Seattle Tunnel Partners, V. Great Lakes Reinsurance (uk) Plc, Resps ( 2023 )

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
SEATTLE TUNNEL PARTNERS, a
Washington joint venture, and HITACHI No. 79460-4-I
ZOSEN U.S.A. LTD., (consolidated with No.
79890-1-I)
Petitioners,
ORDER WITHDRAWING AND
WASHINGTON STATE DEPARTMENT SUBSTITUTING OPINION
OF TRANSPORTATION,
Respondent,
v.
GREAT LAKES REINSURANCE (UK)
PLC, a foreign insurance company;
SURICH INSURANCE PLC, a foreign
insurance company; STARR SURPLUS
LINES INSURANCE COMPANY, an
Illinois corporation; INDIAN HARBOR
INSURANCE COMPANY, a Delaware
corporation; ALLIANZ GLOBAL
CORPORATE & SPECIALTY AG, a
foreign insurance company; TORUS
INSURANCE (UK) LIMITED, a foreign
insurance company; PARTNER RE
IRELAND INSURANCE LIMITED, a
foreign insurance company; DOES 1-
100, individual and/or corporate
members of SYNDICATE 382 AT
LLOYD’’S, LONDON; and DOES 101-
200, individual and/or corporate
members of SYNDICATE 1882 AT
LLOYD’S LONDON,
Respondents.
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The court has determined that the opinion in the above-entitled case filed on
March 27, 2023 shall be modified as follows: The words “acted in bad faith and” are
deleted from the second sentence of the first paragraph on page 9 of the opinion.
Now, therefore, it is hereby
ORDERED that the opinion filed on March 27, 2023 is withdrawn and a
substitute published opinion reflecting this modification shall be filed.
FOR THE COURT:
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
SEATTLE TUNNEL PARTNERS, a No. 79460-4-I
Washington joint venture, and HITACHI (consolidated with No.
ZOSEN U.S.A. LTD., 79890-1-I)
Petitioners, DIVISION ONE
WASHINGTON STATE DEPARTMENT PUBLISHED OPINION
OF TRANSPORTATION,
Respondent,
v.
GREAT LAKES REINSURANCE (UK)
PLC, a foreign insurance company;
SURICH INSURANCE PLC, a foreign
insurance company; STARR SURPLUS
LINES INSURANCE COMPANY, an
Illinois corporation; INDIAN HARBOR
INSURANCE COMPANY, a Delaware
corporation; ALLIANZ GLOBAL
CORPORATE & SPECIALTY AG, a
foreign insurance company; TORUS
INSURANCE (UK) LIMITED, a foreign
insurance company; PARTNER RE
IRELAND INSURANCE LIMITED, a
foreign insurance company; DOES 1-100,
individual and/or corporate members of
SYNDICATE 382 AT LLOYD’’S,
LONDON; and DOES 101-200, individual
and/or corporate members of SYNDICATE
1882 AT LLOYD’S LONDON,
Respondents.
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No. 79460-4-I/2
(consolidated with No. 79890-1-I)
ANDRUS, J.P.T. — Seattle Tunnel Partners (STP) and Hitachi Zosen U.S.A.,
Ltd. (Hitachi) appeal an order imposing spoliation sanctions in this insurance
coverage lawsuit. STP contends the trial court erred in concluding it committed
spoliation and erred in ruling that the Washington Department of Transportation
(WSDOT) and STP’s builders risk insurance providers (Insurers) were entitled to
an adverse inference jury instruction as a sanction. Hitachi argues that even if
STP engaged in spoliation, the trial court erred in imposing an adverse inference
jury instruction because such a sanction would unfairly prejudice Hitachi, an
innocent party.
We reverse. First, we conclude that our spoliation case law requires, as a
threshold showing, that the alleged spoliating party owes a duty to the party
seeking sanctions to preserve the missing, lost, or destroyed evidence. We
conclude that STP owed a contractual duty to WSDOT to preserve evidence
relating to its change order request and it foresaw the materiality of this evidence
to that claim. But we conclude STP had no duty to the Insurers by contract or
otherwise and, as a result, the Insurers are not entitled to a spoliation remedy.
Second, we conclude that an adverse inference jury instruction is only
appropriate as a sanction for the intentional destruction of evidence or the willful
failure to preserve evidence with an improper motive (i.e., bad faith). The trial
court’s findings do not support this level of culpability, making an adverse inference
instruction inappropriate.
Third, we alternatively conclude that the trial court erred in concluding that
the lost evidence was sufficiently important to WSDOT to justify such a harsh
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No. 79460-4-I/3
(consolidated with No. 79890-1-I)
sanction in this case. While some sanction may be appropriate, we conclude an
adverse inference instruction is not. Because we reverse the spoliation sanction,
we need not reach Hitachi’s appeal.
FACTS
In 2011, WSDOT contracted with STP to construct an underground tunnel
to replace the Alaskan Way Viaduct in Seattle. STP procured a tunnel boring
machine (TBM) designed and manufactured by Hitachi. The TBM cutterhead was
57.5 feet in diameter and contained approximately 700 cutting tools. As the TBM
advanced, the machine forced excavated material through the TBM to a conveyor
belt for disposal.
Pursuant to its design-build contract with WSDOT, STP obtained a builder’s
all-risk insurance policy from Great Lakes Reinsurance (UK) PLC and several
insurance underwriters 1 (collectively Insurers). The policy insured against damage
to both the tunneling works and the TBM. WSDOT and STP are both named
insureds under the policy. Hitachi claims to be an insured as well, a claim the
Insurers dispute.
STP launched the TBM and began mining in July 2013. Between July 2013
and December 2013, the TBM experienced a variety of problems, including
clogging and deformation of the cutterhead, which cracked the machine’s center
pipe. On December 4, 2013, the TBM encountered the steel casing of an
1 Great Lakes Reinsurance is joined by the following insurance underwriters: Zurich American
Insurance Company, Starr Surplus Lines Insurance Company, Indian Harbor Insurance Company,
Allianz Global Corporate and Specialty SE, Torus Insurance (UK) Limited, PartnerRe Ireland
Insurance Limited, Syndicate 382 at Lloyd’s of London, and Syndicate 1882 at Lloyd's of London.
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No. 79460-4-I/4
(consolidated with No. 79890-1-I)
abandoned test well (TW-2). TW-2 was over 100 feet long, consisting of 93 feet
of 8-inch diameter steel pipe with 3/8-inch thick walls, and 15 feet of fine steel
mesh.
In the days following the encounter with TW-2, the TBM slowed and began
making unusual noises and, by December 7, 2013, stopped mining entirely due to
damage to the TBM. On December 12, 2013, STP submitted a notice of a
proposed change order to WSDOT, asserting that TW-2 constituted a differing site
condition under the contract. Because STP considered TW-2, the alleged differing
site condition, to be the cause of the TBM’s damage, STP argued that it was
entitled to a time extension and an increase in compensation. The TBM did not
successfully resume full mining operations until December 2015.
STP recovered a total of nine steel pieces, totaling 89 feet, that it believed
came from TW-2. When the TBM first hit TW-2, a portion of the pipe was pushed
up through the soil and stood proud above the ground. STP cut off this protruding
portion of the pipe. On December 5, STP removed two boulders and two pieces
of steel from the TBM’s conveyor belt. On December 11, STP pulled a 55-foot
long piece of TW-2 out of the ground. On January 2, 2014, STP found a large
piece of steel and a collection of small metal fragments in the TBM’s “muck bin.”
On January 18, another two steel pieces were extracted from the TBM’s spokes.
STP found the final piece on January 25 on the conveyor belt. STP documented
and photographed each of these pieces.
STP’s Deputy Project Manager, Greg Hauser, directed employees to place
several of the recovered pipe pieces and the boulders from the conveyor belt on a
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No. 79460-4-I/5
(consolidated with No. 79890-1-I)
wooden pallet in STP’s construction yard. Hauser ordered several supervisors and
crew members to retain all of the recovered pipe pieces and boulders. STP,
however, did not employ any systematic way of informing every person with access
to the pallet not to disturb it. Nor did STP put a label or sign on or near the pallet.
General Superintendent Tom McMahon testified that he intended to move the
pallet’s contents to STP’s storage warehouse, but never did so.
In February 2014, McMahon gave the order for the yard foreman to “clean
the yard up.” A couple weeks later, McMahon asked the foreman to move the
wooden pallet and its contents to STP’s storage warehouse. When the foreman
and McMahon were unable to locate the pallet or its contents, they discovered that
an equipment operator had placed the steel pieces in the dumpster for steel waste
disposal while cleaning out the yard. By the time they discovered this fact, the
dumpster had been removed and the steel pieces, along with the two boulders,
were gone.
Hauser kept handwritten notes in personal journals detailing the project and
its progression. His journal covering December 2013 through February 2014,
however, also went missing and could not shed light on the TBM’s breakdown, or
on the loss of the steel pieces.
