DIANE TRIBBLE v. DAVID MYTELKA and MILDRED MYTELKA, his wife, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2735-05T52735-05T5

DIANE TRIBBLE,

Plaintiff-Appellant,

v.

DAVID MYTELKA and MILDRED

MYTELKA, his wife, and

COLDWELL BANKER RESIDENTIAL

BROKERAGE CORPORATION,

Defendants-Respondents.

___________________________________________________________

 

Submitted October 25, 2006 - Decided November 30, 2006

Before Judges Fuentes and Baxter.

On appeal from the Superior Court of New Jersey, Law Division, Union County, L-2314-04.

Richard J. Kaplow, attorney for appellant.

Lindabury, McCormick & Estabrook, attorneys for respondents, David Mytelka and Mildred Mytelka (Paul J. Endler, on the brief).

Saul Ewing, attorneys for respondent, Coldwell Banker Residential Brokerage Corporation (Michael J. Conlan, on the brief).

PER CURIAM

Plaintiff Diane Tribble bought a home in Mountainside from defendants David and Mildred Mytelka. She alleges that defendants had deliberately hidden extensive deterioration of the foundation of the greenhouse behind sheetrock. Plaintiff filed suit against them and their realtor Coldwell Banker Residential Brokerage Corporation (Coldwell) alleging consumer fraud in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and common law fraud. While that suit was in active discovery, and before either the Mytelkas or Coldwell had retained a structural engineering expert, plaintiff demolished the greenhouse. That demolition was the basis of a motion for summary judgment by both defendants based on a claim of spoliation of evidence. The court granted their motions and denied plaintiff's subsequent motion for reconsideration. Plaintiff appeals from both of those adverse decisions.

We conclude that the court's finding of spoliation was correct; however, we agree with plaintiff's contention that there were remedies, short of dismissal of her complaint, which could have fully and fairly offset the advantage plaintiff would have achieved through spoliation. Accordingly, we conclude that the dismissal of her complaint was error. Manorcare Health Servs., v. Osmose Wood Preserving, 336 N.J. Super. 218 (App. Div. 2001). We reverse and remand.

I

Plaintiff purchased the property at 172 New Providence Road on October 28, 2002. Mary McEnerney of Coldwell had served as the listing agent for the Mytelkas, who at the time were both in their eighties and had lived in that home for fifty-one years. McEnerney assisted Mrs. Mytelka in completing the written Seller's Disclosure document prior to the settlement. Despite having hired a termite company to treat termite infestation of the greenhouse on June 9, 1993, and despite having later installed new joists under the greenhouse floor to replace the wet, rotted and termite-infested joists supporting it, the Mytelkas, with the assistance of McEnerney, answered "no" on October 9, 2002 to the following questions on that disclosure statement:

7. TERMITES, DRY ROT, PESTS

(a) Do you have any knowledge of termites on . . . or affecting the property?

(b) Do you have any knowledge of any damage to the property caused by termites. . . ?

. . . .

9. BASEMENTS AND CRAWL SPACES

. . . .

(b) Has there ever been any water leakage . . . or dampness within the basement or crawl space?

(c) Have there been any repairs or other attempts to control any water or dampness problem in the basement or crawlspace?

. . . .

10. ADDITIONS/REMODELS

(a) Have you made any . . . structural changes or other alterations to the property?

On July 18, 2002, at the time the agreement of sale was signed, McEnerney wrote a letter to counsel for the Mytelkas stating that she "brought up some structural issues with the Mytelkas." McEnerney never specified the "structural issues" to which she was referring.

On August 1, 2002, plaintiff hired Fawzy Salib to perform a pre-sale home inspection. During the inspection, Salib noted, among other problems, that there was water penetration in the basement underneath the greenhouse. He further noted termite damage underneath the living room, and recommended termite treatment. As a result, on August 16, 2002, counsel for plaintiff sent a letter to sellers' counsel requesting (1) an inspection for termites and any necessary repair; (2) removal of sheetrock in the basement area under the greenhouse in order to inspect for water intrusion and mold, as well as any repair necessary; (3) "remediation of asbestos residue on the pipes in the basement;" (4) repointing of the chimney; and (5) the right to inspect the plumbing.

In response, on September 15, 2002, the Mytelkas' attorney sent a letter to plaintiff offering a $5,000 reduction in the price of the home in exchange for not requiring any further repairs other than that of the termite damage, which was already in progress at the time of the correspondence. Two days later plaintiff accepted the offer.

