### IN THE TENTH COURT OF APPEALS

No. 10
- 16
- 00420
- CV
IN RE XTERRA CONSTRU CTION, LLC, VENTURI CAPITAL, INC . D/B/A ARTISAN CABI NETS

AND KEITH D. RICHBOU RG
Original Proceeding

O P I N I O N

Relators Xterra Construction, LLC (Xterra) , Venturi Capital, Inc. d/b/a Artisan
Cabinets (Venturi) , and Keith D. Richbourg (collectively, the Xterra Defendants) seek mandamus relief to vacate the “Order on Motion for Sanctions for Spoliation of Evidence” that was signed by the trial court in the underlying case on November 22, 2016. We conditionally grant mandamus relief.
Fac tual Background
Xterra entered into a commercial lease contract with Dan iel Hull and William H. Beazley, Jr., to rent the warehouse located at 224 Kelly Drive in Waco, Texas

. Richbourg , who testified that he i s the sole owner of both Xterra and Venturi , signed the leaseIn re Xterra Constr

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contract as Xterra’s representative

. Richbourg also signed a personal g uaranty of the
lease contract. The lease contract provided that Xterra was to use the warehouse for the purpose of “[w]oodworking and [c]abinet [m]aking.” The term of the lease contract was March 15, 2013 to March 14, 2014. On March 15, 2014, Richbourg signed an amendment
to the initial lease contract as Venturi’s representative . The amendment stated that the term of the lease contract was extended through July 14, 2014

. Thereafter, t he term of the
lease contract was again extended , ultimately t o November 14, 2014. On October 18, 2014, there was a fire at the warehouse. Richbourg and Hull agree that the Xterra Defendants were the sole tenant s of the warehouse at that time

. By October 20, 2014, Richbourg had notified Venturi’s insurance carrier , Cincinnati Insurance Companies (Cincinnati) , about the fire and had made a claim with the
insurance carrier for Venturi’s personal property that was lost or damaged by the fire.
Leann Williams , who was then a Cincinnati claims specialist , testified that she
received an email regarding Venturi’s claim on October 20

. S oon after receiving the email, Williams spoke with Richbourg and scheduled to meet him a t the wareh ouse later that day . Richbourg told Williams that the warehouse was secure d

. After talking to Richbourg, Williams then called Hull

. Hull advised her that he was represented by Billy
Davis and that Williams should talk to him

. Finally, b efore meeting Richbourg at the warehouse, Williams forwarded the email regarding Venturi’s claim to Jim Reil. Reil testified that he is a licensed professional engineer and a certified fire and explosion investigator and that he was asked by Cincinnati to examine the scene and to determine where the fire had originated and what had caused it

.In re Xterra Constr

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Williams testified that she then met Richbourg on O ctober 20 at the warehouse
and that everything was secured at that time . Richbourg unlocked the door to the warehouse with a key, and t hey entered and walked through the building

. T here was a particular room in the warehouse where most of the fire damage had occurred

— the room that Richbourg has referred to as the “finishing room” or “paint room.” Richbourg

tes tified that the materials that had been in the room were a complete loss. Williams explained that the room was where Venturi “finished the furniture, applied varnish or paint or whatever the customer needed on the furniture.” Wil liams stated that she too k photos of the scene that day but that n either she nor Richbourg took anything or moved anything from the scene

. Williams and Richbourg eventually exited through the same
door through which they had entered , and Richbourg locked the door when they left

. Richbourg acknowledged that when he and Williams were leaving the premises,
Williams specifically instructed him not to go back into the finishing room.
Williams stated that on October 21 , 2014, she then finally spoke with Davis , the attorney whom Hull stated was representing him

. Williams informed Davis that a cause

and

- origin engineer was going to inspect the warehouse on October 2 3 , 2014 and suggested that Hull might want to have a representative from his insurance carrier look
at the warehouse as we ll . Davis told Williams , however, that Hull did not have any
insurance. On October 22 , 2014, Williams then emailed Reil some of the photos that she
had ta ken on October 20 of the scene at the warehouse and informed Reil that it appeared
that the fire had started in the paint room. Reil replied and confirmed that he hadIn re Xterra Constr

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arranged to meet Richbour g on the morning of October 23 and that he would call Williams after performing his inspection. Richbourg testified that he let Reil into the building on October 23 and then left while Reil p roceeded with his investigation , which Reil confirmed

. Richbourg stated that
Reil had told him tha t he would call him when he was concluding his investigation at the end of the day. Reil testified that he spent about six hours at the warehouse that day and took numerous photo s of the scene. Reil ultimately identified a point of origin of the fire in the paint room. He also identified two portable air movers (AM1 and AM2) in the pai nt room , one of which

