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When Remediation Goes Wrong: Appellate Division Says Remedial Efforts May Constitute Evidence Spoliation

In 18-01 Pollitt Drive, LLC v. Engel, the Appellate Division held that the discard of piping, a sump pit, and concrete flooring during remediation constitutes spoliation of material, physical evidence. Docket No. A-4833-13T3 (App. Div. Oct. 31, 2016).  Spoliation of evidence occurs when a litigant has “hidden, destroyed, or lost relevant evidence and thereby impaired another party’s ability to prosecute or defend the action.”  All parties to a litigation have a duty to preserve material evidence.  This duty arises when litigation involving defendants is probable, or when a plaintiff has knowledge of the existence or likelihood of litigation.  It follows that spoliation of evidence carries severe consequences for the spoliator in the form of sanctions, which may include an adverse inference or dismissal of plaintiff’s action.

In Pollitt, prior to acquiring the subject property, plaintiff had an environmental site assessment (the “ESA”) performed in March 2006, which revealed that the property had a history of potentially hazardous uses from at least 1958 through 1973.  Plaintiff also learned that the property was adjacent to the Fair Lawn Well Field Site, an Environmental Protection Agency-designated Superfund Site.  After purchasing the property, plaintiff hired additional environmental consultants to perform tests at the property, which confirmed the presence of volatile organic compounds and extensive soil and groundwater contamination.  These results were reported to the New Jersey Department of Environmental Protection, and plaintiff assumed remedial obligations for the property moving forward.

In September 2009, counsel for plaintiff issued demand letters to prior owners and operators, demanding contribution for remediation costs it incurred.  Plaintiff filed its lawsuit in April 2010, asserting New Jersey Spill Compensation and Control Act, federal CERCLA, and common law claims.  Defendants, in turn, alleged spoliation of evidence, notably because three key pieces of evidence were destroyed by Plaintiff, which were used to establish the timing and source of the purported discharges.

The first discarded piece of evidence at issue was a corroded segment to a lateral pipe originally located beneath the building slab on the property.  This piece of pipe was removed by plaintiff in 2008, two years before plaintiff filed its complaint.  Plaintiff hired a metallurgy expert to attest to the cause of contamination and relied on photographs of said pipe and samples from another to opine that the original pipe had, in fact, corroded and breached in 1971, thereby causing the discharges to the property.  When defendants requested additional information regarding the pipe, defendants learned that plaintiff discarded the pipe sample.  Defendants moved to dismiss plaintiff’s complaint on spoliation grounds and alternatively, sought to bar introduction of the pipe or any related evidence at trial.  The court agreed and issued an order barring plaintiff’s reliance on the pipe and any related evidence.  It found further fault in plaintiff’s failure to direct its environmental consultants to preserve the pipe itself or the similar pipe sample, notable, if not key, pieces of physical evidence in this matter.

The second and third pieces of evidence challenged where an acid dilution sump pit and the concrete slab floor of the building, which were removed from the subject property in 2011.  Plaintiff again relied on photographs of the materials and data from sludge within the sump structures and from soils beneath the sump to form its expert opinions.  Defendants’ experts expectedly argued that it was impossible for them to verify or refute the scientific basis of plaintiff’s discharge theories without inspection and examination of the actual structures.  Defendants filed a similar motion to its former, seeking dismissal of the action.  The court again found in defendants’ favor, ordering dismissal of the complaint with prejudice as to all defendants.

On appeal, plaintiff argued that it was not required to save the pipe because it had no plan to bring a lawsuit at the time it discarded the pipe.  The court found this argument fundamentally flawed because the obligation to preserve evidence arises when litigation is probable, not by the spoliator’s intent to file suit.  In further support, the court pointed to the uncontroverted facts that plaintiff knew of the property’s historic site uses in 2006 via the ESA and that by 2007, there was no question that the property was contaminated.  Notably, the court reasoned that “[g]iven the extent of the contamination on the subject property, plaintiff’s sophistication and access to remediation experts, and the clean-up occurring at the Superfund site, plaintiff should have anticipated that it could become involved in litigation,” and thus, plaintiff had a legal duty to preserve the lateral pipe, sump pit, and concrete pad.

Although the Appellate Division affirmed the trial court’s finding that plaintiff destroyed material evidence, the matter was remanded for further proceedings.  Because the New Jersey Supreme Court recognizes that spoliation of evidence warrants a situation-specific remedy, dismissal of an action is only to be imposed “when no lesser sanction could erase the prejudice borne by the innocent party.”  Such a less severe sanction could be an adverse inference, which was not appropriately considered by the trial court.

Whether you are a current or former owner/operator of contaminated property in New Jersey, beware of this case and its implications.  The attorneys at Lieberman Blecher & Sinkevich P.C. are experienced in assisting remediating and potentially responsible parties with contaminated property litigation and welcome the opportunity to help you or your business with Spill Act compliance.

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