Markey et al v. Lapolla Industries, Inc. et al

Filing 132

MEMORANDUM & ORDER ADOPTING REPORT AND RECOMMENDATION - For the foregoing reasons, MAR and Lapolla's respective objections are OVERRULED and Judge Tomlinson's R&R is ADOPTED in its entirety. Lapolla's Fee Application (Docket Entry 129) is REFERRED to Judge Tomlinson for a REPORT AND RECOMMENDATION on the appropriate amount of attorneys' fees and costs to be awarded. So Ordered by Judge Joanna Seybert on 1/26/2016. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------X
NEIL and KRISTINE MARKEY, individually
and on behalf of all others
similarly situated,
Plaintiff,
MEMORANDUM & ORDER
12-CV-4622(JS)(AKT)

-againstLAPOLLA INDUSTRIES, INC. a Delaware
Corporation; LAPOLLA INTERNATIONAL,
INC., A Delaware corporation; and
DELFINO INSULATION COMPANY, INC.,
a New York Corporation,

Defendants.
----------------------------------------X
APPEARANCES
For Plaintiffs:
A. Craig Purcell, Esq.
Glynn Mercep and Purcell, LLP
North Country Road
P.O. Box 712
Stony Brook, NY 11790-0712
For Defendants:
Lapolla Industries
and Lapolla
International

Dylan B. Russell, Esq.
Matthew A. Kornhauser, Esq.
Mitchell Ward, Esq.
Sidney Watts, Esq.
Hoover Slovacek LLP
5051 Westheimer Rd., Suite 1200
Houston, TX 77056
Robert M. Goodman, Esq.
Clifford B. Kornbrek, Esq.
Greenbaum, Rowe, Smith, Ravin,
Davis & Himmel LLP
75 Livingston Avenue
Roseland, NJ 07068

Delfino Insulation

Eric G. Siegel, Esq.
John Patrick Cookson, Esq.
Robert W. Gifford, Esq.
McElroy Deutsch Mulvaney & Carpenter, LLP
88 Pine Street
New York, NY 10005

For Interested Non-Party
Morelli Alters
Ratner, P.C.
David Ratner, Esq.
David T. Sirotkin, Esq.
Benedict P. Morelli, Esq.
Morelli Alters Ratner, P.C.
777 Third Avenue, 31st Floor
New York, NY 10017
SEYBERT, District Judge:
Currently pending before the Court is Magistrate Judge
A. Kathleen Tomlinson’s Report and Recommendation dated August 25,
2015 (the “R&R”) with respect to defendant Lapolla Industries,
Inc.’s (“Lapolla”) motion for sanctions.

(R&R, Docket Entry 88.)

Judge Tomlinson recommends that sanctions be imposed against nonparty Morelli Alters Ratner, P.C. (“MAR”) pursuant to Federal Rules
of Civil Procedure 37(c) and 26(g)(3) and that Lapolla be awarded
reasonable attorneys’ fees and costs incurred in connection with
the additional discovery necessitated by MAR’s failure to comply
with discovery obligations and the filing of its sanctions motion,
with Lapolla’s motion being denied in all other respects.
Docket Entry 126, at 58.)

(R&R,

MAR and Lapolla have filed objections

(Docket Entries 127 and 128), which are presently before the Court
along

with

Lapolla’s

fee

application

(Docket Entry 129).
2

(the

“Fee

Application”)

For the reasons set forth below, the R&R is ADOPTED in
its entirety and the Fee Application is REFERRED to Judge Tomlinson
for a report and recommendation.
BACKGROUND
I.

Factual Background
The Court presumes familiarity with the facts of this

case, which are set forth in detail in Judge Tomlinson’s R&R.
Briefly, on September 14, 2012, plaintiffs Neil and Kristine Markey
(“Plaintiffs”) commenced this action against defendants Lapolla
Industries,

Inc.,

Lapolla

International,

Inc.,

and

Delfino

Insulation Company, Inc. (collectively, “Defendants”). Plaintiffs
subsequently filed a Second Amended Complaint that asserts claims
for design defect, failure to warn, breach of express and implied
warranties,
protection

unjust
laws

in

enrichment,

and

connection

with

violations
spray

of

consumer

polyurethane

foam

insulation (“SPF”) manufactured by defendants Lapolla Industries,
Inc. and Lapolla International, Inc. (collectively, “Lapolla”) and
installed in Plaintiffs’ home by defendant Delfino Insulation
Company, Inc. (“Delfino”).

