AVOID SPOLIATION OF EVIDENCE – THE IMPORTANCE OF STRONG DOCUMENT MANAGEMENT FOR ELECTRONIC INFORMATION

imagesLawyers that handle construction disputes understand the importance of project documentation and document management in prosecuting or defending a claim.  Although there is still project documentation that is maintained in hard copy, the way entities now do business and transmit documentation is electronically.  This includes sending e-mails including e-mails with attachments, uploading documentation on web-based sharing platforms, generating documentation electronically, and organizing and storing that documentation on a server in an organized paperless format.  This is how many entities, especially those on fairly sophisticated construction projects, conduct business because it increases the speed in which information is shared and the efficiency in generating, storing, and transmitting information.  Yet, although it increases the efficiency of that entity during construction, it becomes a source of consternation when a dispute arises and a party needs to preserve and produce that electronically stored documentation.

 

 

When a party learns of a potential dispute that party has a duty to preserve its documentation.   Not doing so can lead to the imposition of discovery sanctions associated with what is known as the “spoliation of  evidence.”   The types of sanctions can cumulatively range from monetary sanctions; the striking of a party’s claim or defenses; the prevention of that party from introducing certain evidence that was not produced; or, importantly, an adverse inference jury instruction.  This jury instruction basically allows the jury (for purposes of jury trials) to infer that the spoiled evidence would have been unfavorable to the spoiler which is why that party spoiled the evidence.  Spoliation sanctions are imposed by courts to prevent the spoiler from reaping an unfair advantage in the dispute and to deter this type of conduct from taking place.  See In re Electric Machinery Enterprises, Inc. v. Hunt Construction Group, Inc., 416 B.R. 801, 873 (M.D.Bkrtcy.Fla. 2009) (discussing spoliation of evidence under Florida law).

 

The Fourth District Court of Appeal in Florida explained spoliation as follows:

 

Spoliation is ‘[t]he intentional destruction, mutilation, alteration, or concealment of evidence [.]’ Black’s Law Dictionary 1437 (8th ed.2004). In cases involving negligent spoliation, courts prefer to utilize adverse evidentiary inferences and adverse presumptions during trial to address the lack of evidence. In cases involving intentional spoliation, courts more often strike pleadings or enter default judgments .   Golden Yachts, Inc. v. Hall, 920 So.2d 777, 780 (Fla. 4th DCA 2006) (trial court could give adverse inference jury instruction due to spoliation of a boat cradle).  See also American Hospitality Management Co. of Minnesota v. Hettiger, 904 So.2d 547, 550-51 (Fla. 4th DCA 2005) (“In circumstances where the lost evidence was under the sole control of the party against whom the evidence might have been used to effect, and where the lost evidence is in fact critical to prove the other party’s claim, an adverse inference instruction may be necessary to achieve justice in the jury’s determination of the case.”); Simon Property Group, Inc. v. Lauria, 2012 WL 6859404,*8 (M.D.Fla. 2012) (“Under Florida law, the remedy for a party failing to produce crucial but unfavorable evidence that it destroyed is an adverse inference or discovery sanctions up to and including entry of a default judgment.”)

 

Now, before a Florida court issues any sanction for spoliation of evidence, it needs to answer three fundamental questions: (1) whether the evidence ever existed, (2) whether there was a duty to preserve that evidence, and (3) whether the evidence was critical to the opposing party providing its affirmative claim or a defenseGolden Yachts, 920 So.2d at 781.  While the first question is easy to establish and answer, the second and third questions are not.  An entity should have a duty to preserve evidence where that party could reasonably have foreseen a claim.  See American Hospitality Management Co., 904 So.2d 547; accord Osmulski v. Oldsmar Fine Wine, Inc., 93 So.3d  389 (Fla. 2d DCA 2012).  However, there is strong caselaw in Florida that supports that the lawsuit (and discovery request) triggers the duty to preserve evidence (unless that duty specifically arose prior to the lawsuit from a statute or a contract)See Royal & Sunalliance v. Lauderdale Marine Center, 877 So.2d 843 (Fla. 4th DCA 2004).

 

The Middle District’s opinion in In re Electric Machinery Enterprises contains an insightful discussion about spoliation of evidence in a construction dispute.  In this matter, it was undisputed that the general contractor destroyed relevant documentation prior to its electrical subcontractor filing suit and that the Court found this destruction intentional. The subcontractor argued that the general contractor had a duty to preserve evidence when it had notice of impending litigation. The subcontractor wanted an adverse inference jury instruction.  The Court, however, found that even though the destruction of relevant documentation was intentional, there was nothing to establish that the documentation was critical to the subcontractor’s claims considering the subcontractor produced substantial evidence to support its claim that general contractor breached the subcontract.  Hence, irrespective of whether there was any duty to preserve the documentation, the spoiled documentation was not critical or material to the subcontractor’s burden of proof to support its claim.  If this documentation was deemed critical, the Court likely would have treated the spoliation of evidence differently.