— AM1

— was located at the fire’s point of origin

. Reil testified
that i t is his opinion that a condition of defect within the motor of AM1 caused the fire. Emerson Electric Co. d/b/a Emerson Tool Company a/k/a Emerson Commercial &
Resi dential Solutions (Emerson) is the manufacture r of the portable air movers

. Reil testified that he eventually stopped his inspection because he recognized that there were things that other s might be interest ed in examining before the scene was
altered. Re il acknowledged that when he stopped his inspection , he made an ef fort to
secure the scene but that he did not put up any warning signs or caution tape to keep people out of the area. Reil put orange tape on or near AM1 and AM2 to mark them and to highlight their location in his photos. Reil wrapped AM2 in polymeric film . He then stood a cabinet back up and placed AM2 inside the cabinet where he understood AM2 to
have been located at the time of the fire. Reil stated that AM1 , however, was “a melted mass of orange plastic, some steel handles and the motor itself,” and he decided to leave it in its location. When asked why he left AM1 without the polymeric film on it, ReilIn re Xterra Constr

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repl ied tha t it was a judgment call

. Reil explained that when he completed his investigation, he had wrapped AM2 for the purpose of collecting it as evidence and
intended to do the same with AM1 but that he had then decided that it would be of greater value to other fire investigators and engineers for them to see things in their original location. Reil said that it was also his understanding that there were no more operations taking place at the warehouse

. And Reil made sure that the doors to the
warehouse were lo cked when he left that day

. Reil testified that before he left the warehouse, however, he called both Williams’s supervisor and Richbourg

. Richbourg recounted that when he talked to Reil, Reil told him that the fire was “electrically provoked” and that Re il believed that the cause of the fire had been a fan motor and not anything that the Xterra Defendants had done. Reil stated that during the call , he also instructed Richbourg that no one was to go into the paint room. Richbourg confirmed receiving th is directive , stating that Reil i nstruct ed him not to go into the finishing room and not to disturb the fire scene. Richbourg wa s sure that he conveyed th e message “ accordingly ” thereafter.
Reil stated that when he called Williams’s supervisor, he advised him that some additional parties needed to be put on notice, including AM1’s manufacturer, because those parties would want to inspect the scene. Reil communicated the same thing to
Williams herself later that day , and Williams testified that at some poin t, she did send
notice letters to several entities. Reil stated that he also probably would have told Williams, her supervisor, or both of them at that time t hat there were anomalies on AM1
that he believed were responsible for the fire. Williams testified that she thereafterIn re Xterra Constr

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communicated to Davis what she had found out from Reil. She wanted Davis to know as soon as possible because she thought Hull would be interested in pursui ng Emerson for the faulty fan.
Hull testified that on October 29, 2014, he went back to the warehouse because he was curious and was trying to understand what had happened. He said that he does not know if anyone else was there at the time; he used his key to enter. Although he had already taken several photos on the day of the fire, Hull, once inside, took more photos

. He noted that he did not go into the paint room that day; he stood at the threshold of the room to take the photos. Hull then testified that on November 5, 2014, he hired Ryan Johnson to represent the owners of the warehouse . Hull explained that Davis had called him and told him that he was heavily involved in other litigation at th e time and recommended that Hull hire Johnson. Johnson testified that on the morning of November 6, 2014, he spoke w ith Williams, t old her that he was representing the owners of the warehouse , and told her that he expected that there would be a claim on behalf of the owners. Johnson said that
he thinks that Williams told him at that time that Cincinnati believed that a fan had
caused the fire and that Cincinnati was in the process o f trying to notify the fan
manufacturer

. Johnson asked Williams whether the tenants of the warehouse had
secured the scene and whether they understood their obligation to pre serve the scene. Johnson said that Williams assured him that Richbourg had ensured her that the tenants had preserved and secured the scene and that Richbourg understood the obligation to preserve the scene

. Johnson told Williams that he was nevertheless going to send her aIn re Xterra Constr

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formal request to preserve the scene. Johnson testified that Williams told him to forward
all communications related to the Xterra Defendants and the fire loss to her . Williams then sent Johnson her contact information.
Williams ackn owledged that during the call, she assured Johnson that the scene was secured and told him that Cincinnati had had its engineer at the warehouse.
Williams also confirmed that she told Johnson that Hull would probably be interested in pursuing “ this ” becau se Cincinnati’s cause

