Diversified Concepts v. Koford , 2021 UT App 71 ( 2021 )

2021 UT App 71THE UTAH COURT OF APPEALS
DIVERSIFIED CONCEPTS LLC; DARIN DYELL; AND LANDFORM
DESIGN GROUP PC,
Appellants,
v.
JILL KOFORD AND ROD KOFORD,
Appellees.
Opinion
No. 20191071-CA
Filed July 1, 2021
Second District Court, Ogden Department
The Honorable Camille L. Neider
No. 150903526
S. Spencer Brown and Jack D. Smart,
Attorneys for Appellants Diversified Concepts LLC
and Darin Dyell
Brad M. Liddell, Attorney for Appellant
Landform Design Group PC
Matthew A. Bartlett and Matthew G. Koyle,
Attorneys for Appellees
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN FORSTER and JILL M. POHLMAN
concurred.
MORTENSEN, Judge:
¶1 Jill and Rod Koford set about to improve the grounds
surrounding their home. This project would include the design
and construction of extensive rock retaining walls. These walls
were so large, in fact, that the city required that the plans for
their construction be engineered, and the walls be built
following those engineered plans. The Kofords engaged
Appellants Diversified Concepts LLC and Darin Dyell
Diversified Concepts v. Koford
(collectively, Diversified) along with Landform Design Group
PC (Landform), to design and construct the walls. The Kofords
allege that they fired both Landform and Diversified after
noticing the walls starting to fall apart before the project was
even finished. Both sides hired counsel and letters were
exchanged. But before filing a lawsuit, the Kofords hired other
contractors to completely dismantle the walls and rebuild them.
When the Kofords eventually filed suit, Landform and
Diversified each moved to dismiss the lawsuit as a sanction for
spoliation. They claimed that, without an opportunity to inspect
and observe the demolition of the walls, their ability to defend
the case had been irreparably compromised. The district court
denied the motions. Landform and Diversified bring this
interlocutory appeal of the district court’s order declining to
dismiss the Kofords’ case as a sanction for spoliation. Because
we set forth a new and clarified framework that courts should
apply when evaluating sanctions for spoliation under rule 37 of
the Utah Rules of Civil Procedure, we vacate and remand to the
district court to apply this framework in the first instance.
BACKGROUND1
¶2 In 2012 the Kofords decided to comprehensively remodel
the backyard of their home in Ogden, Utah, which was situated
on a hill with a significant slope. The Kofords wanted to add
various features for their enjoyment such as a pool, a
playground, and planters. Significant landscaping was required
to accommodate the remodel, including the addition of several
large retaining walls. Because of the walls’ size, the city
1. Because this case comes to us on interlocutory appeal, and no
evidentiary hearing occurred below, the facts have yet to be
determined. We recount the facts as alleged in the Kofords’
complaint, as represented by the parties in their memoranda
submitted to the district court (including deposition transcripts),
and as referenced at the oral argument before the district court.
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conditioned a building permit on the walls being engineered to
ensure they would not collapse.
¶3 The Kofords hired Landform to act as the project manager
of the remodel. To facilitate the hiring of the contractors,
Landform was obligated to gather bids and recommend to the
Kofords which contractors to select. Landform agreed to work
directly with the contractors and consultants, supervise them,
and steer the project by collaborating with the Kofords and
contractors to determine which portions of the remodel should
be worked on and when.
¶4 On Landform’s recommendation, the Kofords hired
Diversified as the contractor to construct the retaining walls.
Diversified hired an engineering firm (Engineering Firm) to
comply with the city’s permit conditions. And to that end,
Engineering Firm planned exactly how to engineer the retaining
walls according to the proposed dimensions and placement of
the walls. Diversified was provided with these plans and was to
contact Engineering Firm when construction was underway so
that the latter could undertake soil compaction and material
testing, and otherwise ensure that the retaining walls were
constructed according to plans.
¶5 Diversified started constructing the retaining walls in July
2013. As alleged by the Kofords, Diversified had trouble
performing the work in a timely manner and was still working
on the project into the spring of 2014. Jill Koford represented that
it was around this time that the Kofords noticed that numerous
retaining walls had started sinking, some had started to bow in
the middle, and another was not straight. She further alleged
that, “all over the property,” gravel was leaking out of the seams
of the walls and wall caps were coming off. Moreover, she
asserted that Diversified had deviated from the landscape
blueprint by constructing one large wall (in the place of two,
with one designed to be recessed behind the other) in a different
shape than was specified.
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¶6 The Kofords claim they raised these concerns with both
Landform and Diversified. In response, it appears the Kofords
were essentially told that what they were observing was a
“normal” part of the walls settling. As to the wall that deviated
from the landscape blueprint, Landform apparently told the
Kofords that the deviation was necessary because the wall as
represented in the blueprint “couldn’t be engineered,” and
Landform allowed the deviation because it “didn’t really have
options” and “thought aesthetically it tied in to everything else
and looked great.” Thereafter, the Kofords hired an attorney.
¶7 On June 27, 2014, the Kofords’ attorney sent a letter2 to
Diversified, which he copied to Landform, detailing the Kofords’
various concerns. One section of that letter read:
In addition to the sod, there remain numerous
issues with the project that need to be resolved
either by repair, completion or an offset to the
Kofords. Those issues include . . . two bowed
retaining wall[s] . . . [W]e ask that you contact us
immediately to indicate how you intend to remedy
the above referenced issue. If we do not hear from
you within five (5) business days, we will assume
that you have no intention of performing remedial
work and will seek to have another contractor
finish and/or repair your work.
¶8 On July 1, 2014, the Kofords’ attorney sent separate letters
to Landform and Diversified, informing both that they had been
terminated from the project. The letter to Landform explained
that it had provided “very little if any oversight, observation or
advice as is required by” its contract with the Kofords and that
all communications should go through their attorney. The letter
2. While there is some dispute regarding whether both Landform
and Diversified received all the letters sent by the Kofords’
attorney, the contents of the letters are undisputed.
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to Diversified explained that the Kofords had “hired another
group to complete and/or repair the work done on their project,”
and it demanded receipts for purchases Diversified made in
connection with the project, stating that if the receipts were not
provided, the Kofords would “have no choice but to pursue the
disclosure of that information through legal and/or
administrative action.”
¶9 Sometime later in July 2014, employees of the company
that manufactured the materials used to construct the Kofords’
retaining walls visited the property. Based on the manufacturer’s
recommendation, the Kofords had a forensic engineer (Forensic
Engineer) inspect the property in early August 2014. After
visually inspecting the walls and taking various measurements,
Forensic Engineer identified numerous issues with bowing and
leaning walls. However, he determined that he could not offer a
definitive opinion about the cause of the issues unless the walls
were partially removed and the foundation was examined.
¶10 Around the same time, the Kofords contacted Engineering
Firm—which should have been supervising the site the
whole time to ensure that the ongoing construction matched
its engineering plans. Engineering Firm informed the Kofords
that it had never been in their backyard because, after
handing their plans over to Diversified, it was never
contacted by Diversified or Landform. Shortly thereafter,
Engineering Firm inspected the walls, took numerous
photographs, and agreed with the preliminary findings of
Forensic Engineer. Seeming to reference the wall that deviated
from the landscape blueprint, Engineering Firm specifically
noted this wall was pulling away from the house, which
indicated improper installation.
¶11 On August 22, 2014, the Kofords’ attorney sent another
letter to Diversified, with a copy to Landform, informing
Diversified of the recent developments. In relevant part, that
letter stated:
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Over the past several weeks, we have spent a
considerable amount of time, effort and expense
investigating the nature and cause of several
problems with the [Kofords’] project (i.e. bulging
walls, leaking fill, cracking and/or broken pavers,
etc.).
After meeting with a number of industry experts
and representatives from several product
manufacturers and having those experts and
representatives inspect the project, we now believe
that the majority of the problems with the project
are the result(s) of inferior workmanship and/or
failure to follow the approved engineering plan
obtained from [Engineering Firm] . . . . The
problems with the project are so significant that
they necessitate repairs and remedial work which
will potentially cost hundreds of thousands of
dollars.
The letter stated that the Kofords would “look to [Diversified] to
pay for those repairs and to make them whole,” and requested
certain information “to assist the Kofords in mitigating their
damages.” The letter concluded by warning that if the
information was not sent within five days, the Kofords would
have “no choice but to initiate legal action against [Diversified].”
