974 N.W.2d 680
N.D.2022Background
- Toman Engineering designed a stormwater detention pond (Marilyn Way) for Koch Meadow Hills; Koch entities (Koch Construction, Koch Property Investments — KPI) later faced a neighbor suit (Prchal) alleging drainage problems.
- KPI settled the Prchal suit in September 2018, agreeing to modify the pond and to complete work by June 30, 2019; reconstruction occurred summer/fall 2019.
- Toman sued Koch Construction in 2017 for unpaid engineering fees; Koch defendants served a counterclaim in December 2017 alleging Toman’s negligent design and exposure to the Prchal litigation.
- Toman moved for spoliation sanctions in August 2020, claiming the defendants willfully modified the pond without notice and deprived Toman of the opportunity to have experts inspect the pond pre-modification.
- The district court found intentional spoliation, dismissed the defendants’ counterclaim and defenses as sanctions, excluded certain testimony (Marilyn Koch, expert Scott Schneider), and entered judgment for Toman.
- The Supreme Court of North Dakota reversed and remanded for a new trial, holding dismissal was an abuse of discretion given the notice and relevance facts and that less severe sanctions were available.
Issues
| Issue | Toman's Argument | Koch/Appellants' Argument | Held |
|---|---|---|---|
| Did appellants commit spoliation warranting dismissal of their counterclaim? | Appellants willfully modified the pond without notice, depriving Toman of inspection rights; dismissal is appropriate. | KPI was obligated by the city Prchal settlement to reconstruct; pond was public and accessible; Toman had notice of claims earlier and could have inspected. | Reversed: court abused discretion in dismissing counterclaim; dismissal was too severe under the circumstances. |
| Were appellants under a duty to preserve and did they provide adequate notice before destruction? | No meaningful notice was given; duty to preserve was violated. | KPI had settlement-driven obligation to rebuild; Toman received the counterclaim and later the Prchal settlement—had opportunity and access to inspect. | Appellants had a duty to preserve, but Toman had sufficient notice (counterclaim + receipt of Prchal settlement) and time to inspect; failure to inspect undercuts severe sanction. |
| Was exclusion of expert Scott Schneider’s testimony proper? | Schneider could not opine on whether Toman’s design was deficient; exclusion under Rule 702 appropriate. | Schneider’s modeling showed pre-development flows higher than Toman’s model and could undermine Toman’s claims/establish negligence. | Affirmed in part: court didn’t abuse discretion excluding Schneider’s design-opinion, but his testimony about the pond-as-constructed might be admissible on remand. |
| Was exclusion of Marilyn Koch’s testimony about pre-death business practices and scope of oral agreement proper? | Her testimony lacked personal knowledge; inadmissible. | Her testimony about oral scope would show Toman provided construction oversight/services beyond pure design. | Affirmed: exclusion proper because Marilyn lacked personal knowledge and her testimony would be speculative/hearsay. |
Key Cases Cited
- Simmons v. Cudd Pressure Control, Inc., 969 N.W.2d 442 (N.D. 2022) (standard for reviewing spoliation sanctions and preserving-evidence duty)
- Ihli v. Lazzaretto, 864 N.W.2d 483 (N.D. 2015) (dismissal may be appropriate for willful spoliation; factors for sanction selection)
- Fines v. Ressler Enters., Inc., 820 N.W.2d 688 (N.D. 2012) (use of inherent power to sanction spoliation; dismissal upheld where preservation duty violated)
- Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, Inc., 473 F.3d 450 (2d Cir. 2007) (duty to preserve can be discharged by providing full and fair opportunity to inspect before destruction)
- Miller v. Lankow, 801 N.W.2d 120 (Minn. 2011) (custodial party may destroy evidence if it gives sufficient notice allowing inspection)
- Diversified Concepts LLC v. Koford, 495 P.3d 755 (Utah Ct. App. 2021) (notice specificity and timing necessary to discharge preservation duty)
- Am. Family Mut. Ins. Co. v. Golke, 768 N.W.2d 729 (Wis. 2009) (criteria for discharging duty to preserve by notice and opportunity to inspect)
- Bachmeier v. Wallwork Truck Ctrs., 544 N.W.2d 122 (N.D. 1996) (factors for sanctions; culpability, prejudice, and lesser alternatives)