Opinion
Index No. 657444/2019
01-12-2023
ANEXIA, INC., Plaintiff, v. HORIZON DATA SOLUTIONS CENTER, LLC, d/b/a VAZATA, Defendant.
The following e-filed documents, listed by NYSCEF document number (Motion 006) 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 105, 107, 108, 109, 110, 112, 113, 114, 115, 116, 117 were read on this motion to/for DISCOVERY.
Upon the foregoing documents, it is decided that plaintiff's motion to compel is granted.
VAZATA, defendant herein, provides data center services to private businesses and the United States government at data centers in Texas, and previously, Virginia. Relevant to this dispute, in 2012 VAZATA was awarded a contract from the Federal Deposit Insurance Corporation ("FDIC"). FDIC began ordering colocation services from VAZATA through task orders in March 2012 in the data center known as DC-6, located at 9651 Hornbaker Road, Manassas, Virginia (the "DC-6 facility" or "DC-6"). As part of the transaction, VAZATA sub-leased space to FDIC at DC-6, where VAZATA's employees would then provide services that FDIC needed. FDIC is not a party to this dispute.
Simultaneously, VAZATA also had a contract with Anexia, plaintiff herein. Among other things, Anexia leased space to VAZATA pursuant to the DC-6 services agreement. Anexia leased space to VAZATA prior to VAZATA entering into a contract with FDIC. In addition to space, Anexia also provided services to VAZATA such as power, security and temperature control. Instead of paying a monthly fee to Anexia in exchange for the services Anexia provided to VAZATA, VAZATA agreed to remit 80% of the revenue collected from FDIC at DC-6. The relevant language from the DC-6 Agreement is as follows:
Anexia shall provide Customer the services described in Schedule A regarding the FDIC Cage. Customer shall maintain the Customer relationship with FDIC indefinitely, including responsibility for the billing and collection for the Services from FDIC. Customer agrees to remit eighty (80%) percent of the revenue collected from FDIC, commencing with the invoice for October 2017, during the term of the agreement with FDIC, without additional deduction or offset against the payments received by Customer from FDIC. (Stover Aff., Ex. 5, Statement of Work § 3.C.)
Ultimately, FDIC decided to move its disaster recovery data center outside the state of Virginia, which resulted in FDIC and VAZATA vacating the DC-6 facility. FDIC moved to a power grid in Texas, where VAZATA continues to provide services to FDIC. Upon moving to Texas, VAZATA stopped paying the 80% remittance fee to Anexia. In 2019, Anexia commenced this lawsuit, arguing that under the terms of services agreement, Anexia is entitled to a percent of the revenue that VAZATA collects from FDIC, regardless of whether VAZATA operates out of Virginia or Texas. VAZATA, on the other hand, maintains that Anexia can only collect a fee that VAZATA collects from FDIC for the services that VAZATA provided in the DC-6 facility, located in Virginia. On this basis, VAZATA moved to dismiss Anexia's complaint, but Justice Sherwood denied VAZATA's motion (see NYSCEF Doc. No. 42 [Neither the Statement of Work nor the MSA expressly limits the remittance obligation to apply ... only to work ... performed at the Manassas location"]; see also NYSCEF Doc. No. 73 [Hon. Sherwood: "I don't see any language in that paragraph that limits it (the contract and related damages) to one location"]).
Parties proceeded with discovery, and that takes us to the most recent dispute — the matter within motion to compel. In discovery, Anexia requested that VAZATA produce all invoices sent to FDIC both before and after FDIC's move to Texas. VAZATA agreed to produce all invoices to FDIC for services provided at DC-6 location. However, VAZATA objects to producing some of the invoices related to the non*recurring colocation services provided in the Texas facility, as well as the invoices related to FDIC's move to Texas. VAZATA argues that there is no connection between these invoices and the services to be rendered under the DC-6 services agreement — the agreement Anexia purports to rely on for its breach of contract claim. In other words, VAZATA objects to such production on the relevancy grounds. Anexia, on the other hand, argues that it is entitled to any invoice that FDIC made to VAZATA during the relevant time frame, as specified under the services agreement. Anexia, thus, moves to compel production.
In response to Anexia's motion, VAZATA has produced a binder consisting of 72 documents to this court for an in-camera inspection. The documents are divided into two tabs: tab A contains documents related to the non-recurring charge invoices issued to FIDC, while tab B contains documents related to invoices issued to FDIC in connection with its moving expenses. As stated above, VAZATA maintains that these invoices are irrelevant to plaintiff's damages, to the extent it incurred any.
However, defendant cannot unilaterally withhold a set of documents from discovery because defendant might, at trial, argue that such documents are ultimately irrelevant to plaintiff's damages. The rule is simple: "[t]here shall be full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof" ( CPLR 3101[a] ). "The material and necessary standard is to be interpreted liberally to require disclosure of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing prolixity" ( Reyes v. Lexington 79th Corp. , 149 AD3d 508, 509 [1st Dep't 2017] ). Indeed, "[i]f there is any possibility that the information is sought in good faith for possible use as evidence-in-chief or for cross-examination or in rebuttal, it should be considered [matter] ‘material’ in the action" ( Abedin v. Palominos Osorio , 188 AD3d 764, 766 [2nd Dep't 2020] ).
Defendant is wrong to contend that charges invoiced to FDIC for the Texas facility cannot, as a matter of law, form part of Anexia's damages. First, Anexia argues these damages are within the scope of the contract. Moreover, in deciding VAZATA's motion to dismiss, Justice Sherwood clearly stated that: "I don't see any language in that paragraph [of the MSA] that limits [damages] to one location" (see Stover Aff. ¶ 5, Ex. 6 at 8:17-18). But even if defendant ultimately succeeds in its damages limitation argument, all of the documents are still discoverable at this stage. VAZATA cannot unilaterally prejudge that issue by withholding documents. Rather, what is relevant, for present purposes, is whether there is "any possibility that the information is sought in good faith for possible use" by plaintiff (see Abedin , 188 AD3d at 766 ).
The documents sought in this motion do not implicate any issues of privilege or work product protection. Nor does VAZATA argue that the requested production might somehow be burdensome. Indeed, such an argument would be essentially frivolous, as defendant has already produced the very documents at issue for in-camera review. To the extent the documents are ultimately irrelevant, VAZATA will have an opportunity to exclude them by virtue of filing a motion in limine , before trial. What is discoverable is not necessarily relevant, and in light of a standard mandating liberal disclosure and defendant's failure to assert privilege or work production protection, the court agrees with plaintiff, as it grants its motion to compel.
Accordingly, it is
ORDERED that, within 30 days of the issuance of this decision, defendant VAZATA produce all documents related to non-recurring charge invoices issued to FDIC; and it is further
ORDERED that, within 30 days of the issuance of this decision, defendant VAZATA produce all documents related to major costs invoices issued to FDIC.