The First Department, over a dissent, determined Supreme Court properly sanctioned the defendant, the New York City Housing Authority (NYCHA), for failure to turn over documents in the discovery phase of a contract action. NYCHA alleged that third party defendants “engaged in [a]conspiracy to defraud NYCHA by submitting fraudulent certifications attesting that plaintiff’s former owners had not been charged or convicted of a crime. … Third-party defendants maintain that they informed NYCHA that the charges … had been terminated with a conditional discharge based upon the payment of less than $200 in court costs. They assert that NYCHA extended all three of the contracts … while having full knowledge of these facts.” NYCHA alleged the contested documents were protected by attorney-client privilege:
[Supreme Court] granted plaintiff and third-party defendants’ motion to compel [NYCHA] to comply with discovery orders to the extent of ordering NYCHA to produce discovery material previously redacted on the ground of attorney-client privilege … and … to pay $3,000 as a sanction for its behavior during discovery and for violation of prior court orders, and to certify that it did not possess additional documents responsive to the discovery demands or court orders … . * * *
The court correctly found that having placed the knowledge of its law department at issue, NYCHA waived attorney-client privilege with respect to the subject documents. NYCHA cannot seek to prevent the disclosure of evidence showing that its attorneys — the very individuals who performed the bid review function for NYCHA — recommended that NYCHA award the contracts to plaintiff despite knowledge of the operative facts … .
Further, NYCHA may not rely on attorney-client privilege while selectively disclosing other self-serving privileged communications … .
The motion court providently exercised its discretion in finding that NYCHA’s conduct during discovery warranted sanctions. …
… [I]t is unnecessary to demonstrate willful and contumacious behavior in order to impose a sanction like a monetary sanction or preclusion, as opposed to a more drastic sanction such as the striking of a pleading … . Metropolitan Bridge & Scaffolds Corp. v New York City Hous. Auth., 2019 NY Slip Op 00526, First Dept 1-24-19