ELIZABETH CANAL LLC v. [And Other Third-Party Actions] (2025)

Order, Supreme Court, New York County (Arlene P. Bluth, J.), entered on or about July 15, 2024, which, to the extent appealed from as limited by the briefs, granted plaintiffs' CPLR 3126 motion for sanctions to the extent of striking defendant Structure Tone Global Services, Inc.'s answer and denied so much of the motion as sought to recover legal fees, unanimously modified, on the law and in the exercise of discretion, to deny the motion insofar as it sought to strike the answer and reinstate the answer, on the condition that, within 30 days of the service of a copy of this order, Structure Tone provides the discovery sought along with a privilege log identifying any documents claimed to be privileged and a new Jackson affidavit, and to remand the matter for calculation and imposition of monetary sanctions in accordance with CPLR 3126, and otherwise affirmed, without costs.  Appeal from order, same court and Justice, entered October 28, 2024, which, to the extent appealed from as limited by the briefs, denied Structure Tone's motion to renew plaintiffs' motion, unanimously dismissed, without costs, as academic.

Although the nature and degree of the penalty to be imposed under CPLR 3126 lies within Supreme Court's sound discretion, this Court is vested with its own discretion and corresponding power to substitute its own discretion for that of the trial court, even in the absence of abuse (see Maxim, Inc. v. Feifer, 161 A.D.3d 551, 554, 78 N.Y.S.3d 98 [1st Dept. 2018]).  Under the circumstances presented, the penalty of striking the answer is too severe (see Colucci v. Jennifer Convertibles, Inc., 283 A.D.2d 224, 225, 724 N.Y.S.2d 840 [1st Dept. 2001];  Hanson, 227 A.D.2d at 217, 642 N.Y.S.2d 272).  Structure Tone's failure to comply with discovery, while certainly sanctionable, was not conclusively shown to be willful, contumacious, or in bad faith (see Hanson v. City of New York, 227 A.D.2d 217, 217, 642 N.Y.S.2d 272 [1st Dept. 1996]).  Plaintiffs do not dispute that Structure Tone substantially complied with discovery requirements through the several years of litigation until the dispute underlying this appeal.  Moreover, “even where the proffered excuse is less than compelling, there is a strong preference in our law that matters be decided on their merits” (Catarine v. Beth Israel Med. Ctr., 290 A.D.2d 213, 215, 735 N.Y.S.2d 520 [1st Dept. 2002]).  Accordingly, we remand to Supreme Court to determine an appropriate monetary sanction (see Maxim, 161 A.D.3d at 554, 78 N.Y.S.3d 98;  241 Fifth Ave. Hotel, LLC v. GSY Corp., 110 A.D.3d 470, 471, 973 N.Y.S.2d 129 [1st Dept. 2013]).

In light of our determination, Structure Tone's appeal from the court's denial of its motion to renew the first order is dismissed as academic (see Hassan v. Manhattan & Bronx Surface Tr. Operating Auth., 286 A.D.2d 303, 304, 730 N.Y.S.2d 286 [1st Dept. 2001]).