American Family Mutual Insurance Company v. Golke

Summary

The Wisconsin Supreme Court reviewed dismissal of an insurer’s negligence action as a sanction for spoliation of evidence arising from a residential fire allegedly caused by negligent roof repairs. The court held that a party may discharge its duty to preserve relevant evidence by providing reasonable notice of a possible claim, its basis, the relevant evidence, and a reasonable opportunity to inspect it; first-class mailing may suffice to provide such notice. It further held that dismissal for spoliation requires egregious conduct and reversed and remanded the judgment of dismissal.

Holdings

1. A party or potential litigant with a legitimate reason to destroy evidence discharges its duty to preserve relevant evidence within its control by providing 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 the evidence.
2. Notice sufficient to discharge the duty to preserve evidence may be effectuated by first-class mail. Proof of mailing creates a rebuttable presumption that the letter was received; mere failure to remember receiving it does not rebut the presumption.
3. Dismissal as a spoliation sanction is appropriate only when the party controlling the evidence acted egregiously, meaning through a conscious attempt to affect the outcome of litigation or a flagrant, knowing disregard of the judicial process. Lesser sanctions may be appropriate for non-egregious violations of the preservation duty.

Questions Presented

1. When does a party or potential litigant discharge its duty to preserve evidence relevant to a potential legal claim?
2. Can sufficient notice of impending destruction of evidence be effectuated by first-class mail?
3. When is dismissal an appropriate sanction for spoliation of evidence?

Disposition

reversed_and_remanded