanales and Weber. See Syracuse Supp. Aff., Docket No. 303, at Ex. 36. Similarly, Herrick’s telephone records show that, between April 24, 2007 and May 8, 2007 – when the bulk of the Loans were funded – Chanales never once called Weber. Syracuse Renewal Aff.10 ¶ 6, Ex. 5. Fred Weber’s calendar entries also contradict Chanales’ story. They do not reflect any communications with Chanales (or anyone else at Herrick) in 2007, although they include numerous entries in 2008 and 2009 that show both internal communications at Arbor and conference calls and meetings with Herrick relating to the Project. See Syracuse Supp. Aff., Docket No. 303, Ex. 37. 9 References to the “Weber Renewal Aff.” are to the Affidavit of Fred Weber In Opposition to Herrick’s Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to February 13, 2015. 10 References to the “Syracuse Renewal Aff.” are to the Affirmation of Vincent J. Syracuse In Opposition to Herrick’s Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to February 17, 2015. 11 Moreover, crucial documents that Chanales wrote (and did not write) are inconsistent with his story. First, Chanales never memorialized his supposed conversation with Weber. Put more starkly, Chanales supposedly just warned a client who was about to lend $70 million dollars for a real estate project with “aggressive” zoning, the client said that he was willing to roll the dice, and Chanales did not write a confirming letter to Weber, or to Arbor’s CEO or to its general counsel, or send one of them a short e-mail, or even prepare an internal memo to the files. Next, when Chanales finally did send an email to Arbor’s general counsel, on Christmas Eve, 2008, but Chanales never mentioned the story about his conversation with Fred Weber. Syracuse Renewal Aff., Ex. 10. Nine months later, in September 2009, a Herrick employee prepared an internal summary among George Wolf (Herrick’s Administrator), and Ivan Kaufman, Fred Weber, and Paul Elenio of Arbor. See Syracuse Renewal Aff. ¶ 6, Ex. 6. Although the participants apparently discussed the summary made no reference to any supposed pre-closing call from Chanales stating that the Borrower’s zoning positions were aggressive. Id.11 In short, Chanales’ story is untrue, and the Minutes do not support it. C. The Other Arbor Employees Were Not Materially Involved in the Project. Herrick now argues that Arbor should have collected and produced documents from every single one of the individuals who attended the May 10, 2007 loan committee meeting. This argument is wrong because Arbor had no obligation to preserve their documents, and 11 Herrick finds some nefarious plot in the timing of the production of the Minutes. The Syracuse Renewal Affirmation puts that point to rest. See Syracuse Renewal Aff. ¶¶ 2-5. 12 because those documents were subject to the same routine policies that affected all other Arbor employees, the 189-day auto-deletion policy and the departing employee policy that erased email accounts and hard drives. Of course, in 2010, Arbor did designate five attendees of that meeting as document custodians. They were individuals whom Arbor and its counsel determined were materially involved with the issues raised by the anticipated claims and defenses: Fred Weber; Paul Elenio; John Kovarik; Sal Villani; and Harvey Lederman. Arbor collected their responsive documents and produced them to Herrick, together with responsive documents Arbor collected from thirteen other individuals who were not at the loan committee meeting, but whom Arbor and its counsel selected based upon the same criteria as the other five. See Syracuse Renewal Aff. ¶¶ 8-10, n.1.12 Herrick argues that, in addition, Arbor should have collected documents from Maria Elefante, Kristen Farha, Mark Fogel, Ron Gaither, Ryan Lebrecht, and Chris Read.13 Of these, the only one who had any connection with the decision-making process for the Loans was Ron Gaither (see Lederman Renewal Aff. ¶¶ 9-10) , but he left Arbor in 2008, eighteen months before Arbor or its counsel even began the document collection process in May 2010, and his documents were deleted pursuant to the departing employee policy. 