American Family Mutual Ins. Co. v. David Golke
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2009 WI 81 SUPREME COURT CASE NO.: COMPLETE TITLE: OF WISCONSIN 2006AP3003 American Family Mutual Insurance Company, Plaintiff-Appellant, David Ronaldson, Involuntary-Plaintiff, v. David Golke, Joseph Golke, Charles Golke, Golke Brothers Roofing and Siding LLC and Indiana Insurance Company, Defendants-Respondents, Ellington Mutual Insurance Company, Intervenor-Defendant. ON CERTIFICATION FROM THE COURT OF APPEALS OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: SOURCE OF APPEAL: COURT: COUNTY: JUDGE: JUSTICES: CONCURRED: July 15, 2009 December 2, 2008 Circuit Waupaca Raymond S. Huber ABRAHAMSON, C.J., concurs (opinion filed). BRADLEY, J., joins concurrence. DISSENTED: NOT PARTICIPATING: ATTORNEYS: For the plaintiff-appellant there were briefs by Charles W. Kramer, Monte E. Weiss, and Deutch & Weiss, LLC, Milwaukee, and oral argument by Charles W. Kramer. For the defendants-respondents, Joseph Golke, Charles Golke, and Golke Brothers Roofing and Siding, LLC, there was a brief filed by Michael P. Konz, Erik L. Fuehrer, and Gabert, Williams, Konz & Lawrynk, LLP, Appleton, and oral argument by Michael P. Konz. For the defendants-respondents, David Golke and Indiana Insurance Company, there was a brief by Peter M. Farb and Law Offices of Thomas P. Stilp, Appleton, and oral argument by Peter M. Farb. An amicus curiae brief was filed by Ryan L. Woody, Gary L. Wickert, and Matthiesen, Wickert & Lehrer, S.C., Hartford, on behalf of the National Association of Subrogation Professionals. An amicus curiae brief was filed by Arnold P. Anderson and Mohr & Anderson, LLC, Madison, on behalf of the Wisconsin Reinsurance Corporation. 2 2009 WI 81 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2006AP3003 (L.C. No. 2003CV112) STATE OF WISCONSIN : IN SUPREME COURT American Family Mutual Insurance Company, Plaintiff-Appellant, David Ronaldson, FILED Involuntary-Plaintiff, v. JUL 15, 2009 David Golke, Joseph Golke, Charles Golke, Golke Brothers Roofing and Siding LLC and Indiana Insurance Company, David R. Schanker Clerk of Supreme Court Defendants-Respondents, Ellington Mutual Insurance Company, Intervenor-Defendant. APPEAL from an order and a judgment of the Circuit Court for Waupaca County, Raymond S. Huber, Judge. Reversed and cause remanded. ¶1 MICHAEL J. GABLEMAN, J. This is an appeal pursuant to Wis. Stat. § 809.61 (2007-08)1 in which American Family Insurance 1 All subsequent references to the Wisconsin Statutes are to the 2007-08 version unless otherwise indicated. No. Co. ("American dismissal Family") entered by the seeks review Circuit of Court the for 2006AP3003 judgment of Waupaca County, action against Raymond S. Huber, Judge. ¶2 American Family brought a cause of three brothers David, Joseph, and Charles Golke, Golke Brothers Roofing and Siding LLC, and Indiana Insurance Co. ("Indiana Insurance")2 for damages alleged to have arisen from negligent roof repairs. American Family claimed that the Golkes' negligent roof repair caused a fire that damaged a home owned by its insured, American the Family Ronaldsons. had failed The to circuit preserve court any found portion that of the pertinent roof or chimney sections when it knew or should have known that litigation was likely. The circuit court further found that American Family did not give the Golkes sufficient notice of a claim against them or of the impending destruction of the fire scene. destruction of Concluding that this amounted to improper evidence, or "spoliation," the circuit court dismissed American Family's suit as a sanction for spoliation and entered judgments in favor of all defendants. ¶3 American Family appealed, certified two questions to us. and the court of appeals First, under what circumstances may evidence crucial to a potential legal claim be destroyed? Second, what notice must be given to a civil litigant before 2 For convenience, we refer to these defendants-respondents collectively as "the Golkes" in this opinion. Where distinctions are appropriate, we will refer to the relevant party or parties by name. 2 No. 2006AP3003 such evidence is destroyed? The certification by the court of appeals proper also discussed the standard for imposing the sanction of dismissal for spoliation. ¶4 does a We therefore address the following issues: (1) When party or potential litigant discharge its duty to preserve evidence relevant to a potential legal claim; (2) Can sufficient notice be effectuated by the mailing of a letter via first-class mail; and (3) When is dismissal an appropriate sanction for spoliation of evidence? ¶5 We conclude that the duty to preserve relevant evidence is discharged when a party or potential litigant with a legitimate reason to destroy evidence provides 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 that evidence. We further hold that such notice can be properly effectuated by mailing a letter via first-class mail. We also affirm that dismissal is an appropriate sanction for spoliation of evidence only if a party acts egregiously that is, in a conscious effort to affect the outcome of litigation or in flagrant, knowing disregard of the judicial process. Applying the law to the facts of this case, we conclude that as a matter of law, Joseph and Charles Golke received the March 13, 2000, letter, and that American Family provided the Golkes with reasonable and sufficient notice, thereby discharging its duty to preserve the evidence from the fire. The circuit court therefore erroneously exercised its discretion when it dismissed American Family's suit. Because American Family discharged its 3 No. 2006AP3003 duty to preserve evidence and no sanctions are appropriate, the judgment of the circuit court is reversed, and the cause is remanded to the circuit court for trial on the merits. I. FACTS ¶6 On February 13, 2000, fire damaged a home owned by David and Lori Ronaldson. The home was insured by American Family, which appointed a field examiner, Albert Hlavachek, and a fire origin and cause expert, Todd Haltaufderheid, to handle the case. On February 14, 2000, they inspected the home and concluded that the fire began near a metal chimney that extended through the roof. discovered that After further investigation, Haltaufderheid the three Golke brothers David, Joseph, and Charles had performed roof repairs on the Ronaldson home in 1994. ¶7 When the Golke brothers performed construction on the Ronaldson's home, they were all working together in one partnership. This partnership was insured by Indiana Insurance until when 1997 the partnership partnership dissolved, David construction work sole as a Golke a new liability partnership, company, which later was After continued proprietor Insurance as his insurance provider. formed dissolved. and to retained the perform Indiana Joseph and Charles Golke transformed insured by into a Ellington limited Mutual Insurance. ¶8 On February 22, 2000, Haltaufderheid met with Charles Golke at Joseph and Charles Golke's business address. that meeting, Haltaufderheid confirmed 4 that the During construction No. work on the Ronaldson home was performed by 2006AP3003 the Golkes. Haltaufderheid later concluded that their actions had reduced the clearance between the chimney and the wood underlying the roof, and that this reduced clearance allowed the hot chimney to heat the surrounding wood to the point of ignition, leading to the fire that damaged the home. American Family determined that repair was not possible, and that the home would have to be demolished and rebuilt. ¶9 On March 13, 2000, Hlavachek, the American Family field examiner, mailed letters to the Golkes after he learned of their involvement with the roof construction.3 One copy was mailed to David Golke; the other copy was mailed to Joseph and Charles Golke at their business address. This correspondence was sent via United States Postal Service first-class mail, not certified mail. (3/13/2000), the The name letter of the stated insureds the date (the of the Ronaldsons), loss the address of the home, that the loss of property resulted from fire, and that the amount of loss was pending. The body of the letter stated in full as follows: This letter is notice for the date of loss. were negligent property at the to put you and your roofing company on fire damage that occurred on the above Our investigation determined that you for work performed on our insured's above loss location. If you have a liability insurance carrier, please forward this letter to them and we will handle these 3 The parties dispute whether the March 13, 2000, letter was actually sent to Joseph and Charles Golke. We address this further below. 