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44 F&F Digital January | February 2019

EDUCATION

Spoliation is a unique, legal concept occurring when relevant evidence is intentionally or negligently lost, altered, or destroyed. The severity of spoliation in litigation runs the gamut—from the unintentional

loss of superfluous records to the intentional destruction of case critical emails. All types of evidence can be subject to spoliation, and spoliation can occur in various ways. Below are a few examples:

• Deleting electronic documents;• Losing documents due to a scheduled purge of older

documents; • Throwing out tangible items; or• Performing repairs or alterations on tangible items.

This article explores the possible ramifications of spoliation and how you can be on guard to both prevent and spot spoliation in your cases.

HOW COURTS HANDLE SPOLIATIONSpoliation is not handled consistently across the country. Some states allow parties to pursue independent tort actions against a spoliator. Other states have such stringent spoliation sanctions available to parties that spoliated evidence could be better than the real thing. For instance, courts in Maryland, New Mexico, and Florida can dismiss a lawsuit if spoliation of evidence is particularly prejudicial or egregious. Other states, such as Ohio, may even allow punitive damages in certain spoliation cases.

Sanctions. Before a court sanctions a party, the court will consider the circumstances under which the evidence was lost, altered, or destroyed. Typically, before a court will impose any type of sanction for spoliation, the spoliator must have had some type of duty to preserve. It is important to understand at what point the obligation to preserve evidence begins, which many courts refer to as a “triggering event.” This triggering event generally happens when a lawsuit becomes possible or probable, such as when a pre-

suit demand is made or received, or a Complaint is served. Courts also consider the importance of the evidence to the non-spoliating party, providing more relief where a case is heavily impacted by the spoliation. In fact, severe sanctions can be ordered in cases of even inadvertent spoliation if the non-spoliating party can demonstrate that it is so prejudiced by the destruction or loss of evidence that it cannot proceed.

If spoliation remedies are warranted, courts across the country have approved a variety of remedies to cure the prejudice created by the spoliation. These remedies include providing adverse inference jury instructions, creating rebuttable presumptions for the jury, limiting evidence, striking pleadings, striking testimony, or even dismissing a case.

Independent Tort Actions. Even with the availability of the above sanctions, some courts have recognized that these remedies are inadequate to compensate an injured party or deter a spoliator. Courts in certain states, such as Alabama, Indiana, and Montana, recognize an independent tort for certain types of spoliation.

Generally, independent tort actions are pursued against a third-party who either negligently or intentionally destroyed material evidence in an underlying lawsuit. In states that recognize this cause of action, a party hampered by a third-parties’ spoliation may be able to pursue a separate spoliation cause of action against that third-party.

An interesting hiccup that makes the independent tort not feasible for many is that the underlying lawsuit must generally be resolved before an independent tort for spoliation can be pursued. This makes sense because an independent tort for spoliation would likely be premature until the party suffers a cognizable injury due to the alleged spoliation. »

Understanding, Spotting,and Preventing Spoliation

Written by Lindy K. Keown, Esq.

ARTICLE EXCERPT FROMJANUARY | FEBRUARY 2019

45January | February 2019 F&F Digital

EDUCATION

PREVENTING AND SPOTTING SPOLIATIONRegardless of what side of the ‘v’ you are working on, a litigation paralegal can be critical in either preventing or spotting spoliation.

Preventing spoliation centers around preservation, communication, and understanding how your client operates. To avoid spoliation, paralegals and attorneys alike must familiarize themselves with their clients’ electronic systems and processes. When litigation becomes probable or likely, such as when a client receives a demand letter or is served with a Complaint, the client should take immediate preservation actions. Sophisticated clients may have this down to a science, with litigation hold policies set in stone. However, not all clients are aware of their obligations to preserve relevant evidence. A paralegal can assist by ensuring a client knows about the breadth of this obligation, from physical documents (records, photos) to electronic documents (text messages, emails), to multimedia (surveillance videos). Equally as important, legal counsel and paralegals must ensure that a litigation hold is disseminated to all employees with control over any piece of relevant evidence. A hold could cover multiple departments and custodians in a business (i.e. IT department, HR department, etc.). Although it may be difficult to determine what evidence is relevant at the outset of a lawsuit, communication with your client can go a long way. A carefully tailored litigation hold could serve as a helpful reminder about a party’s obligations to preserve in a lawsuit—and prevent costly ramifications.

Spotting spoliation can be trickier. At the outset of a lawsuit, a form preservation letter sent to opposing counsel with follow up discovery about any lost, destroyed, or altered documents/tangible objects, can certainly get the ball rolling.