WSDOT, STP, and Hitachi tendered insurance claims based on the damage
to the TBM, losses from the delay in mining, and the cost of construction of an
access shaft built to rescue the TBM. The Insurers denied coverage on the basis
that the policy excludes coverage for physical damage to the TBM caused by
design defects. Following their investigation, the Insurers rejected STP’s
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No. 79460-4-I/6
(consolidated with No. 79890-1-I)
contention that the encounter with TW-2 had caused any damaged and instead
concluded that the “TBM sustained a machinery breakdown due to the fact that it
was improperly designed, under dimensioned, and had an inadequate lubrication
system. Overall, the TBM was not fit for the specified purpose.”
In June 2015, STP initiated this coverage lawsuit against the Insurers in
King County Superior Court (King County Coverage Case). WSDOT was joined
as a necessary party defendant, but later realigned as a plaintiff. Hitachi joined
the action as an intervenor-plaintiff. All three parties sought a declaratory judgment
that the policy covers their losses. STP later amended its complaint, alleging the
Insurers breached the implied covenant of good faith and violated unfair claims
settlement practices regulations, the Consumer Protection Act, 2 and the Insurance
Fair Conduct Act. 3
STP, WSDOT, and Hitachi each dispute the Insurers’ contention that design
defects caused the TBM’s damage. STP and Hitachi both contend that the
encounter with TW-2 damaged the TBM. WSDOT, on the other hand, claims that
STP operator error, in addition to design defects, damaged the TBM.
After STP initiated the King County Coverage Case, WSDOT filed a
separate action against STP in Thurston County Superior Court, alleging that STP
had breached the design-build contract when it failed to meet the substantial
completion deadline (Thurston County Contract Case). See Washington State
Dep’t of Transp. v. Seattle Tunnel Partners, No. 54425-3-II, slip op. at 5 (Wash.
2 RCW ch. 19.86.
3 RCW ch. 48.30.
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No. 79460-4-I/7
(consolidated with No. 79890-1-I)
Ct. App. June 14, 2022) (unpublished). 4 STP in turn filed a counterclaim against
WSDOT for breach of contract, claiming it was entitled to damages based on
alleged differing site conditions relating to the TBM tunneling. Id.
In the King County Coverage Case, the Insurers filed a motion for spoliation
sanctions based on STP’s failure to preserve the pieces of TW-2 and requested
that the court “instruct the jury to presume that the evidence STP spoliated would
be unfavorable to STP” and to preclude STP from arguing that the pipe contributed
to the TBM’s failure. WSDOT subsequently filed a similar motion for the loss of
the several steel pipe fragments, three boulders, and Hauser’s work journal at the
time of the pipe strike. STP moved for an evidentiary hearing to resolve any factual
disputes relating to the alleged spoliation, 5 a request the trial court denied.
Around the same time, WSDOT moved for spoliation sanctions in the
Thurston County Contract Case, seeking an adverse jury instruction based on
STP’s failure to preserve pieces of TW-2, the boulders, and Hauser’s journal. The
Thurston County Superior Court granted STP’s request for an evidentiary hearing.
Hitachi, in response to the spoliation motions in both cases, took no position
regarding STP’s culpability, but strongly opposed the proposed sanctions of
excluding evidence about TW-2 or imposing an adverse inference jury instruction.
4 https://www.courts.wa.gov/opinions/pdf/D2%2054425-3-II%20Unpublished%20Opinion.pdf.
5 Because WSDOT had filed a similar motion for spoliation sanctions in Thurston County and the
trial court in that case had agreed to hold an evidentiary hearing on the matter, STP asked that the
court refer the evidentiary hearing to the Special Master that had been appointed to oversee
discovery in the two cases.
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No. 79460-4-I/8
(consolidated with No. 79890-1-I)
Hitachi argued that either sanction would unfairly prejudice it as an innocent party
because its theory of causation and that of STP were so strongly aligned.
The King County Superior Court granted the Insurers’ and WSDOT’s
motions for spoliation sanctions on December 7, 2018. It found that “[t]he missing
pipe fragments and boulders are certainly important and relevant.” It also found
that the lack of access to these physical objects did not prevent any of the parties’
experts from developing opinions and none claimed that the lack of an ability to
physically examine the fragments severely impacted their ability to reach their
conclusions. With regard to the missing Hauser journals, the trial court could not
determine how important that evidence was but found their relevance to be “clear.”
As to STP’s culpability, the trial court found that STP had a duty to preserve
the evidence and that STP’s explanation for the lost items, “while perhaps not
clearly evidencing intent, can hardly be characterized as innocent given the
stakes.” Because the “critically relevant” evidence was within STP’s exclusive
control and was lost or destroyed “without satisfactory explanation,” the trial court
determined that WSDOT and the Insurers were entitled to an adverse jury
instruction. The court rejected the Insurers’ and WSDOT’s request for the harsher
sanction of excluding all evidence relating to the pipe strike.
The trial court ordered WSDOT and the Insurers to each propose an
instruction “that establishes an adverse inference relating to the evidence that has
been lost or destroyed by STP.” Before the court approved any such instruction,
both STP and Hitachi moved for, and this court granted, discretionary review.
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No. 79460-4-I/9
(consolidated with No. 79890-1-I)
Meanwhile, the Thurston County Superior Court conducted an evidentiary
hearing on January 9 and 10, 2019, after which it also granted WSDOT’s request
for spoliation sanctions in an April 19, 2019 order containing over 190 findings of
fact and 29 conclusions of law. Findings of Fact & Conclusion of L. re Evidentiary
Hr’g on Spoliation, Wash. State Dep’t of Transp. v. Seattle Tunnel Partners, No.
16-2-00980-34 (Thurston County Super. Ct., Wash. Apr. 19, 2019) (“Thurston
FF&CL”). It concluded STP had acted in conscious disregard of the importance of
the pipe pieces and boulders and that this missing evidence was important and
relevant. Id. at 44. The court approved an instruction directing the jury to infer that
the missing steel pieces did not damage the TBM and a second instruction
permitting the jury to infer that the lost Hauser journal contained information
adverse to STP’s position in the case. Seattle Tunnel Partners, slip op. at 8. A
Thurston County jury subsequently found that the TW-2 steel casing was not a
differing site condition as that term was defined in the WSDOT contract and
awarded $57.2 million in liquidated damages to WSDOT. Id. at 11-12.
We stayed this appeal from June 2019 to January 2020 and again from
June 2020 to August 2021, when we granted STP’s and Hitachi’s motions for
discretionary review.
In June 2022, before this court heard oral argument on this appeal, Division
Two affirmed the jury verdict against STP in favor of WSDOT in the Thurston
County Contract Case and concluded that any error in giving an adverse inference
jury instruction in that case was harmless because the instructions concerned
causation, an issue the jury never reached. Id. at 30.
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No. 79460-4-I/10
(consolidated with No. 79890-1-I)
ANALYSIS
STP argues the trial court erred in concluding that it committed spoliation.
STP and Hitachi both contend the court erred in concluding that WSDOT and the
Insurers are entitled to an adverse inference jury instruction as a sanction for STP’s
conduct. 6
Standard of Review
We review a trial court’s decision imposing sanctions for spoliation for abuse
of discretion. J.K. by Wolf v. Bellevue Sch. Dist. No. 405, 20 Wn. App. 2d 291,
303, 500 P.3d 138 (2021). A trial court abuses its discretion if its decision is
manifestly unreasonable or based on untenable grounds or untenable reasons. Id.A court’s decision is manifestly unreasonable if, given the facts and the applicable
legal standard, it is outside the range of acceptable choices. In re Marriage of
Littlefield, 133 Wn.2d 39, 47, 940 P.2d 1362 (1997). A decision is based on
untenable grounds if the record does not support the trial court’s factual findings.
Id. We review the trial court’s findings of fact for substantial evidence. J.K. by
Wolf, 20 Wn. App. 2d at 302. Substantial evidence is the quantum of evidence
sufficient to persuade a rational fair-minded person that the premise is true. Id. at
303.
We review de novo whether a duty to preserve evidence exists. Id. And
we review de novo whether a trial court applied the correct legal standard in
6 STP also argues that the trial court erred in denying STP’s request for an evidentiary hearing. We
conclude that, in light of the evidentiary hearing STP obtained in the Thurston County Contract
Case, where it had the opportunity to litigate the factual and legal issues fully, this issue is now
moot.
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No. 79460-4-I/11
(consolidated with No. 79890-1-I)
assessing sanctions for spoliation. Id. A trial court’s decision is an abuse of
discretion if based on an incorrect legal standard or the facts do not meet the
requirements of the correct legal standard. Littlefield, 133 Wn.2d at 47.
Summary of Issues
The parties disagree on several key legal principles relating to the doctrine
of spoliation. First, STP contends that the existence of a duty to preserve evidence
is a threshold legal issue and that, without such a duty, no spoliation can occur.
WSDOT and the Insurers argue, on the other hand, that the existence of a duty to
preserve evidence is merely one of many factors a trial court should assess in
determining a party’s culpability for its destruction of or failure to preserve
evidence.