(See, Sec. Am. Compl., Docket Entry

61.)
MAR served as counsel for Plaintiffs.1

On April 28,

2014, MAR moved to withdraw from this action based on certain

The Second Amended Complaint reflects that three separate law
firms represented Plaintiffs: Morelli Ratner, P.C., Alters Law
1

3

“irreconcilable
Plaintiffs.
2014,

the

differences”

that

arose

between

(MAR’s Affirm., Docket Entry 76-1, at 1.)
Court

granted

Plaintiffs’ counsel.

MAR’s

motion

and

MAR

and

On May 2,

terminated

MAR

as

(Docket Entry 82.)

On May 29, 2014, Glynn Mercep and Purcell, LLP appeared
as counsel for Plaintiffs and moved to voluntarily dismiss this
action.

(Docket Entry 83 and 84.)

On July 8, 2014, Lapolla filed

its motion seeking sanctions against Plaintiffs and MAR pursuant
to Federal Rules of Civil Procedure 26 and 37, 28 U.S.C. § 1927,
and the Court’s inherent power.

(Lapolla’s Mot., Docket Entry

88.) Lapolla argues that the Court should impose sanctions against
Plaintiffs and MAR based on: (1) their failure to disclose an
original report prepared by Insight Environmental (the “Original
Report”) and emails between Mrs. Markey and George Maul of Insight
Environmental (the “Maul Emails”), and (2) their prosecution of
Plaintiffs’ personal injury claims with the knowledge that they
“simply had no evidence to support their claims.”
Docket Entry 89, ¶¶ 34, 61, 75.)

(Lapolla’s Br.,

Lapolla also requested that

Plaintiffs and MAR “be compelled to pay Lapolla’s legal fees and
costs.”

(Lapolla’s Br. at 30.)

Firm, P.A., and the Law Offices of Wolf & Pravato (the “Pravato
Firm”). (Sec. Am. Compl. at 23-24.) As noted by Judge
Tomlinson, at some point during this litigation, Morelli Ratner,
P.C. and Alters Law Firm, P.A. merged to become Morelli Alters
Ratner, P.C. (R&R at 21.)
4

On

December

15,

2014,

the

Court

referred

Lapolla’s

motion to Judge Tomlinson for a report and recommendation “on
whether the motion should be granted.
Entry 104.)

(Referral Order, Docket

On January 6, 2015, Judge Tomlinson set this case

down for an evidentiary hearing pursuant to Federal Rule of Civil
Procedure 43(c).

(Docket Entry 105.)

Judge Tomlinson conducted

the evidentiary hearing on March 23, 2015, April 7, 2015, and April
17, 2015.

(R&R at 6.)
On

February

3,

2015,

the

Court

granted

Plaintiffs’

motion to dismiss; however, the Court retained jurisdiction to
address Lapolla’s sanctions motion.

(See Feb. 3 Order, Docket

Entry 110.)
A.

The R&R
Judge Tomlinson concludes in her R&R that MAR violated

its discovery obligations pursuant to Rules 26(a) and 26(g)(1) by
failing to disclose the Original Report and Maul Emails.
33.)

(R&R at

MAR failed to make a “reasonable inquiry” to determine what

discovery was in Plaintiffs’ possession prior to certifying that
Plaintiffs’ initial disclosures were complete.

(R&R at 34.)

Additionally, it was not reasonable for MAR to assume that the
documents it received from Plaintiffs and from its co-counsel, the
Pravato

Firm,

“encompassed

all

the

documents

required to disclose under Rule 26(a).”

5

Plaintiffs

(R&R at 35.)

were

Judge Tomlinson also concludes that MAR’s inquiry was
similarly insufficient with respect to its responses to Lapolla’s
request for production.

(R&R at 35.)

While Mr. Sirotkin signed

Plaintiffs’ discovery responses and Mr. Ratner oversaw discovery,2
these attorneys had minimal direct contact with Plaintiffs during
the

discovery

process,

Sirotkin’s paralegal.

which

was

primarily

(R&R at 37.)

conducted

by

Mr.

Plaintiffs also credibly

testified that MAR did not (1) explain the types of documents that
would be responsive to discovery requests, (2) advise Mrs. Markey
that emails were discoverable, or (3) review Lapolla’s specific
discovery requests with Plaintiffs.

(R&R at 37-38.)

