13-0556-cv
Metro v. Arch, et al.,
                                  UNITED STATES COURT OF APPEALS
                                      FOR THE SECOND CIRCUIT

                                               SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH
THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER
MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
13th day of January, two thousand fourteen.

Present:            Robert D. Sack,
                    Peter W. Hall,
                    Debra Ann Livingston,

                        Circuit Judges.
____________________________________________________

Metro Foundation Contractors, Inc.,

                             Plaintiff-Counter-Defendant-Appellant,

                    v.
                                                                                    13-0556-cv
Arch Insurance Company,

                             Defendant-Third-Party-Plaintiff-Appellee,

Marco Martelli Associates, Inc,

                             Third-Party-Defendant-Counter-Claimant-Appellee,

Martelli Real Estate, Inc., Marco Martelli, Madeline Martelli, Ronald Kuhlmann, Patrick J.
Quigley,
                       Third-Party-Defendants-Appellees.1
____________________________________________________
1
    The Clerk of the Court is directed to amend the caption accordingly.
FOR APPELLANT:                        Bryan Ha, White Plains, New York.

FOR APPELLEES:                        Steven H. Rittmaster (Lawrence S. Novak, on the brief)
                                      Torre, Lentz, Gamell, Gary & Rittmaster, LLP, Jericho,
                                      New York, for Arch Insurance Company.

                                  Joshua D. Olsen, Mastropietro-Frade, LLC, Mineola, New
                                  York, for Marco Martelli Associates, Inc., Martelli Real
                                  Estate, Inc., Madeline Martelli, Ronald Kuhlmann, Patrick
                                  J. Quigley.
_____________________________________________________
      Appeal from a judgment of the United States District Court for the Southern District of

New York, (Forrest, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED in part, VACATED in part,

and REMANDED for proceedings consistent with this summary order.

       Metro Foundation Contractors, Inc., (“Metro”) appeals the district court’s judgment in

favor of Marco Martelli Associates (“MMA”) on its claims for breach of contract and

indemnification and dismissing Metro’s claims against Arch Insurance Company (“Arch”). On

appeal, Metro argues that the district court erred when it entered judgment in favor of MMA on

MMA’s claims against Metro and that its award of attorney’s fees was excessive. Metro also

argues that the district court abused its discretion when it dismissed Metro’s claims against Arch

based on Metro’s spoliation of evidence. We assume the parties’ familiarity with the underlying

facts and procedural history of the case.

       “Imposing sanctions pursuant to Rule 37 is within the discretion of the district court and a

decision to dismiss an action for failure to comply with discovery orders will only be reversed if

the decision constitutes an abuse of that discretion.” World Wide Polymers, Inc. v. Shinkong

Synthetic Fibers Corp., 694 F.3d 155, 159 (2d Cir. 2012) (internal quotation marks omitted).


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In examining a district court's exercise of its discretion pursuant to Rule 37, we evaluate “(1) the

willfulness of the non-compliant party; (2) the efficacy of lesser sanctions; (3) the duration of the

noncompliance; and (4) whether the non-compliant party had been warned that noncompliance

would be sanctioned.” Guggenheim Capital, L.L.C. v. Birnbaum, 722 F.3d 444, 451 (2d Cir.

2013) (internal quotation marks omitted).

       Metro contends that it did not willfully disobey the district court’s discovery orders, and

thus, the district court abused its discretion in entering default judgment against Metro on the

claims brought by MMA. Noting Metro’s intransigence, the district court found that Metro had

willfully disobeyed its discovery orders. It stated in pertinent part,

       Metro has declined to participate further in discovery and has blatantly disregarded
       multiple warnings and orders. . . . The Court has already precluded Metro from relying
       on the documents it has continuously and willfully failed to produce. Metro has
       suggested that no sanction short of a default judgment on liability that will remedy its
       egregious failures to produce documents and its failure to comply with the Court’s orders.
       In short, Metro’s conduct is plainly willful.

Joint App. 261-262.

       Given Metro’s recalcitrance this finding was not clearly erroneous. See generally Baba

v. Japan Travel Bureau Int’l, Inc., 111 F.3d 2, 5 (2d Cir. 1997) (per curiam) (holding that

plaintiff willfully disregarded the court’s discovery orders for more than a year in the face of

repeated warnings that her actions could result in dismissal); John B. Hull, Inc. v. Waterbury

Petroleum Prods., Inc. 845 F.2d 1172, 1177 (2d Cir. 1988) (affirming dismissal of complaint

where district court issued three orders including two warnings that failure to obey would result

in dismissal).

