Minnesota Supreme Court Clarifies Evidence Spoliation Rules for Construction Defect Cases

by Alex Nelson

June 20, 2012

To repair or not to repair? This is a common question facing many construction defect victims. When weighing your options, make sure that potential “evidence spoliation” is on your list of considerations.  If you fix your defects without giving adequate notice to others, thereby “destroying the evidence”, it may come back to bite you later in litigation. The Minnesota Supreme Court gave some recent guidance on the issue in the case of Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011).

The Court’s Syllabus:  “The duty of a custodial party to preserve evidence may be discharged when the custodial party has a legitimate need to destroy the evidence and gives the noncustodial party notice sufficient to enable the noncustodial party to protect itself against the loss of the evidence.”  In plain English, that means:

Plaintiff Miller purchased a home from Defendants Lankow and Betz (“Sellers”).  The Sellers had previously extensively remediated moisture intrusion and resulting damage in the home, and disclosed it to Miller.  After moving in to the home, however, Miller noticed additional water damage, and notified Sellers as well as three contractors that were involved with the Sellers’ original remediation (“Contractors”). 18 months later, Miller began to repair the home without further notice to Sellers or Contractors. Three months after that, Miller commenced litigation against Sellers and Contractors to recover damages.

Miller endorsed four expert witnesses, all of whom had viewed the home and the water damage prior to the time Miller began his repairs. Defendants’ experts had never been given an opportunity to view the home. As a sanction for spoliation of evidence, the trial court refused to permit Miller’s four experts to testify, and then granted summary judgment against him since expert testimony was necessary to prove his claims.  The court of appeals affirmed the trial court.

The Minnesota Supreme Court reversed the decision, however, outlining several exceptions and caveats to the well known evidence spoliation rules.  In general, spoliation is “failure to preserve property for another’s use as evidence in pending or future litigation,” and that “the duty to preserve evidence exists not only after the formal commencement of litigation, but whenever a party knows or should know that litigation is reasonably foreseeable.”  The Court conceded though that “a party with a legitimate need to destroy evidence may, under certain limited circumstances, do so.”  The Court explained itself by noting that Miller had given Sellers and Contractors previous indications that a problem existed, that suit might be filed, and that they could have inspected the property at that time: “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.”  “An important factor to consider when determining effective notice should be whether the noncustodial parties had sufficient knowledge to protect themselves.” The Court qualified itself, noting 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. Similarly, [the Court's decision did] not deal with the situation where evidence is destroyed unintentionally.”

The Court gave this 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. Nevertheless, we conclude that when a court is able to determine that noncustodial parties had sufficient knowledge to protect their interests, but nonetheless failed to inspect important evidence, failure of the custodial party to provide further notice of destruction in and of itself should not deprive the custodial party of an otherwise valid claim or defense.”

These instructions were given to the trial court after remand of the case: “Determine whether Miller was under a duty to preserve critical evidence, and nevertheless intentionally destroyed that evidence. If so, the district court should determine whether Miller had a legitimate reason to destroy the evidence, and whether he provided notice sufficient to enable the respondents to protect themselves by inspecting the relevant evidence. After making these determinations, the court should determine whether imposition of sanctions for spoliation is appropriate and, if so, whether it is appropriate to exclude all of Miller’s expert reports and testimony relating to moisture intrusion and the extent of mold or if some lesser sanction is more appropriate.”

The Minnesota Supreme Court opinion indicates that whether or not “evidence spoliation” has occurred, and whether or not it constitutes sanctionable conduct of a claimant, is highly fact specific.  If you’re about to make repairs or “alter the evidence” in any way, make sure to give advance notice to all potential defendants, and their insurance carriers too if at all possible.  If you’re not clear whether you’ve given adequate notice or not, don’t be afraid to consult an attorney to clarify. The worst case scenario of having your construction defect claims thrown out of court as a sanction for evidence spoliation is not something to take lightly or gamble with.