Judge Tomlinson concludes that Lapolla satisfied its
burden of demonstrating that sanctions should be imposed against
MAR.

(R&R at 39-44.)

The evidence establishes that MAR acted

with a culpable state of mind with its conduct falling “somewhere
between negligence and gross negligence, closer to the former than
the latter.”

(R&R at 39.)

Finally, the Original Report and Maul

Emails were relevant to Lapolla’s case as “a reasonable trier of
fact could find that the information in the non-disclosed documents
supported Lapolla’s defenses in this action.”

(R&R at 40-41.)

While Judge Tomlinson declines to recommend sanctions
against MAR for its failure to disclose the Original Report due to

Messrs. Sirotkin and Ratner were Plaintiffs’ former counsel at
MAR. (R&R at 6.)
2

6

the absence of any prejudice to Lapolla, the R&R recommends that
sanctions be imposed against MAR for its failure to produce the
Maul Emails.

(R&R at 43-44, 46.)

The R&R notes that the Maul

Emails were disclosed during or after Mr. Maul’s deposition and
Lapolla was unable to examine Mr. Maul about certain of these
emails, including Mrs. Markey’s email requesting that Mr. Maul
revise the Original Report.

(R&R at 44.)

Additionally, Lapolla

was unable to request Court intervention regarding the Maul Emails
as MAR filed a motion to withdraw as counsel within days of the
production of these emails.
to

disclose

the

Maul

(R&R at 44.)

Emails

resulted

Further, MAR’s failure
in

Lapolla

incurring

unnecessary attorney’s fees and expenses, particularly the time
spent by its counsel reviewing the Maul Emails in preparation for
Plaintiffs’ depositions.

(R&R at 44.)

Judge Tomlinson recommends that Lapolla’s request for
the imposition of sanctions pursuant to Section 1927 and/or the
Court’s inherent power based on MAR’s assertion and prosecution of
personal injury claims and “ultimate withdrawal of the action” be
denied.

(R&R at 48, 56.)

Judge Tomlinson concludes that Lapolla

failed to establish that Plaintiffs’ personal injury claims were
not colorable.

(R&R at 49-51.)

Additionally, there was “no clear

evidence” that Plaintiffs or MAR acted in bad faith by: (1) failing
to disclose the Original Report and Maul Emails; (2) filing the
pleadings

or

proceeding

with

this
7

action;

(3)

Plaintiffs

voluntarily withdrawing their claims; or (4) MAR’s withdrawal as
Plaintiffs’ counsel.

(R&R at 53-54 (internal quotation marks and

citations omitted).)
Judge Tomlinson concludes that “sanctions against MAR
are only warranted as to its failure to exercise due diligence and
comply with its obligations in the discovery process.”
56.)

(R&R at

Accordingly, Judge Tomlinson recommends that sanctions be

awarded against MAR for reasonable attorneys’ fees and costs
incurred by Lapolla with respect to its review of the Maul Emails
in preparation for Plaintiffs’ depositions as well as attorneys’
fees and costs “related to bringing this motion.”

(R&R at 56.)

Judge Tomlinson notes that Lapolla’s counsel billed $1,020 in
connection with their review of the Maul Emails; however, the
relevant billing records did not include the attorneys’ fees and
costs incurred in filing the sanctions motion.

(R&R at 57.)

Judge Tomlinson recommends that the final amount of
sanctions be deferred to permit Lapolla to make a fee application
for attorneys’ fees and costs “incurred in connection with the
additional discovery described above, as well as the fees and costs
incurred in drafting the motion for sanctions as well as Lapolla’s
post-hearing brief--but not for the time incurred at the hearing
since that time was directed by the Court.”

8

(R&R at 57.)

B.

Fee Application
On September 24, 2015, Lapolla filed a fee application.

(Docket Entry 129.)
fee application.

On October 26, 2015, MAR opposed Lapolla’s

(Docket Entry 131.)
DISCUSSION

I.

Legal Standard
“When evaluating the report and recommendation of a

magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are not
facially erroneous.”

Walker v. Vaughan, 216 F. Supp. 2d 290, 291

(S.D.N.Y. 2002) (citation omitted).

A party may serve and file

specific, written objections to a magistrate judge’s report and
recommendation within fourteen days of being served with the
recommended disposition.
receiving

any

timely

See FED. R. CIV. P. 72(b)(2).

objections

to

the

magistrate

Upon
judge’s

recommendation, the district court “may accept, reject, or modify,
in whole or in part, the findings or recommendations made by the
magistrate judge.”
P. 72(b)(3).
must

point

28 U.S.C. § 636(b)(1)(C); see also FED. R. CIV.

A party that objects to a report and recommendation
out

the

specific

portions

of

recommendation to which they are objecting to.

the

report

and

See Barratt v.