¶12 On October 1, 2014, the Kofords’ attorney sent a letter to
Diversified’s counsel.3 This letter stated that the Kofords had
hired Forensic Engineer and explained:
3. The Kofords contend that a copy of the October 1 letter was
sent to Landform. That contention is disputed and is unresolved.
See infra ¶ 48. Diversified does not dispute that it received the
letter.
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[Forensic Engineer] has performed an initial walk
through of the property and has indicated that the
movement observed in the walls . . . is likely due to
faulty construction and in particular faulty
mechanically stabilized earth. [Forensic Engineer]
is currently in the process of taking measurements
at the property to determine the amount to which
the construction is outside the acceptable
tolerances. . . . [I]t is anticipated that [Forensic
Engineer] will (at a cost of between $5,000 and
$20,000) be required to dismantle a portion of the
walls and do further tests on the mechanically
stabilized earth behind and beneath those walls.
¶13 In February 2015, the Kofords had a new contractor tear
down and replace two of the retaining walls, and they hired
Engineering Firm to document it. Engineering Firm reported a
number of problems with how these two walls had originally
been installed: the soil had not been compacted properly, the
geogrid4 was improperly installed, and there was trash and
drainage behind the walls. The Kofords testified that they were
“terrified” about what the destruction of these two walls
revealed, and consequently they made the decision to tear down
and reconstruct the rest of the walls. Jill Koford testified in her
deposition that while Engineering Firm did not specifically
provide the Kofords with an opinion that the rest of the walls
needed to be removed, Engineering Firm did tell her something
along the lines of, “This is what I found, and if I had these giant
4. “Geogrid is a high density polyethylene or polyester fabric
that, when placed between layers of soil and joined to a retaining
wall, creates cohesion among loose soil particles for durable soil
reinforcement, ties the wall into the surrounding landscape, and
increases the strength of the wall.” Economides v. District of
Columbia Board of Zoning Adjustment, 954 A.2d 427, 431 n.2 (D.C.
2008).
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walls in my backyard and I had found this kind of construction,
I would reconstruct them.” Engineering Firm documented the
destruction of the remaining walls and put its findings into a
written report. Jill Koford also testified that Engineering Firm
took thousands of pictures during the deconstruction.
¶14 In June 2015, the Kofords filed a lawsuit against Landform
and Diversified, bringing various causes of action relating to
Diversified’s installation of the retaining walls and Landform’s
obligation to supervise Diversified. After the completion of some
discovery, Landform and Diversified each moved for sanctions
under rule 37 of the Utah Rules of Civil Procedure, requesting
that the district court dismiss the Kofords’ case in its entirety as a
sanction for spoliation, alleging that the Kofords had
intentionally destroyed the subject of the litigation when they
tore down and replaced the retaining walls.
¶15 The district court recognized that “Utah Appellate Courts
have not directly addressed Rule 37 Spoliation claims,” and
applied case law from other jurisdictions in deciding the
motions.5 In so doing, the court recognized that the factual
record before it was undeveloped, and it thus reserved
consideration of certain sanctions until after further discovery.
However, based on the letters that the Kofords’ attorney sent to
Landform and Diversified, the district court declined to dismiss
the case outright, or to even dismiss certain claims. Specifically,
the court determined that the letters the Kofords’ attorney sent
in June and July had provided “general notice” of anticipated
litigation, reasoned that general notice shifted the onus to
Landform and Diversified to investigate and to take action to
preserve evidence, and thus concluded that neither should be
“rewarded” by the dismissal of the case. In other words, the
court focused less on the Kofords’ duty to preserve evidence and
5. We laud the district court’s efforts to dissect these thorny
issues and wade into nuanced issues with little jurisprudence to
guide it.
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instead relied more on an implicit duty to investigate on the part
of Landform and Diversified.
¶16 Landform and Diversified now bring this interlocutory
appeal. They contend that the district court’s only proper course
of action was to dismiss the case outright.
ISSUE AND STANDARD OF REVIEW
¶17 Landform and Diversified contend the district court erred
by declining to dismiss the Kofords’ case as a sanction for
destroying the retaining walls that are the subject of the
litigation. “[D]istrict courts are granted a great deal of deference
in selecting discovery sanctions, and we overturn a sanction only
in cases evidencing a clear abuse of discretion.” Kilpatrick v.
Bullough Abatement, Inc., 2008 UT 82, ¶ 23, 199 P.3d 957. “Our
deferential review recognizes that trial courts must deal first
hand with the parties and the discovery process.” Id. (cleaned
up). With that said, “an abuse of discretion may be
demonstrated by showing that the district court relied on an
erroneous conclusion of law.” Id. (cleaned up). In other words,
“an exercise of discretion guided by an erroneous legal
conclusion is reversible.” Coroles v. State, 2015 UT 48, ¶ 24, 349
P.3d 739; see also Gilbert Dev. Corp. v. Wardley Corp., 2010 UT App
361, ¶ 21, 246 P.3d 131 (“Whether a duty exists is a purely legal
question . . . .” (cleaned up)).
ANALYSIS
I. Clarifying the law
¶18 As recognized by the district court, Utah appellate
courts have had seldom opportunity to address the issue of
spoliation. Spoliation is currently treated as a discovery issue
that is governed by the Utah Rules of Civil Procedure, as the
Utah Supreme Court has expressly rejected spoliation as a
standalone cause of action. See Hills v. United Parcel Service, Inc.,
20191071-CA 9 2021 UT App 71Diversified Concepts v. Koford
2010 UT 39, ¶¶ 31–33, 232 P.3d 1049 (declining to adopt the tort
of spoliation); Daynight, LLC v. Mobilight, Inc., 2011 UT App 28,
¶ 2, 248 P.3d 1010 (addressing spoliation under our rules of civil
procedure). Specifically, rule 37(e) of the Utah Rules of Civil
Procedure empowers our courts to sanction a litigant that
“destroys, conceals, alters, tampers with or fails to preserve a
document, tangible item, electronic data or other evidence.” See
also Hills, 2010 UT 39, ¶ 16 (noting that spoliation includes
“destruction, mutilation, alteration, or concealment of evidence”
(cleaned up)).6 Now, we attempt to provide our courts with a
framework to guide the exercise of their discretion in deciding
when and how to sanction litigants for spoliation. And we do so
with the benefit of jurisprudence from numerous state and
federal courts that, with some notable differences, have crafted a
largely uniform framework.
A. Determining when a party may be sanctioned
¶19 We first answer the question of when a party may
be sanctioned for the destruction of evidence. As we discuss,
the court must first find that the custodial party was under a
duty to preserve evidence, and that it violated that duty. At
that point, the court has the discretion to impose sanctions
for spoliation. But if the custodial party did not violate its
duty to preserve, it may not be sanctioned for spoliation. And
this is true whether the custodial party was never under a duty
to preserve or, in the alternative, if the custodial party
discharged its duty to preserve prior to the destruction of
evidence.
6. For clarity and convenience, throughout this opinion we refer
to spoliation singularly as the destruction of evidence. By so
doing, we do not mean to exclude other forms of spoliation such
as the alteration or disposal of evidence from the scope of this
ruling.
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1. Duty to preserve
¶20 As rule 37 of the Utah Rules of Civil Procedure
acknowledges, sanctionable spoliation of evidence occurs when
a litigant destroys evidence “in violation of a duty.” Utah R. Civ.
P. 37(e); see also Montana State Univ.-Bozeman v. Montana First Jud.
Dist. Court, 2018 MT 220, ¶ 23, 426 P.3d 541 (“Sanctionable
spoliation occurs only upon the breach of a duty to preserve the
subject evidence.”); Micron Tech., Inc. v. Rambus Inc., 645 F.3d
1311, 1320 (Fed. Cir. 2011) (“A party can only be sanctioned for
destroying evidence if it had a duty to preserve it.” (cleaned
up)). So, before a district court may sanction a party for
spoliation, it must first determine that the spoliation occurred
while the party was under a duty to preserve the evidence.
¶21 While it perhaps goes without saying that all parties to
pending litigation have a duty to preserve evidence, a lawsuit
need not have been filed for the duty to arise. See Montana State,
2018 MT 220, ¶ 23 (explaining that once litigation is pending,
federal and state rules of civil procedure governing the duty to
disclose evidence imply a concomitant duty to preserve
evidence); Philips Elecs. N. Am. Corp. v. BC Tech., 773 F. Supp. 2d
1149, 1195 (D. Utah 2011) (“In most cases, the duty to preserve is
triggered by the filing of a lawsuit, but that duty may arise even
before a lawsuit is filed.”). Rather, “the duty to preserve
evidence begins when litigation is ‘pending or reasonably
foreseeable.’” Micron Tech., 645 F.3d at 1320 (quoting Silvestri v.