SPOLIATION REQUIRES CONSTANT VIGILANCESimply put, the key to avoiding spoliation is preservation. When and how this preservation is accomplished is where a strong paralegal and attorney can assist a client. As we become a more cloud based, paperless society, recognizing and being vigilant about spoliation issues is even more important in the legal profession and something every litigation paralegal should always have in their mind as they work on a case.

Lindy K. Keown is an attorney with the law firm of Rumberger, Kirk & Caldwell, P.A. whose practice is concentrated on construction, product liability, and commercial cases in state and federal courts. She routinely represents general contractors and subcontractors in construction defect disputes involving condominiums and commercial projects throughout the state of Florida. Lindy’s practice also includes complex product liability and varied commercial matters. She has been a practicing

attorney in Florida since graduating from the University of Florida Levin College of Law in 2015. lkeown@rumberger.com

24 F&F September | October 2018

EDUCATION

Company A is interested in purchasing a vacant building in Oklahoma to renovate into upscale condominiums,

but some local landowners are not interested in selling their property. The owner of a vacant building nearby has agreed to sell and issued a press release that Company A is purchasing his property. In negotiation of the contract, the owner of the vacant building states that there is no structural damage, and the parking lot would pass an environmental inspection. Company A signed the contract with the belief that the structure was in good condition, and the adjacent lot was part of the deal. They did not first consult an outside legal firm prior to signing the contract because they were hesitant to engage a firm. Company A thought a handshake and a promise would be enough.

In the meantime, Company A’s paralegal started research and uncovered significant problems. First, not only was the vacant building the only building damaged in the 2015 earthquake, but the owners knew there was structural damage. They had filed a claim but the owners refused to comply with the request of the insurance company. Second, there are documents that exist that elude to the fact the building is no longer safe. Third, the owner who signed the contract only owns 25 percent of the building so the legal description on the contract is not correct. Fourth, the parking lot is not owned by the owner who signed the contract but by another individual. As a result of these findings, Company A now wishes to terminate the contract, and finds it necessary to do damage control as they are afraid no one will want to sell to them because of the negative publicity.

Company A has decided to hire a local law firm to resolve the issues. The first step the attorney takes is to get a structural engineer to look at the building to determine the extent of the work that would need to be done to fix the damage from the earthquake. Company A had already hired

another firm to design the condominiums and the designer and the structural engineer, working together, determined the repairs needed would have been needed anyway in order to construct the condos. Company A is happy with this result and asks the attorney to proceed to the next step with the assistance of Company A’s in-house counsel.

The next step is going to the Register of Deeds Office and determining the correct real estate description and the rightful landowners. They also determine who owns the parking lot and its correct real estate description so that if Company A wishes, they can be contacted to see if they might be willing to sell. It turns out that the owner of the parking lot only owns the parking lot and not any other real estate in the area so there is a good chance he might be willing to sell.

The attorneys then proceed to contact all the owners regarding selling their interest in the properties. The owner of the parking lot agrees but there is some dissension among the owners of the vacant building. The attorney wants to avoid court, so he works with a mediator to come to an agreement with all the owners. The mediation was not only successful but is binding. The purchase/closing of the parking lot transaction can be a separate closing.

The Phase One Environmental Assessment, a detailed onsite inspection of the property to identify hidden risk and/or noncompliance, was performed on the parking lot with no significant problems. This was relief to the in-house counsel and the paralegal as it was assumed that a dry cleaners had been on the other side of the lot, but discovered the cleaners was never at that location. What would have been the order of this transaction in your state? If there had been a dry cleaner on the other side of the parking lot, would you have requested a Phase Two Environmental Assessment? That would be a soil »

COMMERCIAL LAWWritten by June E. Brown, CP

Commercial law is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales. It is similar in some respects to corporate law which relates to the life-cycle of companies, including mergers and acquisitions. One way to learn about commercial law is to take a scenario and break it down.

ARTICLE EXCERPT FROMSEPTEMBER | OCTOBER 2018

25September | October 2018 F&F

EDUCATION

investigation to determine the chemical makeup of the soil to determine any significant amounts of contaminants that will/may require remediation or monitoring.

The seller agrees to furnish Company A title evidence covering the property in the form of Title Insurance Commitment and Survey. The Title Commitment is defined as the instrument provided by the title agency as the ‘binding’ instrument to insure the loan and/or the new owner of the property as to the prior owners’ acts against the property.

Both owner and seller agreed to use one of the better licensed surveyors and split the cost. A survey will show boundary lines, location of fences, driveways, improvements within the boundary lines, easements, alleys, etc. Since the property is platted, a metes and bounds description was not necessary. This is also the time where the legal description is documented.

