In recent years, numerous courts have addressed the issue of spoliation in the context of commercial construction disputes. Despite jurisdictional differences, the relevant cases seemingly offer similar guidance for avoiding spoliation claims. The cases indicate that the custodial party should provide non-custodial parties with sufficient notice, and a full and fair opportunity to inspect relevant evidence before remediating defects or other structural problems.
For example, in Robertet Flavors, Inc. v. Tri-Form Constr., Inc., 1 A.3d 658 (N.J. 2010), the Supreme Court of New Jersey considered whether a property owner’s remediation efforts warranted a spoliation sanction. In Robertet, the Plaintiff property owner brought suit against its construction manager and a contractor who installed an allegedly defective window system. Id. at 664. After noticing widespread leaks in the window system, Plaintiff informed the Defendant contractor of the problem and allowed the contractor to conduct an inspection of the building. Id. at 663. Plaintiff, however, did not provide its construction manager an opportunity to inspect. Id. at 678. The Court determined that Plaintiff could proceed with its claims against the contractor, but dismissed Plaintiff’s claims against the construction manager. Id. The Court acknowledged that the “critical” distinction was that the Plaintiff had deprived the construction manager of the opportunity to inspect the leaking windows before remediation. Id.
The Supreme Court of Wisconsin offered a similar viewpoint in Am. Family Mut. Ins. Co. v. Golke, 768 N.W.2d 729 (Wis. 2009). In Golke, the Plaintiff insurer brought a subrogation action against a roofing company and its principals, claiming the company made negligent roof repairs which caused a fire that damaged a home owned by its insured. Id. at 732. After sending Defendants several letters about the fire damage and receiving no response, Plaintiff demolished what remained of the home without preserving any physical evidence. Id. at 734. On Defendants’ motion, the circuit court dismissed Plaintiff’s claims as a sanction for its failure to preserve evidence. Id. The state Supreme Court reversed the decision, however, holding that the duty to preserve evidence is discharged when a party or potential litigant with a legitimate reason to destroy evidence provides (i) reasonable notice of a possible claim, (ii) the basis for that claim, (iii) the existence of evidence relevant to the claim, and (iv) a reasonable opportunity to inspect that evidence. Id. at 735. Based on the facts in the record, the Court determined that Plaintiff had satisfied these requirements by informing Defendants of the scheduled demolition date and offering them a fair opportunity to conduct an investigation prior to that time. Id. at 743-44.
Additionally, in Fines v. Ressler Enter., Inc., 820 N.W.2d 688 (N.D. 2012), the Supreme Court of North Dakota upheld the dismissal of a homeowner’s action against her contractor as a sanction for the spoliation of evidence. In Fines, the Plaintiff homeowner filed suit alleging that the Defendant contractor negligently installed the siding on her home. Id. at 689. After filing the complaint, Plaintiff faxed Defendant a letter on the Friday preceding Labor Day stating that she intended to remove and replace the allegedly faulty siding on Labor Day. Id. Although Defendant demanded that Plaintiff leave the siding in place so Defendant’s experts could inspect and examine the building, Plaintiff proceeded with the scheduled remediation. Id. at 689-90. Analyzing these facts, the Court determined that Plaintiff gave Defendant no notice of intent to remove the siding until “all practical ability to have an expert inspect the siding in place was removed.” Id. at 691. Calling the Plaintiff’s conduct prejudicial and offensive, the Court affirmed the lower court’s dismissal order. Id.
All of these cases indicate that courts will consider the notice and opportunity to inspect provided to a non-custodial party when deciding whether to impose sanctions for spoliation of evidence. Construction attorneys should keep this guidance in mind when advising clients regarding remediation efforts that could impair otherwise valid claims.