General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001)). “This is an
objective standard, asking not whether the party in fact
reasonably foresaw litigation, but whether a reasonable party in
the same factual circumstances would have reasonably foreseen
litigation.” Id. And as to the scope of the duty, it applies to
“then-existing items or information reasonably likely to be
relevant to, or likely to lead to the discovery of evidence relevant
to, claims or defenses at issue in the contemplated litigation.”
Montana State, 2018 MT 220, ¶ 24; see also Zubulake v. UBS
Warburg LLC, 220 F.R.D. 212, 217 (S.D.N.Y. 2003) (“[A]nyone
who anticipates being a party or is a party to a lawsuit must not
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destroy unique, relevant evidence that might be useful to an
adversary.”).
¶22 Once a district court determines that a custodial party has
violated its duty to preserve evidence, the court has the inherent
power to sanction the party for spoliation. See Utah R. Civ. P.
37(e) (noting the district court’s inherent power to “take any
action authorized by paragraph (b)” as a sanction for
spoliation).7 And like other jurisdictions, our existing case law
has already clarified that the district court need not find that the
party’s failure to preserve was motivated by willfulness or bad
faith.8 See Daynight, LLC v. Mobilight, Inc., 2011 UT App 28, ¶ 2,
248 P.3d 1010; see also, e.g., Miller v. Lankow, 801 N.W.2d 120, 128
(Minn. 2011) (noting that the court “must” attempt to remedy
7. With that said, the same rule acknowledges that a district
court’s discretion to impose sanctions narrows when it concerns
“electronically stored information lost as a result of the routine,
good-faith operation of an electronic information system.” Utah
R. Civ. P. 37(e).
8. That a party must have failed to preserve items “reasonably”
likely to be relevant demands that the custodial party have at
least been negligent in failing to preserve. See Brookshire Bros. v.
Aldridge, 438 S.W.3d 9, 19 (Tex. 2014) (explaining the duty is not
breached unless the party at least negligently failed to preserve
the evidence); Montana State Univ.-Bozeman v. Montana First Jud.
Dist. Court, 2018 MT 220, ¶ 25, 426 P.3d 541 (same). But nothing
is required beyond mere negligence for sanctions to be available;
heightened culpability is relevant only to the severity of sanctions
that are appropriate. See Manorcare Health Services, Inc. v. Osmose
Wood Preserving, Inc., 764 A.2d 475, 479 (N.J. Super. Ct. App. Div.
2001) (“The spoliator’s level of intent, whether negligent or
intentional, does not affect the spoliator’s liability. Rather, it is a
factor to be considered when determining the appropriate
remedy for the spoliation.” (cleaned up)).
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spoliation with the appropriate sanction, “even when a breach of
the duty to preserve evidence is not done in bad faith”).
2. Discharging the duty to preserve
¶23 But we also recognize that the duty to preserve is not
boundless. See Miller v. Lankow, 801 N.W.2d 120, 128 (Minn.
2011); American Family Mutual Ins. Co. v. Golke, 2009 WI 81,
¶¶ 19–28, 768 N.W.2d 729.9 In certain circumstances, a party may
reasonably need to destroy material that it is presumptively
duty-bound to preserve. See Miller, 801 N.W.2d at 128–29
(implying that remediating mold-damage was reasonable);
Golke, 2009 WI 81, ¶¶ 2, 28 n.11 (stating that because the
homeowners “needed a place to live,” there was a legitimate
reason to destroy the fire-damaged remnants of their home). For
example, if an individual’s home burns down, it seems
reasonable to clear the debris so that the house can be rebuilt.
But if the individual believes the fire was caused by a faulty
appliance and intends to sue the manufacturer on that basis,
clearing the debris would likely violate the duty to preserve.10 In
9. We largely agree with, and thus throughout this section draw
heavily from, the underlying rationale set forth by the Minnesota
Supreme Court in Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011),
and the Wisconsin Supreme Court in American Family Mutual
Insurance Co. v. Golke, 2009 WI 81, 768 N.W.2d 729—the two
seminal cases to discuss the role of pre-destruction notice in
either discharging a party’s duty to preserve evidence or in the
court’s assessment of spoliation sanctions. However, our
analysis contains its own nuances and thus does not move in
lockstep with either case. See infra ¶¶ 26–33. Indeed, after
drawing from these cases in articulating our approach to
discharging the duty to preserve, we explain how our approach
differs. See infra ¶¶ 30 n.12, 31–33.
10. It would likely not be sufficient for the homeowner to, for
instance, simply save the allegedly faulty appliance and go
(continued…)
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effect, the duty to preserve—if unyielding—would force the
individual to choose between rebuilding the home or pursuing a
lawsuit. See Miller, 801 N.W.2d at 128 (explaining that this would
force a party to choose between remediating damage to the
home “at the risk that any action to recover damages will be
fatally compromised for spoliation of evidence” or preserving
evidence by doing nothing).
¶24 Putting a custodial party in such a position would vitiate
the purpose behind the very rules that the duty to preserve is
designed to bulwark. See Utah R. Civ. P. 1 (stating that the rules
of civil procedure are designed to “achieve the just, speedy, and
inexpensive determination of every action”); see also id. R. 26
advisory committee’s note (explaining that discovery rules
should “advance” the “important objectives of the rules of civil
procedure”); accord Fed. R. Civ. P. 26 advisory committee’s notes
to 1983 amendment (explaining that discovery rules should
advance the “fundamental goal of the ‘just, speedy, and
inexpensive determination of every action’” (quoting id. R. 1)).
So, any formulation of the duty to preserve must necessarily
recognize and account for this conflict. Accordingly, the duty to
preserve must allow, under certain circumstances, custodial
parties to destroy evidence when they have reasonable grounds
for doing so. See Golke, 2009 WI 81, ¶ 19 (holding that a party
with a “legitimate reason” to destroy evidence may do so);
Miller, 801 N.W.2d at 128 (explaining that “the duty to preserve
evidence must be tempered by allowing custodial parties to
dispose of or remediate evidence when the situation reasonably
requires it”); cf. Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D.
497, 525 (D. Md. 2010) (“Breach of the preservation duty . . . is
premised on reasonableness . . . .”).
(…continued)
about rebuilding the home because that would deprive the
manufacturer of examining the wiring of the home or any other
alternative cause of the fire. See generally, e.g., Howell v. Maytag,
168 F.R.D. 502, 507 (M.D. Pa. 1996).
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¶25 With that said, just because a custodial party has
reasonable grounds to destroy evidence does not mean it can
unilaterally do so. Instead, the custodial party must provide to
the noncustodial party advance notice outlining its intention to
destroy evidence. And that notice must be specific enough and
be given far enough in advance to allow the noncustodial party
to “protect itself against the loss of evidence,” see Miller, 801
N.W.2d at 133, through a “full and fair opportunity to inspect”
that evidence before its destruction, see Golke, 2009 WI 81, ¶ 28.
Placing this burden on the custodial party balances the interests
of the parties and, if complied with, effectively obviates any
need for the court to impose spoliation sanctions. See infra ¶ 36
(explaining that spoliation sanctions are designed to punish and
deter future violations, along with remedying the prejudice to
the noncustodial party’s case); see also Golke, 2009 WI 81, ¶ 29
(“This framework serves the judicial system’s truth-seeking
function and effectively prevents parties from prematurely
destroying evidence.”).11
11. Cf. Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473
F.3d 450, 458 (2d Cir. 2007) (holding that the district court
abused its discretion by imposing a spoliation sanction where
the noncustodial party was “provided a full opportunity to
inspect the items”); Silvestri v. General Motors Corp., 271 F.3d 583,
592 (4th Cir. 2001) (discussing that the custodial party breached
the duty to preserve because it “failed to preserve material
evidence” or “notify [the noncustodial party] of the availability
of this evidence”); Berwecky v. Montgomery Ward, Inc., 214 A.D.2d
936, 937 (N.Y. App. Div. 1995) (“Defendants were twice notified
. . . that the refrigerator was available for inspection but that it
would not remain so indefinitely . . . . Their delay in moving to
protect their interests should not now work to their benefit.”
(cleaned up)); Thiele v. Oddy’s Auto & Marine, Inc., 906 F. Supp.