- and

- origin engineer had found that the fan
motor was the cause of the fire

. Williams, however, disputed that Johnson had told her anything during the call about Hull having a claim against the Xterra Defendants.
Williams also stated that she never tells an attorney that s he is an agent for an insured. Johnson testified that after his phone call with Williams ended, he met with Hull for the first time. They met at Hull’s office, which is not far from the warehouse , and a fter
the m eeting, Johnson suggested that he and Hull go by the warehouse. Johnson stated
that when he and Hull arrived at the warehouse on November 6 , a large trailer with the Xterra Defendants’ logos on it was parked outside the building, and a door to the
warehou se was open. When Johnson and Hull walked into the area where the fire had occurred, Johnson saw two men sweeping in the middle of the fire scene , including in the
location that Reil had identified as the fire’s point of origin . Johnson yelled at the wor kers to stop , which they did . Johnson explained to the m that it was a fire scene and that they needed to stop immediately. According to Johnson, o ne of the workers told him that they
were there to clean the entire warehouse. Johnson then a sked the worke rs who had
instructed them to be there, and the y acknowledged that Richbourg had.In re Xterra Constr

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Johnson stated that he then asked if there were any other people there at the
warehouse. The workers told him that there was another person. Johnson then saw a
third man st anding in a commercial

- sized dumpster just outside the warehouse , stomping on the debris to compact it. Johnson and Hull went out to the dumpster area. Johnson testified that it was clear that in addition to sweeping the fire scene, the workers were “dumping fire

- charred material and paint cans and varnishes and things like that into the dumpster.” Hull agreed, testifying that he personally witnessed the workers putting fire

- charred debris into the dumpster. Hull stated that the only place tha t there had been any charred materials was in the room where the fire had occurred and that any charred materials must therefore h ave come from that room. Johnson stated that the workers eventually moved away from the fire scene , and Johnson then went dir ectly back
to his office. Richbourg acknowledged that s ome sort of miscommunicati on had occurred

. Richbourg explained that when the fire occurred, the Xterra Defendants had been in the process of setting up a new location to conduct business but that the new location had not yet been operational. A fter the fire, the Xterra Defendants were then pressed to move their equipment to the new location because they needed to resume the operation of the
business. The Xterra Defendants were therefore motivated to bring the warehouse as best as possible to its move

- out condition and to retrieve items of value from the
warehouse that were important for the continuation of the business. Marty Schraeder , Venturi’s former general manager, testified that on the morning

o f November 6, he therefore met with several workers at the warehouse

. Schraeder toldIn re Xterra Constr

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the workers that they had been allowed to move “good” equipment out of the warehouse
and that they needed to salvage what they could salvage

. Schraeder , however, denied telling the workers to clean o ut the entire warehouse. Schraeder stated that he told the workers not to go into the offices and not to go into the room where the fire had occurred. Richbourg testified that before November 6, he had communicated to Schrae der that no one was to go into the area where the fire had occurred. Schraeder stated that h e had also been told by someone from the insurance company not to go into the room where the fire
had occurred because it was under investigation

. Schraeder furth er explained that t here was nothing for the workers to salvage out of the room a nd that h e did not want the
workers going in the room because of safety concerns. Schraeder nevertheless acknowledged that he was not at the warehouse all day supervising the workers and
agree d that the workers di sregarded his instructions about not going into the room where
the fire occurred.
Landon Wilkins testified that he was one of the workers at the warehouse on November 6 and that he recalled being told to recover all of the equipment and usable
lumber from the warehouse but to stay out of the paint room. Wilkins acknowledged
that o ne of the other workers nevertheless swept a path through the paint room. Wilkins stated that he did not have an understanding of why the worker had done that. Richbourg testified , however, that he asked the workers why they had disturbed the area of the fire’s origin and that the workers had told him that they were trying to remove things from a room that was unaffected by the fire and tha t it was expedient to transport the materials through the room where the fire occurred. Wilkins stat ed that nothing wasIn re Xterra Constr

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taken out of the paint room though

. The only thing that was thrown into the dumpster that day was water

- damaged or charred wood. John son testified that when he arrived back at his office, he immediately composed
a letter (“the spoliation letter”) and emailed it to Williams at 6:18 p.m. on November 6. Johnson a lso called Williams and left her a voicemail. The spoliation letter state s : “You should consider this letter as notice of representation and a notice of claim against your
insured

... .” Johnson testified that he tried to document in the letter what he had seen at

t he warehouse because what he had seen was contrary to what Williams had represented
to him. The spoliation letter state s that , based on Johnson’s personal observations, the Xterra Defendants “had spoliated large amounts of key evidence, including evidence located in the room in which the fire originated.” The spoliation letter then state s :

We request that you, your agents, servants and representatives secure and protect and do not allow anyone to MOVE, MUTILATE, REPAIR, DESTROY, TRANSPORT, DISPOSE OF, OR CHANGE IN ANY WAY FROM ITS PRESENT CONDITION the Warehous e or any of its contents. We also request that you inform anyone you have employed and/or utilized or directed to retain, store, or control Warehouse or any of its current contents to preserve and protect such evidence for trial. Please preserve and prot ect said critical and important evidence as described above until all of our client’s representatives have had a reasonable opportunity to inspect the said items. We may require that multiple experts inspect and analyze the above