Joie, No. 96-CV-0324, 2002 WL 335014, at *1 (S.D.N.Y. Mar. 4, 2002)
(citations omitted).
When a party raises an objection to a magistrate judge’s
9

report, the Court must conduct a de novo review of any contested
sections of the report.

See Pizarro v. Bartlett, 776 F. Supp.

815, 817 (S.D.N.Y. 1991).
or

general

objections,

But if a party “makes only conclusory
or

simply

reiterates

his

original

arguments, the Court reviews the Report and Recommendation only
for clear error.”

Walker, 216 F. Supp. 2d at 291 (internal

quotation marks and citation omitted).

Furthermore, even in a de

novo review of a party’s specific objections, the Court ordinarily
will not consider “arguments, case law and/or evidentiary material
which could have been, but [were] not, presented to the magistrate
judge in the first instance.”

Kennedy v. Adamo, No. 02-CV-1776,

2006 WL 3704784, at *1 (E.D.N.Y. Sept. 1, 2006) (internal quotation
marks and citation omitted).

But see Stock Market Recovery

Consultants, Inc. v. Watkins, No. 13-CV-0193, 2015 WL 5771997, at
*3 (E.D.N.Y. Sept. 30, 2015) (Noting disagreement in the Second
Circuit regarding the District Court’s ability to consider legal
arguments raised for the first time in a party’s objection to the
report

and

recommendation

of

a

magistrate

judge)

(citations

omitted).
The Court will address each party and interested nonparty’s objections in turn.

10

II.

Lapolla’s Objections

A. Section 1927 and the Court’s Inherent Power
Lapolla objects to the exclusion of certain information
from the R&R and avers that these facts provide a basis for
sanctions pursuant to Section 1927 and the Court’s inherent power.
(Lapolla’s Obj., Docket Entry 128, at 2.)3

Specifically, Lapolla

argues that the R&R should have included the following facts: (1)
MAR decided to withdraw as counsel because it did not want to
persist in spending resources when it “represent[s] hundreds of
other clients who could also use our resources”; (2) MAR admitted
that it included personal injury claims in Plaintiffs’ Complaint
“with the hope of achieving [a multi-district litigation] in all
of the cases”; (3) Mrs. Markey’s affidavit stated that MAR’s cocounsel, Mr. Pravato, advised Plaintiffs that a multi-district
class action was pending against Lapolla and that they could be
included in that proceeding; (4) Although Mr. Pravato advised
Plaintiffs that “they would be included in their application for
the multi-district class action litigation,” Plaintiffs had, in
actuality,

already

been

included

when

the

multi-district

litigation (“MDL”) application was filed; and (5) Plaintiffs were
“totally in the dark as to the exact status of [their] law suit
instituted by the Pravato firm.”

(Lapolla’s Obj. at 2-3 (internal

The Court will utilize the ECF pagination for Lapolla’s
Objections based on an error in Lapolla’s pagination.
3

11

quotation marks omitted).)

Lapolla also objects, in a footnote,

to the R&R’s exclusion of Mr. Ratner’s testimony that he did not
recall

personally

communicating

with

Plaintiffs

prior

to

the

filing of the Second Amended Complaint and “for many months
thereafter.”

(Lapolla’s Obj. at 4.)

Lapolla avers that these

facts provide “undisputed evidence of an ‘improper purpose’ and
thus a basis for issuing sanctions against MAR under [Section]
1927 and the Court’s inherent power.”

(Lapolla’s Obj. at 2.)

The demonstration of bad faith necessary to support an
award

of

sanctions

under

Section

1927

is

similar

to

the

demonstration necessary to invoke the inherent powers of the Court;
the only meaningful distinction is that awards under Section 1927
may only be made against attorneys or persons authorized to
practice in the Courts while sanctions under the Court’s inherent
power may be imposed against attorneys, parties, or both.

Emmon

v. Prospect Cap. Corp., 675 F.3d 138, 143-44 (2d Cir. 2012).

A

finding of bad faith requires that the Court: “(i) find that the
challenged actions were taken for improper purposes, such as
harassment or delay; and (ii) provide a high degree of specificity
in the factual findings.”