158, 160, 162 (W.D.N.Y. 1995) (“In none of the cited cases where
spoliation sanctions were imposed did the defendant have the
(continued…)
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¶26 In sum, a custodial party may discharge its duty to
preserve evidence—thereby insulating it from spoliation
sanctions—if it: (1) has reasonable grounds for destroying the
evidence and (2) provides advance notice to the noncustodial
party that allows for a full and fair opportunity to inspect that
evidence. And, if challenged, the burden is on the custodial
party to demonstrate that both elements have been met. We now
discuss each criterion in more detail.
¶27 In assessing the first criterion, the court must obviously
identify the reason for destruction. See infra ¶ 30. Inherently, the
custodial party’s reason will amount to an assertion that the
evidence is burdensome to preserve and, as a result, it cannot
reasonably do so. Accordingly, once the reason is identified, the
court should evaluate the true extent of that burden and the
custodial party’s ability to bear it. Cf. Golke, 2009 WI 81, ¶ 29
(identifying the custodial party’s ability “to bear the burden and
expense of preserving” the evidence as a relevant factor). And in
doing so, the court should be cognizant that reasonableness is
not decided in a vacuum; the ultimate inquiry is whether the
burden was serious enough to warrant the destruction of
evidence, and in the manner and timing that it occurred. See
Fines v. Ressler Enters., 2012 ND 175, ¶ 13, 820 N.W.2d 688(“There is no evidence before the Court that removal and
replacement of the siding was in any way an emergency or that
there was any other reason the project could not wait . . . .”); cf.
Golke, 2009 WI 81, ¶ 29 (“Relevant facts might include the length
of time evidence can be preserved . . . [and] the prejudice posed
to possible adversaries by the destruction of the evidence . . . .”).
¶28 Moving to the second criterion, as explained above, the
purpose of providing advance notice is to allow the noncustodial
party an opportunity to protect its interests in the litigation. To
(…continued)
opportunity that [the noncustodial party] had to inspect the
evidence . . . .”).
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afford the noncustodial party a full and fair opportunity to
investigate the evidence such that the duty to preserve might be
considered discharged, the custodial party must specifically
inform the noncustodial party of the anticipated claim; the
factual and legal basis for the claim; the evidence relevant to that
claim which will be destroyed; the reason the evidence needs to
be destroyed; the date on which the evidence will be destroyed;
and that the noncustodial party may inspect the evidence prior
to and contemporaneous with its destruction. In addition, the
custodial party must provide notice far enough in advance to
give the noncustodial party a reasonable opportunity to arrange
an inspection or otherwise protect its interests. See Golke, 2009 WI
81, ¶ 28 (setting forth similar requirements).
¶29 Each of these requirements is necessary to adequately
apprise the noncustodial party of the significance of the evidence
to the litigation and allow that party to take steps either to
preserve it or examine it prior to its destruction. See Dickinson
Frozen Foods, Inc. v. FPS Food Process Sols. Corp., No. 1:17-CV-
00519-DCN, 2020 WL 2841517, at *21–22 (D. Idaho June 1, 2020)
(explaining that because the noncustodial party only viewed the
evidence when it did not anticipate litigation, it “did not have an
adequate opportunity to run tests or analysis to defend against”
the custodial party’s eventual legal claims, and therefore the
custodial party did not discharge its duty to preserve);
Harborview Office Center, LLC v. Camosy Inc., 2006 WI App 56U,
¶¶ 39, 46 (explaining that, even where the noncustodial party
was able to view the remedial work, when the custodial party
found an unanticipated cause of the damages and failed to relay
that information to the noncustodial party, spoliation sanctions
were warranted because the noncustodial party “had [no] reason
to ask questions or suspect anything was amiss” with respect to
that issue); Fines, 2012 ND 175, ¶ 11 (“Fines gave Ressler no
notice of intent to remove the siding until all practical ability to
have an expert inspect the siding in place was removed.”).
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¶30 The requirement that the notice include the custodial
party’s reason for destruction serves additional functions.12 This
requirement is important because it conveys the immediacy of
the problem and allows the noncustodial party the opportunity,
if appropriate or possible, to ameliorate the problem
necessitating destruction. See In re Wechsler, 121 F. Supp. 2d 404,
419–21 (D. Del. 2000) (explaining that there was “no reason to
destroy” the evidence where the noncustodial party “had
already committed to paying the additional storage costs” that
led to the initial need to destroy); Hoffman v. Ford Motor Co., 587
N.W.2d 66, 70 (Minn. Ct. App. 1998) (“Notice provides the
[noncustodial party] a chance to correct any defect.” (cleaned
up)). If the noncustodial party offers an accommodation that
reasonably resolves the custodial party’s reason for destruction,
thereby obviating the need to destroy evidence, then the duty to
preserve is not discharged. Additionally, this requirement serves
a purely practical function: it limits the custodial party’s ability
to, in responding to a rule 37 motion, advance post-hoc
explanations that played no part in its decision to destroy
evidence. Obviously, post-hoc reasons that played no actual role
in the custodial party’s decision to destroy evidence should be
ignored by the court.
¶31 In setting forth our specific requirements for discharging
the duty to preserve, our approach is largely consistent with the
two other seminal cases outlining the import and mechanics of
pre-destruction notice. In American Family Mutual Insurance Co. v.
Golke, the Wisconsin Supreme Court promulgated a similar
approach that allows a party to discharge its duty to preserve,
provided it has “a legitimate reason to destroy evidence,” and
“provid[es] the opposing party or potential litigant: (1)
reasonable notice of a possible claim; (2) the basis for that claim;
12. We recognize that this requirement has not been explored in
other spoliation cases dealing with the import of pre-destruction
notice. However, for the reasons that follow, we believe that it is
a necessary requirement.
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(3) the existence of evidence relevant to the claim; and (4)
reasonable opportunity to inspect that evidence.” 2009 WI 81,
¶ 28. And in Miller v. Lankow, the Minnesota Supreme Court
evaluated the role of pre-destruction notice but announced a less
onerous requirement that, at first blush, might seem inconsistent
with our requirements. See 801 N.W.2d at 134. Specifically, the
Miller court held that the custodial party must only “provide[]
notice sufficient to enable the [noncustodial parties] to protect
themselves by inspecting the relevant evidence.” See id. And the
Miller court adopted this approach after expressing concern with
the type of “actual notice” required by our discharge rule
because,
an absolute requirement may be unfair to a
custodial party who has already given substantial
notice of a breach or claim, and that notice is
sufficient to allow the noncustodial parties to
protect their interests. When a custodial party has
given such notice to the noncustodial parties, we
should not deprive the custodial party of the
critical evidence because of a failure to strictly
observe a rigid requirement.
Id. at 131; see also id. (rejecting the lower court’s conclusion
that “a party must provide actual notice of the nature and timing of
any action that could lead to destruction of evidence” (cleaned
up) (emphasis in original)). But the Miller court appears to
have expressed this concern in the context of rejecting the
notion that a party could discharge its duty to preserve
and instead holding that “any destruction of evidence, whether
or not notice is given, [i]s a breach of the duty to preserve
evidence.” Id. at 132–33. For the Miller court, the adequacy of
the notice is instead a factor in assessing what type of sanctions
should be imposed. See id. at 131–33 (explaining that some
courts evaluate pre-destruction notice “as part of the duty to
preserve evidence” such that the “court will have no occasion to
consider the Schmid factors,” i.e., the factors that inform
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what type of sanction is warranted, but implicitly rejecting such
an approach out of concern that bad faith destruction of
evidence should be sanctionable notwithstanding whatever
notice was provided).13
¶32 Our overall approach blends both the Golke and Miller
approaches. As in Golke, our approach allows a custodial party
to discharge its duty to preserve evidence, thereby preventing
any sanctions for spoliation. A corollary of “discharging” a
burden is that the custodial party must take affirmative steps to
do so. And in this scenario, it is perfectly sensible to require the
custodial party to relay specific information so as to provide
“actual notice” of the nature of the evidence that will be
destroyed and the anticipated timing of the destruction. To this
end, our requirements clarify and expand upon the Golke factors,
but they do not require Herculean efforts. Nevertheless, we
agree with the Miller court that imperfect notice should not
13. Indeed, the Miller court found that the adequacy of the notice
provided should be a factor evaluated under the framework set
forth in Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76 (3d Cir.
1994), for evaluating the appropriate sanction. See Miller, 801
N.W.2d at 132–33 (explaining that Minnesota courts had already
been applying the Schmid framework, “though in different
language”). This is the same framework that we direct our
district courts to apply when fashioning the appropriate sanction
for a violation of the duty to preserve. See infra ¶ 36. However,
and to be abundantly clear, we disavow any notion that
“sanctions are not appropriate,” see Miller, 801 N.W.2d at 133,
where a custodial party fails to satisfy our requirements for
discharging the duty to preserve but nevertheless provides
some, albeit inadequate, measure of pre-destruction notice.
