Valid Fraud Defense Forfeited By Ignoring Disclosure Orders
New York’s Court of Appeals (the highest appellate court) recently administered severe chastisement to a litigant for failing to comply with a conditional order to disclose.
The case is Wilson v. Galicia Contracting & Restoration Corp., 10 N.Y.3d 827, 860 N.Y.S.2d 417 (2008) and was reported by David D. Siegel, the leading commentator on New York civil procedure, in the New York Law Digest , No. 585, September 2008, which is distributed to members by the New York State Bar Association.
According to the Law Digest, the Court of Appeals has tended to punish “dilatory conduct in litigation” and, if so, we would add: Good! But, whether this particular case is a good example of that tendency or a bad result for one unfortunate litigant remains an open question.
Here’s a very brief summary: There were several defendants in this case involving an eye injury to the plaintiff while passing a construction site. The defendants were ordered to disclose some information about the incident that caused the injury. One defendant failed to comply with the order. The order was a “self-executing conditional order,” that is, it spelled out what to do (disclose) and what would happen if the defendant did not do it (a default).
Thus, failure to comply meant a default which, in turn, meant liability was determined and the only issue remaining was the amount to be paid in damages.
The case was then discontinued against the other defendants because the cause of the injury turned out to be something other than what was alleged (metal from a pellet fun, rather than construction debris). It seems the remaining (defaulting) defendant might have had a valid defense based on a fraud on the court (a false allegation about the cause of the injury). Nonetheless, the inquest (hearing) that followed the default was limited to proving damages, ultimately assessed at $700,000. There was a dissenting opinion but that provides no comfort for the defendant ordered to pay damages to a plaintiff who might have had no case.
In general, we applaud the Court of Appeals’ efforts to punish recalcitrant litigants who do not meet their disclosure obligations and fail to comply with court orders. That kind of conduct, aside from being very annoying, causes delays, raises the cost of litigation for everyone and undermines respect for the courts. The question here was whether the courts are undermined even more if a defendant who might have had a valid defense is not permitted to present evidence of it.
We don’t know whether the non-compliance with the discovery order by this defendant was a deliberate strategy or inadvertent. Thus, although we can’t, in fairness, reach any conclusion about whether the result was deserved in this case, it does send a caution signal about the practice of not complying with discovery orders.
Image: Court of Appeals, from its website.
