In construction defect claims, failure to preserve the “scene” can be fatal to either a valid claim or a strong defense. Indeed, when a defect or failure is discovered, it is important to do two things, as soon as possible: (1) secure the “scene” and related items and documents; and (2) notify any individuals or entities that may be involved in a claim concerning the defect or failure, and provide them with reasonable opportunity to inspect and observe the items related to the defect or failure. This is true regardless of whether you may be the party asserting the claim or a party defending the claim. In both instances, securing the “scene” and preserving all related items and documents until the other parties have been given reasonable opportunity to inspect and investigate, many times with a consulting expert, is oftentimes critical.
Recently, the Tennessee Court of Appeals reaffirmed the importance of preserving evidence once a potential claim arises, and the potential consequences for a party’s failure to preserve evidence. In Gardner v. R&J Express, LLC, 2018 Tenn. App. LEXIS 248, No. E2017-00823-COA-R3-CV (Tenn. Ct. App. May 7, 2018), the Court upheld the trial court’s complete dismissal of the plaintiffs’ claims as sanctions for the plaintiffs’ “spoliation” of evidence – even though the “spoliation,” or destruction of evidence, was not intentional. A copy of the Court’s decision can be found here.Gardnerdealt with a tractor trailer accident, where the plaintiffs alleged the trailer being hauled by the plaintiffs, which was owned by the defendant, caused the accident and serious injuries to one of the plaintiffs. Shortly after the accident, the plaintiffs retained counsel. Plaintiffs’ counsel promptly notified the defendant of the potential claim and the need for the defendant to preserve all relevant evidence. The defendant complied and preserved the trailer. Ultimately, the plaintiffs’ expert was able to inspect the trailer, which was the basis for the expert’s opinions that the cause of the accident was the trailer. However, when the defendant requested access to the tractor (truck) owned by the plaintiff (that was hauling the defendant’s trailer at the time of the accident), the plaintiffs were unable to produce it for an inspection. It was later discovered that the plaintiffs had signed over title and possession of the truck to their insurance company just days after their counsel’s initial letter to the defendant notifying the defendant of the claim. As a result, the truck had been sent for salvage and dismantled to the point where an inspection could not be performed by the defendant or its expert. As a result, the defendant was left without the ability to adequately investigate the accident and was unable to present evidence on its competing theory that the truck was the cause of the accident.
In short, the plaintiffs argued that dismissal of their claims was inappropriate because they had not acted intentionally in allowing the truck to be destroyed. However, the Court reaffirmed that intentional conduct is not a prerequisite for dismissal of claims as sanctions for spoliation of evidence. Instead, the Court reaffirmed the four factors recognized by Tennessee Courts when evaluating sanctions for spoliation of evidence:
- The culpability of the spoliating party in causing the destruction of the evidence, including evidence of intentional misconduct or fraudulent intent;
- The degree of prejudice suffered by the non-spoliating party as a result of absence of the evidence;
- Whether, at the time the evidence was destroyed, the spoliating party knew or should have known that the evidence was relevant to pending or reasonably foreseeable litigation; and
- The least severe sanction available to remedy any prejudice caused to the non-spoliating party.
The Court concluded that even though the plaintiffs did not act intentionally in signing over the title to the truck, they should have known at the time that the truck was important and relevant to their intended claim against the defendant. Because the destruction of the truck left the defendant without the ability to adequately defend itself, the only appropriate sanction was to dismiss the plaintiffs’ claims.
While Gardnerwas not a construction defect case, the Court’s opinion is very instructive to the same issues faced when addressing a construction defect or failure. Just as in Gardner, it is important for any property owner that may have a claim for a construction defect or failure to take affirmative steps to preserve the “scene” of the defect or failure as soon as reasonably possible following discovery of the potential issue or claim. This includes not only any defective or failing parts or components, but also any associated documents, data, testing, or other information that may be relevant to the defect or failure. In short, placing a “hold” on all items until all involved parties are provided an opportunity to observe and inspect the items is the best course of action. Likewise, promptly advising the potentially involved parties, whether it be the architect, engineer, contractor, subcontractor, or vendor, is important to properly preserving the claim. If a claim is to be asserted against any of these parties, then they need to have the opportunity to inspect the items in question before the items are materially altered. Of course, if there is a need for emergency repairs to protect persons or other aspects of the property, then reasonable efforts to do so are likely permissible (if not required) without suffering sanctions for spoliation.
Likewise, if you are a potential target of a claim, such as an architect, engineer, contractor, subcontractor, or vendor, and you are in possession of items or information that may be relevant to a claim, and especially after you become aware of the potential for such a claim, it is important that you take steps to preserve the items and information until all involved parties have the chance to inspect the items or information. The potential sanctions for failing to preserve evidence as a defendant include preclusion of the ability to defend the claim, or even being subject to a default judgment.
In any event, Gardnerreinforces the importance of promptly preserving relevant evidence for construction defect claims in Tennessee. It also reinforces that severe sanctions (dismissal of a claim or entry of a default judgment) are possible even when the spoliation or destruction of evidence is not intentional, willful or in any way in bad faith. Rather, Gardner reinforces that as a party to a potential claim, it is important to preserve the “scene.”
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