- described said items and salvage after our initial inspection. Any change in the condition of said items will be considered spoliation of evidence as that term is defined under Texas Law, and any such action will be presumed to be in violation of this notice letter and subject to penalty under Texas Law

. On November 9, Williams responded to Johnson’s email, stating that she had been
sick and out of the office but that she would be back the next day. Johnson re plied , stating
that he needed confirmation from Williams that she had told the Xterra Defendants toIn re Xterra Constr

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stop entering the fire scene and to stop removing items from the warehouse. Johnson also wanted to know what happened to “all the fans.” On the morning of November 10,
Williams responded to Johnson again , stating that she h ad forwarded his letter to Richbourg and “ha[d] a call into him.” Williams stat ed that she had told Richbourg that he could “take the wood stock and stuff in the front room but they were not to go into the fire room at all” and that Richbourg had assured her that he would convey that
message. Richbourg testified that he became aware that the owners of the warehouse were potentially pursuing a claim against the Xterra Defendants when he received the spoliation letter on November 10

. Williams had emailed t he spoliation letter to Richbourg at 8:07 a.m. on November 10. Williams testified that that was the only way Richbourg would have received th e spoliation letter. Richbourg testified that when he received the spoliation letter, he returned to the warehouse because he felt responsible to identify what had happened. When he entered the paint room, he observed the change in condition from his previous visit when he ha d
been there with Reil. Richbourg noticed that AM2 was located on the floor adjacent to the swept path through the area and that the wrapping on AM2 had been opened. Richbourg stated that he did not know who had moved AM2 to that location. Richbourg
pro ceeded to put AM2 back up on top of a cabinet. Richbourg explained that he moved AM2 because that is where he understood that Reil had placed it when Reil had finished his inspection . Richbourg said that he was just trying to restore AM2 to its original
location. Richbourg also got into the dumpster at the warehouse and looked for evidenceIn re Xterra Constr

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of any materials that would have been in the room of the fire’s origin. Although there was a significant amount of material in the dumpster, Richbourg could not find any materials from the room of the fire’s origin. Richbourg found only material from other
areas of the warehouse.
A fter Richbourg left the warehouse, he emailed Williams, notif ying her that he had
found AM2 on the floor about ten feet from its original l ocation and that he had restored AM2 to its original location. Richbourg also acknowledged in his email to Williams that the workers had “broomed a path through the finishing room so they could roll carts of
materials out the door” and that that had not been a good idea. Richbourg reported to Williams, however, that upon inspection of the dumpster, he found it evident that none of the material was removed from the finishing room. Richbourg also reported that he had taped the area off with caution tape as of that morning. Williams replied that she had advised Johnson that the lease terminate d on November 14 , 2014 and that Hull needed to get his investigator out to the warehouse for his own investigation.
Reil testified that on No vember 12, 2014, he finally visited the fire scene with Joe Ellington, Hull’s cause

- and

- origin expert, who was going to inspect the scene. Ellington stated that he had actually been to the warehouse on November 11, 2014 with Hull, who
then left him there alone for about an hour and a half. Ellington spent time sketching, measuring, and taking notes. He did not touch or move anything in the paint room. Ellington then left the warehouse and locked the door.
Reil testified that on November 12, he noticed t hat the fire scene had been significantly altered since October 23. Two wall fans had been removed. The area thatIn re Xterra Constr

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Reil had identified as the point of origin of the fire had been swept

. Rei l stated , however,
that he did not consider th at alteration of the scene to be very serious. Similarly, AM2
had been moved . B ut again, Reil stated that he did not think that that would have an impact on anyone’s investigation of the scene. The scene had been altered , however, in a way that Reil consi dered to be very serious

— AM1 had been removed from the scene

. No one knows what happened to AM1. It remains missing. Reil testified that he received a photo that was taken by Hull on October 29. According to Reil, the photo
shows the motor of AM1 missin g; therefore, Reil believes that AM1 may have been moved before the Xterra Defendants swept the scene. Reil testified that one of the “roll

up” doors in the October 29 photo was in a different condition than it had been when he
was there on October 23. W hen asked if Reil was saying that someone burglarized the
warehouse between October 23 and October 29 , he replied, “I’m saying that’s a
candidate.” Similarly, Richbourg testifie d that all types of metal in the warehouse had disappeared since the fire; the refore, he speculated that AM1 was pilfer ed along with the
other metal. Both Johnson and Wilkins testified that they did not see AM1 at the warehouse on
November 6. But Johnson stated that it appeared to him that AM1 could be seen in both
the October 23 p hoto and the October 29 photo. Johnson explained that based on his experience, it therefore seems obvious that representatives of the Xterra Defendants swept up and threw away AM1. Ellington agreed, stating that it is more probable that
the Xterra Defend ants had already started sweeping and moving the area and accidentally swept up AM1 as part of that process than that AM1 was stolen . EllingtonIn re Xterra Constr

