The Minnesota Supreme Court has outlined a simple caveat to the traditional rules of spoliation of evidence. In Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011), the Court held that “a party with a legitimate need to destroy evidence may, under certain limited circumstances, do so.” Id. at 128-29. In construction litigation, whether spoliation of evidence has occurred and whether it constitutes sanctionable conduct are highly fact specific inquiries. If you plan to make repairs or “alter evidence” in any way, advance notice is crucial.
In Miller, Lankow and Betz (“Sellers”) built a home in 1992. In 2003, the house suffered significant water damage. After extensive remediation, the house was sold to Plaintiff Miller in 2004. The moisture intrusion and resulting damage to the home was disclosed to Miller who elected not to conduct further investigation prior to purchase. Upon moving into the home, Miller discovered additional water damage and notified Sellers and three contractors that were involved with the Sellers’ original remediation (“Contractors”). Miller offered all parties the opportunity to inspect the home. Eighteen months later, Miller contracted with third parties to repair the preexisting damage without further notice to Sellers or Contractors. To recover his expenses, Miller brought suit against Sellers and Contractors to recover damages.
Miller retained four expert witnesses, all of whom had seen the home and its water damage prior to the time Miller began his repairs. Defendants’ experts, however, had never been given the opportunity to view the home. The trial court thus concluded that spoliation of evidence had occurred and the proper remedy was sanctions. The trial court then refused to permit the four expert witnesses to testify and then granted summary judgment against Miller because expert testimony was necessary to prove his claims. The court of appeals affirmed this result.
When the Minnesota Supreme Court reviewed the case, it reversed, holding that although a custodial party has a duty to preserve evidence, that duty is not boundless; and in some circumstances destruction of evidence may be acceptable. The Court reasoned that Miller had previously given both the Sellers and the Contractors indication that there was a problem, that suit might be filed, and that they were welcome to inspect the property at that time. Accordingly, “a custodial party with a legitimate need to destroy evidence may be absolved of a failure to preserve evidence by providing sufficient notice and a full and fair opportunity to inspect the evidence to a noncustodial party.” Id. at 129 (emphasis added).
The Court concluded that when considering sanctions for spoliation a court should consider the “totality of the circumstances” in determining whether the notice was sufficient to satisfy a custodial party’s duty to preserve evidence. Id. at 131. “[A]n important factor to consider when determining effective notice should be whether the noncustodial parties had sufficient knowledge to protect themselves.” Id. Moreover, the Court noted that “Under this rule, notice and a full and fair opportunity to inspect will not excuse a failure to preserve evidence where a party destroys evidence without a legitimate need to do so, or destroys evidence in bad faith.” Id. at 129. The Court makes it especially clear that this decision does not address situations wherein evidence is destroyed intentionally. Id.
The Court provided specific guidance to future litigants:
A meeting or a letter indicating the time and nature of any action likely to lead to destruction of the evidence, and offering a full and fair opportunity to inspect will usually be sufficient to satisfy our notice rule. Moreover, it is the better practice to explicitly provide such a notice, and particularly to provide it in written form.
Id. at 132. On remand, the Supreme Court instructed the trial court to determine “whether [the plaintiff] was under a duty to preserve critical evidence, and nevertheless intentionally destroyed that evidence.” Id. at 134. If so, the district court should determine whether Miller had: 1) a legitimate reason to destroy the evidence, and 2) whether he provided notice sufficient to enable the respondents to protect themselves by inspecting the relevant evidence. The trial court was instructed to only then determine whether imposition of sanctions for spoliation is appropriate. Id.
Thus far, Miller v. Lankow has been cited favorably by the Supreme Court of North Dakota (see Fines v. Ressler Enters., 820 N.W.2d 688) and the Texas Court of Appeals (see Miner Dederick Constr., LLP v. Gulf Chem. & Metallurgical Corp., No. 01-11-00325-CV, 2013 Tex. App. LEXIS 4589 (Tex. Ct. App. Apr. 11, 2013).
Before undertaking repairs for construction defects, Minnesota claimants should make sure to supply notice to all potential defendants as well as their insurance carriers if at all possible.