Supreme Court of New York Compels Plaintiff to Produce Unredacted ESI Related to Loss Mitigation
In Ambac Assurance Corp. v. First Franklin Financial Corporation et. al., 2016 NY Slip Op 31297(U) (Supreme Court of N.Y., New York County, July 8, 2016), Plaintiff insured over 15,000 loans pooled into a trust after various Defendants made representations regarding the quality of the loans. Plaintiff filed a complaint against Defendants for breach of contract and fraudulent inducement. During discovery, Defendants requested documents related to activities that would reduce the amount Plaintiff would have to pay under its policies and thus show that it had mitigated its losses; Defendant filed a Motion to Compel after accusing Plaintiff of withholding relevant documents, including failing to produce ESI. Included in the documents requested were Plaintiff’s documents related to repurchases of bonds and additional loss mitigation efforts.
Among the items sought was ESI related to loss mitigation efforts. The court recited the standard for the scope of discovery in New York, which is that documents are discoverable if they relate to “any fact bearing on the controversy” and the test for determining whether disclosure is required is “one of usefulness and reason.” Plaintiff produced spreadsheets that had been redacted substantially, which, according to the court, rendered them unusable. The court also found that the emails produced were also unusable, as they were mostly the transmissions for the redacted spreadsheets and contained no “substantive insight” into the decision making processes. The court found that these requested items were “material and necessary” to understanding Plaintiff’s loss mitigation efforts and therefore found them relevant, ordering Plaintiff to comply with the requests.