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stated that in any event, he cannot conclusively determine the cause of the fire because the “most vital piece of evidence” is no longer available to be evaluated. Procedural Background Hull and William H. Beazley, III, as executor of the William H. Beazley, Jr., estate 1
and as co

- trustee of the Bertie Lea Beazley 1998 Family Trust, (collectively, Hull and Beazley) filed su it against the Xterra Defendants , asserting negligence and breach

- of

contract causes of action against the m
. The Xterra Defendants subsequently filed a motion for leave to designate Emerson as a responsible third party. Hull and Beazley amended their petition and added Emerson as a defendant.
Hull and Bea z ley then file d a motion for sanctions against the Xterra Defendants for spoliation of evidence. After several evidentiary hearings in which Emerson also partici pated , t he trial court signed an order granting the motion for sanctions . The trial court made the following findings: (1) that the Xterra Defendants collectively had a duty to reasonably preserve the fire scene and all articles at the fire scene because: (a) the Xterra Defendants were the sole occupiers of the warehouse building at the time of the fire; and (b) the Xterra Defendants knew or reasonably should have known that there was a substantial chance that a claim would be filed and that evidence in its po ssession or control would be material and relevant to that claim; (2) that the Xterra Defendants spoliated the fire scene and artifacts at the fire scene, including without limitation: (a) the point of origin of the fire; (b) the air mover previously located at the point of origin of the fire that the Xterra Defendants allege to have caused the fire; and (c) fire debris located at the point of origin of the fire; and

1 Hull testified that Beazley, Jr., passed away on September 20, 2014.In re Xterra Constr

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(3) that Plaintiffs [Hull and Beazley] and Emerson Defendants have been deprived by the Xterra De fendants’ spoliation of certain evidence (including the air mover previously located at the point of origin of the fire that Xterra Defendants allege to have caused the fire and fire debris located at the point of origin of the fire) of any meaningful abil ity to present evidence concerning the “causation” element of Plaintiffs’ [Hull’s and Beazley’s] and Emerson Defendants’ claims and defenses. The trial court then ordered the following: (1) the portion of the Xterra Defendants’ Second Amended Original Answers, Special Exceptions and Counterclaims denying the causation element of Plaintiffs’ [Hull’s and Beazley’s] claims against the Xterra Defendants is hereby stricken; (2) the portion of the Xte rra Defendants’ Second Amended Original Answers, Special Exceptions and Counterclaims in which the Xterra Defendants designate Emerson Tool Company a/k/a Emerson Commercial & Residential Solutions as a responsible third party is hereby stricken; (3) this Cour t will issue a spoliation instruction to the jury as to the causation element of Plaintiffs’ [Hull’s and Beazley’s] claims against the Xterra Defendants consistent with the Texas Pattern Jury Charge

– Business 100.13 (2014). This Court will prepare the sp oliation instruction after the close of evidence in this case and include the spoliation instruction in the Charge to be presented to the Jury;
and (4) Plaintiffs [Hull and Beazley] are hereby awarded $ 40,973.50 for reasonable attorney’s fees and expenses r elated to the filing of P LAINTIFFS ’ M OTION FOR S ANCTIONS FOR S POLIATION OF E VIDENCE and hearing on the same;
and (5) Emerson Defendants are hereby awarded $ 20,000.00 for reasonable attorney’s fees and expenses related to the filing of P LAINTIFFS ’ M OTION FOR S ANCTIONS FOR S POLIATION OF E VIDENCE and hearing on the same.In re Xterra Constr

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The Xterra Defendants subsequently filed this original proceeding , seeking
mandamus relief to vacate the trial court’s order imposing sanctions against them for the spoliation of evidence

. See T EX
. R. A PP
. P. 52. The Xterra Defendants also filed a motion
for stay pending disposition of the ir mandamus petition

. See id. R. 52.10(a). We granted
the motion for stay and ordered that the trial court’s order and any trial setting in the underlying case be stayed pending further order of this Court. See id. R. 52.10(b). We
also requested a response to the petition for writ of mandamus

. See id. R. 52.8(b). Hu ll

a nd Beazley filed a response; Emerson and Respondent did not.
Mandamus Standard Mandamus is an extraordinary remedy, available only in limited circumstances.
Walker v. Packer

, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). To obtain mandamus relief, a relator must show both that the trial court has clearly abused its discretion and
that the relator has no adequate remedy by appeal. In re Prudential Ins. Co. of Am. , 148 S.W.3d 124, 135

- 36 (Tex. 2004) (orig. proceeding).
Clear Abuse of Discretion We begin with whether the Xterra Defendants have shown that the trial court clearly abused its discretion in imposing sanctions against them for the spoliation of
evidence

. See id. at 135.