5 No. 2006AP3003 matters directly with them. If you do not have a liability insurance carrier, we will expect you to pay for the repairs/replacement. The amount of repairs/replacement at this time is pending. To provide adequate time for yourself or your liability carrier to conduct a proper investigation, any destruction of the fire damaged building will not take place until April 1, 2000. ¶10 David Golke admitted receiving this letter, which he forwarded to his insurer, Indiana Insurance. Indiana Insurance sent a response letter to American Family on March 17, 2000, acknowledging the potential claim March Family 23, Insurance 2000, and American David Golke by but denying replied letter coverage.4 to both recommending On Indiana that they investigate the fire scene if they so desired because American Family was "planning demolition to begin on April 1, 2000." ¶11 March American Family did not receive any response to the 13, 2000, letter insurer on their behalf. Charles Golke claimed 2000, letter. Joseph Golke from Joseph or Charles Golke or any Though not denying receipt, Joseph and not to recall receiving the March 13, Charles Golke testified at trial that he and had experienced some difficulty in securing accurate and reliable mail service at their business address. ¶12 time via On April 6, 2000, Hlavachek sent a second letter, this United States Postal Service certified mail, with copies being sent to both David Golke, and Joseph and Charles Golke at their business address. 4 This second letter also stated Indiana Insurance later determined that it did cover David Golke with respect to this claim. 6 No. 2006AP3003 the date of the loss, the name of the insureds, the address of the home, that the loss of property resulted from fire, and that the amount of loss was pending. The body of the letter provided: This is our second request for insurance information concerning your liability regarding the above loss. All losses must be reported to your insurance company on a timely basis. Failure to do so may result in denial of your coverages due to your failure to meet policy conditions. You will need to contact your current insurance carrier and have them contact us as soon as possible. ¶13 Both David and Joseph Golke received copies of the second letter. admitted that they At trial, Joseph Golke initially claimed not to recall receiving the second letter, but when confronted with his signature on the delivery receipt, admitted that he received it on April 7, 2000. Charles Golke also Golke admitted receiving that letter. Charles called Hlavachek in response to the letter on April 8, 2000, leaving a message for him. Hlavachek returned Charles Golke's message that 5:37 same day at p.m., but there was no answer, and Hlavachek did not leave a message. ¶14 None of the three Golke brothers, the limited liability roofing company, the insurers, or anyone else on their behalf contacted American Family to arrange for inspection of the burned home, nor did anyone (or any defendant) request an extension of the inspection period. 7 American Family's adjuster No. 2006AP3003 testified that he "definitely" would have granted an extension if so requested. ¶15 Although demolition of American the home Family's would first occur on letter April stated 1, that 2000, the demolition and rebuilding did not begin until sometime after April 2000.5 11, Neither American Family nor its experts preserved any physical evidence of the roof, chimney, or any other part of the fire scene. Family's failure to preserve The Golkes urge that American physical evidence, such as the chimney and surrounding roof sheathing, fell short of applicable fire investigation industry standards as articulated in the National Fire Protection Association's Publication 921 and the American Society for Testing and Materials' publication E 118895 both of which state that fire inspectors should preserve physical evidence from a fire scene.6 did retain produced by demolition. many its photographs experts who and American Family, however, drawings inspected of the the home fire scene before its American Family shared these materials with the Golkes and their fire experts during discovery. II. PROCEDURAL HISTORY ¶16 Despite additional attempted contacts, American Family heard nothing from the Golkes and brought suit on March 14, 5 The record is unclear as to the precise dates of both demolition and commencement of construction on the new home. 6 David Golke and Indiana Insurance Company asked this court to take judicial notice of this publication or supplement the record with it. We deny the motion. 8 No. 2006AP3003 2003, against David, Joseph, and Charles Golke, Golke Brothers Roofing and Siding LLC, arising from the fire.7 order dismissing evidence. proceeded and Indiana Insurance for damages All defendants filed motions for an American Family's claims for spoliation of The circuit court denied the motions and the case to a bench trial sufficiency of notice. At portion the trial, the of on the the issues conclusion defendants of of renewed spoliation the and evidentiary their motions, arguing that American Family's claims should be dismissed for spoliation. The circuit court then dismissed American Family's claims as a sanction for its failure to preserve any physical evidence. ¶17 American Family appealed, contending that the circuit court erred in dismissing its cause without first finding that American Family acted egregiously. American Family asserted that its actions were not egregious, and that dismissal of its cause was an erroneous exercise of discretion. Stat. § 809.61, the court of appeals Pursuant to Wis. certified the aforementioned questions to this court. III. STANDARD OF REVIEW ¶18 Under Wis. Const. art. VII, § 3(3), by accepting the certified appeal, we acquire jurisdiction of the entire appeal, not merely the questions certified. State v. Stoehr, 134 Wis. 2d 66, 70, 396 N.W.2d 177 (1986); Wis. Stat. §§ 808.05(2), 7 Ellington Mutual Insurance Co. later intervened and asserted that it provided no coverage for Joseph Golke, Charles Golke, or their limited liability roofing company. 9 No. 808.05(3), and (Rule) 809.61. 2006AP3003 We review the decision to impose sanctions for spoliation of evidence for erroneous exercise of discretion. City of Stoughton v. Thomasson Lumber Co., 2004 WI App 6, ¶38, 269 Wis. 2d 339, 675 N.W.2d 487. Whether a court applied the correct legal standard in exercising its discretion is a question of law which we review de novo. Garfoot v. Fireman's Fund Ins. Co., 228 Wis. 2d 707, 717, 599 N.W.2d 411 (Ct. App. 1999). IV. DISCUSSION ¶19 Our initial task is to examine the questions addressed to us by the court of appeals. First, we discuss the standard for when a party or potential litigant discharges its duty to preserve relevant evidence. We conclude that this duty is discharged when a party or potential litigant with a legitimate reason to possible destroy claim, evidence the basis provides for that reasonable claim, the notice of existence a of evidence relevant to the claim, and reasonable opportunity to inspect that address whether constitute evidence mailing sufficient affirmative. prior a to its letter notice, destruction. via answering Second, we first-class the mail question in can the Third, we address when dismissal is an appropriate sanction for spoliation of evidence, concluding that dismissal is only appropriate if a party acts egregiously. After establishing the relevant legal standards, we apply them to the facts of legitimate this case reason to and conclude destroy that evidence, 10 American and Family gave the had a Golkes No. 2006AP3003 reasonable and sufficient notice, thereby discharging its duty to preserve the evidence from the fire. A. ¶20 The court of appeals first asked us to address the following: Under what circumstances may evidence crucial to a potential legal claim be destroyed? This question concerns when a party or potential litigant discharges its duty to preserve relevant evidence. ¶21 Every preserve party evidence litigated. or potential essential to Sentry Ins. v. a litigant claim Royal is that Ins. duty-bound will Co. Wis. 2d 907, 918, 539 N.W.2d 911 (Ct. App. 1995). the "intentional destruction, concealment of evidence." 