McCune v. Rugged Entm’t, LLC, No. 08-

CV-2677, 2010 WL 1189390, at *3 (E.D.N.Y. Mar. 29, 2010).

The

standard for bad faith is not satisfied easily and “sanctions are
warranted only in extreme cases.”

12

Id. at *4.

The Court finds that the previously noted facts cited by
Lapolla do not establish that MAR prosecuted the personal injury
claims

and/or

“improper

withdrew

purpose.”

from

MAR’s

representing

stated

reason

Plaintiffs

an

withdrawing

for

for

as

Plaintiffs’ counsel--that it did not want to continue spending
firm resources on this action when other clients needed its
resources--is hardly improper and appears to be nothing more than
a business decision, particularly in light of MAR’s testimony that
it is a contingency fee firm.

(R&R at 24.)

Similarly, MAR’s

testimony that it hoped to achieve an MDL in this and other cases
does not establish that it asserted the personal injury claims in
bad faith.

Further, it is unclear how or why the Pravato Firm’s

alleged representations regarding Plaintiffs’ inclusion in an MDL
could be imputed to MAR.

In any event, these purported statements

by the Pravato Firm fail to establish an improper purpose for the
litigation of Plaintiffs’ personal injury claims.

Finally, the

allegations that Plaintiffs were purportedly “in the dark” as to
the status of their lawsuit and that Mr. Ratner did not communicate
with Plaintiffs prior to and after filing the Second Amended
Complaint also fail to demonstrate that MAR’s actions were taken
in

bad

faith

and,

at

best,

speak

to

a

purported

lack

of

communication between Plaintiffs and their counsel.
Lapolla also objects to the R&R’s suggestion that “there
was a colorable claim that Mr. Markey suffered personal injury.”
13

(Lapolla’s Obj. at 3.)

Lapolla argues that Mr. Markey testified

that he never told the Pravato Firm that he suffered a personal
injury and they did not discuss the assertion of a personal injury
claim.

(Lapolla’s Obj. at 3.)

Additionally, Lapolla avers that

MAR did not have any personal knowledge that Mr. Markey suffered
from any injury and “the only basis for Mr. Ratner’s testimony
suggesting he ‘knew’ that Mr. Markey had been physically [a]ffected
by the SPF was the hearsay of alleged ‘information they received
from the Pravato Firm.’”

(Lapolla’s Obj. at 3-4.)

A claim is “colorable” when “viewed in light of the
reasonable beliefs of the party making the claim, it has some
amount of factual and legal support.”
*4 (emphasis in original).
low.

Id.

McCune, 2010 WL 1189390, at

Thus, the colorability threshold is

See also Schlaifer Nance & Co. v. Estate of Warhol, 194

F.3d 323, 337 (2d Cir. 1999) (“A claim is colorable when it
reasonably might be successful, while a claim lacks a colorable
basis when it is utterly devoid of a legal or factual basis.”)
(emphasis in original).
MAR’s testimony that it received information from cocounsel regarding Mr. Markey’s discomfort combined with MAR’s
general

knowledge

establishes

that

of
MAR

the

potential

possessed

a

adverse

reasonable

effects
belief

of

SPE

that

Mr.

Markey’s personal injury claim had factual and legal support. (See
R&R at 51.)

Lapolla’s reliance on Mr. Markey’s testimony that he
14

did not tell the Pravato Firm that he was injured is misplaced in
light of the subjective standard for colorability.

(See Lapolla’s

Obj. at 3.)
Further,

Lapolla’s

argument

regarding

the

inadmissibility of MAR’s testimony about the alleged information
it received from the Pravato Firm is equally misplaced.
Lapolla’s Obj. at 3-4.)

(See

Federal Rule of Evidence 803(3) provides

an exception to the exclusion of hearsay testimony for “a statement
of the declarant’s then-existing state of mind (such as motive,
intent, or plan). . . .”

Fed. R. Evid. 803(3).

See, e.g., Messer

v. Bd. of Educ. of City of N.Y., No. 01-CV-6129, 2007 WL 136027,
at *7 (E.D.N.Y. Jan. 16, 2007) (Holding that a medical summary was
admissible where it was presented to establish the defendant’s
“state of mind” belief that the plaintiff was not eligible for
certain benefits rather than to prove the absence of any evidence
to support plaintiff’s benefits claims.); Trouble v. Wet Seal,
Inc., 179 F. Supp. 2d 291, 298-99 (S.D.N.Y. 2001) (Holding that
“there is no hearsay problem with the statement by [plaintiff’s]
customers

indicating

that

they

were

confused.”)

