Introduction

In Dorman v. Luva of NY, LLC, 2025 NY Slip Op 06155 (App Div 2d Dept Nov. 12, 2025), the Appellate Division, Second Department, addressed two recurring and increasingly consequential issues in New York civil practice: (1) the appropriate sanction for the loss or destruction of electronic communications—in this case, entire email accounts—in a construction-related contract dispute; and (2) the standards governing subpoenas to nonparties, particularly financial institutions, under CPLR 3101(a)(4) and CPLR 2304.

The case arises from a residential renovation agreement between the plaintiffs (homeowners) and the defendant Luva of NY, LLC (the general contractor), executed in February 2018 for a single-family home in Brooklyn. Alleging faulty workmanship and missed deadlines, the plaintiffs sued in October 2020 for breach of contract and related claims. During discovery, the defendants advised that emails relating to the renovation were “not presently available,” and the plaintiffs also served a subpoena duces tecum on the contractor’s bank, Polish & Slavic Federal Credit Union, seeking account records.

Two trial-court rulings were appealed:

• January 28, 2024 order (Sup Ct, Kings County, Rivera, J.) denying, among other relief, sanctions striking defendants’ answer for noncompliance and spoliation.
• February 7, 2024 order granting Luva’s motion to quash the bank subpoena.

The Appellate Division modified the first order to impose an adverse inference sanction at trial for spoliation of email accounts and emails, while affirming the refusal to strike the answer for general discovery noncompliance. It also affirmed the order quashing the nonparty bank subpoena. Together, these rulings refine the application of spoliation doctrine to lost ESI (electronic stored information) and reinforce the burden-shifting framework for nonparty subpoenas.

Summary of the Opinion

• Spoliation sanction: The court held that defendants were under a duty to preserve their email accounts and emails, that the loss or destruction occurred with a culpable state of mind (which includes negligence), and that the missing emails were relevant to the litigation. The Supreme Court should have imposed a sanction. The Appellate Division directed that an adverse inference charge be given at trial regarding the loss/destruction of the email accounts and emails. It declined to strike the answer, finding that drastic relief was unwarranted.
• General discovery noncompliance: The court affirmed the denial of the plaintiffs’ motion to strike the answer under CPLR 3126 for alleged failure to comply with discovery, finding no clear showing of willful and contumacious conduct.
• Nonparty bank subpoena: Applying CPLR 3101(a)(4) and CPLR 2304, the court held that although plaintiffs satisfied the minimal notice requirement to the bank, Luva demonstrated that the requested bank records were “utterly irrelevant” to the action. The motion to quash was properly granted.

Net result: The plaintiffs gained a trial-level remedy (adverse inference) for email spoliation but lost the attempt to strike the answer and to obtain nonparty bank records.

Analysis

Precedents Cited and Their Influence

The opinion stands firmly on established discovery and spoliation jurisprudence, particularly:

