Client Alert
August 18, 2010
New Jersey Supreme Court Spoliation Decision
Potential for Severe Penalties for Destruction of Defective Work
By Anthony M. Bottenfield, Esq.
 
 

On construction projects, disputes often arise relating to a contractor's quality of work.  Once a dispute arises, the normal process is for the owner, or owner's representative, to meet with the contractor to inspect the allegedly defective work.  After that inspection, some type of plan is agreed upon to correct the defect.  In order to be held accountable for the cost of repair, both parties are entitled to have the opportunity to inspect the defect before it is repaired.  Spoliation is when a party repairs or makes a material alteration to the work, thereby destroying evidence of the defect.

 

On August 3, 2010, the New Jersey Supreme Court issued an opinion specifically tailored to the spoliation of evidence in the construction litigation context.  In Robertet Flavors, Inc. v. Tri-Form Construction, Inc., the Court clarified New Jersey's standard for spoliation.  The Robertet opinion impacts owners, contractors, and design professionals operating in New Jersey and might change the way those parties address defective work in the future. 

 

This case involved the construction of a new commercial building that included curtainwall and strip window systems.  After the owner began occupying the building, it noticed that substantial leaking occurred around the strip windows.  The glass company that installed the windows was called to investigate the leaks, made several visual inspections, and undertook some repair efforts.  The leaks continued, however, and about two years later, the owner hired a private consultant to address the problem.  The consultant recommended that the windows, inside walls, insulation, and carpeting be replaced, and the owner agreed.  Unfortunately, the owner did not share its plans with the glass company.

 

In January 2002, the owner filed suit, and in March 2002, the glass company served its answer.  However, counsel for the owner still did not inform the glass company's counsel about the consultant's investigations, mold discovery, or owner's plan to replace the strip windows.  The owner began the remediation process on December 13, 2002, yet did not notify the glass company until three weeks prior to its completion.  The glass company requested that the remediation stop and that it have the opportunity to inspect the allegedly defective work. In response, the owner claimed that halting the process would be impractical and denied the glass company's request.

 

During litigation, the glass company filed a motion to prevent the owner from offering any testimony relating to the installation of the strip windows.  The glass company claimed it had been unfairly prejudiced because it did not have an opportunity to inspect the condition that the leaking windows had created.  In review of the underlying proceedings, the New Jersey Supreme Court provided a thorough discussion of the construction industry and spoliation of evidence as it relates to construction.  As a result, the Court found that the owner's claim could proceed but was greatly limited.  The Court ruled that the owner was barred from presenting any evidence relating to the removal of the windows, discovery of the mold, and installation of the replacement windows.

 

The Court's rationale shows that spoliation of evidence can impact numerous players in the construction industry.  Specifically, the Court demonstrated how severe penalties,  such as preventing all evidence relating to the removal, inspection, and remediation of the windows, can result when a party fails to avail a contractor the right to investigate defective work.  The Robertet decision serves as a cautionary tale for all parties in construction projects.  Owners must make sure that all affected parties are put on notice of alleged defects and plan to remediate such defects.  Contractors also have an obligation to be active during the evidence gathering stages.  The decision further confirms that even for instances in which spoliation occurs, a party will not automatically be precluded from recovering for, or defending against, alleged construction defects, although other penalties may still apply.

 

Anthony M. Bottenfield is an associate in the firm's Philadelphia office and concentrates his practice on construction litigation.  He is licensed to practice in Pennsylvania and New Jersey.  Mr. Bottenfield can be reached at (215) 564-1700 or abottenfield@cohenseglias.com.

     
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