1. There Was No Obligation To Preserve. As a threshold matter, Arbor had no obligation to preserve the documents of these additional employees. The accompanying Syracuse Affirmation describes the manner by which 12 These individuals’ electronic documents were subject to the same routine IT and employment practice policies that affected allother Arbor employees – the 189-day auto-deletion policy and the departing employee policy that erased email accounts and hard drives. See supra at 3-4. 13 Herrick’s papers contend thatGene Kilgore was among the Arbor employees who attended the loan committee meeting, and whose documents Arbor should have collected (Herrick Renewal Br. at 9, 17); however, the Minutes show otherwise. See Lederman Renewal Aff. ¶ 11, Ex. 2. 13 Arbor and its counsel identified the Arbor employees whose documents should be collected, and the basis for their selection was the good faith belief that these were the people who were materially involved with the issues raised by the anticipated claims and defenses. This process resulted in the collection of documents from seventeen people at Arbor, including five who attended the loan committee meeting. See Syracuse Renewal Aff. ¶¶ 8-10, n.1. Herrick’s argument that Arbor should have collected documents from all the other employees who attended that meeting is wrong on the law, and belied by Herrick’s own actions. In Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003), Judge Scheindlin rejected the contention that “a corporation, upon recognizing the threat of litigation, [must] preserve every shred of paper, every e-mail or electronic document, and every backup tape.” Id. The “duty to preserve extends to those employees likely to have relevant information – the ‘key players’ in the case.” Id., at 218. See The Sedona Conference, Commentary on Legal Holds: The Trigger and The Process, 11 Sedona Conf. J. 265, 279 (Fall 2010), available at http://www.thesedonaconference. org/content/miscFiles/legal_holds_sept_2010.pdf): Guideline 6. The duty to preserve involves reasonable and good faith efforts, taken as soon as is practicable and applied proportionately, to identify and, as necessary, notify persons likely to have relevant information to preserve the information. . . . The obligation to preserve ESI requires reasonableness and good faith efforts, but it is “unreasonable to expect parties to take every conceivable step to preserve all potentially relevant data.” The organization should consider the sources of information within its “possession, custody, and control” that are likely to include relevant, unique information. Id. (emphasis added); Report of the E-Discovery Committee of the Commercial and Federal Litigation Section of the New York State Bar Association, Best Practices In E-Discovery In New York State and Federal Courts, at 5 (December 2012, approved April 2013), available at http://www.nysba.org/Sections/Commercial_Federal_Litigation/ComFed_Display_Tabs/Reports/ Ediscovery_Final5_2013_pdf.html (same). 14 Herrick’s only basis for arguing that Arbor should have collected and produced the documents of the other employees was their attendance at this one loan committee meeting, coupled with important-sounding job titles. See Herrick Renewal Br. at 3, 8-10, 16-18. Of course, Herrick could have taken their depositions to ascertain what roles they really played, but Herrick had no interest in the actual facts. Moreover, ever since Arbor produced documents to Herrick in July 2011, Herrick has known which employees Arbor selected for this purpose because Arbor produced its documents with custodian metadata. Furthermore, because of Herrick’s representation of Arbor in this transaction, and in several others that preceded it, Herrick knew Arbor’s employees, knew what their roles were (including who the decision- makers were), and knew which ones were involved in each transaction. (See Syracuse Renewal Aff. ¶ 9; Connolly Aff.14 ¶ 5.) Arbor’s document production confirms that Herrick knew these people. Their names appear on nearly two thousand documents that Arbor originally produced, many of which show Herrick lawyers in email correspondence with them. (Syracuse Renewal Aff. ¶ 13.) And Herrick’s own production includes nearly 400 documents with their names. Id. If any of these individuals had any real involvement in this matter, Herrick would have known of that involvement, and they would have sought their documents years ago, as they did with Christy Cropanese and John Natalone, two other Arbor employees whom Herrick believed to be involved in the Loans. Id. ¶¶ 9 and 13. Herrick has never sought the documents of any of the individuals about whom they are complaining now. Herrick never served a single interrogatory about them, or noticed their 14 References to the “Connolly Aff.” are to the Affidavit of William Connolly In Opposition to Herrick’s Motion For Leave to Renew its Motion For Spoliation Sanctions, sworn to on February 12, 2015. 