Indeed, it seems the exceedingly rare case where sanctions
would not be appropriate if the duty to preserve has been
violated. But if a party has provided some notice, even if that
notice is insufficient to discharge the party’s duty to preserve,
that notice may mitigate the severity of the spoliation sanction.
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simply be ignored altogether. Instead, where a party has not
met the requirements to discharge its duty to preserve, the
court may still consider the nature of any notice the party
provided when determining what sanction to impose. See infra
¶¶ 39, 43 (explaining that notice is relevant to both culpability
and prejudice—factors that inform the severity of the
appropriate sanction).
¶33 With the foregoing in mind, we provide a brief review
of the duty to preserve. Before sanctioning a custodial party
for spoliation, the court should determine (A) whether
the custodial party had a duty to preserve the evidence at issue,
and (B) whether the custodial party violated that duty. In
undertaking the latter inquiry, the district court must evaluate—
if raised—whether the custodial party has demonstrated that
it discharged its duty prior to destruction by (1) having
reasonable grounds to destroy the evidence and (2) providing
notice to the noncustodial party, far enough in advance to
give the noncustodial party a reasonable opportunity to
arrange an inspection or otherwise protect its interests,
specifically informing it of (i) the anticipated claim; (ii) the
factual and legal basis for the claim; (iii) the evidence relevant to
that claim which will be destroyed; (iv) the reason why the
evidence must be destroyed; (v) the date on which the evidence
will be destroyed; and (vi) its opportunity to inspect the
evidence.14
¶34 And with that, we turn to the next question: if the
custodial party did violate its duty to preserve, how should the
court evaluate what sanctions are appropriate?
14. For those seeking the safe harbor of discharge, and for all
counsel advising clients as such, the best practice would be for
custodial parties to put this notice in writing and to deliver the
notice through a verifiable means such as certified mail.
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B. Evaluating what type of sanctions are appropriate
¶35 As with all discovery violations, the district court has
broad discretion to choose the sanction it deems appropriate. See
Kilpatrick v. Bullough Abatement, Inc., 2008 UT 82, ¶ 23, 199 P.3d
957. Likewise, any sanction should be proportionate to the
violation at issue; extreme sanctions that would otherwise cut
against our “strong preference for resolving cases on their merits
whenever possible,” see Lee v. Max Int’l, LLC, 638 F.3d 1318, 1319
(10th Cir. 2011), should be used as a last resort, see Darrington v.
Wade, 812 P.2d 452, 456 (Utah Ct. App. 1991) (“[D]efault
judgment is an unusually harsh sanction that should be meted
out with caution . . . .”); Yuanzong Fu v. Rhodes, 2015 UT 59, ¶ 21,
355 P.3d 995 (“[W]e do encourage district courts imposing
sanctions to consider alternative sanctions carefully before
entering a default.”). But spoliation is also unlike many other
discovery violations because of its propensity to impede
resolution of cases on their merits and because courts can be
powerless to ameliorate the harm. See Daynight, LLC v. Mobilight,
Inc., 2011 UT App 28, ¶ 2, 248 P.3d 1010 (noting that unlike
garden-variety “delay[s] in the production of evidence,”
spoliation necessarily entails the “permanent deprivation of
evidence”).
¶36 Accordingly, a district court fashioning a sanction for
spoliation should keep in mind the general rule that sanctions
should be proportional to the need to punish and deter future
violations, and thus severe sanctions should be meted out with
caution. But it must also be cognizant that “the focus in selecting
the proper [spoliation] sanction is evening the playing field, or
rectifying the prejudice caused by the spoliation so as to place
the parties in equipoise,” i.e., the sanction should “make whole,
as nearly as possible, the litigant whose cause of action has been
impaired by the absence of crucial evidence.” See Robertet Flavors,
Inc. v. Tri-Form Constr., Inc., 1 A.3d 658, 671 (N.J. 2010) (cleaned
up). And balancing these competing considerations requires the
district court to engage in a “careful evaluation of the particular
facts and circumstances of the litigation” so that “the true impact
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of the spoliated items can be assessed and an appropriate
sanction imposed.” Id. To guide this assessment, the district
court should evaluate the totality of the circumstances under the
framework set forth by the Third Circuit Court of Appeals in
Schmid v. Milwaukee Electric Tool Corp., which directs courts to
consider:
(1) the degree of fault of the party who altered or
destroyed the evidence; (2) the degree of prejudice
suffered by the opposing party; and (3) whether
there is a lesser sanction that will avoid substantial
unfairness to the opposing party and, where the
offending party is seriously at fault, will serve to
deter such conduct by others in the future.
13 F.3d 76, 79 (3d Cir. 1994). The Schmid framework is a sensible
balancing test that courts around the country have treated as the
framework to be applied when fashioning a spoliation sanction.
See, e.g., Micron Tech, 645 F.3d at 1329 (applying the Schmid
framework at face value); Jordan F. Miller Corp. v. Mid-Continent
Aircraft Service, Inc., No. 97-5089, 1998 WL 68879, at *4, *6 (10th
Cir. Feb. 20, 1998) (using the Schmid framework as the basis for
its analysis); Story v. RAJ Props., Inc., 909 So. 2d 797, 802–03 (Ala.
2005) (articulating a five-factor test that substantively evaluates
the same considerations); Miller v. Lankow, 801 N.W.2d 120, 132–
33 (Minn. 2011) (referencing the Schmid framework and
explaining that Minnesota courts had been substantively
applying it); Robertet Flavors, 1 A.3d at 675–77 (applying the
Schmid framework with more precision); Fines v. Ressler Enters.,
2012 ND 175, ¶ 8, 820 N.W.2d 688 (directing courts to consider
the culpability of the spoliator, the degree of prejudice to the
non-spoliator, and the availability of lesser sanctions); Brookshire
Bros. v. Aldridge, 438 S.W.3d 9, 21 (Tex. 2014) (substantively
applying the Schmid framework).
¶37 Generally, the Schmid framework directs a district court to
weigh the impropriety of a custodial party’s conduct against the
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harm suffered by the noncustodial party resulting from the
destruction of evidence, and then to fashion a sanction that
accounts for them both. See Schmid, 13 F.3d at 79 (“Courts select
the least onerous sanction corresponding to the willfulness of the
destructive act and the prejudice suffered by the victim.”
(cleaned up)). And before we explain the three factors in more
detail, it is important to note they are simply criteria for the
district court to consider before imposing a sanction. See
Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992) (opining
on the applicability of substantively similar factors). In other
words, they “do not constitute a rigid test” that a district court
must apply with trepidation.15 See id. Any such rigidity would be
inconsistent with the flexibility courts need to supervise the
discovery process effectively. See Gates Rubber Co. v. Bando Chem.
Indus., Ltd., 167 F.R.D. 90, 102 (D. Colo. 1996). Instead, the
considerations we outline are meant only to guide what amounts
to the district court’s “judgment call” on what type of sanction is
appropriate in light of the particular facts and circumstances
before it. See id.; see also R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25,
40 P.3d 1119 (explaining that “the standard articulated above
will permit a case-by-case evaluation by the trial court, and
flexibility to handle circumstances” unique to the case at hand).
With this in mind, we discuss each factor in more detail.
1. Custodial party’s culpability
¶38 The first Schmid factor is principally meant to guide the
district court in evaluating the severity of the sanction necessary
to effectuate the twin purposes of punishment and deterrence.
See Schmid, 13 F.3d at 79 (instructing courts to impose sanctions
15. The last thing we want to do is cause religious adherence to
factors not found in any rule. See Kamoe v. Ridge, 2021 UT 5, ¶ 36,
483 P.3d 720 (“While these factors may certainly aid the . . .
calculus, we have previously warned against inflexible reliance
on a non-exhaustive list of common-law factors designed to
merely facilitate a court’s analysis.”).
20191071-CA 24 2021 UT App 71Diversified Concepts v. Koford
that will, “where the offending party is seriously at fault, . . .
serve to deter such conduct by others in the future”).