Your state statutes may dictate the numbers of days to examine the survey and commitment. If there is a national holiday during the time period, consult the state statute to determine how this will be accommodated.

The Title Commitment did not yield any troubling matters for Company A to request any cures or remove objections identified in the survey. If there were objections, depending upon your state, the seller would have a set number of days to cure or remove the objections. Company A was prepared for the worst if there were cures the owner did not want to remove. If this had happened, Company A could have

terminated the contract by giving the seller the statutory time to correct, or Company A could have chosen to purchase the property. What can you do in your state?There are times when a breach or failure to close occurs. Individual states will determine if there is a return of all or some of the earnest money or whether you will be required to pursue other remedies.

Closing comes and goes without any problems. Company A is already making plans to buy another building, but will now be sure to enlist the service of in-house counsel, outside legal, and research skills of the paralegal. How would you have handled this matter?

June E. Brown, CP received a B.S. degree in Criminal Justice from the University of Tulsa in 1978, began TU’s Paralegal Program in 2003 and graduated in 2008. She has served as the Secretary to the Board of Trustees and Legal Liaison for TU for over eleven years. June is a graduate of the 2016 Leap Program, the 2018 NALA Liaison for Tulsa Area Paralegal Association and currently serves on the Continuing Education Council of NALA.

20 F&F Digital January | February 2019

ETHICS

There are many reasons lawyers get in trouble with their state

bar association, but the most likely cause of disbarment is for stealing or co-mingling their clients’ money. Even if the lawyer is “just borrowing it” and plans to pay it back, they can, and most likely will, get disbarred.

A paralegal should never engage in unethical conduct even if the lawyer has instructed him or her to do so. The NALA Code of Ethics and Professional Responsibility Canon 3(c) states “A paralegal must not engage in conduct or take any action which would assist or involve the lawyer in a violation of professional ethics or give the appearance of professional impropriety.”

Just like lawyers, paralegals must adhere to the ethical standards laid out in the ABA Model Rules of Professional Conduct (“Model Rules”). Model Rule 1.15, Safekeeping Property section (a) states: A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in the state where the lawyer’s office is situated, or elsewhere with the consent of the client or third person. Section (c) states: A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.

As stated in the Model Rules, lawyers are required to set up a separate trust account called an IOLTA account for each of their clients. The purpose of the account is to hold funds the lawyer receives from a retainer for future work, and to keep the clients’ money separate from his own. Lawyers are never allowed to comingle their funds with that of their clients.

However, Rule 1.15 is the most violated rule of ethics, and unfortunately, law schools do not do a good job of teaching students how to handle clients’ money, and new lawyers often have had little training on managing their clients’ trusts accounts.

It may be tempting for a lawyer to borrow money from a client’s trust account when having cash flow issues. He might feel the pressure of pending expenses that can’t be covered such as rent or payroll and believe borrowing from the trust account and paying it back is the answer. It’s easy to believe that no one would be hurt. But what if they don’t receive the payment they are expecting from another client? As tempting as it may be this will get the lawyer in a lot of trouble and could cost them their license. There is absolutely no legitimate way to borrow money from a trust account. It is simply forbidden.

A lawyer can also be disbarred and held responsible for a paralegal

Vicki L. Kasper, ACP, is employed as a paralegal at Sizzling Platter, LLC, a restaurant management company. Ms. Kasper earned her B.S. degree from ABA approved Paralegal Program at Minnesota State University

Moorhead. She is past president of the Red River Valley Paralegal Association, former Continuing Education Council member and is currently the NALA Ethics Committee Chair and current NALA Liaison for Utah Paralegal Association. vicki90lynn@gmail.com

Just Borrowing It...

or assistant who inadvertently comingles fees. One example is a lawyer in Utah who was disbarred after an investigation showed that his receptionist had inadvertently deposited client money into the operating account and deposited earned fees into the trust account. The investigation showed that even after taking corrective measures such as hiring various accounting firms and, at the accounting firm’s suggestion, a chief operating officer, the operation of the firm’s accounts remained chaotic and funds were comingled. See In re Discipline of Abraham Bates, 2017 UT 11, ¶ 2.

In the U.S. less than 0.1% of lawyers are disbarred every year. Even though the number of lawyers that are disbarred is low, it is still very important that they, along with their paralegals and staff, remain ethical and stay aware and diligent in their work.

It may be tempting for a lawyer to borrow money from a client’s trust account when having cash flow issues.$$$$

Written by Vicki L. Kasper, ACP

ARTICLE EXCERPT FROMJANUARY | FEBRUARY 2019