AIG PROPERTY CASUALTY COMPANY v. MTS POWER SYSTEMS (2024)

Order, Supreme Court, New York County (Mary V. Rosado, J.), entered April 15, 2024, which, inter alia, denied, without prejudice, the motion of defendant MTS Power Systems (MTS) to dismiss the complaint or to preclude certain testimony as spoliation sanctions against plaintiff AIG Property Casualty Company (AIG), unanimously affirmed, without costs.

The motion court providently exercised its discretion in denying as premature MTS's motion for sanctions pursuant to CPLR 3126.  MTS argues that AIG, who paid the insured homeowner after a house fire and then commenced this subrogation action against MTS, destroyed key evidence by renovating or altering the house at issue and disposing of certain of its contents.  In imposing spoliation sanctions, “courts possess broad discretion to provide proportionate relief to a party deprived of lost or destroyed evidence, including [precluding] proof favorable to the spoliator to restore balance ․ [and] employing an adverse inference instruction at the trial” (Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 N.Y.3d 543, 551, 26 N.Y.S.3d 218, 46 N.E.3d 601 [2015];  see also Ortega v. City of New York, 9 N.Y.3d 69, 76, 845 N.Y.S.2d 773, 876 N.E.2d 1189 [2007];  CPLR 3126).  Dismissal “is usually not warranted unless the evidence is crucial, and the spoliator's conduct evinces some higher degree of culpability” (New York City Hous. Auth. v. Pro Quest Sec., Inc., 108 A.D.3d 471, 473, 970 N.Y.S.2d 21 [1st Dept. 2013] [internal quotation marks omitted]).  A motion court may, in its discretion, defer to a trial court a determination of “whether or what sanction to impose” (Butler v. New York City Tr. Auth., 192 A.D.3d 623, 624, 141 N.Y.S.3d 311 [1st Dept. 2021]).

MTS has also failed to establish on this record the degree that it will be prejudiced by not having conducted its own timely inspection of the interior of the house.  The parties may yet be able to submit evidence at trial, including additional photos, that support their respective cases and speak to the water damage.  The court thus aptly deferred the decision to the trial court, to be “made on the basis of the record before it at th[at] time,” when the relevance of any missing evidence can better be evaluated (Quinn v. City Univ. of N.Y., 43 A.D.3d 679, 680, 841 N.Y.S.2d 306 [1st Dept. 2007]).