On September 19, 2002, Jim Krynie, who had been hired by the Mytelkas to repair the existing termite damage, inspected the property and reported no further termite activity and recommended no further treatment. He noted, however, that certain areas of the basement, crawl space and main level were inaccessible or obstructed.

According to plaintiff, in February 2003, approximately three to four months after she moved into the residence, she noticed small holes developing in the living room floor. After watching the condition of the floor deteriorate for approximately one month, she called McEnerney, who told her to call Krynie, the termite specialist hired by the Mytelkas during the sale of the property. On April 5, 2003, after determining that the holes were being caused by termites, Krynie treated the infestation. He inspected the greenhouse, which was connected to the living room, and between the basement underneath the greenhouse and the greenhouse itself, he found sheetrock covering damp wood. Krynie told plaintiff that the greenhouse was the source of the termite infestation. On January 8, 2004, plaintiff hired Jim Pilewski to completely remove the sheetrock underneath the greenhouse. When this was done, the rotted wood was discovered beneath the sheetrock. Plaintiff took several photographs of the greenhouse once the sheetrock was removed.

In April 2004, plaintiff met with McEnerney and other Coldwell staff to discuss the situation, but received no response from Coldwell thereafter. Salib, plaintiff's home inspector, re-inspected the property on May 12, 2004, after the removal of the sheetrock in the basement beneath the greenhouse. Salib concluded that "the previous owner was aware of the termite damage and repair performed and deliberately concealed the damage." On May 20, 2004, plaintiff's counsel sent a letter to all defendants informing them of the condition of the greenhouse. In that letter, he accused all defendants of being aware of and responsible for the condition, and demanded reimbursement. He ended the letter with the following paragraph: "The existing greenhouse and its foundation are in danger of collapse, and are uninhabitable. Obviously, my client cannot and therefore will not permit the status quo to continue. Please be guided accordingly."

Plaintiff contends that she waited over five months from the time her lawyer mailed that letter before she demolished the greenhouse. Although the parties disagree about the amount of time that elapsed prior to the demolition, the trial court determined that, whatever the actual date of demolition was, it "was several months after the May letter." That conclusion is supported by the record. Specifically, plaintiff hired the firm of Caruso-Dellomo on July 12, 2004 to remove the greenhouse and replace it with a heated sun room.

Defendants did not inspect the greenhouse before it was demolished nor did they take photographs or retain a structural engineer. Defendants assert that had they been able to retain a structural engineer, they would have been able to evaluate whether, as plaintiff claimed, there was pervasive infestation, and whether any alternatives less drastic and less costly than total removal of the greenhouse were viable. Plaintiff asserts defendants never made any request to inspect or view the greenhouse after receiving Kaplow's May 20, 2004 letter. Defendants moved for summary judgment based on spoliation of evidence because the greenhouse had been demolished prior to their inspection. On November 4, 2005, the trial court granted defendants' motions for summary judgment, and issued a written opinion three days later. On December 16, 2005, the trial court denied plaintiff's motion for reconsideration in an oral opinion.

In her written opinion, the judge found that the demolition of the greenhouse constituted "spoliation" as that term had been defined in Aetna Life and Casualty Company v. Imet Mason Contractors, 309 N.J. Super. 358, 364 (App. Div. 1998). After rejecting plaintiff's argument that the doctrines of laches, estoppel and waiver served as a complete defense to defendants' claim of spoliation, the judge held that "plaintiff unjustifiably spoiled the evidence in this matter" when she destroyed the greenhouse without having provided defendants with a specific notice as to the date the demolition would commence. The judge noted that courts dealing with spoliation issues are obliged to search for remedies that "level the playing field," with the purpose of avoiding the ultimate sanction of a dismissal with prejudice. Her written opinion explains why no remedy short of dismissal of plaintiff's complaint was viable. The judge wrote:

The court must now fashion a remedy. The plaintiff will not be permitted to offer expert reports or pictures as to the damage. This would leave plaintiff with no evidence but her own testimony. But under the circumstances of this case even plaintiff's own testimony must be barred since the defense has no way to meet any allegation of liability or damage. There is no way for the court to 'level the playing field' short of this remedy. Consequently, summary judgment will be granted to defendants.

Plaintiff's motion for reconsideration was denied for the same reason. After again rejecting laches, estoppel and waiver, the court denied plaintiff's motion for reconsideration stating:

Frankly in this case, [plaintiff] acted too quickly.

. . . .

There is no way to prove this case without the physical greenhouse or inspection of the physical greenhouse. And I do not find that the . . . [d]efendants acted wrongfully in not inspecting it.

. . . .