1999). mutilation, to likely Am., of be 196 Spoliation is alteration, or Black's Law Dictionary 1409 (7th ed. Courts have discretionary authority to sanction parties who destroy or withhold evidence relevant to pending or future litigation. See Estate of Neumann v. Neumann, 2001 WI App 61, ¶80, 242 Wis. 2d 205, 626 N.W.2d 821. These sanctions serve two main the judicial deter parties purposes: seeking "(1) function evidence." and to uphold (2) to system's from truth- destroying Insurance Co. of N. Am. v. Cease Elec. Inc., 2004 WI App 15, ¶16, 269 Wis. 2d 286, 674 N.W.2d 886. ¶22 In the case at bar, the parties dispute whether the general duty to preserve relevant evidence may be discharged, and if so, discharge what that a duty. party or David potential Golke litigant (along with must his do to insurer, Indiana Insurance) argues that evidence must be preserved until 11 No. 2006AP3003 and unless all parties consent to its destruction. American Family asserts duty that a party or potential litigant's to preserve evidence is discharged once it has given notice and an opportunity to test or inspect the evidence. Joseph and Charles Golke (along with their partnership, Golke Brothers Roofing and Siding LLC) appear to agree with American Family that the duty to preserve evidence may be discharged with proper notice regarding the claim and the impending destruction of evidence.8 ¶23 multiple Though a question of first impression for this court, jurisdictions have either directly or indirectly addressed the question of whether and under what preconditions a party or potential litigant may legitimately destroy relevant evidence. ¶24 Inc., 473 Several illustrative cases demonstrate a pattern. In Allstate Ins. Co. v. Hamilton Beach/Proctor Silex, F.3d 450, 458 (2d Cir. 2007), the Second Circuit considered a subrogation9 claim for a home fire allegedly caused by a coffee maker. On the date of the fire, the insurer sent the defendant product manufacturer a letter notifying it of the potential claim and offering to 8 preserve the fire scene for Joseph and Charles Golke do maintain, however, American Family has not provided sufficient notice. 9 that Subrogation, the claim also at issue here, is a cause of action "[w]here one party is substituted for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor." Black's Law Dictionary 1440 (7th ed. 1999). Here, American Family substitutes itself in place of the Ronaldsons and is allowed to pursue this action against third parties as if it stepped into the Ronaldsons' shoes. 12 No. inspection. to the Id. at 457. scene two weeks 2006AP3003 The manufacturer sent a representative later, who indicated he wanted to preserve the remains of the coffee maker and a receptacle, not the range or range hood which were also potential causes of the fire. Id. The insurer then took detailed pictures of the range and range hood and discarded them after ruling them out as a cause of the fire. Id. However, the manufacturer's initial inspector passed away, and the new representative was unable to state conclusively that the range and range hood were not the causes of the fire discarded evidence. ¶25 without an opportunity to examine the Id. at 453. The U.S. District Court for the District of Vermont found that it would be inequitable to allow the insurer to use this evidence, and excluded it. Id. at 457. The insurer argued that this was effectively a sanction for spoliation, and that the district court's actions constituted an abuse of discretion because the insurer provided the manufacturer a "full and fair opportunity to examine the fire scene as well as the alternate potential ignition sources." Id. at 457-58. The Second Circuit held that the duty to preserve evidence was not perpetual, and that the district court abused its discretion by effectively sanctioning the insurer for spoliation of evidence even though it provided the manufacturer with a full and fair opportunity to inspect the evidence, and the defendant manufacturer disclaimed interest in that evidence. ¶26 Id. at 458. In another case on point, a homeowner made one phone call to a car dealer complaining that the car he bought from the 13 No. 2006AP3003 dealer started on fire while in his garage, causing his home to burn down. Hoffman v. Ford Motor Co., 587 N.W.2d 66, 68 (Minn. Ct. App. 1998). The homeowner did not make any claim or demand during his phone call, did not request or instruct the dealer to undertake an investigation, and did not indicate how the fire started or whether the car dealer or manufacturer may be liable. Id. at 70-71. Neither the homeowner nor his insurer ever informed the car dealer or manufacturer that they intended to pursue a claim against either of them, that the car and home were available for inspection, or that the car and home would soon be destroyed. Id. Before the car's manufacturer was given an opportunity to inspect them, the home was destroyed, the car had been allowed to corrode and degrade in a salvage yard for several months, and some of the car's parts that were allegedly the cause of the fire were damaged or lost. ¶27 content, Id. at 71. The Hoffman court concluded that "to be sufficient in a spoliation notice must recipient of a breach or a claim." reasonably Id. at 70. notify the The court equated the purposes of a notice of evidence spoliation to the purposes of the notice a purchaser owes to a seller as a precondition of bringing a U.C.C. claim for breach of warranty, explaining as follows: First, notice provides the seller a chance to correct any defect. Second, notice affords the seller an opportunity to prepare for negotiation and litigation. Third, notice provides the seller a safeguard against stale claims being asserted after it is too late for the manufacturer or seller to investigate them. 14 No. 2006AP3003 Id. (citing Church of the Nativity of Our Lord v. Watpro, Inc., 491 N.W.2d 1, 5-6 (Minn. 1992)). The court concluded that the content of the phone call constituted insufficient notice. at 72. It therefore excluded all evidence and Id. testimony regarding the cause of the fire that derived from the insurer's investigation spoliation. of evidence. ¶28 similar of Id. both the car and garage as a sanction for As a result, the claim was dismissed for lack Id. Numerous other principles.10 courts These have cases 10 outlined reveal a or suggested loose consensus See, e.g., N. Assurance Co. v. Ware, 145 F.R.D. 281, 284 (D. Me. 1993) (holding that "reasonable notice to likely adversaries" that the evidence was to be destroyed would be sufficient to prevent a sanction for spoliation); Cooper v. United Vaccines, Inc., 117 F. Supp. 2d 864, 875 (E.D. Wis. 2000) (stating that the claim might not have been dismissed if the plaintiff had notified the defendant of its intention to engage in destructive testing of the evidence so that the defendant could have participated or conducted its own testing); Howell v. Maytag, 168 F.R.D. 502, 506 (M.D. Pa. 1996) (stating that "plaintiffs could reasonably have given [the defendant] notice of the potential claim, and provided it with an opportunity to conduct an independent investigation before the demolition of the fire scene."); Baliotis v. McNeil, 870 F. Supp. 1285, 129091 (M.D. Pa. 1994) (stating that relevant evidence should not be destroyed without giving the other party an opportunity for inspection); Hirsch v. Gen. Motors Corp., 628 A.2d 1108, 1122 (N.J. Super. Ct. Law Div. 1993) (holding that a "potential spoliator need do only what is reasonable under the circumstances," which included allowing defendants a reasonable amount of time to inspect the evidence and giving notice of probable litigation (citation omitted)); Hamilton Mut. Ins. Co. of Cincinnati v. Ford Motor Co., 702 N.E.2d 491, 493 (Ohio Ct. App. 1997) (holding that exclusion of expert testimony as a sanction for spoliation was improper because the defendant had been given multiple notices and opportunities to inspect the evidence and had indicated that it would not do so). 