15 depositions. Id. ¶ 11. Herrick’s insistence that Arbor should nonetheless have collected their documents is another example of Herrick’s bad faith. 2. Arbor’s Failure To Collect Was Not Gross Negligence. Moreover, even if Arbor did have an obligation to preserve the documents of these employees, that would not change the Court’s prior determination that Arbor acted with ordinary negligence, as opposed to gross negligence. This follows because, as Herrick acknowledged (Herrick Renewal Br. at 17), these employees’ emails were subject to Arbor’s 189-day automatic deletion policy, and all their electronic documents were subject to the same departing employee policies that Arbor neglected to shut down because the Arbor “synapses didn’t connect.” D. Herrick’s Other Arguments Are Improper. Herrick makes two other arguments, neither of which has any apparent relevance to this renewal motion, and neither of which has any merit. The first argument is that Arbor assigned the Loans in 2008 to a related entity, and thus Arbor has no standing to sue Herrick. The second argument is that the documents that Arbor has been unable to produce prevent Herrick from proving the supposedly limited “scope of Herrick’s engagement.” Herrick’s argument that Arbor assigned the loans in 2008 to ARSR, a related entity (see Herrick Renewal Br. at 5 and 24-25), is bizarre. It is not disputed that, in April 2010, Arbor sold the Loans at a huge loss to HFZ. Herrick knows that to be true because Herrick represented Arbor in that transaction. See Connolly Aff. ¶ 4-5. In this litigation, Herrick admitted this fact in its Answer (see id. ¶ 6, Ex. 1), and in its statement of undisputed facts submitted in connection with its summary judgment motion (id., Ex. 2). Those judicial admissions – which are based upon Herrick’s actual knowledge – are conclusive, and estop Herrick from taking a contrary 16 position. Figueiredo v. New Palace Painters Supply Co., 39 A.D.3d 363, 364 (1st Dep’t 2007) (admission in defendant’s answer is formal judicial admission of the fact alleged by the adversary and takes the place of evidence); Richard T. Farrell, PRINCE, RICHARDSON ON EVIDENCE § 8-215, at 523-24 (11th ed. 1995). If Arbor sold the loans in 2010, as Herrick admits it did, Arbor could not possibly have assigned those same loans to ARSR in 2008. That is one reason why this argument is so totally devoid of merit. Moreover, this argument has nothing to do with the Minutes, and itcould have been raised on the original motion. As such, it is not properly interposed now. Eddine v. Federated Dep’t Stores, Inc., 72 A.D.3d 487, 487-88 (1st Dep’t 2010) (renewal properly denied where defendant failed to provide a reasonable explanation for not presenting such material on its prior motion). Herrick’s argument that deleted emails prevent Herrick from proving the “scope of Herrick’s engagement” (Herrick Renewal Br. at 23) is similarly bizarre. It was Herrick’s obligation to have an engagement letter. 22 NYCRR §1215.1(b)(1) requires lawyers to have engagement letters that “shall address” the “scope of the legal services to be provided.” If Herrick is unhappy that it lacks a document demonstrating the scope of its engagement, it has only itself to blame. In addition, there is no connection between this argument and the Minutes, Herrick makes no effort to show why it could not have raised this argument in its original motion, and it is barred by Eddine supra. These arguments are further evidence of Herrick’s bad faith. 