I'm not saying in all cases you must give a deadline, but I'm saying in this case it was fatal not to do so. So the motion [for reconsideration] is denied.

II

We begin our analysis by agreeing with the judge's conclusion that the demolition of the greenhouse constituted spoliation of evidence. She correctly relied on our determination in Aetna that "spoliation of evidence" in a prospective civil action occurs when evidence pertinent to the action is destroyed, thereby interfering with the action's proper administration and disposition. Aetna, supra, 309 N.J. Super. at 364. There, we determined that when deciding whether a party has a duty to preserve evidence, the trial court must apply four factors, and determine whether there was "(1) pending or probable litigation involving the defendants; (2) knowledge by the plaintiff of the existence or likelihood of litigation; (3) foreseeability of harm to the defendants, or in other words, discarding the evidence would be prejudicial to defendants; and (4) evidence relevant to the litigation." Id. at 366.

Here, the court's application of these four factors was sound. She determined that plaintiff had already threatened litigation before the greenhouse was destroyed; it was certainly foreseeable that defendants would be harmed by the demolition of the greenhouse; plaintiff had a duty to preserve the evidence; and the condition of the greenhouse was the sole issue in the litigation.

Plaintiff does not quarrel with these findings. Her challenge to the grant of summary judgment is instead premised on her argument that the court improperly rejected the doctrines of laches, estoppel and waiver as a defense to spoliation. We disagree with plaintiff's argument that the judge's rejection of those defenses was improper.

In order for laches to bar a defendant from asserting a right, such as the right to the preservation of evidence, the defendant must "engage[] in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party." Knorr v. Smeal, 178 N.J. 169, 181 (2003). In light of the trial court's finding that plaintiff demolished the greenhouse only a "few months" after her attorney's letter of May 20, 2004 was delivered, the judge's finding that defendants did not engage in any "inexcusable delay" is sound. Plaintiff has not pointed to any decisions where such a brief period led to a finding that laches applied.

Additionally, although the judge did not so state, we note that by the time plaintiff demolished the greenhouse, the time for submitting experts' reports had not yet ended. Accordingly, defendants cannot be said to have engaged in an unreasonable delay, because they were certainly entitled to assume that the greenhouse would remain standing until they had retained a structural engineering expert, and the expert's review had been completed.

As to plaintiff's argument that defendants are estopped from claiming spoliation, we agree with the judge that plaintiff cannot prevail unless she establishes that she was induced to change her position in reliance on some action or inaction of defendants. Knorr, supra, 178 N.J. at 178. Plaintiff failed to demonstrate that she was forced to change her course of conduct in reliance on defendants' inaction; therefore, the claim of estoppel fails.

The trial court's rejection of plaintiff's waiver argument was sound as well. A defendant does not waive a right, such as the right to inspect evidence, unless, knowing such right exists, he intentionally relinquishes that right. Id. at 177. The court's conclusion, that no waiver could have existed because defendants were unaware that plaintiff was on the verge of tearing down the greenhouse, was therefore correct. Plaintiff's argument that defendants' indifference to plaintiff's "critical circumstances" expressed an intent to waive their right to inspection, is a misapplication of the law. In order to waive their right to raise the spoliation claim, defendants would have to have been indifferent toward their right to inspect the greenhouse, not indifferent to plaintiff's situation. Id. at 177; see also, Merchs. Indem. Corp. v. Eggleston, 68 N.J. Super. 235 (App. Div. 1961), aff'd, 37 N.J. 114 (1962).

Here, discovery was still ongoing. Accordingly, there was no particular timeframe in which defendants were required to inspect the greenhouse. Therefore, the trial court was correct in rejecting waiver as a defense.

III

Plaintiff further argues that the trial court erred when it relied on cases in which, unlike the instant case, defendant had expressly demanded that plaintiff preserve the evidence. Defendants respond that the trial court appropriately and accurately applied relevant case law, and that they had no duty to request preservation of evidence. We agree.

In conducting its spoliation analysis, the trial court correctly applied the holdings of Manorcare, supra, 336 N.J. Super. 218, and Aetna, supra, 309 N.J. Super. 358. In Manorcare and Aetna, the parties raising the issue of spoliation expressly requested preservation of evidence before the destruction took place. Although the defendants in these cases expressly requested preservation of the evidence, we did not hold in either one that defendants had a duty to do so. Although we discussed in Aetna and Manorcare the defendants' request for preservation of evidence, in neither opinion was such a request essential to our holding. Accordingly, the court correctly rejected plaintiff's claim to the contrary.

