Even the most careful community association is bound to have the occasional dispute with an owner, a municipality, or vendor. Typically, documents are created, records are made, and emails and letters are exchanged. What records, if any, should a community association retain?

In some circumstances, parties are under a legal obligation to preserve relevant documents and evidence for purposes of potential litigation. Importantly, this duty can apply regardless of whether a lawsuit has been filed. The failure to comply with that duty is known as “spoliation”.

When dealing with spoliation, courts are empowered to impose a variety of punitive sanctions. These sanctions are varied and may range from an award of attorney’s fees to an adverse inference instruction, which is an instruction to the jury that they must infer that the litigant’s failure to preserve the evidence means that the evidence was unfavorable to the litigant. Needless to say, such an instruction to a jury could lead to a substantially increased damages award.

Virginia’s General Assembly recently acted by creating a new statute (effective July 1, 2019) to clarify the duties of potential litigants when it comes to document and evidence preservation. The new statute also provides courts with a list of remedies in the event of spoliation.

The new statute makes clear that “[a] party or potential litigant has a duty to preserve evidence that may be relevant to reasonably foreseeable litigation.” Va. Code Section 8.01-379.2:1(A). Relevant evidence likely has a broad scope.

The statute provides that “[i]n determining whether and at what point such a duty to preserve arose, the court shall include in its consideration the totality of the circumstances, including the extent to which the party or potential litigant was on notice that specific and identifiable litigation was likely and that the evidence would be relevant.” Va. Code Section 8.01-379.2:1(A). As such, the question of when litigation becomes foreseeable is still seemingly determined on a case-by-case analysis.

The statute also authorizes courts to take serious remedial measures if a litigant fails to take reasonable steps to preserve such evidence or documents. Under the new statute, courts are empowered to “order measures no greater than necessary to cure the prejudice” in the event the court finds that another party suffered prejudice from another party’s “loss, disposal, alteration, concealment, or destruction of the evidence.” Va. Code Section 8.01-379.2:1(B).

For reckless or intentional spoliation, the remedies are even more severe. If the Court finds that a party “acted recklessly or with the intent to deprive another party of the evidence’s use in the litigation”, the Court “may (a) presume that the evidence was unfavorable to the party, (b) instruct the jury that it may or shall presume that the evidence was unfavorable to the party, or (c) dismiss the action or enter a default judgment.” Va. Code Section 8.01-379.2:1(B). These remedial measures would likely lead to serious legal consequences for instances of reckless or intentional spoliation.

The statute makes clear that spoliation alone does not create any new cause of action, claim, or legal right on the part of the party affected by the spoliation. Va. Code Section 8.01-379.2:1(C).

Community associations would be well-served by reviewing their document and evidence retention policies with their counsel for compliance with this legal standard. Community associations should also work collaboratively with their counsel to understand how this legal duty applies to them, and also to develop and implement practical document retention and preservation policies going forward.