Ihli v. Lazzaretto
| Decision Date | 11 June 2015 |
| Docket Number | No. 20140415.,20140415. |
| Citation | 864 N.W.2d 483 |
| Parties | Lori IHLI, Plaintiff and Appellant v. Anthony LAZZARETTO d/b/a Lazzaretto Construction, Defendant and Appellee |
| Court | North Dakota Supreme Court |
Jessica L. Merchant (argued) and Ryan G. Quarne (appeared), Minot, ND, for plaintiff and appellant.
Kelsey A. Krapp, Bismarck, ND, for defendant and appellee.
[¶ 1] Lori Ihli appeals from a district court judgment dismissing her claims against Anthony Lazzaretto, d/b/a Lazzaretto Construction (“Lazzaretto”). Under the facts of this case, we conclude the district court did not abuse its discretion in imposing the sanction of dismissal and denying Ihli's motion to amend. We affirm.
[¶ 2] In June 2011, Ihli's Minot home flooded. Ihli contacted Lazzaretto for an estimate to repair the home, and in February 2012, she accepted Lazzaretto's bid proposal. Lazzaretto began working on Ihli's home; however, a dispute arose between the parties regarding the quality of the work, and Lazzaretto ceased working on the home. In November 2012, Ihli applied for federal disaster relief funding to repair or replace her house through the City of Minot Disaster Recovery Homeowner Rehabilitation and Reconstruction Program. In early 2013, Ihli sought estimates from two construction companies, Real Builders, Inc. and Wright Brothers, to “repair” and complete the project.
[¶ 3] On July 23, 2013, Ihli sued Lazzaretto, alleging he damaged her property by performing remodeling work in a negligent manner. On July 31, 2013, Lazzaretto's attorneys served a Notice of Appearance upon Ihli's attorney. According to an affidavit of Lazzaretto's attorney, on or about August 23, Lazzaretto's attorney left a voice message for Ihli's attorney, requesting an extension of time to respond to Ihli's complaint, and on August 26, Ihli's attorney e-mailed Lazzaretto's attorney, granting the extension. Lazzaretto's attorney's affidavit stated that on September 3, Lazzaretto's attorney e-mailed a reply to Ihli's attorney, requesting until September 13, to serve Lazzaretto's answer.
[¶ 4] According to an affidavit of Ihli, after commencing the suit against Lazzaretto on July 23, 2013, she learned she was eligible for the disaster relief funding in “late August 2013.” In Ihli's deposition, Ihli stated that after learning she was eligible for the funding, program administrators inspected the house and recommended the house be torn down and replaced, instead of being repaired. After Ihli commenced the suit against Lazzaretto and learned of her eligibility for disaster relief funding and after Ihli's counsel granted Lazzaretto's counsel an extension to file Lazzaretto's answer to Ihli's complaint, Ihli allowed the house to be demolished on September 6, 2013.
[¶ 5] Before the house was demolished, Ihli's attorney had advised Ihli to take photos or video of the property before the house was torn down. Ihli never informed Lazzaretto of the plan to demolish the house. After the house was demolished, Lazzaretto served its answer on September 13, 2013. In June 2014, Lazzaretto moved for sanctions, requesting the case be dismissed due to Ihli's spoliation of evidence. Ihli then moved to amend her complaint, seeking to add a claim for breach of contract. After a hearing on both motions, the district court denied Ihli's motion to amend the complaint, granted Lazzaretto's motion for sanctions, and dismissed Ihli's claims.
[¶ 6] On appeal, Ihli argues the district court erred in dismissing her case as a sanction for spoliation of evidence because the sanction was overly severe and an abuse of discretion. Ihli also argues the district court erred in denying her motion to amend the complaint because Lazzaretto was on notice of the proposed breach of contract claim and would not be prejudiced.
[¶ 7] Ihli argues the district court abused its discretion in dismissing her case as a sanction for spoliation of evidence because the sanction was overly severe.
[¶ 8] There is a duty to preserve evidence when litigation is reasonably foreseeable. Fines v. Ressler Enters., Inc., 2012 ND 175, ¶ 7, 820 N.W.2d 688. “Spoliation is the destruction of or failure to preserve probative evidence.” Id. When evidence relevant to a lawsuit is destroyed, sanctions may be appropriate. Bachmeier v. Wallwork Truck Ctrs., 507 N.W.2d 527, 532 (N.D.1993) (Bachmeier I ). When evidence relevant to a lawsuit is destroyed, the district court may utilize its inherent power to sanction, and a court's decision to sanction will only be reversed on appeal if there was an abuse of discretion. Fines, at ¶ 7. “The appellant who is contesting the district court's choice of a sanction has the burden of showing the abuse of discretion, and that burden is met only when it is clear that no reasonable person would agree with the trial court's assessment of what sanctions are appropriate.” Id. at ¶ 15 (citations omitted).