17 E. Herrick Makes No Effort To Show That The Supposed New Facts Warrant A Change In The Court’s Prior Determination. Finally, and most significantly for a renewal motion governed by CPLR 2221(e)(2), Herrick does not even attempt to show that the supposed “new facts” warrant any change in the Court’s “prior determination.” Even if Herrick had made the attempt, it could not possibly succeed because the supposed new facts have nothing to do with any one of the Court’s findings on the original motion, that: x April/May 2007 was the key time period, when Arbor was making its ultimate decisions about the Loan (Ludmerer Aff., Ex. 1 [Argument Tr. at 51:19-21, 23-25; 70:23- 24]); x Ivan Kaufman’s practice of deleting e-mails prior to June 2008 was not spoliation because there was no obligation to preserve them at that time (id. at 71:3-16); or x Arbor’s failure to suspend its normal practices concerning the email accounts and hard drives of departing employees and the recycling of its back-up tapes was negligent, and not grossly negligent or intentional. (Id. at 78:9-10, 12-13; 78:26 – 79:6; 84:21 – 85:10.) II. HERRICK’S MOTION IS DEFICIENT AS A MATTER OF LAW. There is a separate and independent ground for denying this motion, and that is Herrick’s failure to comply with CPLR 2214(c), which required Herrick, as the moving party, either to supply the Court with a complete set of the papers that were submitted on the original motion, or at least (because this is an e-filed case) to specify in its motion papers the docket numbers on the 18 e-filing system of all those papers. Herrick did not comply with CPLR 2214(c). See Syracuse Renewal Aff. ¶¶ 15-17. A party’s failure to provide such documents (or docket numbers) on a renewal motion makes the motion defective. Biscone v. JetBlue Airways Corp., 103 A.D.3d 158, 177-79 (2d Dep’t 2012), app. dismissed, 20 N.Y.3d 1084 (2013) (denial of motion to renew where the movant did not provide papers from the original motion); In re MetLife, Inc. Shareholder Litig. 2014 WL 2151718, at *1 (Sup. Ct. N.Y. Co. May 16, 2014) (Scarpulla, J.) (plaintiffs failed to submit “the moving and opposition papers” on the “underlying motion to dismiss. This alone is sufficient to deny leave to reargue”). III. ARBOR IS ENTITLED TO PART 130 COSTS AND ATTORNEYS’ FEES AGAINST HERRICK FOR ITS FRIVOLOUS MOTION. Herrick’s renewal motion is frivolous within the meaning of 22 NYCRR §130-1.1[a] and [c] for two separate reasons: Herrick’s motion is “completely without merit in law or fact and cannot be supported by a reasonable argument for an extension, modification, or reversal of existing law”; and Herrick made the motion “primarily to delay or prolong the resolution of the litigation.” A. Herrick’s Motion is “Completely Without Merit.” On three prior occasions, Arbor explained to Herrick that the Minutes, which form the entire basis for its renewal motion, are nothing more than a truncated version of the Underwriting Memorandum on which Herrick relied on the original motion; they are not “new facts” within the meaning of CPLR 2221(e)(2), much less new facts that could “change” the Court’s “prior determination.” Arbor explained all this to Herrick by email on October 9, 2014, in its letter to 19 the Court on October 27, 2014, and in its presentation to the Court on October 27, 2014. See Syracuse Renewal Aff. ¶ 7, Exs.7-8; Ludmerer Aff., Ex. 11 [Tr. at 61:16-22]. The October 27 letter stated: The loan committee minutes are not a “critical document.” The minutes add no substance whatever to the Underwriting Memorandum, which predicated many of the arguments Herrick made in their spoliation motion, all of which [the Court] rejected. Syracuse Renewal Aff., Ex. 8, at 1. Nevertheless, Herrick moved to renew, but itmade no effort to show that the Minutes were “new facts,” or how the Minutes should change the Court’s prior rulings, or to respond to the assertions Arbor previously made about them. Instead, Herrick recycled its old arguments that were based upon the Underwriting Memorandum, and several others that revealed its bad faith. These facts establish the frivolity of Herrick’s motion. Wesselmann v. Int’l Images, 259 A.D.2d 448, 450 (1st Dep’t 1999) (affirming sanctions where the thrust of plaintiff’s re-argument motion “was a rehash of arguments that the [motion] court previously refused to entertain”); First Deposit Nat’l Bank v. Van Allen, 277 A.D.2d 858, 859-60 (3d Dep’t 2000) (affirming imposition of sanctions where defendant made no effort to controvert the prima facie evidence presented by plaintiff, and where the defenses interposed by defendant were strikingly similar to ones that the Court rejected in a prior action).