Avoiding Trouble: Spoliation of Evidence

When engineering work is being done, careful consideration must be given to the doctrine of spoliation of evidence. This is a doctrine that says that before any repair work or invasive testing is done that substantially affects the original condition of the property in question, fair notice must be given to any person who may have an interest in that work.

Case Intake: Applicable Statutes and Insurance

One of the first considerations is applicable statutes of limitation or repose. The statute of limitations is a statutory limit on when a claim can be brought. It is an equitable statute. The case law allows the statute to be extended if a reasonable person could not, through the exercise of reasonable diligence, have known about the defect. This is known as the “discovery rule.”

The Value of Contingency

Handling a major construction litigation case takes three to five years in state courts. A complex case can cost upwards of $1 million in legal fees, plus hundreds of thousands more in expert fees and costs. Most clients cannot afford to finance such litigation. As a result, when appropriate, Stark & Stark will handle large, complex, multi-million dollar cases on a full or partial contingency.

Selection of Experts

A lot of careful thought has to be given to what claims are worth fighting about, because the association will likely have scarce resources available to it. Much of the value that counsel brings to this process is counsel’s experience and judgment and counsel’s relationships with experts who are particularly skilled in disciplines that are responsive to the needs of the association.

Spoliation of Evidence – Leveling the Playing Field

If you are planning to sue to recover damages relating to construction defects, don’t destroy the evidence of the defects before the defendants have had a reasonable opportunity to inspect and document them. Such premature destruction of evidence could destroy the strength of your case.

Home Improvement Contracts

Home improvements can cause homeowners as many, and sometimes more, headaches as building a new home. Until recently, home improvement contractors were essentially unregulated, which led to many unskilled and sometimes dishonest contractors preying upon innocent homeowners. In response, the New Jersey Department of Community Affairs (“DCA”) required home improvement contractors to register with the State as of December 31, 2005. N.J.A.C. 13:45A-17.1, et seq. The registration includes the registration of the formal name and address of the company, including all trade names, as well as the disclosure of the name and address of the principals of the company and any criminal record of any of those principals.

The DCA also recently created regulations that were specific to home improvement contracts under the New Jersey Consumer Fraud Act. The regulations take into account almost any type of home improvement, from remodeling the kitchen to repairing the driveway to installing wall-to-wall carpeting. Specific actions are prohibited by the regulations including misrepresenting the types of material used in the home improvement, failing to begin or complete work on the date or within the time period specified, failing to give timely written notice to the buyer of reasons beyond the seller’s control for any delay in performance, and when the work will begin or be completed and failing to obtain the proper building permits or inspections.

Also, any home improvement contract for a purchase price in excess of $500.00 must be in writing, must be signed by both the buyer and seller and must clearly set forth the terms of the contract. The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller must also be included in the contract. The contract must also include a description of the work to be done and the principal products and materials to be used or installed in performance of the contract, the total price to be paid by the buyer, the dates or time period on or within which the work is to begin and be completed and a statement of any guarantee or warranty to be provided. Violations of these regulations could result in the award of triple damages and reimbursement of counsel fees, if those violations result in damage to the homeowner.

Therefore, in addition to obtaining several bids for the work, asking for and following up with references, it may also be beneficial to homeowners who are thinking about making improvements to their home to obtain the registration information from the DCA and to make sure that the regulations provided by the DCA are followed to protect themselves from future problems.

Documentation of remediation projects – a picture is worth a thousand words.

Whenever one of Stark & Stark’s Construction Litigation Department’s clients advises us that they intend to repair and/or remediate their home, condominium or other structure, it is our typical practice to advise the client to coordinate the repairs and/or remediation through our office. That way, we can ensure that all parties that may have potential liability for the clients’ claims can be notified in a reasonable time to permit them to inspect the condition of the home, condominium or other structure before the existing conditions are changed in any way through the repair process. If such notice is not properly given, there is a possibility that the client’s ability to pursue its claims may be adversely affected through a legal doctrine called spoliation of evidence. The doctrine is, generally, just what is sounds like – a doctrine that provides remedies to aggrieved parties when their ability to defend claims against them has been hampered by the destruction (or spoiling) of evidence. It is also the our practice to advise our clients to retain an engineering expert or other qualified professional to formulate specifications or a protocol for the remediation, provide on-site supervision of the work, as well as documenting the work through video, photographs and personal observation in order to prepare a report summarizing the evidence of damage to the structure discovered during the repair process.

The above is the ideal scenario for preserving evidence of damage to a home, condominium or other structure for use in litigation. We have had clients, however, who were not in a financial position to afford to retain a professional to be present throughout an entire remediation project to document the damage that is found. For those situations, and generally for homeowners or condominium owners who desire to repair and/or remediate their homes immediately, but may not be considering litigation, the firm still recommends that notice of the repair work be provided to all parties that may have potential liability for any defects in question, and that the following protocol, or one like it, be followed in order to preserve evidence of the damage to the structure:

1. Prior to the inception of any work, the condition of the structure should documented by video camera or digital camera showing the date and time of the images recorded. Images should include distance shots of each elevation of the structure and closeup shots of all details on each side of the structure, including window & door details, terminations at ground level and roof lines, areas where flashing exists or should exist, floor lines, joints between dissimilar materials such as wood or stone or vinyl, and all attachments such as light fixtures, gutters, shudders, etc. A record of the photos taken should be maintained so that these photos may be matched with photos taken of the same areas throughout the later stages of remediation.