The

Court

construes MAR’s testimony regarding the information received from
the Pravato Firm--namely, that Mr. Markey was suffering from
discomfort--as being offered not to establish that Mr. Markey did,
in fact, suffer from an injury, but to demonstrate that MAR
believed Mr. Markey suffered from discomfort and, accordingly, its
15

assertion of a personal injury claim on his behalf was motivated
by a reasonable belief in the factual and legal basis of that
claim.
Accordingly, the Court OVERRULES Lapolla’s objections
regarding the R&R’s recommendation that the Court deny sanctions
under Section 1927 and the Court’s inherent powers.
B.

Attorneys’ Fees
Lapolla

objects

to

the

R&R’s

attorneys’ fees it can seek to recover.

limitations

on

the

(Lapolla’s Obj. at 5.)

Lapolla avers that it is “severely prejudice[d]” by the R&R’s
exclusion of time expended at the hearing on its sanctions motion
and argues that “but for MAR’s discovery abuse, neither the motion
nor any hearings would have been necessary.”
5.)

(Lapolla’s Obj. at

Lapolla maintains that it should at least be permitted to

recover for its preparation time and time expended at the hearing
“that could reasonably be related to addressing the discovery
issues, as opposed to the issues relating to the substantive claims
made by the Markeys.”

(Lapolla’s Obj. at 6.)

The Court concurs with Judge Tomlinson’s recommendation
that Lapolla’s time expended at the hearing be excluded from its
fee application.

(R&R at 57.)

As noted in the R&R, the three-

day hearing was directed by the Court. (R&R at 57.) Additionally,
the Court finds it unreasonable to award Lapolla attorneys’ fees
for time spent at a lengthy hearing that also addressed the
16

unsuccessful portions of Lapolla’s motion.

While Lapolla avers

that it should, at the very least, be permitted to recover its
time spent at the hearing related to “discovery issues,” the Court
finds that it would be futile to attempt to parse out and quantify
the specific amount of time devoted to discovery during a threeday hearing.

(Lapolla’s Obj. at 6.)

Lapolla also objects to the R&R to the extent that it
did not permit Lapolla to request attorneys’ fees for: (1) its
review and analysis of MAR and Plaintiffs’ responses to its motion
for sanctions; (2) its preparation for Plaintiffs’ depositions,
which were cancelled a few days after the production of the Maul
Emails; (3) its preparation for and examination of Mr. Maul, as
much of the deposition involved questions regarding the creation
of

the

Revised

Report

and

the

existence

of

any

emails

or

communications explaining the Revised Report; and (4) its time
spent

regarding

written

discovery

to

Mr.

Maul

and

Insight

Environmental, as such discovery “would not have been necessary
but for MAR’s discovery failures regarding such communications and
documents relating to George Maul and Insight Environmental.”
(Lapolla’s Obj. at 6.)
Judge
imposed

for

Tomlinson

MAR’s

only

failure

recommended

to

disclose

that
the

sanctions
Maul

be

Emails.

Accordingly, the Court finds it reasonable that Lapolla only be
awarded attorneys’ fees and costs in connection with its belated
17

review of the Maul Emails and its filing of this motion.
finds

that

the

R&R’s

recommendation

that

Lapolla

The Court

be

awarded

attorneys’ fees and costs “related to bringing this motion” is
inclusive of the time Lapolla spent reviewing opposition and
drafting its reply and its post-hearing brief.
57.)

(See R&R at 56-

Lapolla’s objection to the R&R’s failure to award attorneys’

fees in connection with depositions and written discovery in this
matter is OVERRULED.
Lapolla’s objection to Judge Tomlinson’s recommendation
that it not be awarded attorneys’ fees for “conducting discovery
and

otherwise

defending

the

improper

allegations

of

personal

injury for Mr. Markey brought by MAR without the consent or
knowledge of their then-clients,” is also OVERRULED in light of
the Court’s denial of its request for sanctions with respect to
MAR’s assertion and prosecution of Mr. Markey’ personal injury
claims.

(See Lapolla’s Obj. at 4-5.)

III. MAR’s Objections
MAR objects to the portions of the R&R that: (1) awarded
sanctions for MAR’s failure to supervise discovery and produce
emails between Mrs. Markey and George Maul (the “Maul Emails”),
and (2) awarded Lapolla attorneys’ fees. (MAR’s Obj., Docket Entry
127, at 1.)