Second, STP contends that “spoliation” is a legal term of art, limited to the
intentional destruction of evidence. The parties agree that “[w]hen a party
intentionally withholds or destroys evidence, the trial court may issue a spoliation
instruction for the jury to draw an inference that the missing evidence would be
unfavorable to the party at fault.” Henderson v. Thompson, 200 Wn.2d 417, 441,
518 P.3d 1011 (2022). Both the King County and Thurston County Superior Courts
found that STP did not intentionally destroy the TW-2 pieces, the boulders, or
Hauser’s journal. But WSDOT and the Insurers maintain that under Washington
case law, courts have extended the term “spoliation” to conduct that includes the
failure to preserve evidence in bad faith and to conduct constituting a conscious
disregard for the importance of that evidence.
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No. 79460-4-I/12
(consolidated with No. 79890-1-I)
Third, STP argues that even if the unintentional failure to preserve evidence
can constitute spoliation and some sanction is appropriate, an adverse jury
instruction is so severe a sanction that it should be reserved for intentional
misconduct. WSDOT and the Insurers contend that the sanction may be imposed,
regardless of the level of culpability of the spoliating party, whenever a trial court
deems the missing evidence to be so important and relevant that the only way to
level the litigation playing field is to instruct the jury to infer that the missing
evidence is unfavorable to the spoliating party.
Finally, STP maintains that the trial court’s findings are insufficient to
support the conclusion that spoliation occurred or that STP acted with the requisite
level of culpability to warrant an adverse jury instruction. WSDOT and the Insurers
disagree.
Hitachi, in its separate appeal, contends that even if STP committed
spoliation, an adverse inference instruction cannot be imposed when doing so
would prejudice its rights as an innocent party advancing the same factual theories
as STP.
Because the parties raise questions of first impression and rely on spoliation
case law that, on its face, appears to support their respective arguments, we take
this opportunity to clarify whether a duty to preserve evidence is a prerequisite to
the imposition of any spoliation sanction, what level of culpability is required for the
sanction of an adverse inference instruction, and the factors courts should consider
in determining whether the missing or lost evidence is sufficiently relevant and
important to warrant such a harsh sanction.
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No. 79460-4-I/13
(consolidated with No. 79890-1-I)
A. Evolution of Spoliation Doctrine in Washington
The origin of our modern-day spoliation doctrine in Washington appears to
be the case of State v. Constantine, 48 Wash. 218, 93 P. 317 (1908). In that case,
the State charged Constantine with the attempted murder of Hall. Id. at 220. Hall
claimed at trial that certain individuals had approached him on Constantine’s behalf
and asked that he drop his civil lawsuit for damages, accept money to travel to
California, and not appear in the criminal proceeding. Id. at 220-21. The court
refused to allow Constantine to call witnesses to dispute Hall’s accusations. In
reversing the conviction, the court stated:
It is a rule of evidence, as old as the law itself, applicable alike to
both civil and criminal causes, that a party’s fraud in the preparation
or presentation of his case, such as the suppression or attempt to
suppress evidence by the bribery of the witness or the spoliation of
documents, can be shown against him as a circumstance tending to
prove that his cause lacks honesty and truth.
Id. at 221 (emphasis added). Bribing witnesses and spoliation of documents, it
said, is evidence showing one’s consciousness of guilt. Id. at 222. Because Hall’s
testimony was admissible for this reason, Constantine should have been permitted
to present evidence that Hall’s testimony was untrue. 7 Id. at 227.
We next see the evidentiary inference discussed in Constantine arise in the
case of British Columbia Breweries (1918) Ltd. v. King County, 17 Wn.2d 437, 135
P.2d 870 (1943). In that case, a King County brewery challenged the county’s
7 In Wood v. Miller, 147 Wash. 251, 254-55, 265 P. 727 (1928), the Supreme Court cited to
Constantine for the proposition that testimony from a witness that she had been approached by a
party’s attorney with a bribe to absent herself from the trial was admissible. It also approved an
adverse inference jury instruction against a party who attempted to bribe the witness. But the court
did not discuss such an instruction in the context of the spoliation of documents or other physical
evidence.
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No. 79460-4-I/14
(consolidated with No. 79890-1-I)
imposition of personal property taxes on buildings it had constructed on county
land leased to the brewery. Id. at 439-40. On appeal, the brewery challenged the
trial court’s valuation of the property and argued that the court erred in considering
the amount for which it had insured the property because the policy itself may have
allocated value between the building and its contents. Id. at 453-54.
The Supreme Court rejected that argument based on two evidentiary
principles. First,
[t]he failure to bring before the tribunal some circumstance,
document, or witness, when either the party himself or his opponent
claims that the facts would thereby be elucidated, serves to indicate,
as the most natural inference, that the party fears to do so, and this
fear is some evidence that the circumstance, or document or witness,
if brought, would have exposed facts unfavorable to the party.
Id. at 454 (quoting 2 WIGMORE ON EVIDENCE (3rd ed.) § 285, at 162). Second, it
held that:
It is a well-established rule that where relevant evidence which would
properly be part of a case is within the control of the party whose
interest it would naturally be to produce it, and he fails to do so,
without satisfactory explanation, the jury may draw an inference that
such evidence would be unfavorable to him. This rule is uniformly
applied by the courts and is an integral part of our jurisprudence.
Id. at 454-55 (quoting 20 AM. JUR., Nonproduction, Suppression, Destruction, or
Fabrication of Evidence, § 183 (1939)). 8
8 The Supreme Court, citing British Columbia Brewery, approved this statement of the law in Krieger
v. McLaughlin, a case in which it reversed an order granting a defendant a new trial after the plaintiff
commented in closing that the defendant’s failure to introduce any evidence at trial allowed the jury
to infer that the reason for doing so was that the evidence would have been unfavorable. 50 Wn.2d
461, 464 n.7, 313 P.2d 361 (1957).
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No. 79460-4-I/15
(consolidated with No. 79890-1-I)
In 1977, the Supreme Court relied on British Columbia Brewery to affirm a
trial court finding of taxpayer discrimination in Pier 67, Inc. v. King County, 89
Wn.2d 379, 385-86, 573 P.2d 2 (1977). In that case, a taxpayer challenged the
validity of the county valuations placed on its leasehold interests and
improvements on state-owned land. Id. at 380. In discovery, during the pendency
of litigation, Pier 67 sought the production of tax assessment documents relating
to two similarly situated taxpayers, documents the county claimed were
unavailable. Id. at 385-86. The Supreme Court, citing British Columbia Brewery,
noted that the county had been on notice for years that Pier 67 sought evidence
on how the county had assessed two other taxpayers to prove discriminatory
treatment. Id. at 385. Because the county, who was in control of its own
documents, lacked a satisfactory explanation for the loss of these documents, the
court concluded that “the only inference which may be drawn is unfavorable to the
contention of the [County] that such discriminatory techniques were not in fact
employed.” Id. at 386.
These cases treated the loss of evidence as a simple evidentiary issue,
allowing a party to argue at trial that missing, lost, or destroyed evidence was
substantive proof that the missing evidence was unfavorable to the party who
controlled it. 9
9 See also State v. Mark, 36 Wn. App. 428, 434, 675 P.2d 1250 (1984) (in determining restitution
for a defendant’s prescription fraud, auditors and trial court were permitted to infer that fraudulent
prescriptions that existed before the audit but were missing thereafter were destroyed by the
defendant to prevent their discovery); Giles v. Washington Horse Racing Comm’n, 53 Wn. App.
932, 934-35, 771 P.2d 1159 (1989) (loss of optional blood sample, destroyed in accordance with
routine laboratory procedures, did not warrant inference that evidence was unfavorable to
commission); Lynott v. National Union Fire Ins. Co. of Pittsburgh, PA, 123 Wn.2d 678, 689, 871
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No. 79460-4-I/16
(consolidated with No. 79890-1-I)
The first case to lay out a test for imposing a sanction for spoliation was
Henderson v. Tyrrell, 80 Wn. App. 592, 910 P.2d 522 (1996). In that case, three
Henderson siblings were riding in Tyrrell’s Camaro when the car crashed. Id. at
596. Tyrrell was thrown from the car and seriously injured. Tyrrell claimed Darrell
Henderson was driving at the time of the accident; the Henderson siblings said
Tyrrell was at the wheel. Id. at 597-98. The jury determined Henderson caused
the accident and awarded Tyrrell over $3.5 million in damages. Id. at 602.
The Hendersons claimed they were denied a fair trial because Tyrrell had
destroyed his wrecked Camaro, had not produced blood samples his mother had
collected from the interior of his car shortly after the accident, and the police lost
the shoes Tyrrell was wearing on the night of the accident. Id. at 603. The trial
court denied the Hendersons’ request to dismiss Tyrrell’s claim, to limit the
evidence he could present, or to instruct the jury on the issue of spoliation of
evidence because it found no “pattern of willful destruction, and the car was
available for inspection by both sides after the accident.” Id. at 604.
On appeal, this court recognized as “long-standing,” the problem that
litigants and courts faced with the destruction or loss of potentially relevant
evidence. Id. at 604. It noted that spoliation, defined in Black’s Law Dictionary as
“[t]he intentional destruction of evidence,” had “historically [] been treated as an
evidentiary matter,” with the remedy being an inference that the party’s conduct in
destroying the evidence tended to corroborate the opposing party’s case. Id. at
P.2d 146 (1994) (National Union could not find its underwriting file; court affirmed evidentiary
inference that file materials would be unfavorable to it).
