The New York State Supreme Court has sanctioned a real estate brokerage firm, The Corcoran Group, for willfully providing misleading information to a Brooklyn couple along the way to buying a $1.3 million apartment with many defects, and then damaging and/or failing to protect email evidence.

The couple, parents of two young children, was forced to move out of the apartment when it had severe flooding after each rainstorm. Mold in the rec room ensued. The couple is suing Corcaran for $5 million.

The violations Corocran, its IT Director and its lawyers were charged with included failing to stop routine document destruction, failure to produce potentially damaging electronically stored information (ESI), failure of counsel to tell Corcoran to stop deleting relevant ESI. Adding to the malfeasance, Corcoran preserved emails that were helpful to its case while destroying those that were damaging.

Court sanctions include informing the jury that its members could reasonably conclude that "at least some of the deleted e-mails were relevant to this litigation and favorable to the Plaintiffs" that at least one open house was canceled by the brokers due to heavy rain, and that plaintiffs were entitle to costs associated with reviewing the hard disks containing the evidence and fees for counsel to investigate and bring motions in favor of the sanctions and additional discovery. These fees were estimated by Jay B. Itkowitz, of prevailing law firm Itkowitz & Harwood at about $100,000

Manhattan Supreme Court Justice Charles E. Ramos noted that state courts in New York had not until now addressed attorney and party obligations to preserve ESI evidence, making this a landmark case for New York. The author notes that the Southern District has addressed such concerns and such guidance has made it into the Federal Rules of Civil Procedure (FRCP).

The short version:even before the case is finished, the judge awarded about $100,000 in costs to the plaintiff & informed the jury in advance of its decision about what bad guys the defendants are.

The moral? Spoil electronic evidence - pay substantial consequences.