Accordingly, the district court should endeavor to make a
factual finding about the mental state of the custodial party
concerning the failure to preserve evidence. In the so-called
“classic” case of spoliation, the custodial party willfully destroys
evidence in bad faith, i.e., for the purpose of frustrating the
judicial process. See Story v. RAJ Props., Inc., 909 So. 2d 797, 804
(Ala. 2005) (“In a case of classic spoliation, the offending party
purposefully and wrongfully destroyed evidence he knew was
supportive of the interest of his opponent.” (cleaned up)). And in
such an instance, serious sanctions are likely warranted “because
actions which are found to be deliberate and purposeful ought to
be punished accordingly.” See Gates Rubber Co. v. Bando Chem.
Indus., Ltd., 167 F.R.D. 90, 103 (D. Colo. 1996); see also In re
Wechsler, 121 F. Supp. 2d 404, 428 (D. Del. 2000) (“Given this
heightened degree of fault and personal responsibility [for
intentionally destroying evidence to prevent inspection,] a
severe sanction is entirely appropriate.”). But “[w]here a judge
finds no willfulness, bad faith or fault, there exists beneath these
states of mind a broad panoply of unintentional conduct:
recklessness, gross negligence, [and] negligence.” Gates Rubber,
167 F.R.D. at 103; see also Martin ex rel. Mulich v. Intex Recreational
Corp., 858 F. Supp. 161, 163 (D. Kan. 1994) (“Destruction of
potentially relevant evidence obviously occurs along a
continuum of fault, ranging from innocence through degrees of
negligence to intentionality.”). And while this type of
misconduct may, standing alone, be less worthy of serious
sanctions, “the discretion to impose sanctions for reckless or
negligent misconduct [remains] as broad as the discretion which
is accorded for imposition of sanctions where the misconduct
was deliberate and intentional.” Gates Rubber, 167 F.R.D. at 103;
see also Silvestri v. General Motors Corp., 271 F.3d 583, 593 (4th Cir.
2001) (“[S]ometimes even the inadvertent, albeit negligent, loss
of evidence will justify dismissal because of the resulting
unfairness [to the noncustodial party’s case].”).
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¶39 In determining the custodial party’s mental state, the
district court may take into account any consideration relevant
under the circumstances. For example, the district court may
evaluate the sophistication of the custodial party, see Northern
Assurance Co. v. Ware, 145 F.R.D. 281, 283 (D. Me. 1993) (custodial
party was not “a lay person, inexperienced in the conduct of
litigation”), the manner in which the evidence was spoliated, see
Daynight, LLC v. Mobilight, Inc., 2011 UT App 28, ¶ 2, 248 P.3d
1010 (custodial party threw a laptop off a roof, ran over it with a
vehicle, and made contemporaneous statements about going to
prison for doing so), the timing of the spoliation, see State Farm
Fire & Cas. Co. v. Frigidaire, 146 F.R.D. 160, 163 (N.D. Ill. 1992)
(custodial party allowed evidence to be destroyed before filing
suit but only after its experts had finished investigating the
evidence), whether the custodial party ignored a discovery,
preservation, or investigation request relating to the spoliated
evidence, see Story v. RAJ Props., Inc., 909 So. 2d 797, 805 (Ala.
2005) (custodial party ignored discovery requests and neglected
to inform noncustodial party of impending destruction), and
whether the custodial party took affirmative steps to allow the
noncustodial party to investigate the evidence or otherwise
preserve its interests in the litigation, see Miller v. Lankow, 801
N.W.2d 120, 133 (Minn. 2011) (“[N]otice [is] a factor to be
considered when evaluating fault, the first Schmid factor.”). Of
course, this list is by no means exhaustive.
2. Noncustodial party’s degree of prejudice
¶40 The second Schmid factor is meant to guide the district
court in evaluating what type of sanction is necessary to remedy
the prejudice caused by the spoliation. See Schmid, 13 F.3d at 79(instructing courts to choose a “sanction that will avoid
substantial unfairness to the [noncustodial] party”). This
requires the district court to determine the relevance and
strength of the spoliated evidence to the claims at issue. Compare
id. at 77, 79–80 (discussing that the prejudicial impact of the
plaintiff’s failure to preserve a circular saw was limited because
the claim at issue was alleging a design defect), with Fines v.
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Ressler Enters., 2012 ND 175, ¶ 17, 820 N.W.2d 688 (discussing
that removal of siding made it impossible for the contractor to
defend against the allegation that its installation of the siding
was faulty). And this determination necessarily requires the
district court to evaluate the entire evidentiary landscape at the
noncustodial party’s disposal, particularly evaluating the
relative sufficiency of any available substitutes for the spoliated
evidence. See Robertet Flavors, Inc. v. Tri-Form Constr., Inc., 1 A.3d
658, 675–76 (N.J. 2010) (explaining that “the prejudice to the non-
spoliating party” is a function of, among other things, “the
alternate sources of information that are, or are likely to be,
available to the non-spoliator”); Brookshire Bros. v. Aldridge, 438
S.W.3d 9, 22 (Tex. 2014) (“The differences in kind and quality
between the available evidence and the spoliated evidence will
thus be a key factor in analyzing prejudice to the nonspoliating
party.”). This is a difficult task that is highly fact-dependent.
¶41 Often, the purported substitutes for the spoliated
evidence are photographs or videos of the evidence taken or
made by the custodial party, or evidence of other actions the
custodial party took to investigate the evidence prior to
destruction. Sometimes the substitute may be sufficient such that
a sanction other than dismissal is warranted, but sometimes not.
Compare Baliotis v. McNeil, 870 F. Supp. 1285, 1291–93 (M.D. Pa.
1994) (“Also mitigating the prejudice is the existence of scores of
photographs and a lengthy video tape of the fire scene.”), with
Fines, 2012 ND 175, ¶¶ 13–14 (holding dismissal was warranted
in part because pictures and video of allegedly improperly
installed siding was an insufficient substitute for defendant’s
opportunity to have an “objective third party to testify”
regarding the siding installation). And it is also possible that, by
nature of the noncustodial party’s actual involvement in the
events leading up to litigation, its own testimony or
documentation may be a sufficient—albeit imperfect—
substitute. Again, the availability of other evidence may counsel
against dismissal, but it may not. Compare Robertet Flavors, 1 A.3d
at 663, 677–78 (declining to dismiss a claim against a
noncustodial window installer in part because alternative
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evidence in the form of “supporting documents or testimony
from its personnel should [have] be[en] within its possession”),
with Brookshire Bros., 438 S.W.3d at 17 (“Testimony as to what the
lost or destroyed evidence might have shown will not always
restore the nonspoliating party to an approximation of its
position if the evidence were available; sometimes a picture is
indeed worth a thousand words.”).
¶42 But this all raises the practical question of how the district
court should go about evaluating the importance of “evidence
that is no longer available for review.” Brookshire Bros., 438
S.W.3d at 22. The answer is this: the burden is on the
noncustodial party to demonstrate the prejudice to its case. See,
e.g., Gates Rubber Co. v. Bando Chem. Indus., Ltd., 167 F.R.D. 90,
104 (D. Colo. 1996) (“The burden is on the aggrieved party to
establish [prejudice].” (cleaned up)). It may well be that, in
certain cases, the prejudice will be apparent and can be
established through argument or lay witnesses. But, in other
cases, demonstrating prejudice may require the testimony of an
expert who explains why the evidence is important and why the
proffered substitutes are insufficient. See, e.g., Fines, 2012 ND
175, ¶ 23 (expert affidavit used to show prejudice); Robertet
Flavors, 1 A.3d at 666–67 (expert testified at hearing and
explained what his investigation would have consisted of and
why he was unable to render an opinion in the absence of his
own investigation); Miner Dederick Constr., LLP v. Gulf Chem.
& Metallurgical Corp., 403 S.W.3d 451, 470 (Tex. App. 2013)
(expert “identified additional tests that he would have
conducted” and explained why photographs of the spoliated
evidence were insufficient); Silvestri v. General Motors Corp., 271
F.3d 583, 588 (4th Cir. 2001) (expert explained that the failure to
preserve hindered the defendant’s ability to mount its case
because a “crush” analysis was necessary, which could not be
performed); see also Fines, 2012 ND 175, ¶¶ 23–26 (Maring, J.,
dissenting) (opining that the sanction of dismissal should be
reversed, in part because the expert’s affidavit was insufficient to
show the degree of prejudice that would warrant that sanction).
