Fines v. Ressler Enters., Inc.

• Decision Date: 21 August 2012
• Docket Number: No. 20110357.,20110357.
• Citation: 820 N.W.2d 688,2012 ND 175
• Parties: Sheryl M. FINES and Sheryl M. Fines, as substituted for Bruce Balliet, deceased, Plaintiffs Sheryl M. Fines, Appellant v. RESSLER ENTERPRISES, INC., d/b/a Ressler Siding and Windows, Defendant, Third Party Plaintiff and Appellee and Associated Materials, Inc., d/b/a Alside, Third Party Defendant.
• Court: North Dakota Supreme Court

820 N.W.2d 688

2012 ND 175

Sheryl M. FINES and Sheryl M. Fines, as substituted for Bruce Balliet, deceased, PlaintiffsSheryl M. Fines, Appellant

v. RESSLER ENTERPRISES, INC., d/b/a Ressler Siding and Windows, Defendant, Third Party Plaintiff and AppelleeandAssociated Materials, Inc., d/b/a Alside, Third Party Defendant.

No. 20110357.

Supreme Court of North Dakota.

Aug. 21, 2012.

Justin D. Hager, Bismarck, ND, for appellant.

Daniel J. Nagle, Mandan, ND, for defendant, third party plaintiff and appellee.

KAPSNER, Justice.

[¶ 1] Sheryl Fines appeals from a judgment dismissing her action against Ressler Enterprises, Inc., doing business as Ressler Siding and Windows (Ressler). Fines argues the district court abused its discretion in dismissing her action against Ressler as a sanction for spoliation of evidence. She contends dismissal was not appropriate because the court erred in determining Ressler was prejudiced by the destruction of the evidence and the court failed to consider the availability of less severe sanctions. Under the facts of this case, we conclude the district court did not abuse its discretion in imposing the sanction of dismissal. We affirm.

I

[¶ 2] In September 2007, Ressler installed siding on Fines' property. Due to problems with the siding, the manufacturer agreed to provide all new siding. Ressler installed the new siding in September 2007. Fines alleged there were also problems with the new siding and filed a warranty claim, which the manufacturer denied.

[¶ 3] Fines filed a complaint, alleging Ressler negligently installed the siding on her property. The complaint was dated July 28, 2010, and was served on August 3, 2010. Amended complaints were filed in August 2010. On September 3, 2010, Ressler filed an answer, denying Fines' allegations and claiming any damages were caused or contributed to by the acts of third persons. Ressler also brought a cross-claim against a third-party defendant, Associated Materials, Inc., the siding manufacturer, alleging a breach of warranty and claiming the siding was defective. Ressler's claim against Associated Materials, Inc. was later dismissed.

[¶ 4] At 12:57 p.m. on Friday, September 3, 2010, Ressler's counsel received a faxed letter from Fines' counsel stating a third party had been hired to remove and replace the siding and noting the work was scheduled to begin on Monday, September 6, 2010, which was a national holiday. The letter stated the “defective siding can be saved if you would like it[,]” but added Ressler would be responsible for any costs to retain the siding. Ressler's counsel responded by faxed letter that same day, demanding the siding not be removed until Ressler and its experts had an opportunity to inspect and examine the siding on the building. Fines had the siding removed and replaced.

[¶ 5] On October 14, 2011, Ressler moved for summary judgment, arguing the action should be dismissed because Fines unnecessarily destroyed the evidence without providing Ressler with sufficient notice, Ressler did not have an opportunity to have a third-party expert examine the siding on the property, and Ressler was unable to properly defend itself because of the spoliation. Fines responded, arguing Ressler had an opportunity to inspect the property, photographs and video of the siding had been taken and were provided to Ressler during discovery, and dismissal was not appropriate. On November 22, 2011, the district court entered an order dismissing the case, ruling it had the inherent power to sanction for the destruction of evidence, Fines was culpable in the destruction of the evidence, Ressler was prejudiced by Fines' decision to remove the siding, and dismissal was the only appropriate sanction.

II

[¶ 6] Fines argues the district court erred as a matter of law in exercising its inherent sanctioning power to dismiss the action, the court erred in finding Ressler was prejudiced, and the court failed to determine the least restrictive available sanction.