In Brookshire Brothers, [ Ltd. v. Aldridge , 438 S.W.3d 9 (Tex. 2014), the Texas Supreme C ourt] adopted a framework governing the imposition of remedies for evidence spoliation. [The supreme court] explained that whether a party spoliated evidence and whether a particular remedy is appropriate are questions of law for the trial court. Id. at 20. . . . [The court] further held in Brookshire Brothers that, to find that spoliation occurred, the trial court must make affirmative determinations as to two elements. First,In re Xterra Constr

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the party who failed to produce evidence must have had a duty to preserve th e evidence. Id

. . . . “Such a duty arises only when a party knows or reasonably should know that there is a substantial chance that a claim will be filed and that evidence in its possession or control will be material and relevant to that claim.” Id. (c itation and internal quotation marks omitted). Second, the nonproducing party must have breached its duty to reasonably preserve material and relevant evidence. Id. A party cannot breach its duty to preserve without at least acting negligently. Id. at 20

- 21 & n.8. Petroleum Solutions, Inc. v. Head , 454 S.W.3d 482, 488 (Tex. 2014).
Based on Brookshire Brothers , t he first matter that we must address then is whether the Xterra Defendants had a duty to preserve the evidence at the fire scene. See id. Hull and Beazley Any duty to Hull and Beazley that the Xterra Defendants had to preserve evidence
at the fire scene would have arisen only when the Xterra Defendants knew or reasonably
should have known that there was a substantial chance that Hull and Be azley would file a claim against them and that evidence in their possession or control would be material
and relevant to that claim. See id. The Xte rra Defendants contend that any duty that they
had was therefore not triggered until “after the disappeara nce of AM1 as well as the sweeping incident.” Hull and Beazley disagree and argue that the Xterra Defendants’ duty arose immediately after the fire occurred

. T he record here shows that the earliest that the Xterra Defendants actually knew
that there was a substantial chance that a claim would be filed against them by Hull and Beazley was when Richbourg received Williams’s email containing the spoliation letter on the morning of November 10 , 2014

. Richbourg , the sole owner of Xterra and Venturi,
testified that that is when he became aware that the owners of the warehouse wereIn re Xterra Constr

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potentially pursuing a claim against the Xterra Defendants , and n o other testimony
indicates otherwise

. Hull testified that all of his communication about the issue went through Davis and Johnson. Davis did not testify at the spoliation hearing , and Johnson testified that he did not know whether Davis had provided notice to anyone that there
would be a claim. Johnson stated that he told Williams (not the Xterra Def endants) on the morning of November 6, 2014, that he expected that there would be a claim on behalf of the owners, and Johnson then emailed the spoliation letter to Williams (not the Xterra Defendants) on November 6. Williams did not email the spoliation letter to Richbourg until 8:07 a.m. on November 10, and Williams testified that that was the only way Richbourg would have received the spoliation letter. Hull and Beazley argue that the Xterra Defendants nevertheless reasonably should
have known much soo ner than November 10 that there was a substantial chance that a

c laim would be filed

. Hull and Beazley first contend th at the very nature of the event
would cause a reasonable person to anticipate that claims would be filed. They assert
that this case is similar to In re J.H. Walker, Inc. , No. 05

- 14

- 01497

- CV, 2016 WL 819592 (Tex. App.

— Dallas Jan. 15, 2016, orig. proceeding) (mem. op.) , a case involving a motor vehicle
accident

. In J.H. Walker , the court noted that in some circumstances, it is possible that a reasonable person would conclude from the severity of an accident and other circumstances that a substantial chance of litigation will ensue

. Id. at *5; see also In re
Advanced Powder Solutions , Inc. , 496 S.W.3d 838, 854 (Tex. App.

— Houston [1st Dist.] 2016, orig. proceeding) (citing Wal

- Mart Stores, Inc. v. Johnson , 106 S.W.3d 718, 722 (Tex. 2003)).
The J.H. W

alker court then concluded that based on the record as a whole, including theIn re Xterra Constr

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severity of the crash, which included a fatality, the relator had a duty to preserve the
wrecked vehicle

. J.H. Walker , 2016 WL 819592, at *6.
Th e present case is , however, distinguishable from J.H. Walker

. Hull and Beazley
argue that “this case involves serious circumstances in which a commercial [w]arehouse worth hundreds of thousands of dollars was significantly damaged by fire.” But t his case does not involve a fatality or severe personal injury. Instead, this case involves property damage. Furthermore, the evidence indicates that the damage was confin ed to one room
of the warehouse , not the entire warehouse. Accordingly, the evidence does not support that a reasonable person would concl ude from the severity of the fire or extent of the damages that a substantial chance of litigation would ensue between Hull and Beazley
and the Xterra Defendants