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¶43 Further, one more consideration is clearly in play:
whether the noncustodial party unreasonably failed to take steps
to investigate or preserve the spoliated evidence. See Robertet
Flavors, 1 A.3d at 676 (“Courts evaluating prejudice should also
recognize that the non-spoliating party may bear some of the
responsibility for the loss of the evidence.”). The need for the
court to “even[] the playing field” sounds in equity, and where
the noncustodial party acted unreasonably in protecting its
interests in the evidence, this mitigates against the need for the
district court to step in and “place the parties in equipoise.” Id. at
671 (cleaned up); see also Markel Ins. Co. v. Bottini Fuel, 116 A.D.3d
1143, 1145 (N.Y. App. Div. 2014) (“However, the existence and
alleged significance of this [evidence] . . . could also have been
discovered through a timely inspection by defendants, had they
elected to conduct one.” (cleaned up)). So, even where the
custodial party fails to discharge its duty to preserve, to the
extent the court finds that the noncustodial party acted
unreasonably under the circumstances in not taking steps to
investigate or preserve the evidence, the court may take that
inaction into account when determining the degree of prejudice
suffered. Thus, if the custodial party fails to discharge its duty to
preserve evidence, but the noncustodial party is nevertheless on
notice of specific facts that render its failure to take any steps to
preserve or inspect evidence unreasonable, there will be less
cause for the court to remedy a situation that the noncustodial
party failed to prioritize.16 See Robertet Flavors, 1 A.3d at 676 (“A
contractor, for example, that is called back to the building
repeatedly but that merely glances at the work and makes little
16. We are not in a position to define the precise contours as to
how a district court should fashion the eventual sanction if it
finds that the noncustodial party could and should have taken
steps to investigate or preserve the evidence—this is very much
the district court’s judgment call. But at the very least, it seems
that it would be well within the court’s discretion to find that
total dismissal of the case would be unwarranted in light of such
a finding.
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effort to identify a cause, to document the conditions observed,
or to effect a solution will have less ground to complain when
the owner seeks assistance from others.”); Fujitsu Ltd. v. Federal
Express Corp., 247 F.3d 423, 436 (2d Cir. 2001) (explaining that the
need for sanctions was minimized where it was “undisputed
that [the noncustodial party] did not request to inspect the
damaged shipping container after [the custodial party] notified it
of the damage, nor at any time other than prior to it making the
summary judgment motion”).
3. Fashioning the appropriate sanction
¶44 The third step of the Schmid framework is where the
district court should weigh its findings on the foregoing factors
and determine what sanction is appropriate in light of them. See
Schmid, 13 F.3d at 79. If the court concludes that the custodial
party destroyed evidence in bad faith, it is unlikely that severe
sanctions will ever exceed the district court’s discretion. See
Robertet Flavors, Inc. v. Tri-Form Constr., Inc., 1 A.3d 658, 676 (N.J.
2010). But, so long as the prejudice to the opposing party’s case
can be effectively remedied by the imposition of a lesser
sanction, the court is not required to impose a severe sanction
such as dismissal even if it finds that the evidence was destroyed
in bad faith. See id. at 676–77 (“But even in those circumstances,
if it is possible to return the parties to the status quo ante, or to
limit the claims to those that can be tried fairly, the court may
elect to address egregiousness through imposition of [lesser
sanctions].” (emphasis added)). But regardless of the custodial
party’s culpability in destroying the evidence, the district court
should always—at the very least—seek to impose a sanction that
workably remedies the prejudice to the opposing party’s case.17
Further, the court should keep in mind that,
17. We are aware that some courts require a showing of
willfulness or bad faith before severe sanctions like dismissal are
warranted. See, e.g., Golke, 2009 WI 81, ¶ 42 (“We affirm that
(continued…)
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It will not always be possible to recreate the
evidence that has been lost or to limit the claims so
as to be fair to the non-spoliating party. In those
circumstances, the severe sanction of dismissal
may indeed be appropriate. Moreover, even after
the claims are limited and the matter can fairly
proceed, it will still be within the court’s power to
utilize other sanctions against the spoliator
through the use of an adverse inference or the
imposition of monetary sanctions designed to shift
costs to the spoliator.
(…continued)
dismissal as a sanction for spoliation is appropriate only when
the party in control of the evidence acted egregiously in
destroying that evidence.”). We disagree with this approach,
finding it to be inconsistent with our view that spoliation
sanctions are principally designed to remedy the prejudice to the
noncustodial party’s case. See Robertet Flavors, Inc. v. Tri-Form
Constr., Inc., 1 A.3d 658, 671 (N.J. 2010) (“[T]he focus in selecting
the proper sanction is evening the playing field . . . .” (cleaned
up)); cf. Hamann v. Ridge Tool Co., 539 N.W.2d 753, 756–57 (Mich.
Ct. App. 1995) (noting that court’s view that “[w]hether the
evidence was destroyed or lost accidently or in bad faith is
irrelevant, because the opposing party suffered the same
prejudice”). In other words, we view culpability functionally as a
type of “plus-factor” that the district court may find justifies
even the most severe sanctions, but there is no ceiling on the
range of available sanctions in the absence of willfulness or bad
faith. Instead, the focus should remain primarily on how
hamstrung the noncustodial party is in prosecuting or defending
its claims as a result of the spoliation—keeping in mind that if
the noncustodial party played a part in hamstringing its own
case, the court may understandably refrain from imposing
severe sanctions.
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Id. at 677. And we again reiterate that district courts have wide
discretion in determining what sanction is warranted.
C. Recapping the law
¶45 Where there is an allegation of spoliation, the district
court should first determine whether the custodial party violated
its duty to preserve the evidence at issue. If the duty was not
violated, then sanctions may not be imposed. But if the duty was
violated, the court should then assess what type of sanction
should be imposed under the Schmid framework.
¶46 And within the overall spoliation inquiry, notice of
destruction is relevant in determining if the duty to preserve was
discharged and, in the event that the duty was not discharged,
what type of sanction is appropriate under the Schmid
framework. A party that provides notice sufficient to discharge
its duty to preserve evidence may not be sanctioned because it
has not violated its duty to preserve. But if the party failed to
provide the detailed notice required by our discharge inquiry,
the district court may still assess the import of the imperfect
notice under the Schmid framework. Imperfect notice is a
consideration that informs the first Schmid factor, as greater
lengths to notify the noncustodial party about destruction tend
to undermine the notion of willful or bad faith destruction. And
imperfect notice is also relevant to the second Schmid factor,
insofar as what and how it was conveyed to the noncustodial
party renders unreasonable that party’s failure to take steps to
investigate or preserve the evidence.
II. Reviewing the district court’s order
¶47 We now turn to a review of the district court’s order in
this case. We first provide a brief summary of the motion
hearing and the court’s order, and then evaluate whether the
district court abused its discretion.
20191071-CA 32 2021 UT App 71Diversified Concepts v. Koford
¶48 At the motion hearing, the district court asked a number
of questions about the alternative sources of evidence available
to Landform and Diversified. The court was apprised that
discovery was not complete and that they were not “past expert
discovery.” But the court was also informed that Engineering
Firm took “hundreds of pictures” of the demolition of the walls
“to inspect in a very detailed way what was going on and what
the problems with the project were” and authored a report about
its findings that was provided to Landform and Diversified. The
court was then advised that Landform and Diversified had
attempted to depose the employee from Engineering Firm who
had actually taken the photos and authored the report, but they
had not completed the deposition prior to the motion hearing.
When the court was apprised that Diversified had hired its own
expert, the court asked whether its expert had concluded that he
could not “form an opinion because [he] couldn’t go look at the
property[.]” Diversified’s counsel answered, “Yes,” indicating
that its expert stated he could not make a determination without
seeing the walls themselves. But neither an expert report nor an
expert affidavit was provided to the district court before or
during the hearing. Moreover, the Kofords’ counsel, who was
provided with Diversified’s expert report during mediation, told
the court, “I don’t recall the expert report saying what they’ve
represented her[e] today . . . . Without getting too far into
divulging mediation [,] . . . the report that I recall actually
allowed him to set a dollar amount as to what he thought it
would take to remedy the issues that he saw.” The court was
also apprised that there was a factual dispute as to whether
Landform received the October 2014 letter.
¶49 At the end of the hearing, the district court indicated, “I
don’t see how I can dismiss the complaint in its entirety. I think
there will be some measurement of what was known, when was
it known and some more surgical precision as opposed to a
complete dismissal.” It further noted, “You may have and you
may end up with expert reports that say we can’t make a
decision, we can’t give an opinion, but I don’t have those.” The
court thus intimated that it may have to delay the imposition of
20191071-CA 33 2021 UT App 71Diversified Concepts v. Koford
sanctions “until trial to determine exactly what was known or
what wasn’t known or what could be reconstructed and what
couldn’t be reconstructed.” The court finished by stating, “all I
can say is I can’t imagine, based on the research that [I have]
done so far[,] . . . that this is going to get dismissed in its
entirety.”
