Destruction of evidence (Spoliation) allowing for an inference/presumption

In Doko v Jablonowski & AAA of Michigan, Unpub Per Curiam Opinion, (#306082, 11/15/2012) the Court of Appeals held that the trial court did not err by failing to conclude that AAA intentionally renewed an insurance policy with knowledge of the policy holder’s death. However, AAA should have preserved any files related to the 2003-2004 policy, rather than allow them to be purged from its computers after six years. AAA’s own record retention policy allowed for a “litigation hold” to be placed on information when it was informed of pending litigation. The underwriting files, if any, should not have been purged.

MCR 2.313(B) permits a trial court to impose sanctions for failure to comply with a discovery order. The court rule is inapplicable “in the absence of a discovery order.” Brenner v Kolk, 226 Mich App 149, 159 (1997). Nonetheless, “[a] trial court has the authority, derived from its inherent powers, to sanction a party for failing to preserve evidence that it knows or should know is relevant before litigation is commenced.” Bloemendaal v Town & Country Sports Ctr, Inc, 255 Mich App 207, 211; 659 NW2d 684 (2002), citing MASB-SEG Property/Casualty Pool, Inc, 231 Mich App at 400.

Spoliation can occur in the absence of a discovery order. Brenner, 226 Mich App at 160. Spoliation of evidence occurs when a party either deliberately or accidentally destroys or loses crucial evidence, or when a party fails to preserve such evidence when it is under a duty to preserve evidence that it knows or reasonably should know is relevant to the action. Id. The litigant is under such a duty “[e]ven when an action has not been commenced and there is only a potential for litigation[.]” Id. at 162.

An appropriate consequence for a party’s failure to preserve evidence may be “an instruction to the jury that it may draw an inference adverse to the culpable party from the absence of the evidence.” Brenner, 226 Mich App at 161. There is, however, a procedural and substantive difference between the drawing of an inference and a presumption in favor of the aggrieved party.

The presumption that unproduced evidence would have been adverse can be applied only “where there is evidence of intentional fraudulent conduct and intentional destruction of evidence.” Lagalo v Allied Corp, 233 Mich App 514, 520 (1999). An adverse presumption, if unrebutted, requires the fact finder to “conclude that the unproduced evidence would have been adverse.” Id. at 521. An adverse inference, by contrast, merely permits the fact finder to conclude that the unproduced evidence would have been adverse, the fact-finder is still “free to decide for itself.” Id. at 521.