May 7, 2019

By: Brandon Rutledge, Associate, Peckar & Abramson, P.C.

If a dispute over a subcontractor’s defective work escalates into a lawsuit, the seemingly innocuous act of proactively repairing defects may jeopardize your right to later recover damages on a construction defect claim—or worse, invite additional liability—by unintentionally violating the evidentiary doctrine of spoliation.

“Spoliation” generally refers to the intentional or negligent destruction or alteration of evidence potentially relevant to a lawsuit. When evidence is altered or destroyed, trial courts across the country possess the power to impose various sanctions to level the playing field.

While spoliation occurs in all types of lawsuits, construction defect cases present specific challenges as contractors inherently tend to focus more on completing a project than on preserving evidence for litigation.

In all fairness, at some point, altering or repairing evidence becomes unavoidable. When problems arise on a project, whether in the form of seemingly minor flaws or major defects, the most natural response is to fix the problem immediately. After all, life teaches us that the failure to address or fix a problem often causes that problem to worsen. Nevertheless, courts across the country continue to impose a duty on contractors to preserve evidence in construction cases in the face of the industry’s time sensitive complexion.

Courts typically treat the alteration or destruction of evidence as a form of admission by conduct. In many states, the harshest sanction for spoliation of evidence is fatal: the altogether dismissal of a defect claim. However, in a small number of states, courts allow parties to bring additional, independent claims against parties who alter evidence relevant to the underlying litigation, including non-parties. Most of these states generally hold that third-party spoliators must first possess a duty to preserve the evidence before additional liability attaches.

At a minimum, if a court finds you guilty of spoliation, it may elect to exclude evidence critical to your case. Alternatively, in a majority of states, courts may also instruct a jury to presume or infer that the missing evidence would have been detrimental to your case. As a result, a finding from a court that you spoliated evidence poses a potentially devastating threat to your legal team’s ability to prove the existence of defective work.

To illustrate, in my home state of Texas, a court found that an owner of a hazardous materials recycling facility breached its duty to preserve evidence in connection with a construction defect claim against the general contractor over a leaking expansion joint in the facility.

The general contractor requested an opportunity to inspect the expansion joint before any repairs. Nevertheless, the owner contended that it was not in a position to slow down repairs and hired a replacement contractor to immediately stop the water intrusion and fix the expansion joint. When the owner rebuffed the general contractor’s last attempt to inspect the expansion joint, the owner stated it would go through great lengths to document any defects.

Despite the owner’s significant efforts to photograph the defective expansion joint, the court ultimately determined that the owner deprived the general contractor of the means to defend itself. Specifically, the court found that owner stifled the general contractor’s ability to show that it complied with the design and specifications. The court emphasized that the defendant contractor could not counter the testimony of the owner’s expert, who described his personal observations of the expansion joint, with its own witness testimony regarding the condition of the expansion joint. In the same way, the general contractor could not refute observations made in the owner’s expert report or take its own photographs of the expansion joint or of the testing.

This case, like many in other states, raises the question: How long must a party in control of a project have to wait before repairing defective work that is likely to be the subject of a lawsuit?

In the name of preserving evidence, the spoliation doctrine appears to implicitly require contractors and owners to halt a project when a dispute is not only likely but foreseeable—an absurd and unintended result—or worse, wait to fix a leak and allow water to intrude into a structure.

Consequently, courts in a small number of states have recognized an exception to the spoliation doctrine when special circumstances exist that make it unreasonable for a party to comply with its general duty to preserve evidence. A party with a “legitimate need” to destroy evidence may do so, under certain limited circumstances in these states. For example, in Minnesota, one case noted that remediation of a moisture problem in a family home may become necessary to address immediate health concerns. Likewise, one case in Wisconsin found that a family whose home was destroyed by fire allegedly caused by defective roof repair should not be expected to wait indefinitely for the defendants to inspect the home. However, it is unclear whether a court would find the type of limited circumstances for this situation applicable in the commercial construction context.

In situations where a dispute arises as to a subcontractor’s defective work, at a minimum a general contractor who anticipates litigation must notify that subcontractor that the general contractor intends to alter or repair the defect within a certain period of time, thereby allowing a subcontractor to not only inspect but to document the evidence they might need to effectively defend against a defect claim.

A general contractor might expect to receive a “litigation hold” letter—a directive that instructs the party in control of the defective work to preserve potentially relevant evidence in anticipation of future litigation. With the litigation hold in place, the adverse parties must then communicate with each other to conduct inspections and repairs. Across most jurisdictions, any effort short of allowing a party to inspect and document the alleged defect themselves will likely fatally harm your chances of recovering on a construction defect claim.

The bottom line is that it is critical to be aware of the duty to preserve evidence on the jobsite as well as the potential consequences of changing the condition of an alleged defect that will likely be the subject of a dispute. Taking photographs for later is not enough. Despite the impracticality of halting a construction project to allow another party to conduct an inspection, the alternative is significantly worse: bearing the cost of the repair in addition to any punishment imposed by a court.

The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.