[¶ 7] When litigation is reasonably foreseeable, there is a duty to preserve evidence. See Bachmeier v. Wallwork Truck Ctrs., 507 N.W.2d 527, 532 (N.D.1993) (Bachmeier I ) (stating sanctions may be appropriate for the destruction of evidence relevant to a lawsuit); see also Micron Tech., Inc. v. Rambus Inc., 645 F.3d 1311, 1320 (Fed.Cir.2011); Miller v. Lankow, 801 N.W.2d 120, 127–28 (Minn.2011); Bass–Davis v. Davis, 122 Nev. 442, 134 P.3d 103, 108 (2006). Spoliation is the destruction of or failure to preserve probative evidence. See, e.g., Micron Tech., at 1320;AMLI Residential Props., Inc. v. Ga. Power Co., 293 Ga.App. 358, 667 S.E.2d 150, 153 (2008); Miller, at 127; 32B Am.Jur.2d Federal Courts § 2111 (2007 & Supp.2012). We have stated the district court may exercise its inherent power to sanction when evidence relevant to a lawsuit is destroyed or spoiled. Bachmeier I, at 532. A court's decision to exercise its inherent power to sanction will only be reversed on appeal if the court abused its discretion. Id. at 533. A court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, when it misinterprets or misapplies the law, or when its decision is not the product of a rational mental process leading to a reasoned determination. Belgarde v. Askim, 2001 ND 206, ¶ 6, 636 N.W.2d 916.

[¶ 8] Sanctions for the spoliation of evidence serve two purposes: “First, sanctions exist to penalize those whose conduct is deemed to warrant a sanction; second, they exist to deter others who may be tempted to behave in such a way as to warrant the imposition of a sanction.” Bachmeier I, 507 N.W.2d at 533. Sanctions have an additional goal of protecting the integrity of the legal process by “evening the ... playing field.” Id. Sanctions for spoliation of evidence require a case-by-case analysis of the facts and circumstances present in each case. Id. at 534. We have stated a court should consider “the culpability, or state of mind, of the party against whom sanctions are being imposed; 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, the availability of less severe alternative sanctions.” Id. While we favor resolving disputes on their merits, we must balancethat preference against the need to penalize those whose conduct warrants a sanction and to deter those who may be tempted to behave in a way that would warrant a sanction. See id. at 533. “Dismissal of the entire case with prejudice is perhaps the most restrictive sanction which exists.” Id.

[¶ 9] We turn our attention to the facts of Bachmeier I in order to analyze whether the judicial response to the spoliation of evidence in the case at hand was appropriate. Bachmeier I arose out of the second litigation that resulted from the death of Steven Bachmeier. 507 N.W.2d at 530. The apparent cause of his death was the breakdown of the right hub of a truck in which he was riding as a passenger. Id. The first litigation was a wrongful death action brought against the owner of the truck. Id. The owner's insurer hired an expert to examine the hub and to prepare a report. Id. The wrongful death action was settled, after which the truck owner's insurer notified the examining expert that the case had settled and that the expert could dispose of the parts in his possession. Id. No litigation was pending when the hub was destroyed. See id. Rather, one year after the hub's destruction, the product liability litigation—the second litigation at issue in Bachmeier I—was commenced. Id.

[¶ 10] In Bachmeier I, we noted, “First, this is not a case where the evidence was ‘willfully’ destroyed. Second, Loper and Great West, the people who destroyed the evidence, were not parties to the second action, nor were they real parties in interest. Finally, the hub was not in Bachmeier's possession or control at the time of its destruction.” Bachmeier I, 507 N.W.2d at 533–34 (citations omitted). We noted the record contained no expert testimony stating a defense could not be proven due to the destruction of the hub. Id. at 535. Instead, “What is included in the record is a legal argument advocating the preference of having the actual hub available. This is not adequate.” Id. Because we concluded the unavailability of the hub itself was not adequate proof of prejudice, we reversed and remanded for the court to consider the significance of the detriment to the defendant and to allow the defendant to present expert testimony showing the missing evidence was essential to its defense. Id. Each of the facts in Bachmeier I is in marked contrast to the operative facts in this case.

[¶ 11] Here, the litigation was commenced by Fines with a complaint served August 3, 2010. In July 2010, Fines obtained an estimate for the cost of removal and replacement of the siding. The evidence remained within the control of Fines. Fines gave Ressler no notice of intent to remove the siding until all practical ability to have an expert inspect the siding in place was removed. Upon receiving notice in the afternoon on Friday, September 3, 2010, preceding the Monday, September 6, 2010, holiday on which the siding was going to be removed, Ressler's attorney responded with a clear request that the siding remain in place so it could be inspected. Fines ignored that communication. Litigation tactics like this are not only prejudicial to the other party, but offensive. We have stated sanctions for the spoliation of evidence penalize inappropriate conduct and “exist to deter others who may be tempted to behave in such a way[.]” Bachmeier I, 507 N.W.2d at 533. Commencing a lawsuit and spoiling access to evidence within weeks of that commencement is the type of conduct that should be deterred.

[¶ 12] To support the position that Ressler was prejudiced by the spoliation, Ressler submitted an affidavit of James A. Skaret, P.E., who asserted:

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