Wisconsin Business and Commercial Litigation

Whichever side of the v. you’re on, preservation of evidence can cause heartburn.  In this opinion, issued on July 15, 2009, the Court addressed a dismissal granted to the defendant roofers sued by a homeowner’s insurance company after the insured home burned down, allegedly because of substandard roof repair.  After notification by mail, the homeowners insurance company destroyed the home, and the defendant roofers moved for dismissal based on spoliation.  Here’s the rub:

We conclude that the duty to preserve relevant evidence is discharged when a party or potential litigant with a legitimate reason to destroy evidence provides reasonable notice of a possible claim, the basis for that claim, the existence of evidence relevant to the claim, and a reasonable opportunity to inspect that evidence. We further hold that such notice can be properly effectuated by mailing a letter via first-class mail. We also affirm that dismissal is an appropriate sanction for spoliation of evidence only if a party acts egregiously—-that is, in a conscious effort to affect the outcome of litigation or in flagrant, knowing disregard of the judicial process. Applying the law to the facts of this case, we conclude that as a matter of law, Joseph and Charles Golke received the March 13, 2000, letter, and that American Family provided the Golkes with reasonable and sufficient notice, thereby discharging its duty to preserve the evidence from the fire. The circuit court therefore erroneously exercised its discretion when it dismissed American Family’s suit. Because American Family discharged its duty to preserve evidence and no sanctions are appropriate, the judgment of the circuit court is reversed, and the cause is remanded to the circuit court for trial on the merits.

Abrahamson and Bradely are critical of the majority’s application of the general principles to the facts of the case.  Both would have preferred to remand to the circuit court for a determination of whether a lesser sanction than dismissal was appropriate.  Regardless of who’s right, the case provides a nice discussion of spoliation law.