15 No. 2006AP3003 grounded in the idea that a party or potential litigant may discharge its potential claim relevant duty by and a evidence. giving full We the and hold, other fair side notice opportunity therefore, that to a of a inspect party or potential litigant with a legitimate reason to destroy evidence11 discharges its duty to preserve relevant evidence within its control by providing the opposing party or potential litigant: (1) reasonable notice of a possible claim; (2) the basis for that claim; (3) the existence of evidence relevant to the claim; and (4) reasonable opportunity to inspect that evidence. ¶29 The specific method or frequency of such notice is less significant. Rather, the trial court must use its own judgment, its own discretion, to determine whether the content of the notice is sufficient in light of the totality of the circumstances. Relevant facts might include the length of time evidence can be preserved, the ownership of the evidence, the prejudice posed to possible adversaries by the destruction of the evidence, the form of the notice, the sophistication of the parties, and the ability of the party in possession of evidence to bear the burden and expense of preserving it. framework and serves the effectively evidence. judicial prevents system's parties from truth-seeking prematurely the This function destroying See Insurance Co. of N. Am., 269 Wis. 2d 286, ¶16. 11 In this case, American Family had a legitimate reason to destroy the home the Ronaldsons needed a place to live. 16 No. ¶30 A rule that does not allow a 2006AP3003 or potential party litigant to discharge its duty to preserve evidence unless all other parties practical nor consent, fair. as Such David a rule Golke would urges,12 place is the neither party in control of the evidence at the mercy of its adversary who would be indirectly rewarded for withholding its consent to destroy evidence. An adversary would have no incentive to either inspect the evidence or grant its consent to the destruction of evidence. This is to say nothing of the unfairness to insureds who (like the homeowners in this case) could be stuck in limbo while a court-endorsed and costly waiting game ensued between the parties. We cannot endorse a rule that encourages such brinkmanship. B. ¶31 The second question the court of appeals certified to us is really a subset of the first: What notice must be given to a civil litigant before the evidence is destroyed? We have already answered the substance of this question, stating that notice sufficient to discharge the duty to preserve evidence requires: (1) reasonable notice of a possible claim; (2) the basis for that claim; (3) the existence of evidence relevant to the claim; and (4) reasonable opportunity to inspect that evidence. 12 He bases this assertion on the National Fire Protection Association and American Society for Testing and Materials standards which state that fire inspectors should preserve physical evidence from a fire scene. 17 No. ¶32 2006AP3003 We do wish to address one sub-point regarding notice that is particularly relevant under the facts of this case whether notice can be effectuated via whether some other method is required. on the method of delivery of the first-class mail, or This question is focused notice, not the content (which we have already addressed above). required Joseph and Charles Golke argue that American Family has the burden to prove receipt of the March 13, 2000, letter, and that it did not meet this burden. Specifically, they assert that sufficient notice of this type must be either by personal service, as with a summons and complaint under Wis. Stat. § 801.11, or certified mail with a return receipt or reply required. American Family counters that first-class mail is a common and accepted form of notice throughout the law. ¶33 mail The legislature has long recognized that first-class service calculated is to an efficient provide actual mechanism notice of that is possible reasonably or pending litigation and effective alteration of substantive legal rights and interests. See, e.g., Wis. Stat. § 631.36(2)(b)-(c) (providing for cancellation of insurance policies ten days after notice is sent by first-class mail); Wis. Stat. § 968.04(3)(b)2 (providing for a person's arrest on a warrant issued if he fails to appear for court as directed in a summons served by mail); Wis. Stat. § 48.977(4)(c)2 (providing for notice of a hearing on a petition to appoint a guardian for a child to be sent to the child's parents and others by first-class mail); Wis. Stat. § 146.819(3)(a) (providing for the deletion or destruction of a 18 No. 2006AP3003 patient's medical records 35 days after notice is sent by firstclass mail). ¶34 even the Contrary to commencing Joseph of and Charles multimillion Golke's dollar suggestion, lawsuits may be effectuated by sending the summons and complaint via first-class mail if personal § 801.11(1)(c). service is not possible. See Wis. Stat. The service of pleadings and other papers in a lawsuit may also be accomplished through first-class mail. Wis. Stat. § 801.14(2). See Both the legislature and this court13 have affirmed the sufficiency of notice by mail in a variety of circumstances. ¶35 Notice by mail is usually considered complete not upon proof of receipt, but upon mailing. is complete upon mailing."); see See id. ("Service by mail also Wis. Stat. § 891.46 ("[n]otices . . . required or authorized to be served by mail in judicial or administrative proceedings are presumed to be served when deposited in the U.S. mail with properly affixed evidence of prepaid postage."); Mansfield v. Smith, 88 Wis. 2d 575, 588, 277 N.W.2d 740 (1979) (discussing the "mailbox rule," that acceptance of a contract is effective upon mailing, and noting that "[m]ailing is sufficient to satisfy the legal requirements imposed in the day-to-day conduct of business"). ¶36 Accordingly, evidence of mailing a letter raises a rebuttable presumption that the addressee received the letter. 13 State ex rel. Flores v. State, 183 Wis. 2d 587, 612-14, 516 N.W.2d 362 (1994). 19 No. 2006AP3003 See State ex rel. Flores v. State, 183 Wis. 2d 587, 612, 516 N.W.2d 362 (1994) ("It is well established that the mailing of a letter creates a presumption that the letter was delivered and received.").14 Once the presumption of mailing has been established, the burden shifts to the party challenging receipt to present credible evidence of non-receipt. Id. at 613. The presumption may not be overcome without a denial of receipt. Id. If receipt is denied, the issue is a credibility question to be resolved by the factfinder. receipt is not enough; overcome without denial.15 the Id. presumption Mere non-remembrance of of receipt cannot be See id. 14 See also, State v. Kemp, 106 Wis. 2d 697, 709, 318 N.W.2d 13 (1982) (referring to "the presumption of receipt from mailing"); Greene v. Donner, 198 Wis. 122, 126, 223 N.W. 427, (1929) ("The presumption of the receipt of the notice which the law raises is a rebuttable presumption."); Nack v. State, 189 Wis. 633, 636, 208 N.W. 487 (1926) ("The copy of the letter was received on the theory that the mailing of the letter was presumptive evidence of its receipt. . . . [T]here was a presumption that defendant received the letter."); Reeves v. Midland Cas. Co., 170 Wis. 370, 377, 174 N.W. 475 (1919) ("From the proof of mailing a presumption arises that [the notice] was received by the [addressee]."); Mullen v. Braatz, 179 Wis. 2d 749, 756, 508 N.W.2d 446 (Ct. App. 1993) ("The mailing of a letter creates a presumption that the letter was delivered," but the presumption is rebuttable.). 15 Even in 1897, when this court held that mailing a letter was prima facie evidence of its receipt (rather than raising a presumption of receipt), an express denial of receipt was required to challenge the evidence. McDermott v. Jackson, 97 Wis. 64, 75, 72 N.W. 375 (1897) ("Defendant did not deny having received the letter. He said he did not remember having received it. That did not weaken the prima facie effect of the evidence."). 