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Court dismisses landlord's suit - suit against Bank of Montreal

Real Estate Weekly, Jan 21, 2004

A decision by a New York court in 430 Park Avenue Co. v. Bank of Montreal et al, has made it clear that the destruction of evidence prior to the commencement of litigation by a plaintiff can be grounds for dismissal of the lawsuit, according to Marc L. Fried, a partner in the New York City office of Nixon Peabody LLP, which handled the case.

"This is an important decision because it confirmed that the destruction of critical evidence will not be tolerated by the courts, even when the destruction takes place prior to the commencement of the lawsuit, if the party in control of the evidence is contemplating a claim", said Fried.

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In the case, filed in New York State Supreme Court in Manhattan, landlord 430 Park Avenue Co., sued its tenant, the Bank of Montreal, claiming that, at the end of the lease, the tenant failed to maintain and surrender the building in good condition.

The landlord sought to recover the costs allegedly incurred in restoring the building to good order.

More specifically, the landlord claimed that the Bank of Montreal owed approximately $10 million for renovations performed to the building after its lease ended.

These costs included the replacement of entire buildings systems, such as the electrical system, HVAC units, windows, roof drains and flashing, and the entire sidewalk around the building.

However, before the case was ever brought, the landlord undertook a $27 million modernization project, including the extensive renovations of the building systems, making it impossible to investigate the validity of its claims.

As a result, Judge Louis B. York dismissed the lawsuit.

Vince Alfieri, an attorney with Bryan Cave LLP, who represented 430 Park Avenue Co. said he would appeal York's ruling.

"We think that decision was in error and we are pursuing an appeal," Alfieri said, declining to comment further.

Fried, who represented the Bank of Montreal, said: "This decision is a significant ruling on the issue of spoliation. It confirms that the opportunity to inspect evidence must be meaningful.

"The Court correctly recognized that the Bank's access to the building during the term of its lease had no value, since the Bank was without knowledge of the specific claims that the landlord would bring after surrender.

"The decision is firmly supported by existing law as well as fundamental principles of fairness, and is instructional for both landlords and tenants who are faced with comparable leasehold issues."

Business Services Industry

Court dismisses landlord's suit - suit against Bank of Montreal

Real Estate Weekly, Jan 21, 2004

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