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No. 79460-4-I/17
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605. This approach was in fact that taken by our Supreme Court in British
Columbia Brewery and Pier 67.
The Henderson court identified two different approaches courts had begun
to take to sanction spoliation. Citing Sweet v. Sisters of Providence, 895 P.2d 484,
490-91 (Alaska 1995), it recognized that some state courts were applying “a
rebuttable presumption, shifting the burden of proof to a party who destroys, alters,
or loses important evidence.” Henderson, 80 Wn. App. at 605. It noted that federal
courts had taken a different path, treating spoliation as a civil discovery violation,
the remedy for which is sanction under Fed. R. Civ. Pro. 37. Id. at 605-06 (citing
Shepherd v. American Broadcasting Cos., 62 F.3d 1469, 1474-75 (D.C. Cir. 1995);
Dillon v. Nissan Motor Co., 986 F.2d 263, 266-67 (8th Cir. 1993)).
The Henderson court said that, regardless which approach it took,
sanctioning Tyrrell for the loss of the blood samples and missing shoes was
inappropriate because he was not responsible for the evidence, or even know that
it was missing. Id. at 606. As for the disposal of the car, the court referred back
to Pier 67 as one of “the few Washington cases that address the problem.” Id. It
recognized that the Supreme Court applied an adverse inference in that case
because the county lacked a satisfactory explanation for the loss of its tax
documents, but found no clarity as to what explanation could be offered to avoid a
Pier 67 adverse inference. Id. at 606-07. The court chose to adopt the Alaska
Supreme Court’s approach in Sweet:
In deciding whether to apply a rebuttable presumption in spoliation
cases, the Alaska Supreme Court examined two general factors: (1)
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No. 79460-4-I/18
(consolidated with No. 79890-1-I)
the potential importance or relevance of the missing evidence; and
(2) the culpability or fault of the adverse party.
Id. (citing Sweet, 895 P.2d at 491). As to the first factor, the Henderson court said
“whether missing evidence is important or relevant obviously depends on the
particular circumstances of the case.” Id. Other “important considerations” were
whether the loss or destruction of the evidence resulted in an investigative
advantage for one party over another, or whether the adverse party was afforded
an adequate opportunity to examine the evidence. Id.
The parties in Henderson presented expert testimony that having the actual
vehicle available to inspect would have provided a better understanding of how
Tyrrell’s injuries occurred, but the court concluded there were extensive
photographs of the car admitted into evidence and both parties had had two years
to inspect the car before Tyrrell disposed of it. These facts, the court held,
supported the trial court’s decision not to impose any sanctions against Tyrrell at
trial. Id. at 608-09.
As to the culpability factor, the court stated that “many courts examine
whether the party acted in bad faith or conscious disregard of the importance of
the evidence, or whether there was some innocent explanation for the destruction.”
Id. at 609. The reason for looking at this factor “derives from the evidentiary
inference that spoliation creates; unless there was bad faith, there is no basis for
‘the inference of consciousness of a weak cause.’” Id. (quoting 2 MCCORMICK ON
EVIDENCE § 265, at 191 (John William Strong ed., 4th ed. 1992)). Because the
Hendersons lacked any evidence that Tyrrell acted in bad faith in destroying his
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No. 79460-4-I/19
(consolidated with No. 79890-1-I)
car, the court concluded this evidence supported the denial of spoliation sanctions.
Id. at 609-11.
Henderson went on: “[a]nother important consideration is whether the actor
violated a duty to preserve the evidence.” Id. at 610. The court cited Simich v.
Culjak, 27 Wn.2d 403, 178 P.2d 336 (1947), 10 a case in which a defendant violated
a duty he owed as a managing partner to render accurate accounts of the
partnership business to his partners, and Carr v. St. Paul Fire & Marine Ins. Co.,
384 F. Supp. 821 (W.D. Ark. 1974), 11 and DeLaughter v. Lawrence County Hosp.,
601 So.2d 818 (Miss. 1992), 12 cases in which the destruction of medical records
violated legal or regulatory requirements. Henderson, at 610. It concluded that
Tyrrell had no similar duty to retain the Camaro. Id. Although Tyrrell’s attorney
had received a request from the Hendersons’ attorney to retain the vehicle and
Tyrrell could be charged with knowledge through his attorney, the court concluded
that the Hendersons failed to establish that a breach of any duty to retain the car
prejudiced their case because they “had ample opportunity during [the two years
10 In Simich, a partnership dissolution case, the court held that the managing partner who failed to
maintain records of his transactions on behalf of the partnership breached his duty of good faith
toward the other partners and was thus not entitled to take part in the division of the remaining
partnership assets. 27 Wn.2d at 410.
11 In Carr, a medical malpractice action based on a hospital’s refusal to treat the decedent in a
medical emergency, hospital employees destroyed medical records of the patient’s vital signs after
learning that he had died. 384 F. Supp. at 831. The court held that the jury had the right to infer
from the destruction of this evidence that it would have proved the existence of a medical
emergency. Id.12 DeLaughter is a medical malpractice action against an emergency room physician and hospital
for failure to diagnose a fatal condition and a separate claim for negligence in the destruction of the
patient’s hospital records, in violation of Mississippi statute. 601 So.2d at 821. It held that “where
the evidence is positive that the hospital deliberately destroyed the original medical record or where
a record required by law ito be kept is unavailable due to negligence, an inference arises that the
record contained information unfavorable to the hospital, and the jury should be so instructed.” Id.
at 821-22.
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No. 79460-4-I/20
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prior to litigation] to examine the car” and Tyrrell had not prevented them from
doing so. Id. at 611.
The Henderson court separately analyzed the trial court’s refusal to give an
adverse inference jury instruction. Id. at 612-13. Citing to the Washington Pattern
Jury Instructions WPI 5.01, entitled “Failure to Testify or Produce Evidence,” it
noted that the Pattern Jury Instruction Committee recommended that trial courts
not instruct a jury on a party’s failure to produce evidence or a witness. Id. at 612.
It rejected the Hendersons’ argument that the WPI committee’s comment related
only to the failure to call witnesses, concluding that even if the failure to produce
physical evidence is different from the failure to produce witnesses, the trial court
reasonably concluded Tyrrell had satisfactorily explained his destruction of the
Camaro. Id. at 613.
Division Two of this court applied the Henderson framework in Marshall v.
Bally’s Pacwest, Inc., 94 Wn. App. 372, 972 P.2d 475 (1999). In that case, a health
club member injured on a treadmill machine sued the club, the treadmill
manufacturer, and the repairer for damages. Id. at 376. On appeal of a summary
judgment order dismissing the action, Marshall contended the trial court should
have applied a favorable evidentiary presumption in her favor because the
treadmill was destroyed before she could inspect it. Id. at 381. The Marshall court,
like Henderson, recognized that the term “spoliation” means the “intentional
destruction of evidence.” Id. Citing to Pier 67 and Henderson, the court said that
spoliation may be remedied with a rebuttable presumption shifting the burden of
proof to a party who destroys or alters important evidence. Id. The court
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No. 79460-4-I/21
(consolidated with No. 79890-1-I)
concluded that Marshall was not entitled to this adverse inference, however,
because she had four years in which to ask the club to preserve the machine or to
inspect it, and the treadmill was not destroyed in bad faith. 13 Id. at 382-83.
Division Two again revisited Henderson in Homeworks Constr., Inc. v.
Wells, 133 Wn. App. 892, 138 P.3d 654 (2006). In that case, a general contractor
settled a claim from homeowners for the alleged improper installation of synthetic
stucco on their house and then sued the two stucco subcontractors for breach of
contract and indemnification. Id. at 896. The trial court granted summary judgment
to the subcontractors as a sanction for spoliation of evidence because the
homeowners—who were not parties to the litigation—repaired the house before
the subcontractors could inspect the damage. Id. at 897.
On appeal, the subcontractors argued that the general contractor and its
insurer had a duty to preserve the evidence for the subcontractors to inspect. Id.
at 901. This court rejected that argument and reversed because neither the
general contractor nor its insurer, State Farm, had a duty to notify the
subcontractors that the homeowners might repair the house and they did not
control the house or have access to the premises being repaired. Id.
Focusing on the culpability element of the Henderson test, the court noted
that spoliation is a “term of art, referring to the legal conclusion that a party’s
13 At least one commentator cites Marshall for the proposition that “the destruction of potential
evidence is not always improper, and thus when a party is alleged to have committed spoliation,
the threshold issue is whether the party had any duty to preserve the evidence in the first place. If
no such duty existed, a finding of spoliation is unwarranted.” 15A DOUGLAS J. ENDE, W ASHINGTON
PRACTICE: HANDBOOK ON CIVIL PROCEDURE § 56.15, at 556 (2021).
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No. 79460-4-I/22
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destruction of evidence was both willful and improper.” Id. at 900 (quoting KARL B.