. Hull and Beazley next argue that from the moment that the fire occurred, the
Xterra Defendan ts should have been aware of their duty to preserve the fire scene because they were the sole tenants and occupiers of the warehouse and the sole owners of the personal property located in the area of the fire’s origin and because the language of the
lease and guaranty make the Xterra Defendants responsible for any property damage to
the warehouse. The lease term, however, was to end on November 14, 2014, and the lease required the Xterra Defendants to return the warehouse to Hull and Beazley in the same

c ondition as it was at the beginning of the lease , except for normal wear and tear

. Yet Hull, who was at the warehouse as early as the day of the fire and continued to visit the
warehouse thereafter , never indicated to the Xterra Defendants that there was a substantial chance that a claim would be filed or that the Xterra Defendants needed toIn re Xterra Constr

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preserve the fire scene. Nor is there any evidence that Davis indicated that there was a
substantial chance that a claim would be filed or that the Xterra Defendants needed to preserve the fire scene, even when Williams contacted him. Accordingly, the evidence does not support that a reasonable person would conclude t hat a substantial chance of litigation would ensue between Hull and Beazley and the Xterra Defendants just because
of the lease

. See Brookshire Bros. , 438 S.W.3d at 20 (“ [A] ‘substantial chance of litigation’ arises when ‘litigation is more than merely an abstract possibility or unwarranted fear.’”). Finally, Hull and Beazley argue that immediately after the fire occurred, the Xterra Defendants should have been aware of their duty to preserve the fire scene because the y
pur sued their own insurance claim within forty

- eight hours of the fire, Reil and Williams instructed Richbourg to preserve the scene , and Richb ourg made a commitment to do so. Richbourg making a claim with Cincinnati for Venturi’s personal property that was lost or damaged by the fire does not , however, equate to Richbourg having knowledge of a
substantial chance of a claim being file d by Hull and Beazley against the Xterra
Defendants

. As stated above, Hull and Beazley point out that the Xterra Defendants were the sole tenants of the warehouse and the sole owners of the personal property in the
warehouse at the time of the fire. As o wners of personal property in the warehouse, i t follows that a fire in one of the rooms of the warehouse would cause damage to the Xterra
Defendants. But it does not follow that there would be a substantial chance that a claim would be filed by Hull and B eazley, who did not have personal property in the warehouse, against the Xterra Defendants. This is especially true given the fact that
neither Hull nor Davis indicated to the Xterra Defendants that there was a substantialIn re Xterra Constr

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chance that a claim would be fil ed or that the Xterra Defendants needed to preserve the
fire scene.
Based on the foregoing , we conclude that the Xterra Defendants did not know , nor reasonably should they have known , that there was a substantial chance that a claim
would be filed by Hull and Beazley against them until Richbourg received Williams’s email containing the spoliation letter on the morning of November 10, 2014. Furthermore, t here is no dispute that by th e morning of November 10, 2014, the fire scene had been swept and AM1 was g one. Accordingly, we conclude that by th e time the Xterra Defendants knew or reasonably should have known that there was a substantial chance that a claim would be filed by Hull and Beazley against them , the fire scene no longer
contained evidence that wo uld be material and relevant to that claim. Therefore, the Xterra Defendants did not have a duty to Hull and Beazley to preserve any evidence from
the fire scene. See Petroleum Solutions , 454 S.W.3d at 488.
Emerson Emerson’s relationship with the Xterra Defendants is different than Hull’s and Beazley’s relationship with the m
. Emerson has not filed any claim against the Xterra Defendants, and t he Xterra Defendants have not filed any claim against Emerson

. S ee
T EX
. C IV
. P RAC

. & R EM
. C ODE A NN
. § 33.004(i) (“The filing or granting of a motion to designate a person as a responsible third party or a finding of fault against the person: (1) does not by itself impose liability on the person; and (2) may not be used in any other proceeding, on the basis of res judicata, collateral estoppel, or any other legal theory, to impose liability on the person.” ). Instead, Hull and Beazley ha ve filed a claim againstIn re Xterra Constr