2. The process of removing whatever part of the structure is being repaired or remediated should be documented via video camera or digital camera showing the date and time of the images recorded. The level of detail of these images should be sufficient to show a time lapse progression of the work on all sides where it exists. A record of the photos taken should be maintained so that these photos may be matched with photos taken of the same areas throughout the earlier and later stages of remediation. Close up photographs should be taken of any notable areas of damage, improper construction detailing, insect infestation, etc. The photographs should be taken close enough to the matter being photographed with the idea in mind that these photos or video will be the only evidence of the condition later on once the structure is completely repaired.

3. Samples should be taken from areas where water damage or other damage is revealed as the work progresses. The samples should be marked with a letter or number. On a separate sheet of paper, for each letter or number there should be a corresponding notation of the date and time of removal, a description of the location of the house the sample was taken from, the name of the individual who removed the sample and the individual who marked the sample. If it is the same individual it should be noted as such. The samples should be wrapped or sealed in a container of some kind to remove the possibility of exposure to ambient conditions altering the condition of the sample over time.

4. Prior to removal and replacement of any damaged sheathing, roofing, windows or other part of the structure, the damaged condition should be documented via video camera or digital camera showing the date and time of the images recorded. As with the initial images, these images should include distance shots and closeup shots of areas where damage is noted, regardless of the severity of the damage. A record of the photos taken should be maintained so that these photos may be matched with photos taken of the same areas throughout the earlier and later stages of remediation.

5. During repair of the damaged areas of the structure, samples of any damaged wood, gypsum sheathing, roofing materials, windows, or other element should be taken from each area where same is replaced. The samples should be marked with the date and time of removal, a description of the location of the house the sample was taken from, and the name of the individual who removed the sample and the individual who marked the sample (if same individual it should be noted as such).

6. All areas where sheathing, roofing, windows or other elements of the structure are replaced with new materials should be documented via video camera or digital camera showing the date and time of the images recorded. A record of the photos taken should be maintained so that these photos may be matched with photos taken of the same areas throughout the earlier and later stages of remediation.

7. The process of installing the new materials, be it a new exterior cladding, windows, roof, etc., should be documented via video camera or digital camera showing the date and time of the images recorded. The level of detail of these images should be sufficient to show a time lapse progression of installation of the new siding on all sides of the home where it is installed. These photos should be identifiable as to the side of the home from which they were taken to be matched to photos described above.

8. The end result of above should be a well documented progression, by video or digital photos or both, of the remediation work from start to finish with a focus on those areas where damage was discovered and repaired.

9. A summary report should be prepared that describes each of the steps outlined above, describes the damage found and the steps taken to repair same, and the steps taken to install the new construction materials. The report should also read as a progression of the remediation from start to finish. In addition, the report should incorporate and refer to the photos and samples taken as outlined above in the appropriate points of the report, identifying same using either numbers or letters. For example, if the report discusses the removal and replacement of damaged wood beneath a window on the east side of the home, there should be a reference to the photos showing the damaged wood and the new wood placed in that area after repair.

10. Finally, the report should also itemize the cost of the remediation from start to finish, breaking the elements out into the labor costs for removing whatever elements of the existing structure was necessary, the labor and materials costs for repairing the damaged wood substrate, the labor and materials costs for re-installing the new construction materials, and any other costs associated with the remediation work (permits, insurance, debris removal, landscaping replacement, mold remediation, etc.).

UCIOA – A Wolf In Sheep’s Clothing – Part 5

This is part 5 of Randy Sawyer’s 16 Part series on UCIOA. You can read Parts 1, 2, 3 & 4 here.

Section 87, subsection (e)

Subsection (e) of UCIOA’s Section 87 is further evidence of the vague wording throughout the bill and the hastened procedure created to attempt to deal with what are ordinarily complex issues. Subsection (e) provides:

§87(e) – Within 30 days of receipt of the settlement offer, the association shall notify the declarant of two business dates during the 45-day period following the date of the association’s notice, the first of which will not be earlier than 10 days following the date of the association’s notice, on which a majority of the executive board will be prepared to meet with the declarant to discuss the association’s claims and the settlement offer. The association and the declarant may be represented at the meeting by attorneys and independent consultants.

The first sentence of subsection subsection (e) is poorly worded. This language appears to require the Association to provide two meeting dates within 45 days of its original notice to the developer of the defect claim, which would of course be absurd because by the time the developer’s settlement offer comes, those 45 days would likely have passed.

Also worth noting is that, by the time subsection (e) comes into play, the 180 day tolling period for the applicable statutes of limitation provided under subsection (b) will have run. The timing in subsection (e) above when added to time periods in other subsections will erase the 180 day tolling period. That means that the statutes of limitations on the Associations’ claims will begin to run before the arbitration process required in Section 87 makes any real headway.

In addition, the timing of the procedure up to this point in Section 87 makes no practical sense. Those experienced in construction defect litigation in community properties know that many if not most construction deficiencies in a condominium project develop slowly over a few years and do not become visible until several freeze/thaw cycles have occurred from the changing seasons have taken place. UCIOA’s procedure do not allow sufficient time for the Association to identify all of its claims before requiring negotiation between the Association and the Sponsor/Developer.

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