IV

Having determined that plaintiff's duty to preserve the evidence was not extinguished by the lack of a specific request by defendants, we turn to the question of whether the judge was correct in concluding that dismissal of plaintiff's case was the only possible remedy. Plaintiff argues that granting summary judgment was "drastic and unnecessary" in light of the possible curative instructions to the jury and the proofs available to defendants.

The court determined that dismissal of plaintiff's case against these defendants was the only method of eliminating unfair prejudice. That conclusion failed to give due consideration to our holding in Manorcare that dismissal with prejudice is only proper "when no lesser sanction will suffice to erase the prejudice suffered by the [defendant]." Manorcare, supra, 336 N.J. Super. at 231. As we observed there,

The key considerations in determining whether dismissal is appropriate should be: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future.

Ibid.

In Manorcare, we held that although spoliation had occurred, summary judgment should not have been granted. Id. at 236. Instead, the trial judge should have barred at trial all evidence obtained by the plaintiff that the defendant could not effectively challenge because of the spoliation. Ibid. We further concluded that a remedy should have been fashioned by the trial court to "level the playing field." Ibid. Similarly, in Aetna, we noted that preclusion of evidence was an adequate remedy, and, although we ultimately affirmed the trial court's dismissal, we did so only because the plaintiff's counsel conceded that he would be unable to prove his case without the barred expert testimony. Aetna, supra, 309 N.J. Super. at 368. We emphasized that we approved the dismissal only to avoid a "futile remand." Ibid.

Here, we agree with the judge's conclusion that plaintiff should not be permitted to offer the expert report of Salib, her structural engineer, because his opinion was based on an inspection of the greenhouse and defendants did not have that same opportunity to inspect. We further agree that the photographs plaintiff took of the joists underneath the greenhouse and of the damaged wood behind the sheetrock should also be barred, because defendants were not given the chance to view those conditions themselves.

We disagree, however, with the judge's conclusion that this would leave plaintiff with no evidence but her own testimony that "must be barred [because] the defense has no way to meet any allegation of liability or damage." Unlike the trial court, we perceive no unfairness to defendants in allowing plaintiff to testify. Defendants would be free to cross-examine her on many subjects that could undermine her credibility.

Moreover, the judge does not appear to have considered the giving of a "spoliation inference." This, too, would "level the playing field." A "spoliation inference" instructs the jurors that "all things are presumed against the destroyer," and that they are permitted to assume that the missing evidence (i.e. the photographs and an expert's report) would have been damaging to the spoliator. Rosenblit v. Zimmerman, 166 N.J. 391, 401-02 (2001).

Although the discovery sanction of barring plaintiff from presenting the photographs and the testimony of Salib should certainly be imposed, we see no reason to extend that sanction to bar the testimony of Krynie and Pilewski. Unlike Salib, who rendered an opinion, Krynie and Pilewski are fact witnesses. Their testimony can, and indeed, should be limited to their observations of the condition of the greenhouse prior to the removal of the sheetrock. If that limitation is imposed, defendants would be able to counter the testimony of Krynie and Pilewski with that of McEnerney and Mytelka, both of whom were familiar with the condition and appearance of the greenhouse prior to the removal of the sheetrock. Moreover, Mytelka would presumably have been familiar with the conditions existing beneath the sheetrock because she was the owner of the home, and, along with her husband, had hired whoever installed the sheetrock.

Likewise, we see no reason to bar the testimony of plaintiff's expert Charles Huntoon, who rendered an opinion that McEnerney, as the listing agent, breached the Code of Ethics of the National Association of Realtors and applicable provisions of the New Jersey Administrative Code. His opinion was not based on an inspection of the greenhouse, but was based instead on a document review. Defendants are free to retain an expert to review the same documents.

We agree with plaintiff that because dismissal is "a remedy of last resort," Aetna, supra, 309 N.J. Super. at 369, the court's assessment of the available remedies and sanctions here was unduly narrow. We believe the procedures we have specified will give defendants the opportunity for a fair trial, and will, at the same time, enable plaintiff to potentially prove her case. We disagree with the judge's determination "that there is no way to prove this case without . . . inspection of the physical greenhouse."

If, ultimately, plaintiff determines that she cannot prove her case, then dismissal would be a proper disposition. The court erred, however, when it imposed that result without having expressly considered the full array of remedies discussed herein.

Reversed and remanded for further proceedings consistent with this opinion.

 

According to Coldwell's brief, Mr. Mytelka died in July 2005.

(continued)

(continued)

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A-2735-05T5

November 30, 2006