Withheld Emails Lead to Dismissal of Case Against PNC Bank

Withheld Emails Lead to Dismissal of Case Against PNC Bank

Years of discovery delays and dodges have led to the dismissal of a case against PNC Bank as a sanction.

The Pennsylvania Superior Court upheld both the dismissal and the award of $70,000 in attorney fees to PNC that was entered by the trial court in a case initially stemming from financing for a Pittsburgh condominium. The developer for the project, which had sued PNC, stalled for years after it was ordered to turn over thousands of emails in discovery, according to the opinion.

“Appellant did not proceed through the discovery process in good faith,” Superior Court Judge John T. Bender wrote on behalf of the three-judge panel. “For more than two years, it offered contradictory explanations for its failure to produce electronically stored information. Finally, in response to PNC’s motion for sanctions, appellant revealed that it had undertaken ‘the formidable task’ of retrieving emails it had long claimed did not exist and ‘the additional gargantuan task’ of reviewing 41,000 emails to select (without the benefit of legal counsel) approximately 2,100 ‘relevant’ emails.

“The trial court’s suggestion that appellant could, or even should, have included PNC in the retrieval process merely highlights the exasperation with which the court viewed appellant’s dilatory efforts to meet its legitimate obligations. This does not constitute an abuse of the court’s discretion,” Bender said.

Solara Ventures, which began a development project called the Otto Milk Factory Condominiums in 2007, brought a breach of contract suit against PNC in 2010 claiming $2 million in damages since PNC had declined to give Solara additional financing. Solara had originally gotten financing from National City Bank, which was later acquired by PNC.

The suit was filed in May 2010 and in discovery in October of that year, PNC requested electronically stored information. The case never proceeded much beyond that point, according to the opinion.

“Thereafter, in a dispute ongoing for more than two years, appellant offered a series of inconsistent, seemingly contradictory reasons for its noncompliance with PNC’s discovery request,” Bender said.

“For example, in December 2010, appellant suggested that a computer virus had rendered such electronically stored information irretrievable but claimed the computer hard drives had been preserved for inspection. Later, in April 2011, appellant indicated that the virus-ridden computer had been ‘fried and trashed,’ thus suggesting that the computer hard drives were not preserved,” according to the opinion.

After months of various explanations for the lack of compliance from Solara, PNC asked the trial court to dismiss the case, citing Solara’s noncompliance and alleging spoliation of evidence.

The trial court didn’t fully grant PNC’s request at that point, “Rather, the court awarded PNC attorney fees incurred in pursuing its motion. As a further sanction, the court directed appellant to make available to PNC the approximately 41,000 emails retrieved from appellant’s archives,” Bender said.

PNC asked the court for $115,000 in attorney fees and was granted $70,000, according to the opinion. The Superior Court agreed with the trial court that it was reasonable and upheld that award, which was challenged as being “grossly excessive” by Solara.

When Solara didn’t comply with the court’s order to turn over the emails by February 2013, PNC again asked the trial court to impose the sanction of dismissal of the case.

In response, Solara said some of the emails were covered by attorney-client privilege. This was the first time it had asserted the attorney-client privilege, according to the opinion.

After ordering deposition testimony about Solara’s compliance with the earlier sanction order, the trial court dismissed the case.

Solara appealed.

“Initially, appellant argues that the record does not support the trial court’s finding that appellant misled the court and PNC. We disagree,” Bender said.

“The trial court’s methodical approach belies appellant’s suggestion that dismissal was premature. Rather, dismissal was the cumulative result of appellant’s repeated failures to proceed with discovery in good faith and its willful violation of the court’s sanctions order. As it is apparent that the trial court’s initial attempt to remedy appellant’s discovery violations did not successfully deter appellant from engaging in further dilatory behavior, we discern no abuse of the court’s discretion in dismissing this action,” Bender said.

He was joined by Judge Judith Ference Olson and Senior Judge James J. Fitzgerald.

Solara was represented by Rudy Fabian of the Law Offices of Robert O. Lampl in Pittsburgh, and PNC was represented by Jayme L. Butcher of Reed Smith in Pittsburgh. Neither could be reached for comment.

Amaris Elliott-Engel can be contacted at 215-557-2354 or aelliott-engel@alm.com. Follow him on Twitter @BPresentTLI.

(Copies of the 15-page opinion in Solara Ventures v. PNC Bank, PICS No. 14-1271, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.Account holders can order with our online order form.)