18

A.

Sanctions Pursuant to Rule 37(c) and 26(g)(3)
MAR argues that its failure to produce the Maul Emails

was not negligent because it provided Plaintiffs with Lapolla’s
discovery demands, which were “easily discernable”; Plaintiffs
were “informed and involved clients”; and Mrs. Markey’s testimony
that she was not aware emails were discoverable is “disingenuous”
given her production of other email communications in response to
Lapolla’s discovery requests.

(MAR’s Obj. at 6.)

Additionally,

MAR alleges that the Maul Emails were not relevant to Lapolla’s
case, as Lapolla admitted that Mr. Maul was inexperienced with SPF
and unqualified to posit a meaningful opinion.

(MAR’s Obj. at 6.)

Moreover, Mr. Maul was a non-expert witness and neither party
planned

to

rely

upon

his

opinions.

(MAR’s

Obj.

at

6-7.)

Furthermore, MAR asserts that Lapolla did not suffer any harm as
a result of Plaintiffs’ failure to produce the Maul Emails because
(1) MAR withdrew as counsel within days of the production of the
Maul Emails; (2) Lapolla did not expend additional time reviewing
the Maul Emails and the limited time Lapolla’s counsel spent
reviewing these emails would have been expended even if the emails
were provided earlier; and (3) Lapolla did not notice an additional
deposition of Mr. Maul and, in any event, any additional deposition
became moot upon the dismissal of this case with prejudice. (MAR’s
Obj. at 7 (internal citations omitted).)

19

The Court is not persuaded by MAR’s argument that it was
not negligent in failing to produce the Maul Emails.

Although MAR

seeks to deflect responsibility for this discovery violation to
Plaintiffs,

the

fact

that

MAR

forwarded

Lapolla’s

discovery

requests to Plaintiffs and that Plaintiffs were “informed and
involved clients” does not absolve MAR of its responsibility to
competently supervise discovery.

(See MAR’s Obj. at 6.)

See also

Quinby v. WestLB AG, No. 04-CV-7406, 2005 WL 3453908, at *4
(S.D.N.Y. Dec. 15, 2005) (Noting that the purpose of Rule 26(g) is
to create an affirmative duty to responsibly engage in pretrial
discovery and that “the [attorney’s] signature certifies that the
lawyer has made a reasonable effort to assure that the client has
provided all the information and documents available to him that
are responsive to the discovery demand.”) (quoting FED. R. CIV. P.
26(g) Advisory Committee Notes to 1983 Amendments).
As detailed more fully in the R&R, Mr. Sirotkin stated
in an email to Plaintiffs that he had already received documents
from the Pravato Firm “so don’t feel as though you need to send us
everything you have.”
citation omitted).)

(R&R at 34 (internal quotation marks and
However, MAR did not review the particular

documents it received from the Pravato Firm with Plaintiffs or
meet with Plaintiffs to review the documents that they possessed.
(R&R at 35.)

Further, MAR’s attorneys had minimal contact with

Plaintiffs during the process of compiling responsive documents
20

and discovery was primarily conducted by MAR’s paralegal.
37.)

(R&R at

Thus, the R&R properly characterized MAR’s actions as

“fall[ing] on the spectrum somewhere between negligence and gross
negligence, closer to the former than the latter.”

(R&R at 39.)

MAR’s argument that the Maul Emails were not relevant is
similarly unavailing.

The Maul Emails demonstrate that “Mrs.

Markey asked George Maul to revise the Original Report and to make
the changes reflected in the Revised Report.”

(R&R at 40.)

Lapolla’s claims that Mr. Maul was unqualified and the fact that
Mr. Maul “was an extraneous, non-expert witness whose opinions
were never going to be relied upon by either of the parties” does
not obviate the relevance of the Maul Emails to Lapolla’s defenses.
(MAR’s Obj. at 6-7.)
Finally, the Court concurs with the R&R that MAR’s
failure

to

produce

the

Maul

Emails

was

not

harmless.

“Harmlessness” in the context of Rule 37(c)(1) “means an absence
of prejudice to the defendant.”

Ritchie Risk-Lined Strategies

Trading (Ireland), Ltd. v. Coventry First LLC, 280 F.R.D. 147, 159
(S.D.N.Y. 2012) (citations omitted).

