Green v. McClendon

262 F.R.D. 284, 2009 U.S. Dist. LEXIS 71860
CourtDistrict Court, S.D. New York
DecidedAugust 13, 2009
DocketNo. 08 Civ. 8496(JGK)(JCF)
StatusPublished
Cited by31 cases

This text of 262 F.R.D. 284 (Green v. McClendon) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Green v. McClendon, 262 F.R.D. 284, 2009 U.S. Dist. LEXIS 71860 (S.D.N.Y. 2009).

Opinion

MEMORANDUM AND ORDER

JAMES C. FRANCIS IV, United States Magistrate Judge.

This case concerns a painting that the defendants allegedly agreed to purchase from the plaintiff for $4.2 million (the ‘Work”). The plaintiff, Richard Green (Fine Paintings) (“Richard Green”), now moves pursuant to Rule 37 of the Federal Rules of Civil Procedure for sanctions against defendant Mary Alice McClendon and her counsel in connection with the failure to preserve and produce certain electronically-stored documents. For the reasons that follow, the plaintiffs motion is granted in part and denied in part.

Background

A. Factual Background

In May 2007, the plaintiff, a London-based art gallery and dealer, displayed artwork for sale at the annual International Fine Art Fair at the Park Avenue Armory in Manhattan. (Second Amended Complaint (“SAC”), ¶¶ 8, 10). The defendants attended the fair and, while there, negotiated a purchase price of $4.2 million for the Work. (SAC, ¶¶ 10-12; Deposition of Mary Alice McClendon dated April 2, 2009 (“McClendon Dep.”) at 5-11, 151-52). The parties agreed that the defendants would make an initial payment of $500,000, and would satisfy the remaining balance by May 12, 2008. (SAC, ¶¶ 12, 17; McClendon Dep. at 9-11, 151-52). The Work remained in the possession of the Richard Green gallery pending full payment. (McClendon Dep. at 9-11).

On July 18, 2007, Mr. and Mrs. McClendon paid $500,000 to the plaintiff. (SAC, ¶ 15 & Exh. B). At some point thereafter, the McClendons began to experience marital problems, ultimately separating in anticipation of divorce.1 In May 2008, Mrs. McClen-don attended the Fine Arts Fair once again, this time to request an extension of time to pay for the Work because of her separation from her husband and other changed circumstances.2 (SAC, ¶ 17; McClendon Dep. at 161-62, 171-72). Richard Green agreed that the defendants could have until July 31, 2008 to satisfy the balance. (SAC, ¶ 18 & Exh. D).

The defendants never paid the remaining $3.7 million. Accordingly, they also never took possession of the Work. The defendants deny that they entered into a binding contract to purchase the Work, pointing out that the parties never executed a written agreement. (Defendant Mary Alice McClendon’s Motion to Dismiss Plaintiffs Second Amended Complaint and Memorandum of Law in Support Thereof at 6-17). In addition, they contend that the $500,000 payment was actually a refundable deposit. (Declaration of John R. Cahill dated March 13, 2009 (“Cahill 3/13/09 Decl.”), ¶ 3).

B. Procedural Background

The plaintiff filed suit on October 3, 2008, asserting claims for breach of contract and promissory estoppel. The parties exchanged initial disclosures in early December, and the plaintiff served its first document request on Mrs. McClendon on December 23, 2008. (Declaration of John R. Cahill dated July 7, 2009 (“Cahill 7/7/09 Deck”), ¶¶ 4-5 & Exhs. A, C). Among other items, the plaintiff requested all documents “concerning the [287]*287Work” and “concerning Green or transactions with Green” from January 1, 2007 onward. (Plaintiffs First Set of Requests for the Production of Documents (“PL Requests”), attached as Exh. A to Cahill 7/7/09 Decl., at 2-4). The request explicitly incorporated Local Civil Rule 26.3, which defines the term “document” to include “electronic or computerized data compilations.” (PL Requests at 1). In a response dated February 17, 2009, Mrs. McClendon stated that she had produced all responsive, non-privileged documents in her possession. (Defendant Mary Alice McClendon’s Responses to Plaintiffs First Set of Requests for the Production of Documents, attached as Exh. B to Cahill 7/7/09 Decl., at 3-4).

In February and March of 2009, counsel for the plaintiff and counsel for Mrs. McClen-don exchanged several letters and e-mails concerning the plaintiffs discovery requests. (Letter of Ronald W. Adelman dated Feb. 26, 2009, attached as Exh. F to Cahill 7/7/09 Decl.; E-mail of Carter Andersen dated March 12, 2009, attached as Exh. G to Cahill 7/7/09 Decl.; E-mail of Carter Andersen dated March 13, 2009, attached as Exh. H to Cahill 7/7/09 Decl.). Mrs. McClendon and her counsel repeatedly represented that they had conducted thorough searches for responsive documents and had produced everything in Mrs. McClendon’s possession. On March 16, 2009, the plaintiff filed a motion to compel the production of certain documents, including documents concerning other art transactions and any non-privileged communications with third parties concerning the Work. (Ca-hill 3/13/09, ¶¶ 7-14). On April 2, 2009, I ordered the defendants to produce all documents relating to the Work as well as certain information concerning other artworks. (Order dated April 2, 2009, ¶¶ 1, 4). The defendants were also ordered to certify the completeness of their responses. (Order dated April 2, 2009, ¶ 6).

On April 24, 2009, Mrs. McClendon produced a two-page, undated Excel spreadsheet titled “Fine Art, Miscellaneous Galleries” from her home computer files. (Cahill 7/7/09 Decl., ¶ 10 & Exh. L). The spreadsheet provides information about thirty-seven artworks,3 including the Work. The plaintiff then requested additional information about the spreadsheet, specifically seeking the date it was created, dates it was modified, and the name of anyone involved with creating or modifying it. (Cahill 7/7/09 Deck, ¶¶ 13-19 & Exhs. M, N, P, S).

Thereafter, on June 9, 2009, Mrs. McClen-don’s counsel provided what appear to be three additional electronic versions of the spreadsheet with partial electronic history for each.4 (Cahill 7/7/09 Decl., ¶ 20 & Exhs. T, U; Declaration of Michelle R. Drab filed July 17, 2009 (“Drab Decl.”), 112-6). There are some clear differences between the initial spreadsheet provided to the plaintiff in hard-copy form and the additional electronic versions. Most notably, the former lists a purchase price of $4.2 million for the Work whereas the additional versions show no price. In addition, although counsel explained that the spreadsheet was created by an individual hired by the McClendons to organize their art files, no further information about the spreadsheet’s creator has been provided. (Cahill 7/7/09 Decl., ¶¶ 15, 18 & Exhs. O, R).

The plaintiff subsequently filed the instant motion, seeking an order authorizing a forensic examination of Mrs. McClendon’s computer and appropriate sanctions. When Mrs. McClendon responded, however, she disclosed a fact that was previously unknown to the plaintiff and to the Court: in January 2009, “the son of a friend” who is “familiar with computers” reinstalled the operating system on Mrs. McClendon’s computer. (Declaration of Mary Alice McClendon dated July 17, 2009 (“McClendon Decl.”), ¶¶2-3; Declaration of Jordan Chapman dated July [288]*28817, 2009 (“Chapman Deck”), ¶¶ 3-4). During this process, all of her files were transferred from her hard drive onto four compact discs (“CDs”) (McClendon Deck, ¶ 3; Chapman Deck, ¶ 4), so her computer no longer contains the original version of any of the information that was stored there prior to the reinstallation process. (Declaration of Matthew J.

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