       Next Metro argues that the district court abused its discretion by dismissing its claims

against Arch for spoliation of evidence. “Dismissal of a case as a sanction for spoliation of

evidence is reviewed under an abuse of discretion standard.” West v. Goodyear Tire & Rubber

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Co., 167 F.3d 776, 779 (2d Cir. 1999). “Although a district court has broad discretion in crafting

a proper sanction for spoliation, we have explained that the applicable sanction should be molded

to serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine.”

Id. In particular we have recognized that a sanction should “(1) deter parties from engaging in

spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the

risk; and (3) restore the prejudiced party to the same position he would have been in absent the

wrongful destruction of evidence by the opposing party.” Id. (internal quotation marks omitted).

“Dismissal is appropriate if there is a showing of willfulness, bad faith, or fault on the part of the

sanctioned party.” Id.

       Metro maintains that the district court failed to find that Metro acted with the requisite

state of mind warranting dismissal. With respect to Metro’s state of mind, Judge Forrest

observed,

       I think that to the extent the standard of spoliation is what it is, and it does require -- there
       was an intent component to it here. There was a preservation obligation that was
       absolutely clear. The preservation obligation was not met. . . . The finding on the Rule 37
       sanction does include my determination as to state of mind.

Joint App. 1127. Here, in determining Metro’s state of mind the district court considered

Metro’s obligation to preserve the relevant documents, its long history in failing to produce the

documents, and its contention that it had lost them. Having reviewed the record, we hold that the

district court’s finding regarding Metro’s state of mind was sufficiently supported and did not

exceed the bounds of its discretion in dismissing Metro’s claims against Arch.

       Metro further suggests that the district court failed to consider lesser sanctions before

dismissing its claims. We have previously observed that because dismissal is a “drastic remedy,

it should be imposed only in extreme circumstances, usually after consideration of alternative,

less drastic sanctions.” West, 167 F.3d at 779 (internal quotation marks omitted). Although in

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some circumstances excluding evidence in a party’s case is an appropriate lesser sanction, here,

Judge Koetle’s preclusion of the same documents failed to motivate Metro into producing the

requested documents to MMA. Moreover, such exclusion would only serve to benefit Metro.

Indeed, the record establishes that the documents that Arch sought in discovery from Metro were

central to Arch’s ability to challenge Metro’s claims. Considering Metro’s dilatory behavior and

continual disrespect for district court orders, the court was within its discretion in dismissing

Metro’s claims against Arch.

       Metro also contends that the district court erred in awarding $187,804.68 attorneys’ fees.

“Under New York law, a contract that provides for an award of reasonable attorneys’ fees to the

prevailing party in an action to enforce the contract is enforceable if the contractual language is

sufficiently clear.” NetJets Aviation, Inc. v. LHC Comms., LLC, 537 F.3d 168, 175 (2d Cir.

2008). “Where a district court has awarded attorneys’ fees under a valid contractual

authorization, we recognize that it has broad discretion in doing so, and an award of such fees

may be set aside only for abuse of discretion.” U.S. Fid. & Guar. Co. v. Braspetro Oil Servs.

Co., 369 F.3d 34, 74 (2d Cir. 2004) (internal quotation marks omitted). Our review of the record

leads us to conclude that Metro has not established that the district court committed reversible

error in awarding attorney’s fees.

       Metro also argues that the judgment for money damages was incorrectly entered in favor

of all of the third-party defendants, rather than MMA alone. We agree. The claims brought

against Metro as part of the answer to Arch’s third-party complaint were brought on behalf of

MMA and not the other third-party defendants. Accordingly, we vacate the district court’s

judgment in favor of all of the third-party defendants on the claims against Metro and remand

with instructions to reenter the judgment in the amount of $187,805.68 in favor of MMA only.



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      We have considered all of Metro’s remaining arguments and determine them to be

without merit; accordingly, the district court’s judgment is AFFIRMED in part, VACATED in

part, and REMANDED for proceedings consistent with this summary order.


                                                       FOR THE COURT:
                                                       Catherine O’Hagan Wolfe, Clerk




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