[¶ 9] Sanctioning a party for the spoliation of evidence serves to penalize those whose conduct warrants a sanction and to deter others who may be tempted to behave in such a way as to warrant a sanction. Fines, 2012 ND 175, ¶ 8, 820 N.W.2d 688. “Sanctions for spoliation of evidence require a case-by-case analysis of the facts and circumstances present in each case.” Id. In spoliation of evidence cases, courts should consider factors such as: 1) “the culpability, or state of mind, of the party against whom sanctions are being imposed;” 2) “a finding of prejudice against the moving party, and the degree of this prejudice, including the impact it has on presenting or defending the case;” and 3) “the availability of less severe alternative sanctions.” Bachmeier v. Wallwork Truck Ctrs., 544 N.W.2d 122, 124–25 (N.D.1996) (Bachmeier II ) (citation omitted). Perhaps the most restrictive sanction is the dismissal of the entire case with prejudice. Bachmeier I, 507 N.W.2d at 533. Dismissal can result when spoliation is willful or “merely neglectful.” Fines, at ¶ 16.
[¶ 10] Lazzaretto argues the facts in this case are directly on point with the facts in Fines. In Fines, Fines filed a complaint in August 2010 against the defendant, Ressler, alleging Ressler negligently installed siding on her property. 2012 ND 175, ¶ 3, 820 N.W.2d 688. In September 2010, Fines' counsel sent a fax to Ressler's counsel stating a third party had been hired to remove and replace the siding, and work was scheduled to begin the following Monday. Id. at ¶ 4. Ressler's counsel responded, demanding the siding not be removed until Ressler and its experts had an opportunity to inspect and examine the siding on the building, but Fines had the siding removed and replaced. Id. Ressler moved for summary judgment, arguing the case should be dismissed because Fines unnecessarily destroyed evidence without providing adequate notice and Ressler did not have an opportunity to have a third-party expert examine the siding and was unable to defend itself because of the spoliation. Id. at ¶ 5. In response, Fines argued Ressler had an opportunity to inspect the property, photographs and video of the siding had been provided during discovery, and dismissal was not appropriate. Id. The district court dismissed the case, finding it had inherent power to sanction for the destruction of evidence, Fines was culpable in the evidence's destruction, Ressler was prejudiced by Fines' decision to remove the siding, and dismissal of the case was the only appropriate sanction. Id. Fines appealed, and this Court concluded the district court properly considered each factor in imposing the sanction of dismissal. Id. at ¶ 14. Noting the district court's remedy was “unusual” and emphasizing that courts should employ “less drastic remedies,” this Court stated that “when conduct is egregious, as it was here, a greater range of sanctions comes into play.” Id. Finding Fines removed the siding after commencing the suit and after receiving a specific request to preserve the evidence, this Court held the district court did not abuse its discretion by imposing the sanction of dismissal. Id. at ¶ 17.
[¶ 11] Lazzaretto argues this case and Fines are similar in several ways: 1) they both involve claims of negligent construction; 2) both plaintiffs were in control of critical evidence relating to their claims; 3) both plaintiffs planned to remove, repair, or destroy that evidence, but made little or no effort to notify the defendants; 4) both plaintiffs were mindful of the need to preserve evidence to support their own cases, but failed to extend that same opportunity to the defendants; and 5) both plaintiffs voluntarily and intentionally destroyed evidence just weeks after commencing litigation. Lazzaretto argues the only factual difference between this case and Fines is that Ihli's conduct is worse than the plaintiff's conduct in Fines because Lazzaretto was not given any notice of the planned demolition of the house.
[¶ 12] The district court in this case agreed with Lazzaretto, stating:
The facts in the case at hand are clear, and are seemingly worse than the action of the plaintiff in Fines. Ihli alleged Lazzaretto performed negligent work on her home and filed a suit against Laz[z]aretto for negligent construction. Ihli then took pictures and video of the alleged negligent work done by Laz[z]aretto and demolished her home so she could receive grant money. This was done without giving Laz[z]aretto notice of the demolition or an opportunity to inspect the property. Ihli now expects Lazzaretto to defend himself without opportunity to inspect the alleged defective work and prepare his own defense.
[¶ 13] The district court sanctioned Ihli by dismissing her action, after considering each of the three factors, including Ihli's culpability, the prejudice to Lazzaretto, and alternative sanctions:
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