20 No. ¶37 2006AP3003 In sum, notice can be effectuated by first-class mail, and evidence of mailing creates a presumption of receipt that may create an issue for the factfinder only by denial of receipt. C. ¶38 Though not a certified question, the court of appeals addressed additional questions to us regarding egregious conduct and spoliation sanctions. a sanction of dismissal We will address the question of when for spoliation is appropriate sanctions for under Wisconsin law. ¶39 The decision to impose improper spoliation of relevant evidence is generally within the trial court's discretion. Milwaukee Constructors II v. Milwaukee Metro. Sewerage Dist., 177 Wis. 2d 523, 529, 502 N.W.2d 881 (Ct. App. 1993) (reversing the trial court's sanction of dismissal because the party's destruction of stored archived documents in the course egregious of a cost-cutting behavior). There initiative has been did some not constitute dispute, however, regarding when the sanction of dismissal is appropriate. ¶40 In 1993, the court of appeals examined whether the circuit court abused its discretion in dismissing a case after concluding that the claimant intentionally destroyed evidence. Id. The court concluded that dismissal was an extreme sanction that is only justified in cases of egregious conduct. 533. It stated that egregious conduct "involves Id. at more than negligence; rather, it consists of a conscious attempt to affect the outcome of the litigation, or a flagrant, knowing disregard 21 No. of the judicial process." concluded that the Id. party's 2006AP3003 The court of appeals ultimately conduct, though volitional and negligent, was not a purposeful effort to impair discovery or affect the outcome of the litigation. the party's actions exercised erroneously were its party's claims. ¶41 In not Id. at 534-35. egregious, discretion the when Because circuit it court dismissed the Id. 1995, however, the court of appeals took up a similar claim and appeared to allow dismissal without a finding of egregious (excluding conduct. evidence Sentry as a 196 Ins., sanction Wis. for 2d the at 917-18 plaintiff's destruction of the refrigerator that was thought to be the cause of a house fire). In 1999, the court of appeals attempted to harmonize the seemingly inconsistent rulings, and reaffirmed the requirement of egregious Constructors II. ¶42 conduct as outlined in Milwaukee See Garfoot, 228 Wis. 2d at 723-24. We affirm that dismissal as a sanction for spoliation is appropriate only when the party in control of the evidence acted egregiously in destroying that Constructors II, 177 Wis. 2d at 533. evidence. Milwaukee Egregious behavior is "a conscious attempt to affect the outcome of the litigation or a flagrant, Lesser knowing spoliation disregard of sanctions, the such judicial as process." pre-trial Id. discovery sanctions and negative inference instructions, however, may be appropriate for spoliation where a party violated its duty to preserve relevant evidence, but where the destruction of such 22 No. evidence did not constitute egregious conduct. 2006AP3003 See, e.g., id. at 538; Neumann, 242 Wis. 2d 205, ¶80. D. ¶43 In the interests of efficiency and finality, as well as to clarify the standards we have established, we now apply the facts of the case to determine whether the circuit court erroneously Family's exercised case as a its discretion sanction for in dismissing spoliation of American evidence. A circuit court properly exercises its discretion when it examines the relevant facts, applies a proper standard of law, and uses a demonstrably rational process reasonable judge could reach. to reach a conclusion that a Milwaukee Constructors II, 177 Wis. 2d at 529-30. ¶44 We conclude that the circuit court applied an incorrect standard of law in dismissing American Family's claim because it did not make a finding of egregiousness before doing so. Moreover, we conclude that American Family's actions were not only not egregious, they were reasonable as a matter of law and so discharged its duty to preserve the evidence. ¶45 As outlined above, American Family was required to have a legitimate reason to destroy the evidence, and provide: (1) reasonable notice of a possible claim; (2) the basis for that claim; (3) the existence of evidence relevant to the claim; and (4) reasonable opportunity to inspect that evidence. Preliminarily, before addressing the sufficiency of the content of the notice, we must resolve whether notice was in fact given, and this requires us to examine whether Joseph and Charles Golke 23 No. received the March 13, 2000, letter. we will examine the content of 2006AP3003 Once this is established, the notice under the above factors. 1. Did Joseph and Charles Golke Receive the March 13, 2000, Letter? ¶46 American Family claims that it sent letters on both March 13, 2000, and April 6, 2000. One copy of each letter was sent to David Golke, and a second copy of each letter was sent to Joseph and Charles Golke at their business address. Golke admits receiving both letters, and Joseph Golke admit receiving the April 6, 2000, letter. and David Charles Joseph and Charles Golke, however, do not recall receiving the March 13, 2000, letter. As we shall see, the uncontroverted evidence demonstrates that, as a matter of law, Joseph and Charles Golke did receive the March 13, 2000, letter. ¶47 March American Family's adjuster testified that he wrote the 13, 2000, letter on his computer in his cubicle at American Family's office and placed it in his cubicle's outgoing mailbox. The adjuster's assistant was responsible for placing the letter in an envelope and placing postage on the envelope. On March 13, 2000, American Family's "routine, habit, and practice" was for an employee to check the adjuster's cubicle every hour during the work day and pick-up any outgoing mail. Outgoing mail was given to a mail delivery service at 3:00 p.m. or 3:30 p.m. The mail delivery 24 service then delivered the No. 2006AP3003 outgoing mail to the post office for delivery of the mail to its ultimate destination. ¶48 Evidence of routine business practice is admissible for the purposes of showing that a particular action was in conformity with habit or routine practice. See Wis. Stat. § 904.06; 1A J. Wigmore, Wigmore on Evidence § 95 (Tillers rev. 1983). Joseph and Charles Golke provided no evidence that American Family's routine mailing practice was not followed or was in any way interfered with, prevented, or frustrated with regard to the March 13, 2000, letter. Joseph and Charles Golke also conceded that the business address listed in the letter's heading was their address at the time, and that they met with American Family's investigator at that address shortly before the letter was sent. Therefore, the unrebutted evidence is that American Family sent the March 13, 2000, letter to Joseph and Charles Golke in a properly addressed and postage-prepaid envelope.16 ¶49 These facts are sufficient to raise a rebuttable presumption that the March 13, 2000, letter was not only sent, but was received by Joseph and Charles Golke. Flores, 183 Wis. 2d at 613. State ex rel. The presumption is strengthened by the fact that Joseph and Charles Golke concede receiving other mail from American Family at the address to which the March 13, 16 This court has long held that implicit in testimony that a letter was mailed is the fact that "the letter was inclosed (sic) in an envelope, properly addressed, [and] deposited in the postoffice (sic) with the postage duly prepaid." Reeves, 170 Wis. at 376. 25 No. 2006AP3003 2000, letter was sent, namely, the April 6, 2000, letter. See 31A C.J.S. Evidence § 235 ("[T]he presumption may arise where a party admits address."). to receiving another notice mailed to the same The presumption is further strengthened by the fact that American Family's adjuster prepared an identical letter to David Golke on the same day using the same routine mailing practice for that letter as for the letter sent to Joseph and Charles Golke, and David Golke concedes that he received the copy of the March 13, 2000, letter sent to him. Id. See (explaining that when a letter is sent to each of two neighbors, and the first neighbor received the letter, a presumption arises that the second neighbor also received the letter).17 ¶50 credible This presumption of receipt can only be rebutted by evidence of non-receipt, denial that the letter was received. 