Harborview Office Ctr., LLC v. Camosy Inc.
2006 Wisc. App. LEXIS 149 (Wis. Ct. App. Feb. 15, 2006)
Project owner Harborview entered into a contract for the construction of a three-story office building. After discovering significant water infiltration problems, Harborview filed suit against the parties who had provided services in its construction: the general contractor, the architectural firm, the installer of aluminum windows, and the installer of the Exterior Insulation and Finishing System (EIFS). Harborview alleged negligence and breach of contract against each and claimed that in order to resolve the water infiltration problem it would be necessary to remove and replace all of the building’s windows. Harborview hired an expert, who was an architect and engineer, to identify the causes of the problem, evaluate a correction process, and ultimately oversee the remediation process.
During the litigation process, Harborview established a protocol for discovery and retention of evidence relating to mold remediation and the removal and replacement of the windows. According to the plan, the remediation process would be documented through photographs and videotape and specific items removed during the process would be retained for evidentiary purposes. In addition, the parties in interest were invited to an inspection and demonstration of the work to be done during the remediation.
The planned remediation focused mainly on the replacement of windows, the application of sealant around the frames, and correction of the metal flashing. Although some work on the V-grooves in the EIFS was contemplated in the original remediation plan, its purpose was mainly cosmetic. However, once the remediation began, Harborview’s expert discovered that even with newly replaced windows, water was still leaking into the structure. After conducting water testing, he concluded that cracks in the V-grooves was a possible source of the infiltration and that they would require more work than initially anticipated. After reporting his findings to Harborview, the expert gave the order to rework all of the V-grooves in conjunction with the window replacement.
Although all parties had been aware that cracks had been discovered in the V-grooves early on in the process and knew that in general such cracks could potentially lead to water infiltration, since the beginning of the litigation and the remediation project, the focus had been on the windows and the window perimeter. It was not until 98% of the reworking of the V-grooves had been completed that the contractors learned that the cracks in the EIFS were a source of water infiltration. By this time, the contractors’ ability to gather evidence and to allocate responsibility for the problem amongst themselves had been seriously compromised.
As a result, the trial court found that Harborview’s failure to preserve evidence despite its knowledge of its responsibility to do so was egregious conduct justifying dismissal of its claims. The Court of Appeals of Wisconsin upheld the trial court’s decision, noting that when Harborview filed its complaint in December 2001, the exact cause of the water infiltration had not yet been determined, making this a key issue in the litigation. For this reason, Harborview had a duty to preserve evidence essential to the claims, Harborview’s behavior had been “a flagrant, knowing disregard of the judicial process” and the sanction of dismissal was appropriate.