TEGLAND, 5 W ASHINGTON PRACTICE: EVIDENCE LAW AND PRACTICE § 402.6, at 37
(2005)). It recognized that, in Henderson, the court said that spoliation may occur
when a party acts in bad faith or with “conscious disregard” for the importance of
the evidence, suggesting that “spoliation encompasses a broad range of acts
beyond those that are purely intentional or done in bad faith.” Id. (citing
Henderson, 80 Wn. App. at 605). But, the Homeworks court said, even if a party
may be responsible for spoliation without a finding of bad faith, “the party must also
have a duty to preserve the evidence.” Id. “A party’s actions are ‘improper’ and
constitute spoliation where the party has a duty to preserve the evidence in the
first place.” Id.The court concluded that there was no evidence that the general contractor
or insurer acted intentionally or in bad faith. “At most, Homeworks/State Farm
failed to take steps to preserve potential evidence.” Id. at 901. It rejected the
subcontractors’ argument that, under Henderson, a party who knows it intends to
sue and is aware of the evidence’s importance has a general duty to preserve that
evidence. Id. It then stated “[w]hile [the subcontractors] may be correct that a
party has a general duty to preserve evidence on the eve of litigation, we do not
agree that this duty extends to evidence over which a party has no control.” Id. It
reasoned that there was no contractual obligation for the contractor to notify the
subcontractors of any potential claims from the homeowners. Id. And, it said,
there was no indemnification provision requiring the subcontractors to defend the
general contractor from the homeowners’ claim. Id. Finally, it stated there was no
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No. 79460-4-I/23
(consolidated with No. 79890-1-I)
legal method to force the homeowners to permit the subcontractors to inspect the
house. Id. at 901-02. It concluded
Without evidence in the record that the [homeowners] notified
Homeworks/State Farm that they were going to repair their house
within two months of settlement, and absent evidence that
Homeworks/State Farm’s failure to notify [the subcontractors] was in
bad faith, Homeworks/State Farm did not breach a duty to preserve
the [stucco] on the [homeowners’] house.
Id. at 902. The court reversed the spoliation sanction.
After Homeworks, we concluded that a duty to preserve evidence does not
arise simply because a person has been injured by an arguably negligent act and
a lawsuit is a possibility. Ripley v. Lanzer, 152 Wn. App. 296, 326, 215 P.3d 1020(2009); Tavai v. Walmart Stores, Inc., 176 Wn. App. 122, 136, 307 P.3d 811(2013). Division Three formally adopted this holding in Cook v. Tarbert Logging,
Inc., 190 Wn. App. 448, 360 P.3d 855 (2015). Cook involved a driver injured in an
accident with a logging truck. Id. at 450-51. After a defense jury verdict, Cook
appealed, arguing that the trial court erred in excluding testimony of his expert
based on findings of spoliation. Id. at 460. At trial, the logging company claimed
Cook had committed spoliation by allowing his nephew to part out his damaged
truck without taking steps to download the electronic airbag control monitoring data
from the truck, data that would have tracked Cook’s speed while driving on the day
of the accident. Id. at 454-58.
The trial court found that Cook’s actions in not preserving the data were
neither intentional nor made in bad faith, but it nevertheless found Cook culpable
because “common sense should have caused the parties on the plaintiff side to
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No. 79460-4-I/24
(consolidated with No. 79890-1-I)
say, this item needs to be preserved and there needs to be some notice to the
other side.” Id. at 456. The court precluded Cook’s expert from testifying about
the speed at which Cook was traveling at the time of the accident. Id. The court
refused to instruct the jury on spoliation, but allowed the defense to elicit evidence
about the existence of the data, the authorization by the plaintiff’s agents to
dispose of it, and the lack of opportunity for the defense to inspect it. Id. at 458.
This court reversed. First, it held that there is no general duty to preserve
evidence in anticipation of litigation. Id. at 464. Referring to Henderson, it noted
that, while a letter from an attorney demanding that a person preserve evidence
may trigger such a duty, no such letter existed in the Cook case. Id. Second, it
concluded that the mere negligent destruction of evidence cannot support an
adverse inference. Id. at 469-70. The defendants argued that under federal case
law, spoliation sanctions were appropriate for even the negligent loss of evidence.
Id. at 468-69. The court refused to follow this federal case law, relying instead on
language from Henderson for the proposition that unless there is bad faith, there
is no basis for inferring that the party that lost evidence was conscious of the
weakness of their case. Id. at 470. It concluded
In summary, Henderson did not recognize a general duty to preserve
evidence. We need not consider whether federal authority offered
by [the defendants] is persuasive support for finding a general duty
to preserve evidence because the federal cases, like Henderson,
would not support the suggestion of an adverse inference absent bad
faith or, at a minimum, gross negligence. In light of the Cooks’ merely
negligent actions, it is clear that the trial court abused its discretion
in permitting evidence and argument suggesting the inference.
Id.
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No. 79460-4-I/25
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More recently, in J.K. by Wolf, 20 Wn. App. 2d 291, this court affirmed a trial
court’s decision to enter a default judgment on liability against a school district for
the combination of spoliation of video evidence and a series of discovery violations.
In its discussion regarding spoliation, the court distilled several key holdings from
the reported cases. First, citing Homeworks, it held that a party accused of
spoliation must have a duty to preserve the missing evidence. Id. at 308. Because
there is no general duty to preserve evidence under Cook, it held that there must
be a duty arising from some other source. Id. (citing Henderson’s examination of
cases relating to the duty of a partner to preserve records or the duty of a medical
provider to save medical information). In J.K. by Wolf, the duty to preserve video
evidence of alleged child abuse arose under RCW 40.14.070, a statute requiring
the preservation of public records if subject to ongoing or reasonably anticipated
litigation, and the school district’s records retention policies promulgated pursuant
to that statute. Id. at 297, 309-10.
Second, relying on Homeworks, it reasoned that, while every reported case
has defined spoliation as the “intentional destruction of evidence,” our courts have
nevertheless indicated that spoliation may extend to the failure to preserve
evidence when this omission rises to the level of bad faith. Id. at 304, 308. The
court concluded that the district had acted in bad faith sufficient to justify spoliation
sanctions because it had a duty to preserve camera footage, it knew it had this
duty, it knew the video footage was important evidence, it knew their camera
system would overwrite footage if not stopped, and it took no action to preserve
the evidence for six months, leading to the loss of the evidence. Id. at 310, 313.
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No. 79460-4-I/26
(consolidated with No. 79890-1-I)
B. Duty to Preserve Evidence
The Insurers argue that the existence of a duty to preserve evidence before
a lawsuit has been filed is not a threshold legal issue and is merely a factor in the
court’s determination of a party’s level of culpability in failing to preserve evidence.
Wash. Court of Appeals oral argument, Seattle Tunnel Partners, et al. v. Great
Lakes Reinsurance (UK) PLC, et. al., No. 83343-0-I (Jan. 10, 2023) at 33 min., 20
sec. to 34 min. 14 We disagree.
First, despite the language in Henderson that a duty to preserve is an
“important consideration,” 80 Wn. App. at 610, subsequent cases clearly indicate
that the party accused of spoliating evidence must have a duty to preserve that
evidence. This rule is clearly laid out in Homeworks, Cook, and J.K. by Wolf. In
Homeworks, the court held the contractor could not be liable for spoliation because
it owed no duty to the subcontractors to either preserve the stucco or to notify the
subcontractors of the homeowners’ claim for defective workmanship. 133 Wn.
App. at 901-02. In Cook, the court held the injured driver could not be held liable
for spoliation because he owed no duty to the logging truck company to preserve
the electronic data stored in his truck. 190 Wn. App. at 470. In J.K. by Wolf, the
court held that the school district could be held liable for spoliation because it had
a duty to preserve the evidence at issue, knew it had this duty, and took no steps
to preserve it when it knew the evidence would be overwritten by its video system.
20 Wn. App. 2d at 313.
14 https://tvw.org/video/division-1-court-of-appeals-2023011176/?eventID=2023011176.
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No. 79460-4-I/27
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Second, if the existence of a duty to preserve evidence were not a threshold
element of the test, and merely a “factor to consider,” it would undercut the settled
rule that there is no general duty to preserve evidence before a lawsuit has been
filed. That rule of law was the explicit holding in Cook, a case recently cited with
approval by the Supreme Court in Henderson v. Thompson, 200 Wn.2d at 441-42.
Third, the existence of a duty inheres in the concept of culpability.
“Culpable” in the civil context means “involving the breach of a duty.” BLACK’S LAW
DICTIONARY 477 (11th ed. 2019). Each level of culpability recognized in our
spoliation case law—from intentional or willful misconduct, to bad faith, conscious
disregard, and negligence—contemplates the violation of some duty to preserve
that evidence.
“Willful misconduct,” for example, is “the intentional doing of an act which
one has a duty to refrain from doing or the intentional failure to do an act which
one has the duty to do.” 6 W ASHINGTON PRACTICE: W ASHINGTON PATTERN JURY
INSTRUCTIONS: CIVIL 14.01, at 179 (7th ed. 2019). Bad faith, in the spoliation
context, exists when there is destruction of evidence “that is both willful and with
an improper motive.” Carroll v. Akebono Brake Corp., 22 Wn. App. 2d 845, 875,
514 P.3d 720 (2022) (quoting 5 KARL B. TEGLAND, W ASHINGTON PRACTICE:
EVIDENCE LAW AND PRACTICE § 402.5, at 280 (6th ed. 2016)). But to act in “bad
faith” in other contexts under Washington law requires the existence of a duty to
act in good faith. See Smith v. Safeco Ins. Co., 150 Wn.2d 478, 484, 78 P.3d 1274(2003) (insurer has a duty of good faith to its policyholder and violation of that duty
may give rise to a tort for bad faith); Lodis v. Corbis Holdings, Inc., 172 Wn. App.