183 Wis. 2d at 613. usually in the form of a See State ex rel. Flores, Neither Joseph nor Charles Golke denied that they received the March 13, 2000, letter, however. Rather, they concede that they may have received the letter, but cannot recall one way or the other. constitute receipt. denial, and does Non-remembrance, though, does not not rebut the presumption of Id. 17 David Golke was not a neighbor of his brothers' business, but the principle that the receipt by one addressee of a letter sent simultaneously by the same sender of an identical letter to a second addressee strengthens the presumption that the second addressee also received the letter and that routine practice was followed. 26 No. ¶51 not be 2006AP3003 Joseph and Charles Golke argue that the letter should presumed difficulties received receiving because mail at they their allegedly business, had there some is no affidavit of mailing, and the letter was sent via first-class rather than certified mail. or credible evidence of None of these constitute a denial non-receipt, and are therefore enough to overcome the presumption of receipt. not We therefore apply the law to the unrebutted facts and presume that Joseph and Charles Golke received American Family's letter dated March 13, 2000. Because notice was provided, we must examine whether the notice was sufficient to discharge American Family's duty to preserve the evidence. 2. Did American Family Discharge Its Duty to Preserve the Fire Scene Evidence? ¶52 In order to discharge its duty to preserve the evidence from the fire scene, American Family was required to have a legitimate reason to destroy evidence, and provide: (1) reasonable notice of a possible claim; (2) the basis for that claim; (3) the existence of evidence relevant to the claim; and (4) reasonable opportunity to inspect that evidence. ¶53 The March 13, 2000, letter, which David and (as we concluded above) Joseph and Charles Golke received, informed the Golkes that a fire occurred at a specific home on a specific date, and that the Golke brothers' negligent work at that home was believed to be the cause of the fire. The letter instructed the Golkes to forward the letter to their insurers, and advised 27 No. that American insurers, if Family expected applicable, replacement of the home. either to pay the for Golkes the 2006AP3003 or repairs their to or The letter concluded by offering the Golkes or their insurers an opportunity to conduct "a proper investigation" of the fire scene. It stated that destruction of the fire damaged building would be delayed until April 1, 2000, to allow for this inspection. ¶54 The April 6, 2000, letter to the Golkes stated that it was the second notice regarding the Golkes' liability for the fire damage at a specifically identified house. It also instructed the Golkes to quickly have their insurers contact American Family so that the Golkes would have coverage available to pay for the losses for which American Family was holding them liable. ¶55 American Family also had additional correspondence with David Golke, who responded to the March 13, 2000, letter. American Family sent David Golke and Indiana Insurance a letter on March 23, investigation 2000, of that, the among fire other scene things, because of recommended the an planned demolition on April 1, 2000. ¶56 Both the March 13 and April 6 letters provided reasonable notice of a possible claim and the basis for that claim. American Family expected the Golkes or their insurer to pay for the damages arising from their allegedly negligent work performed on a specific house, which allegedly caused a fire on a specific date at that house. The March 13, 2000, letter to both, and the March 23, 2000, letter to David Golke, explicitly 28 No. 2006AP3003 noted the existence of relevant evidence, and provided ample time for the Golkes to inspect or schedule an inspection of the evidence before its destruction. The April 1, 2000, deadline was in fact extended by at least ten days before demolition and rebuilding commenced, and according to American Family, "definitely" would have been extended upon request.18 ¶57 We note that American Family did not own the home in question here. expected The family that did own the home should not be to wait indefinitely for the Golkes to inspect the home, particularly when the Golkes made no efforts to inspect or test the fire scene when presented with the opportunity to do so. American Family was placed in a difficult spot because of 18 The concurrence argues that the Golkes were not given a reasonable amount of time to inspect the evidence. See Concurrence, ¶73. But the concurrence ignores the unrebutted testimony that this deadline would have been extended upon request. Moreover, the concurrence forgets that, had Joseph and Charles Golke responded, their insurer surely could have arranged an inspection within the relevant timeframe. As for David Golke, his insurer initially denied coverage. This put the responsibility on David Golke to protect his rights, which he did not do. In short, the Golkes simply ignored American Family's communications. Contra the concurrence, they did have sufficient time to either inspect or schedule an inspection of the evidence. 29 No. 2006AP3003 the Golkes' unresponsiveness, and it had a legitimate reason to destroy the home19 and acted reasonably under the circumstances. ¶58 Under the facts of this case, we conclude that American Family's March 13, 2000, letter, March 23, 2000, letter to David Golke and his insurer, and to a lesser degree the letter sent on April 6, 2000, provided sufficient notice and an opportunity to inspect the relevant evidence so as to discharge its duty to preserve the evidence. American Family's actions were We therefore conclude that reasonable, and therefore no sanctions for spoliation were appropriate as a matter of law. Thus, the circuit court erroneously exercised its discretion in sanctioning American Family for spoliation. V. ¶59 We conclude that CONCLUSION the duty to preserve relevant evidence is discharged when a party or potential litigant with a legitimate reason to destroy evidence provides 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 that evidence. We further hold that such notice can be 19 The concurrence makes it seem as though if American Family had only preserved certain parts of the home the chimney assembly, fireplace, doghouse (a part of the roof), roof decking and joints, and part of the interior chase all parties would have been satisfied. See Concurrence, ¶63. It is not clear why, however, just these specific parts would have been enough for the Golkes. This situation illustrates why a party may discharge its duty to preserve evidence. When a legitimate reason to destroy evidence exists, as here with the home, parties have an obligation to protect their rights when put on notice. The Golkes failed to do that here. 30 No. 2006AP3003 properly effectuated by mailing a letter via first-class mail. We also affirm that dismissal is an appropriate sanction for spoliation of evidence only if a party acts egregiously that is, in a conscious effort to affect the outcome of litigation or in flagrant, knowing disregard of the judicial process. Applying the law to the facts of this case, we conclude that as a matter of law, Joseph and Charles Golke received the March 13, 2000, letter, and that American Family provided the Golkes with reasonable and sufficient notice, thereby discharging its duty to preserve the evidence from the fire. The circuit court therefore erroneously exercised its discretion when it dismissed American Family's suit. Because American Family discharged its duty to preserve evidence and no sanctions are appropriate, the judgment of the circuit court is reversed, and the cause is remanded to the circuit court for trial on the merits. By the Court. The judgments of the circuit court are reversed, and the cause is remanded to the circuit court for further proceedings consistent with this opinion. 