 

It is imperative that parties involved in a dispute, or are aware of impending litigation, take active efforts to preserve relevant documentation, specifically documentation stored electronically.  Not doing so could lead to cumulative discovery sanctions including the harsh sanctions of an adverse inference jury instruction or the striking of claims or defenses, especially if the documentation is destroyed or lost after litigation commenced.  Spoliation of evidence is still an evolving aspect of the law that is being more defined as electronic discovery and disputes involving electronic discovery become the norm.  Strong document management protocols are a vital aspect of construction to ensure not only projects are running efficiently, but also that claims and defenses to claims are likewise being handled efficiently.

 

For more information on document management, please see: http://www.floridaconstructionlegalupdates.com/consultants-corner-five-tips-for-better-construction-project-documentation/.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

CONSULTANT’S CORNER: FIVE TIPS FOR BETTER CONSTRUCTION PROJECT DOCUMENTATION

don carlowConsultant’s Corner: In addition to providing perspectives and analysis from a lawyer, it is beneficial to hear from industry professionals and consultants. These are the folks that serve as expert witnesses during litigation / trial and consult with owners and contractors preconstruction and during construction. Consultant’s Corner is dedicated towards hearing from those experienced and respected professionals.

 

Don Carlow (photo) is the owner of Florida Construction and Scheduling Consultants, LLC and has over twenty-five years of experience in CPM planning and scheduling, cost engineering, construction claims analysis, and program and construction management. He serves as both an expert witness and as a consultant preconstruction and during construction in scheduling, forensic delay analysis, cost and damages analysis, and litigation support on construction projects ranging in size and scope.  His project experience includes heavy civil; transportation; pipelines/underground utilities; government/military; mixed-use commercial; airports; hospitals; high-rise; theme parks; hospitality; schools/ universities; and single/multi-family residential.   Mr. Carlow has taken the time to share with us a very important article on maintaining organized and good project documentation based on his experience.

 

FIVE TIPS FOR BETTER CONSTRUCTION PROJECT DOCUMENTATION

 

cpm100-wideWhen it comes to claims and disputes, I have often heard the proverbial advice that “you should document everything.” However, in reality this is rarely done and it is often impossible to accomplish. Normally, the folks on a construction project simply don’t have the time to write down everything that’s going on at the site and at every project meeting and then respond to every email and phone call. In fact, I would not advise you to try! Doing so would be frustrating at best and counterproductive at worst. Your management team should be focused on managing the project. This is especially true on a troubled project, where you have to put out one fire after another. Your team’s efforts should be focused on using their time in the office wisely and making sure that the important items are documented. So, how are they supposed to know which of the items are the most important to document? This article attempts to answer that question by establishing some rules and by providing an objective framework that can be used when deciding how and what to document.

 

1. SUPPORT YOUR POSITION

 

For each contractual disagreement or issue, spend the time to write the letters or emails that support your position and explain why your position is correct. This should be the overall framework from which you are focusing your documentation efforts. Document the issues and events as they occur; take a photo, write an email, or put an extra note in the daily report that explains the event or occurrence from your perspective. Make sure there is evidence in the file that supports and explains your position. You’d be surprised how the resolution of an issue was changed by a single photo or a couple of sentences included in a daily report.

 

2. RESPOND TO EVERY LETTER

 

When is it necessary to write a letter? When someone writes one to you. It is not necessary to engage in a letter-writing campaign (it is simply not true that the person with the highest stack of letters automatically “wins”). But, for each letter that’s written to you make sure there is a written response in the file. One solid letter for each issue is a good rule of thumb. Get your points documented, keeping in mind tip #1, above.

 

3. BE PROFESSIONAL

 

In your written correspondence, always be professional and stick to the facts. Be objective, rational and unemotional. There is no need to tell the owner’s rep that he’s an idiot (even if he is). Many people may be involved in the resolution of the dispute after the project is over and they may never meet you. People are going to form their opinions of you based on what you say and how you say it.

 

4. GIVE NOTICE

 

Notice provisions are written into contracts for a reason. Their purpose is to give the other party time to investigate, mitigate expenses, and track costs. Read your contract and make sure you are complying with the notice requirements. To make giving notice easier, we recommend that our clients develop form notices. At a minimum, we suggest having form notices available for each of the following situations: (a) Excusable Delay/Request for Time Extension, (b) Differing Site Condition, (c) Conflicting Specifications, (d) Acceleration (Directed or Constructive), (e) Disruption of Work Force, and (f) A/E Change. Have your lawyer review the notices before using them in the field.

 

5. RESERVE YOUR RIGHTS

 

I have been involved in several lawsuits in which the judge upheld signed releases on payment applications and change orders, and barred recovery for damages. Have your lawyer review the release language on any document before you sign it. At a minimum, cross out the offending language, or simply write that you are reserving your right to additional money or time for the impact encountered on the project or as a result of the change.

 

Knowing how and what to document will keep your team focused on managing the project and put your company in a much better position when it comes to resolving disputes when they arise.
Please contact Don Carlow for more information regarding the value he can provide to your construction project or litigation team. He can be reached at the following contact information:
Website: http://florida-consultants.com/
Email: don@florida-consultants.com
Phone: (407) 603-6165

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.