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No. 79460-4-I/28
(consolidated with No. 79890-1-I)
835, 860, 292 P.3d 779 (2013) (corporate officers owe fiduciary duties of good faith
and loyalty to the corporations under RCW 23B.08.420); Bovy v. Graham, Cohen,
& Wampold, 17 Wn. App. 567, 570, 564 P.2d 1175 (1977) (relationship between
partners is fiduciary in character and imposes on partners the duty to act in good
faith in dealing with each other); Estate of Carter v. Carden, 11 Wn. App. 2d 573,
583, 455 P.3d 197 (2019) (there is in every contract an implied duty of good faith
and fair dealing; the duty obligates parties to the contract to cooperate with each
other so that each may obtain the full benefit of performance).
To act with “conscious disregard” means to act with deliberate indifference.
BLACK’S LAW DICTIONARY 923 (11th ed. 2019). In Henderson, the court relied on
Shepherd v. American Broadcasting Cos., Inc., 62 F.3d 1469 (D.C. Cir. 1995), for
this concept of culpability in the context of spoliation. 80 Wn. App. at 609. That
federal court stated “[a] sanction for failure to preserve evidence is appropriate only
when a party has consciously disregarded its obligation to do so.” Shepherd, 62
F.3d at 1481 (emphasis added). There is thus a link between the existence of a
duty and one’s level of culpability in relation to that duty. One must have a duty to
preserve important evidence before one can deliberately disregard that duty. 15
15 This culpability concept often arises in vehicular assault cases in which driving a vehicle “with
disregard for the safety of others” and causing substantial bodily harm is a felony. RCW
46.61.522(1)(c). Our Supreme Court has defined driving with disregard for the safety of others as
“an aggravated kind of negligence or carelessness, falling short of recklessness but constituting a
more serious dereliction than the hundreds of minor oversights and inadvertences encompassed
within the term ‘negligence.’” State v. Eike, 72 Wn.2d 760, 765-66, 435 P.2d 680 (1967).
Negligence is the violation of a duty to exercise ordinary care. Mathis v. Ammons, 84 Wn. App.
411, 415-16, 928 P.2d 431 (1996). It thus follows logically that to act with “conscious disregard”
means to violate a duty owed to the other party and to do so in a careless manner.
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No. 79460-4-I/29
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Each of these levels of culpability reflects the existence of an underlying
duty. We therefore conclude that a court may impose a sanction for the failure to
preserve evidence before a lawsuit is initiated only if, as a threshold legal issue,
the allegedly spoliating party owed a duty to preserve that evidence. This duty
may arise under statute or regulation for the protection of a particular class of
individuals. See J.K. by Wolf, 20 Wn. App. 2d at 309. It may arise by virtue of a
special or fiduciary relationship between the parties. See Henderson, 80 Wn. App.
at 610. It may arise out of the parties’ contracts. Homeworks, 133 Wn. App. at
901. Or it may, under some circumstances, arise out of a pre-lawsuit letter from
an injured party or their attorney requesting that the party in control of the evidence
not dispose of it without prior notice. Cook, 190 Wn. App. at 464. But the party
seeking a spoliation sanction must establish the existence of a duty to preserve
evidence and that this duty is owed to the party seeking sanctions.
We find compelling the test laid out in Boyd v. Travelers Ins. Co., 652 N.E.2d
267 (Ill. 1995) and Martin v. Keeley & Sons, Inc., 979 N.E.2d 22 (Ill. 2012). In
these cases, the Illinois Supreme Court set out a two-prong test to determine if a
duty to preserve evidence exists. Under the first, or relationship, prong of the test,
a party seeking spoliation sanctions must show that an agreement, contract,
statute, special circumstance, or voluntary undertaking has given rise to a duty to
preserve evidence on the part of the opposing party. Id. at 270-71. Under the
second, or foreseeability, prong of the test, the party seeking sanctions must show
that the duty extends to the specific evidence at issue by demonstrating that a
reasonable person in the opposing party’s position should have foreseen that the
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No. 79460-4-I/30
(consolidated with No. 79890-1-I)
evidence was material to a potential civil action. Id. at 271. If the moving party
fails to satisfy both prongs of this test, the opposing party has no duty to preserve
the evidence at issue. Martin, 979 N.E.2d at 28.
STP argues it owed no duty to either WSDOT or the Insurers to preserve
the missing evidence. We disagree as to WSDOT but agree as to the Insurers.
1. Duty to WSDOT
First, STP owed a contractual duty to WSDOT to preserve evidence relating
to any change order requests it made to the agency. Section 11.5.4. of STP’s
design-build contract with WSDOT provided:
[STP] agrees that it shall give WSDOT access to all of [STP]’s books,
records and other materials relating to the Work in question, and
shall cause its Subcontractors to do the same, so that WSDOT can
investigate the basis for such proposed Change Order.
The Thurston County Superior Court concluded that the word “materials” as used
in this agreement included any pieces of TW-2 that were recovered from the TBM,
as well as the boulders and any other materials relating to the change order
request STP submitted to WSDOT. Thurston FF&CL at 18. 16 We agree with this
interpretation. STP sought additional compensation and more time to complete
the project based on the contention that the presence of TW-2 and the boulders
were differing site conditions under the contract. These items directly related to
that claim and STP agreed to give WSDOT access to these items for investigative
purposes.
16 We take judicial notice of these factual findings.
Under ER 201(c), courts may take judicial notice
of adjudicative facts from another proceeding not for their truth, but to determine what transpired.
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No. 79460-4-I/31
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STP argues that this provision dictates only that it must give access to the
evidence, not that it would preserve it. This argument is unpersuasive. In order
for WSDOT to access the materials, STP had to preserve them, at least until any
proposed change order was resolved. Thus, the contractual duty to preserve the
pipe fragments, boulders, and Hauser’s work journal17 arose by December 12,
2013, when STP notified WSDOT of its differing site condition claim related to the
TBM’s encounter with the pipe. Because that proposed change order was not
resolved prior to litigation, STP had an ongoing duty to preserve the evidence to
allow WSDOT access to it.
Second, WSDOT established that the duty extended to the specific
evidence at issue here by demonstrating that STP should have foreseen, and did
foresee, that the evidence was material to a potential civil action against WSDOT.
WSDOT presented evidence that STP promised to preserve this evidence and
assured it that the missing pipe pieces would not be destroyed. The progress
meeting minutes for February 27, 2014, indicate that STP agreed to “preserve all
samples for examination.” In the following months, STP neither withdrew that
assurance nor informed WSDOT that it had discarded this evidence. The progress
meeting minutes through April 2014 demonstrate that STP concealed the fact that
it had lost the evidence and continued to tell WSDOT that it would analyze the
17 STP argues that this contract provision is inapplicable to Hauser’s work journals. But Hauser
testified that his journals were used to document his activities on the job site, including
conversations he had with other STP employees regarding the operation of the TBM. Presumably,
then, Hauser kept notes regarding the TBM’s encounter with TW-2 and its subsequent breakdown.
Under the plain language of the contract, Hauser’s journals constitute records or other materials
relating to the work in question, which WSDOT could use in investigating the proposed change
order. STP had a duty to preserve that evidence.
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No. 79460-4-I/32
(consolidated with No. 79890-1-I)
metal fragments despite knowing they were missing. STP did not inform WSDOT
that the steel fragments and boulders were gone until February 20, 2015. The trial
court did not err in finding that STP recognized that it owed a contractual obligation
to WSDOT to preserve this evidence, and it is clear from this record that STP
foresaw its materiality to any claim against WSDOT.
2. Duty to Insurers
We reach a different conclusion with regard to the Insurers’ claim that STP
owed them a similar evidence preservation duty.
The Insurers do not contend that the insurance policies between STP and
the Insurers contain a provision imposing a duty of evidence preservation. The
Insurers argue instead that they have the right to rely on STP’s contractual duty to
WSDOT by virtue of the design-build contract. But the language of that agreement
is not so broad. It merely requires STP to preserve materials for WSDOT to
evaluate change order requests. It says nothing about preserving evidence for
potential insurance claims.
Moreover, the design-build contract between WSDOT and STP limits third-
party beneficiaries in Section 26.9, which states in relevant part:
It is not intended by any of the provisions of the Contract Documents
to create any third party beneficiary hereunder, other than the City,
or to authorize anyone not a party hereto to maintain a suit for
personal injury or property damage pursuant to the terms or
provisions hereof, except to the extent that specific provisions (such
as the warranty and indemnity provisions) identify third parties (such
as Utility Owners) and state that they are entitled to benefits
hereunder. Except as otherwise provided in this Section 26.9, the
duties, obligations and responsibilities of the Parties to the Contract
Documents with respect to third parties shall remain as imposed by
law.