• CPLR 3101(a)(4) and nonparty subpoenas
  • Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406: “Material and necessary” is construed liberally, yet obviously cannot support fishing expeditions.
  • Matter of Kapon v Koch, 23 NY3d 32, 34–36: Sets out the nonparty subpoena framework. The subpoenaing party must provide a notice stating reasons/circumstances. Once satisfied, the burden shifts to the movant to quash to show the disclosure is “utterly irrelevant” or that futility is inevitable or obvious. If that burden is carried, the subpoenaing party must then establish materiality and necessity.
  • Nunez v Peikarian, 208 AD3d 670, 670–671: Reinforces Kapon’s minimal notice and burden-shifting structure.
  • Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 332: Warnings against subpoenas used as broad fishing expeditions.
  • Reda v Port Auth. of N.Y. & N.J., 188 AD3d 1278, 1279; Lima v Ancona, 192 AD3d 1093: Applied Kapon’s template to quash overbroad or irrelevant nonparty demands.
  • Savino v Savino, 218 AD3d 508, 509: Illustrates circumstances where financial records were deemed irrelevant and quashed—a comparison point the court used here to confirm irrelevance of the contractor’s bank records.
• CPLR 3126 sanctions and spoliation
  • Tyson v Diallo, 238 AD3d 932, 934; Pizzo v Lustig, 216 AD3d 38, 44; 255 Butler Assoc., LLC v 255 Butler, LLC, 208 AD3d 831, 833; Candela v Kantor, 154 AD3d 733, 734; Farrell v Keldiyarov, 234 AD3d 933, 935; Amos v Southampton Hosp., 198 AD3d 947, 948: These cases reiterate trial courts’ broad discretion over discovery and the high threshold (“willful and contumacious”) to strike a pleading.
  • Gordon v Field, 234 AD3d 823, 824; Van DeVeerdonk v North Westchester Restorative Therapy & Nursing Ctr., 223 AD3d 702, 703; Holland v W.M. Realty Mgt., Inc., 64 AD3d 627, 629; Ortega v City of New York, 9 NY3d 69, 76: Establish spoliation principles and the court’s discretion in tailoring sanctions.
  • Pegasus Aviation I, Inc. v Varig Logistica S.A., 26 NY3d 543, 547: The leading Court of Appeals case on ESI spoliation, clarifying culpability tiers (including negligence) and the requirement that the movant show relevance when destruction is negligent rather than intentional.
  • Franco v Half Moon Riv. Club, LLC, 214 AD3d 956, 958; Dagro Assoc. II, LLC v Chevron U.S.A., Inc., 206 AD3d 793, 795; Hirschberg v Winthrop-University Hosp., 175 AD3d 556, 557: Confirm that negligence suffices as a culpable mental state for spoliation and that the sanction must be proportional to prejudice.
  • Squillacioti v Independent Group Home Living Program, Inc., 167 AD3d 673, 675–676; Eksarko v Associated Supermarket, 155 AD3d 826, 828–829; SM v Plainedge Union Free Sch. Dist., 162 AD3d 814, 818: Support adverse inference as an appropriate remedy where destruction was negligent and the nonspoliating party can still prove its case.

The Second Department synthesized these authorities to reach two targeted holdings: it mandated an adverse inference charge for negligent loss of email accounts, and it kept tight reins on nonparty financial subpoenas by requiring a direct, case-linked showing of relevance after the movant to quash demonstrates irrelevance.

Legal Reasoning

1) Spoliation of Email Accounts: Why an Adverse Inference, Not Striking the Answer

The court applied the familiar three-part spoliation test: the moving party must show (i) the opponent had control over the evidence and a duty to preserve it at the time of destruction; (ii) the evidence was destroyed with a culpable state of mind (which includes negligence); and (iii) the evidence was relevant to claims or defenses such that the trier of fact could find it would have supported the moving party. See, e.g., Gordon v Field, 234 AD3d at 824; Pegasus Aviation, 26 NY3d at 547.

Applying those principles, the court found:

• Duty to preserve and control: Defendants were on notice of their obligation to preserve their email accounts and emails before the loss or destruction occurred. The action had commenced by October 2020, and plaintiffs’ email-related discovery demands were made by October 2021, cementing the preservation duty. The emails and accounts were within defendants’ control.
• Culpability: The emails were lost or destroyed with a culpable state of mind; negligence suffices (Dagro, Hirschberg), and the court did not need to find intentional misconduct to authorize a sanction.
• Relevance: The missing emails were sufficiently relevant to the litigation—communications about the renovation are directly material to breach, performance, timing, notice, change orders, and alleged defects.

The court emphasized proportionality. Striking a pleading is “drastic” and reserved for willful or contumacious conduct and cases where prejudice is so severe that no lesser sanction ensures fairness. See Dagro, 206 AD3d at 795; Eksarko, 155 AD3d at 829. Because plaintiffs were not deprived of the ability to establish their claims altogether, a lesser but meaningful sanction—an adverse inference charge—was appropriate. This aligns with Squillacioti and Eksarko, where adverse inference charges were endorsed for negligent destruction.