Certain of the Maul Emails

were not disclosed until after Mr. Maul’s deposition and Lapolla
was prejudiced to the extent that it was not able to question Mr.
Maul about these emails at his examination.
R&R at 44.)

(See MAR’s Obj. at 7;

The fact that this matter was ultimately dismissed

21

does not render MAR’s actions harmless merely because Lapolla was
not forced to continue with discovery.
MAR cites to Creative Resources Group of N.J., Inc. v.
Creative Resources Group, Inc., 212 F.R.D. 94 (E.D.N.Y. 2002) for
the proposition that “fees that would have been incurred in normal
course of discover are not compensable.”

(MAR’s Obj. at 7.)

In

Creative Resources Group, the court held that the plaintiff was
entitled

to

costs

incurred

in

making

motions

to

compel

and

attempting to enforce the resulting Orders, as well as certain
third-party discovery costs “necessitated by the defendants’ bad
behavior.”

Creative Resources Group, 212 F.R.D. at 103.

However,

the court held that certain of the fees submitted by the plaintiff-including fees for attendance at a status conference, time spent
responding to discovery demands, “some third-party discovery”, and
a continued deposition--were not compensable because they were
“incurred in the course of normal discovery.”

Id. at 104.

While

the Court acknowledges that Lapolla would have spent time reviewing
the Maul Emails had they been timely produced, the Court also
possesses “broad discretion in fashioning an appropriate sanction”
where, as here, the discovery violation is the failure to produce
evidence.

Id. at 102 (internal quotation marks and citation

omitted).

Unlike in Creative Resources Group, where the court

analyzed

the

fees

that

should

be

included

in

the

cost

of

plaintiff’s motion to compel, enforcement proceedings, and third22

party discovery, here, the Court is attempting to discern whether
MAR’s failure to produce the Maul Emails was harmless.

The delay

in disclosure and the likelihood that a supplemental deposition of
Mr. Maul would be required had Plaintiffs not moved to dismiss
this case weighs in favor of a finding that Lapolla’s failure to
disclose the Maul Emails was not harmless.
Accordingly, the Court OVERRULES MAR’s objection to the
R&R’s recommendation that sanctions be imposed for its failure to
produce the Maul Emails.
B.

Attorneys’ Fees
MAR argues that Lapolla should not be awarded attorneys’

fees as Lapolla’s motion is “frivolous and overreaching” and “[a]ny
reasonable investigation by Lapolla would have alerted them that
the bulk of their Motion--which set forth allegations that MAR and
the

Markeys

erroneous.”

brought

and

litigated

(MAR’s Obj. at 8.)

claims

in

bad

faith--was

MAR notes that it incurred

significant expenses defending Lapolla’s motion, which included a
three-day hearing.

(MAR’s Obj. at 8.)

Additionally, Lapolla’s

post-hearing brief was “replete with factual arguments” despite
Judge Tomlinson’s directive that the parties limit their briefs to
the discussion of legal issues.

(MAR’s Obj. at 8.)

As set forth above, the Court concurs with the R&R’s
recommendation that Lapolla be awarded attorneys’ fees and costs
for its review of the Maul Emails and for its filing of this
23

motion.

While Lapolla has not been awarded the totality of the

sanctions it requests, Judge Tomlinson recommended that sanctions
be imposed against MAR for the non-disclosure of the Maul Emails.
Moreover, MAR’s arguments that Lapolla’s fees should be reduced
because its motion was “frivolous and overreaching” and its posthearing brief did not conform to the Court’s directives will be
addressed

in

connection

with

Lapolla’s

fee

application.

Parenthetically, Judge Tomlinson notes that “the Court makes these
recommendations

with

the

understanding

that

Lapolla

was

not

entirely successful on its sanctions motion and, as such, its fee
application should be directed to the relevant legal fees and
costs.”

(R&R at 58.)

Thus, Lapolla’s award of attorneys’ fees

and costs may be fashioned to account for the unsuccessful portions
of Lapolla’s motion.
CONCLUSION
For the foregoing reasons, MAR and Lapolla’s respective
objections are OVERRULED and Judge Tomlinson’s R&R is ADOPTED in
its entirety.

Lapolla’s Fee Application (Docket Entry 129) is

REFERRED to Judge Tomlinson for a REPORT AND RECOMMENDATION on the
appropriate amount of attorneys’ fees and costs to be awarded.
SO ORDERED.

Dated:

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.

January
26 , 2016
Central Islip, NY
24