Issues of Interest to Chicago's business community
Shipley Law Group maintains its legal service edge by keeping up with emerging trends in Illinois business law. We offer our "Issues of Interest" page so that you, our clients, can stay ahead of the trends with us.
The following describes the emerging trend toward evidence preservation. Evidence preservation may prove to significantly affect your settlements and trial outcomes with respect to insurance claims. Pre-litigation evidence handling is likely to become an issue that directly affects you. And it is one of the things we want you to know.
Spoliation of evidence
The Graves v. Daley case involved removal and destruction of a home furnace which had been fully investigated by the fire marshal and homeowner's insurance company. No suit had been filed when the fire debris was removed, so no court order requiring preservation was in place. Nonetheless, the product liability defendant manufacturer and installers successfully argued that their inability to inspect the furnace prejudiced their defense, and were granted a discovery sanction barring all evidence regarding the condition of the furnace.
The issue was first ruled upon by the Illinois Appellate Court in 1988 in Graves v. Daley, 172 Ill.App.3d 35, 526 N.E.2d 679, but had not received Supreme Court attention until ten years later. The courts have since increasingly affirmed a duty of a potential litigant-plaintiff, defendant, or participant in any action to preserve evidence for adequate inspection. As a result, critical decisions regarding inspection and preservation of evidence must be taken at the outset of claims investigation. Insured parties must be made aware of their responsibilities to preserve evidence.
In agreement with appellate courts, the Illinois Supreme Court finds that the Graves v. Daley ruling properly interpreted litigant's responsibilities to "take reasonable measures to preserve the integrity of relevant and material evidence."
Factors to be applied by the trial judge when considering imposition of discovery sanctions include:
- surprise to the adverse party
- prejudicial effect
- the nature of the evidence
- diligence of the adverse party seeking discovery
- the timeliness of the adverse party's objection to the evidence
- good faith of the party offering the evidence
Extending the duty to preserve evidence, Illinois courts now allow claims that violation of that duty can support a negligence action on the ground of spoliation.
Failure to preserve evidence can expose insured parties to a troublesome range of problems in the litigation process. With less preservation, more problems become bigger issues to courts. In many cases, giving notice to all participants of evidence inspection and testing can provide strong immunity from judicial sanctions.
Illinois courts now seem ready and willing to uphold a full range of sanctions, including obliterating an employer's third-party contribution protection.
Claim investigation recommendations
Whether your client is a potential plaintiff, defendant, or third-party contribution party, from our perspective as trial and appellate counsel we are of the opinion that under Illinois law, the client must be clearly and immediately instructed at the initial claim investigation stage regarding the need to preserve evidence. This may raise questions of practicality, particularly for situations involving investigations or orders by legal authorities, equipment or facilities that are intended to be returned to use after repair or renovation, or possible long-term storage while litigation remains viable.
Legal Issues That May Arise When Selling A Business
Q: I am selling my business and have a buyer. After the buyer found some problems with the business, we are now having issues with the sale. Can we participate in dispute resolution or mediation? How can we avoid litigation?
A: While I am always willing to litigate any dispute, it is in the best interest of all parties to work together to reach an amicable resolution. Alternative dispute resolution, especially mediation, is highly recommended. Such a forum is an excellent opportunity for the parties to present and discuss all issues of concern before an impartial third party, specifically a third party who has experience with the particular issues that are involved. When all parties come to the table with a desire to engage in active listening and to resolve the issues, either method (but preferably mediation) quite frequently resolves all pending issues. The best method to ensure alternative dispute resolution is used is to incorporate such a requirement into the discussions leading up to the execution of the contract, as well as included in the final contract document. Read More
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