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No. 79460-4-I/33
(consolidated with No. 79890-1-I)
(Emphasis added). The Insurers provide no analysis as to why they are entitled
to benefit from a contractual duty that STP owes to WSDOT when that same
contract negates third party beneficiary rights. The design-build contract does not
create a contractual duty as to the Insurers.
At oral argument, the Insurers argued that STP had an implicit duty to
cooperate with the Insurers’ investigation of the insurance claim. Wash. Court of
Appeals oral argument, Seattle Tunnel Partners, et al. v. Great Lakes Reinsurance
(UK) PLC, et. al., No. 83343-0-I (Jan. 10, 2023) at 35 min., 5 sec. to 35 min., 20
sec. While many insurance policies contain clauses requiring insureds to
cooperate with an insurer’s handling of a claim, Staples v. Allstate Ins. Co., 176
Wn.2d 404, 410, 295 P.3d 201 (2013), the policies at issue here contain no such
cooperation provision. And the Insurers have cited no authority for the proposition
that an insured has an implied duty to preserve evidence in the absence of a
contract provision addressing the issue. 18 While insurers owe a fiduciary duty to
their policyholders, that duty exists “because of the contract between the insurer
and the insured, the high stakes for both parties, and the ‘elevated level of trust
underlying insureds’ dependency on their insurers.’” Dussault ex rel. Walker-Van
Buren v. American Int’l Grp., Inc., 123 Wn. App. 863, 868, 99 P.3d 1256 (2004)
(quoting Tank v. State Farm Fire & Cas. Co., 105 Wn.2d 381, 385, 715 P.2d 1133(1986)). No court has held that the insureds owe fiduciary duties to their insurers.
18 Nor have the Insurers contended that STP’s failure to preserve evidence constitutes a breach
of any duty of good faith and fair dealing implicit in their insurance contracts.
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No. 79460-4-I/34
(consolidated with No. 79890-1-I)
The Insurers ask us to follow federal law and hold that STP had a general
duty to preserve the evidence in anticipation of the coming litigation. But our courts
have repeatedly refused to impose a general duty of evidence preservation merely
because litigation is foreseeable in the absence of a demand for the retention of,
or access to, the evidence, merely because litigation is foreseeable. See Tavai,
176 Wn. App. at 136 (where the plaintiff sought an adverse inference instruction
against a retailer that destroyed surveillance video, the court “decline[d] to require
store premises to retain all video anytime someone slips and falls and files an
accident report”); Ripley, 152 Wn. App. at 326 (court rejected argument that
hospital staff intentionally discarded broken scalpel handle in bad faith in part
because, at the time it was discarded, the lawsuit had not commenced and no
request had been made to retain the handle).
In Homeworks, the court suggested, without deciding, that a party may have
a duty to preserve evidence “on the eve of litigation.” 133 Wn. App. at 901. In
Cook, the court rejected any suggestion that such a general duty to preserve exists
unless a party receives a request to preserve evidence in anticipation of impending
litigation. 190 Wn. App. at 464. In Carroll, we cited Cook for the proposition that
“courts should consider whether a request to preserve the evidence [was] made
before the evidence was destroyed.” 22 Wn. App. 2d at 875.
There is no evidence here that the Insurers sent STP any formal or informal
request to preserve any evidence before that evidence disappeared. There is also
no support in the record to suggest that STP lost the evidence on “the eve of
litigation.” The events leading to the disposal of the pipe pieces and boulders
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No. 79460-4-I/35
(consolidated with No. 79890-1-I)
occurred more than a year before the Insurers denied STP’s claim for insurance
coverage or STP filed its insurance coverage lawsuit.
Under the two-prong test we adopt here, even if STP should have
reasonably foreseen that the pipe pieces, boulders, and project manager
notebooks were material to their anticipated insurance coverage claim against the
Insurers, there is no evidence of an agreement, statute, special circumstance, or
voluntary undertaking between these parties that would give rise to a duty to
preserve evidence on STP’s part. Because STP did not owe an evidence
preservation duty to the Insurers, they are not entitled to spoliation sanctions
against STP. The trial court erred in concluding otherwise.
C. Levels of Culpability 19
Because STP owed a contractual duty to WSDOT to preserve the evidence
and it breached that duty, we next address what level of culpability is sufficient to
justify an adverse inference instruction. STP contends its breach may warrant
some sanction, but if the breach was neither intentional nor made in bad faith, it
does not justify an adverse inference instruction. We agree.
If a party had a duty to preserve evidence and breaches that duty, a court
must then determine whether the spoliating party acted intentionally, in bad faith,
with conscious disregard for the importance of the evidence, negligently, or
innocently. Henderson, 80 Wn. App. at 609; Homeworks, 133 Wn. App. at 900.
19 STP argues that WSDOT cannot request spoliation sanctions against STP because WSDOT and
STP are not adverse parties in this litigation and the design-build contract prohibits WSDOT from
doing so. Because we reverse the spoliation sanction order for other reasons, we do not reach
these issues.
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No. 79460-4-I/36
(consolidated with No. 79890-1-I)
On the one end of the culpability spectrum, we have held that no sanction may be
imposed if a party has acted merely negligently in failing to preserve evidence, or
has an innocent explanation for the evidence’s loss or destruction. Cook, 190 Wn.
App. at 462, 464; Carroll, 22 Wn. App. 2d at 875-76. And on the other end of the
spectrum, we have also clearly held that an adverse inference jury instruction is
appropriate if a party intentionally destroyed the evidence to gain a litigation
advantage, or willfully failed to preserve the evidence with an improper motive (i.e.,
bad faith). Henderson, 80 Wn. App. at 606; J.K. by Wolf, 20 Wn. App. 2d at 313-
14.
What is less clear, however, is whether this particular sanction is
appropriate for conduct that is nether innocent nor negligent, but also neither
intentional nor done with an improper motive. This is the grey zone into which
STP’s conduct arguably falls. If we assume STP consciously disregarded the
importance of the evidence to WSDOT, does it logically follow that STP must have
believed the evidence would undermine its claim against WSDOT? We think not.
We find persuasive the reasoning of Henderson: “unless there was bad faith, there
is no basis for ‘the inference of consciousness of a weak cause.’” 80 Wn. App. at
609 (quoting 2 MCCORMICK ON EVIDENCE § 265, at 191 (John William Strong ed.,
4th ed. 1992)).
If a party to a civil case has destroyed relevant evidence in bad faith,
the fact of destruction is normally admissible on the theory that the
destruction suggests consciousness of potential liability or
consciousness of other adverse consequences if the evidence were
to be presented to a trier of fact. In other words, it reveals the party's
own belief that he or she has a weak case.
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No. 79460-4-I/37
(consolidated with No. 79890-1-I)
5 KARL B. TEGLAND, WASHINGTON PRACTICE: EVIDENCE LAW AND PRACTICE § 402.5,
at 280 (6th ed. 2016). Failing to preserve evidence, either negligently or through
a conscious disregard of its importance, does not demonstrate a consciousness of
a weak case or a desire to suppress the truth. We therefore conclude that an
adverse inference jury instruction is not an appropriate sanction for spoliation if the
party’s failure to preserve evidence is neither intentional nor rises to the level of
bad faith.
D. Adequacy of Trial Court’s Culpability Findings
STP maintains the trial court’s findings are insufficient to support the
conclusion that spoliation occurred, or that STP acted with the requisite level of
culpability to warrant an adverse jury instruction. We agree that, while the trial
court’s findings may support some sanction against STP, the court did not make
the requisite culpability findings to warrant the imposition of an adverse inference
instruction. It found that “[STP’s] explanation for the destruction of the pipe
fragments, while perhaps not clearly evidencing intent, can hardly be characterized
as innocent given the stakes. It has offered no explanation for the loss or
destruction of the journals.” This finding tells us that STP’s conduct was not
innocent. But it is not a finding that STP acted intentionally or willfully with an
improper motive.
Although STP’s culpability for destroying or losing this same evidence was
fully litigated in the Thurston County Contract Case, that court also found, at most,
that STP acted with a conscious disregard for the importance of the missing pipe
pieces and boulders. It found no bad faith conduct in the loss or destruction of the
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No. 79460-4-I/38
(consolidated with No. 79890-1-I)
evidence. 20 Because the King County trial court did not find that STP acted
intentionally or in bad faith in its destruction or loss of any of the evidence, it erred
in imposing an adverse inference instruction as a spoliation sanction.
E. Relevance and Importance of the Evidence
Even if conscious disregard was an adequate level of culpability for such a
harsh sanction, we would nevertheless reverse on the ground that the trial court’s
findings fail to explain the potential importance of the missing evidence to WSDOT
in its claim against the Insurers.
Henderson tells us that the importance of any missing evidence “depends
on the particular circumstances of the case.” 80 Wn. App. at 607. This statement
suggests the issue is a question of fact. But assessing the relevance or probative
value of any piece of evidence, missing or not, requires a court to apply facts to
well-established evidentiary standards. Thus, whether missing or lost evidence is
important or relevant for the purposes of a spoliation analysis is a mixed question
of fact and law. See In re Trust and Estate of Melter, 167 Wn. App. 285, 300, 273
P.3d 991 (2012) (mixed questions of fact and law involve the application of legal
precepts to a particular set of factual circumstances). We therefore review de novo
the trial court’s ruling as to the importance or relevance of the missing evidence.