¶50 The district court’s written order went on to acknowledge
the dearth of Utah case law on spoliation sanctions but indicated
that it was “persuaded by other jurisdictions that have
addressed the issue related to construction matters.” Specifically,
the court identified two cases that we have cited frequently in
this opinion: Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011)
(expounding upon the import and ramifications of pre-
destruction notice), and Robertet Flavors, Inc. v. Tri-Form
Construction, Inc., 1 A.3d 658 (N.J. 2010) (applying the Schmid
factors and expanding upon them). The district court’s written
order, however, seemed to focus exclusively on the notice that
the Kofords provided to Landform and Diversified before the
walls were destroyed:
It is clear that Plaintiffs were the custodial party of
the property. The[re] is also clear evidence that
both Defendants were on notice that legal action
could be anticipated based on [the] June 27, 2014
and the two July 1, 2014, letters. Both Defendants
had notice of [the] nature of Plaintiffs’ complaints
and that Plaintiffs had hired legal counsel. Both
Defendants took efforts to protect themselves and
secured their own counsel. That timing gave both
Defendants . . . until February 2015 to take steps to
inspect or preserve the evidence themselves and
did not. As such, this passive response will not be
rewarded with a dismissal from the case.
As to notice of specific claims, the Defendants are
in slightly different positions. Diversified was on
20191071-CA 34 2021 UT App 71Diversified Concepts v. Koford
broader notice of [Plaintiffs’] claims based [on] the
involvement of their counsel and the on-going
letters from [the Plaintiffs’ attorney]. Diversified
knew just as well as Plaintiffs on July 1, 2014, that
the project was not complete and something would
have to be done. [The] later letters were even more
specific and continued through October 1, 2014.
This was sufficient notice in all ways to allow
Diversified to protect itself. . . . On that basis,
Diversified’s Motion for Spoliation Sanctions is
denied for any of Plaintiffs’ claims reasonably
related to the letters and communications from [the
Kofords’ attorney] prior to the deconstruction in
February 2015.
As to Landform Design, the letters through July 1
gave it general notice of [Plaintiffs’] complaints and
ample time to protect itself. As such, dismissal of
Landform Design from this case i[s] unwarranted
and that request is denied. What the Court is
unclear of, however, is whether communications
between counsel prior to February 2015, gave
Landform Design the same kind of notice akin to
the specifics provided to Diversified. Because the
parties dispute whether Landform Design received
copies of the letters later sent to Diversified[,] the
Court is unable to resolve this issue currently.
Additionally, both Defendants may have
Spoliation Sanction claims against Plaintiffs for
defects that were . . . discovered at the
deconstruction. A request to dismiss those claims is
preserved and will be addressed if reasserted.
¶51 On appeal, Landform and Diversified argue that the
district court abused its discretion by finding that either party
was provided with notice sufficient to protect itself, and thereby
20191071-CA 35 2021 UT App 71Diversified Concepts v. Koford
erred in concluding that total dismissal was not warranted.
Landform argues that “[g]eneral notice of claims is not sufficient
notice of a legitimate need to destroy, nor does it provide a
reasonable opportunity to inspect the evidence.” Diversified
argues that even the October 2014 letter was insufficient because
that letter did not specifically identify when destruction would
occur, and mentioned only that some of the walls would be
destroyed.
¶52 We think the wisest course of action under these
circumstances is to vacate the district court’s order and remand
in light of the standards we have articulated above.18 It is clear
enough that the district court relied on the concept of notice in
coming to its limited sanction rulings. But it is unclear whether
the court determined that the Kofords discharged their duty to
preserve evidence, or if it instead evaluated notice under the
Schmid framework and simply found that heightened sanctions
were inappropriate as a result of the notice provided. So, given
the important distinction between these two concepts, we think
remand is warranted. Further, it appears that the district court’s
analysis wrongly relied on general notice of potential litigation
and the noncustodial parties engaging counsel as sufficient to
discharge a duty to preserve evidence and impose the burden on
noncustodial parties to proactively attempt to preserve
evidence.19 And “in an effort to offer guidance that might be
18. Again, we praise the district court’s effort in dealing with the
issues presented without any guiding Utah jurisprudence.
Indeed, insofar as the issue of pre-destruction notice is
considered, there is little guiding jurisprudence anywhere. And
neither of the relevant cases we identified, Golke and Miller, see
supra ¶¶ 23–32, discuss in specific terms how a court should
evaluate whether there existed reasonable grounds to destroy
evidence.
19. To be abundantly clear, we reject the notion that notice of
potential litigation and engagement of counsel shift a burden to
(continued…)
20191071-CA 36 2021 UT App 71Diversified Concepts v. Koford
useful on remand,” we take this moment to describe the
analytical steps the court should undertake in this particular
case. See State v. Valdez, 2021 UT App 13, ¶ 54, 482 P.3d 861, cert.
granted, (Utah June 10, 2021) (No. 20210175).
¶53 In the discharge-of-duty inquiry, the court must evaluate
whether the Kofords even had reasonable grounds to destroy the
evidence at issue. At times, the district court appeared to imply
that the Kofords had reasonable grounds to remove the walls,
but there is no specific finding on this point. Discharge is
conditional on the court making a specific factual finding that
the Kofords had reasonable grounds to destroy the walls. With
that being said, on the record before us, the Kofords did not
provide sufficient notice so as to discharge their duty to preserve
with respect to either Landform or Diversified. If Landform
received only the letters in June and July, then it was apprised—
at most—of the potential for litigation and the factual and legal
bases for it. This stops well short of what we have described is
required for the Kofords to discharge their duty to preserve. But
even if Landform, like Diversified, received the August and
October letters, neither party was apprised of the extent to which
the evidence would be destroyed, the approximate date when it
would be destroyed, or that they had the opportunity to inspect
the evidence.
¶54 But it is still within the district court’s discretion to
consider imperfect notice as a relevant consideration under the
Schmid framework. In evaluating the Kofords’ culpability, the
district court may clearly consider the lengths to which the
Kofords went to notify Landform and Diversified of the need to
(…continued)
noncustodial parties to seek to preserve evidence. These facts
might be relevant if they were coupled with notice that evidence
needed to be altered or destroyed. The primary duty to preserve
rests with the custodial party and that duty persists for the
duration of the litigation unless discharged.
20191071-CA 37 2021 UT App 71Diversified Concepts v. Koford
destroy the walls and investigate the cause of their failure.
Likewise, the district court may find that either Landform’s or
Diversified’s failure to take steps to preserve or investigate the
evidence was unreasonable in light of the information provided
by the Kofords or other relevant facts in the record—and if the
court so finds, refusing to impose severe sanctions such as
outright dismissal of the case seems to be an eminently sensible
judgment call.
¶55 Although we are vacating the court’s order so that it can
adjudicate these issues with the guidance we have set forth,
nothing we have said impacts the district court’s broad
discretion in determining what sanction may be warranted if a
breach of the duty to preserve evidence is found. And we agree
with the district court’s comments at the end of the motion
hearing that making such calls on an undeveloped record is
fraught with difficulties and may often result in a court holding
a definitive ruling in abeyance until an accurate picture of
prejudice is available. See Durham v. County of Maui, No. CIV 08-
00342 JMS/LEK, 2010 WL 3528991, at *7–8 (D. Haw. Sept. 10,
2010) (noting that it was “unclear precisely what prejudice” the
noncustodial party would suffer because it did not “articulate[]
any prejudice beyond” generalized concerns, so the court would
wait to make “a final determination of prejudice” until the
existing evidence was “presented to the jury”). The parties
should accordingly be circumspect in ensuring that the record is
sufficiently developed before bringing these issues before the
district court anew.
CONCLUSION
¶56 The district court correctly noted that Utah law on
spoliation was undeveloped. We have endeavored to clarify and
outline the analysis courts should employ in confronting claims
of spoliation. Because the district court did not have the benefit
of this guidance, because it is unclear whether the district court
concluded that the duty to preserve evidence had been
20191071-CA 38 2021 UT App 71Diversified Concepts v. Koford
discharged or whether it was evaluating the sufficiency of the
notice in the context of determining the appropriate sanction,
and because it appears the district court placed too much weight
on general notice of potential litigation, we hereby vacate the
order to afford the district court the opportunity to evaluate
these issues under the standards we have clarified herein.
¶57 Vacated and remanded.
20191071-CA 39 2021 UT App 71