31 No. ¶60 SHIRLEY majority opinion S. ABRAHAMSON, concludes that C.J. 2006AP3003.ssa (concurring). American Family's The actions in razing the fire-damaged house "were reasonable as a matter of law and so discharged [American Family's] duty evidence,"1 such that no sanction is appropriate. ¶61 fact and to preserve Not so! The record supports the circuit court's findings of discretionary determination that American Family violated its duty to preserve evidence and may be sanctioned. Because American Family's conduct was not egregious, that is, because the conduct was not a conscious attempt to affect the outcome of the litigation or a flagrant knowing disregard of the judicial process, the circuit court sanction of dismissing American erred Family's in claim. imposing But on the its findings of fact and this record the circuit court could have imposed another sanction. any sanction other I would remand to determine whether than the sanction of dismissal is appropriate.2 ¶62 American Family's theory in the circuit court was that the Golkes, when doing work on the house's roof, negligently moved the chimney too close to combustible roof, which eventually caught fire. materials on the American Family, however, did not save any of the physical evidence relevant to its theory 1 Majority op., ¶44. See also majority op., ¶¶5, 58-59. 2 The circuit court held a bench trial relating to the Golkes' insurance coverage and to American Family's destruction of evidence. It did not rule on the coverage issue. I assume the majority opinion's remand is for further proceedings related to coverage and to the merits of American Family's claim against the Golkes. 1 No. 2006AP3003.ssa about the cause and origin of the fire and to its theory that the Golkes (as opposed to the original home builder) were responsible for creating a dangerous condition on the roof. ¶63 The important parts preserved, should of could available accepted circuit for the have court the have saved as fire scene been a removed inspection defense found matter "could testimony the chimney been could testing." expert's that [have] The that assembly, fact [have] and and of easily been circuit American the court Family fireplace, the "doghouse" (a part of the roof), roof decking and joists, and part of the interior chase, all of which would have fit easily in a garage testimony stall. American of The circuit Family's fire court also scene accepted the investigator, who testified that he could have preserved critical parts of the roof in a 10x10 foot area,3 that he felt photographs were sufficient to document his findings about the cause and origin of the fire, and that he more than likely would handle the fire scene investigation differently if he were to conduct it today. ¶64 The circuit court found American Family's photographs inadequate. It accepted the defense expert's testimony that the photographs did not permit an inference as to where the fire originated because the photographs were all of very small areas on or in the house, with no "medium 3 view or overall view Another American Family expert testified through a deposition that removal and preservation of physical evidence was not feasible and that the only way to preserve evidence of the fire scene was through photography. The circuit court did not find this testimony persuasive. 2 No. 2006AP3003.ssa photographs of those same areas to place them in relation to the fire scene in general." ¶65 bench The circuit court also determined, after conducting a hearing with Family's failure prejudice to the to all evidence preserve Golkes. The presented, evidence circuit that caused court American significant concluded that American Family had "destroyed what is the crucial evidence that is important for the defendants to be able to evaluate the claim and to prepare and present a defense." The circuit court accepted the defense expert's testimony that due to the complete destruction of physical evidence, he could not form opinions about either the cause or the origin of the fire. ¶66 Having reviewed the evidence and made its findings, the circuit court ultimately determined that American Family's failure to preserve crucial evidence from the fire scene "is a clear case of spoliation every bit as bad" as the conduct that has warranted sanctions in other cases. The circuit court's determination that American Family violated its duty to preserve relevant evidence clearly was reasonable and is supported by the circuit court's findings of fact and evidence in the record. ¶67 The majority opinion properly acknowledges that "the ability of the party in possession of the evidence to bear the burden and expense of preserving it" is a relevant factor in the spoliation analysis.4 Nevertheless, the majority opinion ignores the circuit court's finding of fact that American Family could have preserved crucial evidence from the fire scene with minimal burden or expense. 4 Majority op., ¶29. 3 No. ¶68 potential 2006AP3003.ssa The majority opinion also acknowledges that a party or litigant requires "a legitimate reason to destroy evidence."5 The majority opinion does not explain because it cannot explain what legitimate reason American Family had for destroying every piece of evidence from the fire scene in the present case. ¶69 the In short, the majority opinion turns a blind eye to circuit court's findings of fact and discretionary determination that American Family acted unreasonably in failing to preserve any part of the fire scene, including the parts of the house that American Family's expert knew or should have known to be highly relevant to American Family's claim against the Golkes and to the Golkes' defense. ¶70 This court should uphold the circuit court's discretionary decision to sanction American Family for failing to act reasonably in preserving evidence. ¶71 Although dismissal is not the appropriate sanction in the present case, the circuit court nevertheless may impose a lesser sanction for American Family's failure to preserve any part of the house. A circuit court has "a broad canvas upon which to paint in determining what sanctions are necessary" in a spoliation 5 case.6 Courts have excluded evidence,7 imposed a Majority op., ¶5. 6 Milwaukee Constructors II v. Milwaukee Metro. Sewerage Dist., 177 Wis. 2d 523, 538, 502 N.W.2d 881 (Ct. App. 1993). 7 See Estate of Neumann v. Neumann, 2001 WI App 61, ¶80, 242 Wis. 2d 205, 626 N.W.2d 821 (stating that the Wisconsin courts recognize the exclusion of evidence as a sanction in spoliation cases). 4 No. 2006AP3003.ssa monetary sanction,8 or allowed "the trier of fact . . . to draw an inference from the intentional spoliation of evidence that the destroyed evidence would have been unfavorable to the party that destroyed it."9 See also Howell v. Maytag, 168 F.R.D. 502, 505 (M.D. Pa. 1996) ("Where evidence is destroyed, sanctions may be appropriate, including . . . the exclusion of countervailing evidence . . . ."); N. Assurance Co. v. Ware, 145 F.R.D. 281, 284 (D. Me. 1993) (excluding evidence as a sanction for the spoliation of evidence); Hamilton Mut. Ins. Co. v. Ford Motor Co., 702 N.E.2d 491, 493 (Ohio Ct. App. 1997) ("In product liability cases where evidence is intentionally or negligently 'spoiled' or destroyed by a plaintiff or his expert before the defense has an opportunity to examine that evidence for alleged defects, a court may preclude any and all expert testimony as a sanction for the spoliation of evidence." (quotation marks and citation omitted)). 8 See, e.g., Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 77-78 (S.D.N.Y. 1991) (stating that "courts impose monetary sanctions for the destruction of evidence"; imposing a monetary sanction); Harkins Amusement Enters., Inc. v. Gen. Cinema Corp., 132 F.R.D. 523, 524 (D. Ariz. 1990) (imposing a monetary sanction for the destruction of evidence); Capellupo v. FMC Corp., 126 F.R.D. 545, 553 (D. Minn. 1989) (same). 