Case Reflection Vol. 2 (3/10/25):
Discovery Done Right: Slashing A Claim For Damages In A Commercial Lease Dispute
By: Israel A. Katz, Partner, Litigation Department
The importance of aggressively pursuing discovery and discovery-related remedies with the aim of limiting issues for trial and crippling an opponent’s ability to prove the elements of its case cannot be understated. A recent case highlights how we did just that, forcing a settlement in a commercial lease dispute for a fraction of the amount sought by the plaintiff in damages.
THE FACTS: Our client, a major institutional hospital, faced a lawsuit from its former landlord over alleged restoration damages tied to a leased property. The landlord claimed our client failed to return the premises to its pre-tenancy condition, dating back to when the hospital began its occupancy in September 2008. However, evidence of the property’s condition prior to 2008 was virtually nonexistent, and the landlord stonewalled efforts to produce any records from that time.
THE STRATEGY: The landlord’s claim hinged on proving three elements: (i) the conditions of the premises prior to our client taking occupancy; (ii) the conditions of the premises at the time our client vacated the leased premises; and (iii) the restoration costs former landlord incurred to restore the leased premises. Given that pre-2008 records were scarce or even non-existent, we focused our discovery efforts on restoration cost component. As to these costs, former landlord produced during the course of discovery — two years apart from each other — two sets of conflicting and altered invoices and loan agreements, which former landlord claimed was received from its contractors who performed the work. These discrepancies included markedly different work descriptions, font size, layout, and, importantly, costs of the work. We strongly suspected that former landlord was collaborating with its contractors to manipulate evidence and to stymie the discovery process.
We pounced on these inconsistencies at deposition and when pressed, the former landlord admitted to obtaining both sets of invoices and agreements from the contractors but could not explain why they had been altered two years later and by whom. Almost immediately after the deposition, and to answer these glaring questions, we served the contractors with subpoenas and former landlord with post deposition demands seeking further documents, including original invoices, loan agreements and proof of payment, along with deposition testimony from the contractors on these open issues. Rather than respond as required, the contractors failed to comply with two sets of subpoenas, multiple rounds of service, and follow-up letter and court orders. We then moved to hold the contractors in contempt, that the contractors purge their contempt by serving documentary responses to the subpoenas and appear for deposition within 30 days and, upon their failure to do so, to preclude the former landlord from offering the contractors as witnesses at trial/and or rely on documents received from the contractors.
THE OUTCOME: The court (Giacomo, J.) ruled in our favor holding the contractors in contempt and giving them 20 days to produce documents and appear for deposition. Failure to comply would preclude the landlord from calling them as witnesses or using their unproduced documents at trial. The court also blocked the landlord from introducing any evidence not provided in response to our post-deposition demands by the note of issue deadline. The non-parties contractors did not comply by the deadline effectively gutting the landlord’s case. Without the ability to call the contractors as witnesses at trial, former landlord has no means to authenticate the invoices and documents received from the contractors and which are essential to prove the case. Shortly after this decision and recognizing the crippling effect of this discovery order on its ability to prove its case, the landlord settled the case for a fraction of the restoration damages claimed.
The Takeaway: This case underscores the power of relentless discovery as a strategic weapon in litigation. By aggressively pursuing inconsistencies in the former landlord’s documentation and holding non-compliant third parties accountable, we turned a potentially costly dispute into a resounding victory for our client. The key lesson? Meticulous attention to discovery can expose weaknesses in an opponent’s case, limit their ability to prove essential elements, and pave the way for a settlement on our terms—here, a fraction of the claimed damages. In complex litigation, preparation and persistence in discovery are not just tools; they are game-changers.
Israel A. Katz (https://bbgllp.com/attorney/israel-a-katz/) is a Partner in the Firm’s Litigation Department concentrating in complex commercial real estate litigation matters, including commercial landlord-tenant matters discussed in this article. Israel can be reached at 212-867-4466 ext.824 (ikatz@bbgllp.com).
For previous reflections, see below.