Separately, on the request to strike the answer under CPLR 3126 for general discovery failures (apart from spoliation), the court required a “clear showing” of willful and contumacious conduct. See Tyson, 238 AD3d at 934. Finding the record did not satisfy that threshold, it affirmed denial of that drastic remedy.

2) Nonparty Bank Subpoena: Adequate Notice, but Irrelevance Justified Quashing

Turning to the subpoena duces tecum served upon Polish & Slavic Federal Credit Union, the court meticulously followed the Kapon framework and its progeny:

1. Minimal notice satisfied: Plaintiffs’ subpoena provided the bank with sufficient notice of the “circumstances or reasons” for the requested disclosures (CPLR 3101[a][4]; Kapon, 23 NY3d at 36; Nunez, 208 AD3d at 671). The burden shifted to the movant to quash.
2. Movant’s burden met: Luva demonstrated that the bank records sought were “utterly irrelevant to the action” (Kapon, 23 NY3d at 34), warranting quashal under CPLR 2304. The court cited Savino, 218 AD3d at 509, reinforcing that financial records are not discoverable absent a direct nexus to claims or defenses.
3. No sufficient counter-showing by subpoenaing party: Because Luva carried its burden on irrelevance, the onus reverted to plaintiffs to demonstrate that the requested materials were material and necessary. The court, aligning with Allen and Anheuser-Busch, concluded plaintiffs did not carry that burden here.

In context, a breach-of-contract claim about renovation quality and timeliness generally does not put a contractor’s bank activity at issue. Without claims that make the contractor’s finances directly material (for example, Article 3–A trust diversion, fraudulent conveyance, alter ego/veil-piercing, or fraud-based theories requiring tracing), courts frequently view bank subpoenas as speculative and invasive. The Second Department’s reliance on Savino underscores that default posture.

Note: The opinion refers once to “Luna’s motion” when context indicates “Luva’s motion”—an apparent typographical error immaterial to the holding.

Impact and Significance

A. E-Discovery and Spoliation in Construction and Commercial Disputes

The decision sends a clear signal that:

• Small and mid-sized contractors and individual actors are held to the same preservation standards for email accounts and emails as larger corporate litigants. “We lost the account” or “emails aren’t available” is risky without a documented litigation hold and steps to suspend deletion.
• Negligent loss of email accounts can and will result in a trial adverse inference instruction, which can materially influence a jury’s view of disputed facts including notice, directives, delays, and defect remediation. While not case-dispositive, the instruction meaningfully rebalances evidentiary equities.
• At the same time, the court maintains proportionality—reserving the striking of a pleading for willful/contumacious conduct or extreme prejudice that deprives the adversary of the ability to prove its case.

Practically, counsel should institute early litigation holds, disable auto-deletion, and coordinate with ESI custodians to preserve accounts and cloud-based communications. Uniform Rules for the Trial Courts impose ESI meet-and-confer obligations; failing to anticipate preservation issues exposes parties to sanctions even when destruction is “only” negligent.

B. Nonparty Financial Institutions: High Bar to Compel Production

The ruling tightens the reins on subpoenas to banks:

• Minimal notice is necessary but insufficient; once irrelevance is shown, requesting parties must persuasively link the financial records to specific claims or defenses.
• Without claims inherently placing finances at issue (e.g., Article 3–A trust diversion, unjust enrichment with tracing, fraudulent conveyance, veil piercing), subpoenas for account statements are likely to be quashed as “utterly irrelevant.”
• Privacy and the burden on nonparties factor into the strict application of Kapon. Boilerplate rationales and broad date ranges or account universes are especially vulnerable.

For practitioners, this means carefully tailoring nonparty subpoenas with detailed justifications, tight temporal scopes, and explicit links to pleaded theories. Where appropriate, consider protective orders and staged productions to mitigate burden and privacy concerns.