In re Dependency of G.M.W., 24 Wn. App. 2d 96, 127, 519 P.3d 272 (2022) (mixed
question of fact and law subject to de novo review).
20 The Thurston County Superior Court found evidence of bad faith only in STP’s failure to disclose
to WSDOT that the evidence had disappeared. Thurston FF&CL at 44. STP’s bad faith conduct
after the evidence went missing does not determine its culpability for the loss of the evidence itself.
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No. 79460-4-I/39
(consolidated with No. 79890-1-I)
The parties here agree that the pipe pieces and boulders are relevant to
STP’s claim of causation. But they disagree as to that evidence’s importance. We
have considered the following six factors in assessing the importance of missing,
lost or destroyed evidence: (1) whether the missing evidence would provide direct
evidence of a claim or defense; 21 (2) whether the lost evidence is cumulative of
other available evidence; 22 (3) whether the culpable party admitted the evidence’s
importance; 23 (4) whether the nonspoliating party had the opportunity to inspect
the evidence before it was lost; 24 (5) whether the loss of the evidence impeded
parties from developing expert opinions on liability, causation or damages; 25 and
(6) whether the loss of the evidence gave the culpable party an investigative
advantage to the prejudice of the nonspoliating party. 26
First, the pipe pieces and boulders would be direct evidence that could
support or undercut STP’s claim that the TBM malfunctioned, not because of a
design defect as the Insurers contend, but because of a pipe strike or an encounter
21 Henderson, 80 Wn. App. at 607-08 (missing vehicle was of questionable investigative value);
J.K. by Wolf, 20 Wn. App. 2d at 306 (missing video footage would have provided direct evidence
of alleged child assault on playground and on bus or direct evidence of playground supervisor not
at their post at time of assault).
22 Henderson, at 608-09 (extensive photographic evidence of car existed, mitigating importance of
the vehicle itself and experts were able to reach conclusions as to who was behind wheel at time
of accident and how extensive Tyrrell’s injuries were).
23 J.K. by Wolf, 20 Wn. App. 2d at 309-10 (school district employees admitted evidence was highly
important and needed to be preserved); Cook, 190 Wn. App. at 462 (the fact that the culpable party
investigated the evidence is relevant to determining its importance, but is not determinative).
24 Henderson, 80 Wn. App. at 608-09 (both parties had opportunity to inspect vehicle before it was
destroyed); Marshall, 94 Wn. App. at 382-83 (plaintiff had over four years to inspect treadmill
machine).
25 Cook, 190 Wn. App. at 462 (fact that neither party presented expert who examined evidence
before its destruction diminishes its importance); Carroll, 22 Wn. App. 2d at 896 (neither party’s
experts were aware that autopsy occurred so significance of undisclosed autopsy report was
diminished).
26 Henderson, 80 Wn. App. at 607; Cook, 190 Wn. App. at 462.
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No. 79460-4-I/40
(consolidated with No. 79890-1-I)
with unexpected boulders. We understand the evidence is important to the
Insurers because STP is seeking insurance coverage based on a pipe strike theory
of causation. But the Insurers have no legal right to any spoliation sanctions so
the importance of the evidence to them is immaterial.
As to WSDOT, it is unclear from this record or the trial court’s findings how
this evidence would advance or undercut WSDOT’s claim for insurance coverage.
While we appreciate that this evidence was extremely important in the Thurston
County Superior Court Contract Case, where WSDOT was defending STP’s
differing site condition claim, WSDOT prevailed in that litigation, both at trial and
on appeal. The claims in this lawsuit are much different. WSDOT, like STP, seeks
to recover under insurance policies against the Insurer. WSDOT seeks no
monetary relief from STP.
In this lawsuit, WSDOT originally sought coverage from the Insurers based
on the assertion that its losses were caused by operator error, design defects, or
a combination thereof, both of which it claimed were covered losses. Our Supreme
Court has since determined that damages caused by design defects are not
covered under the insurance policy. Seattle Tunnel Partners v. Great Lakes
Reinsurance (UK) PLC, 200 Wn.2d 315, 332, 516 P.3d 796 (2022). Thus, WSDOT
is now relying on operator error as the coverage-triggering cause of its losses. But
WSDOT does not contend that the missing evidence is necessary to establish the
existence of operator error.
Its importance to WSDOT appears to be in disproving STP’s contention that
the pipe and/or boulders caused the machine’s malfunction. But WSDOT
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No. 79460-4-I/41
(consolidated with No. 79890-1-I)
conceded at oral argument that it would prevail in its coverage claim under the
builder’s risk policies regardless whether the cause of the TBM breakdown was
operator error or a pipe strike. Wash. Court of Appeals oral argument, Seattle
Tunnel Partners, et al. v. Great Lakes Reinsurance (UK) PLC, et al., No. 83343-0-
I (Jan. 10, 2023) at 26 min., 20 sec. to 27 min., 5 sec. The missing evidence has
less importance where, as here, it will have little effect on WSDOT’s coverage
claim against the Insurers.
Second, as STP has noted, there are pieces of TW-2 available that can be
analyzed and there is extensive photographic and video evidence of the missing
evidence. The parties’ respective experts have used this evidence to conduct their
respective analyses. As in Henderson, the missing evidence is cumulative of what
is otherwise available to the parties and their experts.
Third, STP admittedly deemed this evidence to be relevant and important.
The trial court found that “STP recognized the importance of preserving the [pipe]
fragments.” This finding, unchallenged on appeal, is consistent with the finding of
the Thurston County Superior Court, that “Hauser wanted each piece maintained
so that everyone involved had the ability to analyze it, look at it, measure it, weigh
it, or do anything else that was available to determine what happened. He knew
the physical objects were critical and important.” Thurston FF&CL at 7. STP did
not assign error to this factual finding in its appeal of the spoliation decision in
Division Two of this court. These facts weigh in favor of WSDOT and the
importance of the lost evidence.
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No. 79460-4-I/42
(consolidated with No. 79890-1-I)
Fourth, it appears from the Thurston County Superior Court findings that
WSDOT was not denied the opportunity to inspect the missing evidence. The
Thurston County Superior Court found that WSDOT employees inspected and
photographed pipe pieces on numerous occasions, actually observed steel pieces
of TW-2 come through the TBM or saw them immediately afterward, took pictures
of them, and received STP’s contemporaneous photographs and documents
recording its employees’ first-hand observations. Thurston FF&CL at 22. WSDOT
also witnessed “hyperbaric interventions” that occurred in January 2014, during
which it saw a piece of steel casing found between spokes of the TBM’s
cutterhead. Id. at 23. And in December 2013 and January 2014, WSDOT
“regularly received reports from its employees, contractors, and consultants of
pieces of steel entering the TBM, which were identified as pieces of TW-2 and
were photographed, videoed, and described as they were found.” Id.
Fifth, the trial court found that
experts on all sides have reached their conclusions without access
to these physical objects. The moving parties’ experts have testified
that they would find such access useful, and in particular to perhaps
further bolster their criticism of STP’s conclusion that the pipe was
essentially the sole cause of the TBM breakdown. No expert claims
that the lack of ability to physically examine the fragments severely
impacts the ability to reach expert conclusions.
These findings have not been challenged on appeal and we therefore accept them
as verities. Carroll, 22 Wn. App. at 862. The fact that the experts for both WSDOT
and STP were able to develop their opinions in the absence of this evidence
diminishes its importance.
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No. 79460-4-I/43
(consolidated with No. 79890-1-I)
Finally, we cannot identify any evidence supporting a conclusion that the
loss of some of the pipe pieces or boulders has given STP an investigative
advantage over WSDOT. The court made no findings as to whether STP actually
conducted its own analysis of the evidence before it went missing, but the record
suggests it did not. The Thurston County Superior Court found that “[e]xperts
retained by all parties to this litigation cannot inspect, measure, or test the missing
pipe pieces and boulders. Although various employees and experts for WSDOT
and STP were present on the job site before the items went missing, many experts
in this litigation were not retained until the items went missing.” Thurston FF&CL
at 31. This finding supports the conclusion that all of the parties have experienced
the same investigative disadvantage from the loss of this evidence.
Our de novo review leads to the conclusion that despite STP’s failure to
preserve all of the pipe pieces and boulders it recovered from the TBM, the
evidence is not of sufficient importance to WSDOT’s insurance coverage claim
against the Insurers to justify the imposition of an adverse inference instruction
against STP.
Conclusion
Because the trial court’s decision was based on an incorrect legal standard
and the facts do not meet the requirements of the correct legal standard, it abused
its discretion in imposing the spoliation sanction of an adverse inference instruction
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No. 79460-4-I/44
(consolidated with No. 79890-1-I)
against STP. We therefore reverse and remand for further proceedings consistent
with this opinion. 27
WE CONCUR:
27 Because we reverse the spoliation sanction, we need not reach the issues Hitachi raises in its
separate appeal.
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