"My Dog Ate the Evidence": Spoliation in Construction Disputes

“Spoliation” is the destruction, alteration, or loss of evidence in connection with a lawsuit. While it can occur in almost any type of litigation, it is especially prevalent in a construction project, where rapid change is constant (and necessary), and where owners, contractors, subs, and suppliers are generally more focused on finishing the job than on preserving evidence for a potential lawsuit.

Spoliation can occur negligently or intentionally; either way, if a construction dispute ends up in a lawsuit, a party that that has destroyed, altered, or failed to preserve evidence can jeopardize their right to recover damages or create additional liability for themselves.

LEGAL CONSEQUENCES OF SPOLIATION

A basic understanding of spoliation’s legal effects will help you appreciate the harsh results of even negligent (i.e. unintentional) spoliation. After determining that spoliation occurred, the court will generally look to the culpability of the bad actor (you or the other party) and the relevance of the missing evidence. These two considerations will affect the severity of the court’s chosen remedy.

If you lose or destroy evidence, the consequences can include discovery sanctions imposed on you by the court, and/or an adverse-inference jury instruction, in which jurors are told to infer that the spoliated evidence would have been detrimental to your position.[1] (Such an instruction is less likely to be given where the spoliation was negligent and the altered evidence had marginal relevance.)

In Arizona, the harshest sanction for spoliation of evidence is dismissal, although the trial court must consider less severe sanctions before dismissing a case. Dismissal is generally relegated to intentional spoliation cases, especially where the innocent party has no control over the evidence and has asked for its preservation or inspection.

AVOIDING SPOLIATION: PRESERVING EVIDENCE ON THE JOBSITE

Spoliation is not limited to destroying or altering evidence in a lawsuit that has already been filed; it can also apply to failure to preserve certain evidence in reasonably foreseeable litigation. When litigation becomes reasonably foreseeable, that triggers the duty to preserve evidence; once the duty is triggered, an intentional violation can lead to a debilitating presumption of prejudice in a later lawsuit.[2]

At that point, a written “litigation hold” can be a useful legal tool. A litigation hold is a written directive that instructs holders of certain documents and electronically stored information (ESI) to preserve any potentially relevant evidence in anticipation of future litigation. With the litigation hold in place, the adverse parties can communicate with each other to conduct inspections and implement discovery protocols.

In many construction scenarios, indefinite preservation of evidence is unrealistic, and alteration becomes unavoidable. Nonetheless, the duty to preserve evidence persists, even at an incredibly untimely point in the construction of a 15-story mixed-use structure. In such cases, the parties anticipating litigation must be issued written notification that specific property will be altered within a certain period of time, thereby allowing them to inspect and document the evidence they need to effectively litigate. If a given party objects to moving forward with construction, it would not be unreasonable to request that the objecting party cover any delay or other costs connected with the preservation.

With a better understanding of the common pitfalls involved in spoliation and its intersection with construction law, all parties, from homeowners to contractors, can take a more prudent approach to any construction project, or at the very least comprehend spoliation’s future effect in litigation.

[1] Although in many jurisdictions spoliation is recognized as a separate tort claim, the Arizona Supreme Court has effectively rejected spoliation as its own cause of action, no matter if a party or nonparty to a lawsuit committed the spoliation. Even so, A.R.S. § 13-2809 does criminalize the intentional concealing or alteration of evidence.

[2] This is especially true where bad faith or intentional spoliation occurs. The presumption generally does not exist where the spoliating party was merely negligent.