9 Neumann, 242 Wis. 2d 205, ¶81 (citation omitted). See also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78 (3d Cir. 1994) ("Since the early 17th century, courts have admitted evidence tending to show that a party destroyed evidence relevant to the dispute being litigated. Such evidence permitted an inference, the 'spoliation inference,' that the destroyed evidence would have been unfavorable to the position of the offending party." (citation omitted)). In Nation-Wide Check Corp. v. Forest Hills Distributors, Inc., 692 F.2d 214, 218 (1st Cir. 1982), then-Judge Breyer (now Justice Breyer) explained the rationale underlying the "spoliation inference" as follows: The adverse inference is based on two rationales, one evidentiary and one not. The evidentiary rationale is nothing more than the common sense observation that a party who has notice that a document is relevant to litigation and who proceeds to destroy the document is 5 No. ¶72 2006AP3003.ssa The majority opinion does a disservice to the parties and to the law by ignoring American Family's failure to retain any part of the house as evidence. the decision. This is the main defect in Other parts of the majority opinion, however, deserve closer attention as well. ¶73 First, contrary to the majority opinion's holding at ¶58, a reasonable judge could conclude that American Family did not give the Golkes a reasonable opportunity to inspect evidence in the present case before it was destroyed. the American Family's March 13, 2000, letter to the Golkes stated that the house would be demolished on April 1, 2000 just 19 days after the letter was written.10 The letter did not suggest that the April 1 deadline was flexible, although American Family's claims adjustor testified after the fact that he would have granted an extension upon request. During the 19 days between March 13 and April 1, the Golkes needed to contact and work things out with their insurers, to find and retain a fire scene investigator, more likely to have been threatened by the document than is a party in the same position who does not destroy the document. . . . The other rationale for the inference has to do with its prophylactic and punitive effects. Allowing the trier of fact to draw the inference presumably deters parties from destroying relevant evidence before it can be introduced at trial. The inference also serves as a penalty, placing the risk of an erroneous judgment on the party that wrongfully created the risk. 10 Majority op., ¶9. 6 No. and to make arrangements for the investigation. 2006AP3003.ssa A lot to expect from the owners of a local roofing outfit!11 ¶74 Moreover, American Family ended up giving David Golke as few as nine days to retain a fire scene investigator and conduct the investigation. Upon receiving American Family's March 13 letter, David Golke did exactly what the letter told him to do: He promptly forwarded the letter to his insurance carrier.12 insurance David Golke did not know that he, rather than his carrier, would be responsible for dealing with American Family until he received a second letter from American Family, dated March 23, 2000, informing him that his insurance carrier had denied coverage. The March 23 letter reiterated that the house would be demolished on April 1, 2000. ¶75 The majority opinion apparently concludes that as a matter of law it is reasonable to give a small businessman nine days to locate and hire an expert witness before losing the opportunity to inspect evidence that is critically relevant to a potential lawsuit against him. that the March 23 letter See majority op., ¶56 (stating to David Golke "provided ample time . . . to inspect or schedule an inspection of the evidence before its destruction"). I do not find the majority opinion persuasive on this point. 11 The majority opinion identifies the "sophistication of the parties" as a relevant factor in the spoliation analysis. Majority op., ¶29. 12 The March 13 letter stated in relevant part: "If you have a liability insurance carrier, please forward this letter to them and we will handle these matters directly with them." 7 No. ¶76 issue Perhaps with sensing American that Family's a reasonable narrow 2006AP3003.ssa judge timetable, could the take majority opinion hedges its bets by declaring that the Golkes had an extra 10 days to inspect the fire scene because demolition of the house "did not begin until sometime after April 11, 2000."13 The majority opinion, however, decides an issue of fact that the circuit court left undecided. "never heard date" and testimony "[did not] or The circuit court stated that it official know what evidence date the as home to the razed was actually razed."14 ¶77 Even assuming that American Family waited an additional ten days to demolish the house, this delay would not show that American Family's conduct was reasonable as a matter of law. American Family never told the Golkes that they had an extended period of time during which to inspect the fire scene. A letter that American Family sent to the Golkes on April 6, 13 Majority op., ¶15. See also majority op., ¶56 ("The April 1, 2000, deadline was in fact extended by at least ten days before demolition and rebuilding commenced . . . ."). 14 American Family's claims adjustor testified that although he could not recall when the fire scene was demolished, he could infer from two documents in the record that demolition began no earlier than April 11, 2000. American Family introduced two internal reports indicating that as of April 11, 2000, American Family still had not contracted for the rebuilding of its insured's home. The claims adjustor stated in his testimony that he thought "[American Family] would not have given the okay to start the demolition without knowledge of the what we were going to be paying out for the rebuilding process." The circuit court neither accepted nor rejected the claims adjustor's testimony about his inference from the internal reports. 8 No. 2000, requested insurance information and 2006AP3003.ssa neither stated nor implied that the fire scene was still intact or that the Golkes might still have an opportunity to inspect it.15 also failed to provide this information after American Family Charles Golke called American Family on April 7 and left a message in reply to the April 6 letter. American Family's claims adjustor testified that he returned Charles Golke's call after business hours, got no answer, and then made no further attempt to contact any of the Golkes until October 2000. ¶78 the Second, the majority opinion fails to make clear that method of notifying destruction of evidence case. interested depends on persons the of the impending circumstances of In some circumstances first-class mail might be fine. the In others, not. ¶79 Although the majority opinion relies upon statutes permitting notice to be made via first-class mail to justify the use of first-class mail in the present case,16 the legislature does not always deem first-class mail an appropriate method of providing notice. Indeed, a computer search of the Wisconsin Statutes reveals that the phrase "certified mail" appears in 167 sections of the statutes, the phrase "registered mail" appears in 104 sections of the statutes, and the phrase "first-class mail" appears in only 18 sections.17 15 See majority op., ¶12. 16 Majority op., ¶33. 17 The text of the Wisconsin Statutes is searchable at http://nxt.legis.state.wi.us/nxt/gateway.dll?f=templates&fn=stat s.htm (last visited June 30, 2009). 9 No. ¶80 2006AP3003.ssa I am uncomfortable with any language in the majority opinion intimating that first-class mail is sufficient in all cases. ¶81 In any event I suggest it is wiser for a person who must give notice to use a method that provides written evidence that he or she actually did give the notice recipient actually did receive the notice. and that the Without such written proof a dispute may arise about notice, and the notifier, the recipient, and the courts will be faced with a set of presumptions that evolved in a different era and might not be realistic in the technologically-advanced 21st century. ¶82 In sum, I would remand the matter to the circuit court to exercise its discretion in determining whether a sanction lesser than the sanction of dismissal should be imposed for American Family's failure to retain any physical evidence from the fire scene in the present case. ¶83 For the reasons set forth, I write separately. ¶84 I am authorized to state BRADLEY joins this opinion. 10 that Justice ANN WALSH
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