Complex Concepts Simplified

• Spoliation (of evidence): The loss or destruction of evidence that should have been preserved for litigation. Sanctions range from cost-shifting to adverse inferences to striking pleadings, depending on culpability and prejudice.
• CPLR 3126: New York’s rule authorizing sanctions for failure to disclose or for spoliation. Sanctions must be proportionate to the misconduct and its impact on the adversary.
• Adverse inference charge: A jury instruction permitting (but not requiring) the jury to infer that missing/destroyed evidence would have been unfavorable to the party responsible for its loss. It is a common mid-level sanction for negligent spoliation.
• Willful and contumacious conduct: A high threshold of deliberate or defiant noncompliance with discovery orders. Required to impose the “drastic” sanction of striking a pleading.
• CPLR 3101(a)(4): Governs discovery from nonparties. The subpoenaing party must provide a notice stating reasons or circumstances; courts then apply burden shifting to assess relevance and necessity.
• CPLR 2304: The mechanism to move to quash or modify a subpoena. The movant can succeed by showing irrelevance or futility.
• “Utterly irrelevant” and “material and necessary”: Under Kapon, a subpoena is quashed if the movant shows the material is utterly irrelevant or futile to obtain; otherwise, the subpoenaing party must establish that the requested material is important and genuinely needed for the case, not just helpful in the abstract.
• Litigation hold: Internal instructions to custodians to preserve relevant information and suspend routine deletion. Establishing and documenting a hold is crucial to avoid spoliation sanctions.

Practice Pointers

When Seeking Nonparty Bank Records

• Plead or articulate a theory that makes finances directly relevant (e.g., Lien Law Article 3–A trust diversion, fraudulent conveyance, alter ego, or specific fraud requiring tracing).
• Provide a detailed, case-specific notice under CPLR 3101(a)(4), explicitly linking requested records to disputed transactions, timeframes, and claims.
• Narrow the subpoena by account, time period, and transaction type; propose confidentiality protocols or protective orders.
• Be prepared to meet the “material and necessary” standard if the movant to quash meets its burden of showing irrelevance or futility.

To Avoid ESI Spoliation Sanctions

• At the earliest point of reasonably anticipated litigation, issue a written litigation hold identifying custodians, data sources (including email accounts), and suspension of auto-deletion.
• Audit and preserve cloud-based accounts and mobile communications, ensuring that departures, deactivations, or mailbox closures are paused until preservation is complete.
• Document preservation steps; if data loss occurs, be transparent, detail remediation attempts, and consider stipulations or alternative sources to mitigate prejudice.
• Meet and confer early about ESI scope, custodians, and search terms; memorialize agreements to reduce later disputes.

What This Opinion Does Not Do

• It does not create a per se rule that loss of emails requires striking the answer; rather, it confirms that adverse inference is the proportional default where negligence is shown and the nonspoliating party can still prove its case.
• It does not suggest that all nonparty bank records are irrelevant—only that without a claim or factual showing tying finances to the dispute, such subpoenas will be quashed.
• It does not define the precise wording of the adverse inference charge; that remains within the trial court’s discretion, constrained by the appellate directive to address loss/destruction of email accounts and emails.

Conclusion

Dorman v. Luva of NY, LLC refines two important lines of New York practice. First, it underscores that negligent loss or destruction of email accounts and emails after the duty to preserve attaches warrants an adverse inference instruction at trial, even absent a finding of willful or contumacious conduct. The decision is faithful to Pegasus Aviation and its emphasis on culpability and prejudice, favoring proportional sanctions tailored to restore evidentiary balance without unduly punishing non-willful missteps.

Second, it fortifies the Kapon burden-shifting framework for subpoenas to nonparties: minimal notice is necessary but not sufficient; once the movant to quash shows irrelevance, the subpoenaing party must make a concrete, case-linked showing of materiality and necessity. In ordinary breach-of-contract construction disputes, contractors’ bank account statements will often be “utterly irrelevant” absent a direct financial theory that puts the records in issue.

The immediate takeaways for litigants are practical and clear. Preserve ESI rigorously and early, especially email accounts; expect that negligent losses may trigger adverse inference charges. And when seeking nonparty financial records, tailor requests to pleaded theories and articulate a specific relevance nexus—or risk quashal. By calibrating sanctions and discovery obligations in this way, the Second Department advances both fairness and efficiency in modern civil litigation.