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Emerson , and the issue is whether the Xterra Defendants had a duty t o preserve the evidence at the fire scene for Emerson against Hull and Beazley. We assume without deciding that , under the right circumstances, the Xterra Defendants could have a duty to preserve the evidence at the fire scene for Emerson against Hull and Beazley. Any such duty w ould have arisen only when the Xterra
Defendants knew or should have known that there was a substantial chance that Hull and Beazley would file a claim against Emerson and that evidence in the Xterra
Defendants’ possession or control would be material and relevant to that claim. See
Petroleum Solutions , 454 S.W.3d at 488.
There is no indication in the record here that the Xterra Defendants knew or reasonably should have known that there was a substantial chance that a claim would be filed by Hull and Beazley against Emerson before the morning of November 10, 2014 when the Xterra Defendants knew or reasonably should have known that there was a substantial chance that a claim would be filed by Hull and Beazley agai nst them. See
Brookshire Bros. , 438 S.W.3d at 20 (“[A] ‘substantial chance of litigation’ arises when ‘litigation is more than merely an abstract possibility or unwarranted fear.’”). Furthermore, as stated above, there is no dispute that on the morning o f November 10, 2014, the fire scene had been swept and AM1 was gone. Accordingly, we conclude that by the time the Xterra Defendants knew or reasonably should have known that there was a substantial chance that a claim would be filed by Hull and Beazley a gainst Emerson, the fire scene no longer contained evidence that would be material and relevant to that
claim. Therefore, the Xterra Defendants did not have a duty to preserve any evidenceIn re Xterra Constr

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from the fire scene for Emerson against Hull and Beazley

. See Pet roleum Solutions , 454
S.W.3d at 488. Moreover, in light of the foregoing, w e conclude that the trial court clearly abused its discretion in its imposition of sanctions against the Xterra Defendants for the spoliation of evidence. See id.
No A dequate Reme dy by Appeal We now turn to whether the Xterra Defendants have shown that they have no adequate remedy by appeal. See Prudential , 148 S.W.3d at 135

- 36. Generally, orders imposing discovery sanctions, including spoliation instructions, are reviewable on appeal from the final judgment. T EX
. R. C IV
. P. 215.3; see also Shupe v. Lingafelter

, 192 S.W.3d 577, 579 (Tex. 2006) (per curiam) (review of decision to submit or refuse a particular instruction o n appeal is under abuse

- of

- discretion standard); Wal

- Mart
Stores , 106 S.W.3d at 724 (spoliation jury instruction imposed as discovery sanction reviewed on appeal). On the other hand , w hen a trial court imposes sa nctions that have the effect of adjudicating a dispute, whether by striking pleadings, dismissing an action , or rendering a default judgment , but the imposition of the sanctions do es not result in rendition of an appealable judgment, then the eventual reme dy by appeal is inadequate.
TransAmerican Nat. Gas Corp. v. Powell , 811 S.W.2d 913, 919 (Tex. 1991)

. Sanctions that have the effect of adjudicating a claim or precluding a decision on the merits of the case
are referred to as “death penalty” sanctions. In re First Transit Inc. , 499 S.W.3d 584, 591 (Tex. App.

— Houston [14th Dist.] 2016, orig. proceeding) (citing GTE Commc’ns Sys. Corp.
v. Tanner , 856 S.W.2d 725, 732 (Tex. 1993)).In re Xterra Constr

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The Xterra Defendants contend that the trial court ordered death penalty sa nctions in this case. Not only did the trial court decree that it will issue a spoliation instruction to the jury as to the causation element of Hull’s and Beazley’s claim s against the Xterra Defendants, t he trial court also ordered that the portion of th e Xterra Defendants’ pleadings denying the causation element of Hull’s and Beazley’s claims against them i s stricken and that the portion of the Xterra Defendants’ pleadings in which they designate Emerson as a responsible third party is stricken.
Hull an d Beazley argue that the striking of the Xterra Defendants ’ causation
defenses related to Hull’s and Beazley’s breach

- of

- contract and negligence claims is not tantamount to death penalty sanctions because Hull and Beazley must still prove the remaining ele ments of their breach

- of

- contract and negligence claims to prevail at trial. We disagree. The trial court here imposed sanctions that adjudicated any dispute regarding causation in this case; therefore, we conclude that the Xterra Defendants’
eventual re medy by appeal is inadequate

. See TransAmerican , 811 S.W.2d at 919.
Conclusion For the foregoing reasons, we conclude that the trial court clearly abused its
discretion in imposing sanctions against the Xterra Defendants for the spoliation of
evidence. The Xterra Defendants also have no adequate remedy by appeal

. Accordingly,

we lift our stay of the proceedings in the trial court and conditionally grant the Xterra Defendants’ petition for writ of mandamus. A writ will issue only if Respondent fails t o
vacate the “Order on Motion for Sanctions for Spoliation of Evidence” that was signedIn re Xterra Constr

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on November 22, 2016, and to notify this Court in writing that it has done so within seven days from the date of this opinion.

REX D. DAVIS Justice Before Chief Just ice Gray, Justice Davis, and Senior Justice Scoggins 2 (Chief Justice Gray dissenting with opinion) Petition granted Opinion delivered and filed May 15, 2019 [OT06]

2 The Honorable Al Scoggins, Senior Justice of the Tenth Court of Appeals, sitting by assignment of the Chief Justice of the Texas Supreme Court. See T EX

. G OV ’ T C ODE A NN
. §§ 74.003, 75.002, 75.003.