Court Opinion

ID: 8213093
Source: CourtListenerOpinion
Date Created: 2022-10-11 15:02:00.269971+00
Date Added: 2024-06-11T16:42:19.093798
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

STATE OF DELAWARE,                          )
ex rel. Kathleen Jennings, Attorney         )
General of the State of Delaware,           )
                                            )
            Plaintiff,                      )
                                            ) C.A. No. N19C-05-323 FWW
            v.                              )
                                            )
CONCRETE TECHNOLOGY                         )
RESURFACING & DESIGN, INC.,                 )
GUINEVERE M. KUNKEL, and                    )
PAUL E. RANDALL,                            )
                                            )
            Defendants.                     )

                          Submitted: August 25, 2022
                          Decided: October 10, 2022

 Upon Plaintiff State of Delaware’s First Motion for Sanctions for Spoliation of
                                   Evidence,
                                 GRANTED.

Upon Plaintiff State of Delaware’s Second Motion for Sanctions for Spoliation of
                                   Evidence,
                                 GRANTED.
     Upon Plaintiff State of Delaware’s Third Motion to Compel Discovery,
                                   MOOT.
                 MEMORANDUM OPINION AND ORDER
Michael Clarke, Esquire, Deputy Attorney General, Consumer Protection Unit,
DELAWARE DEPARTMENT OF JUSTICE, 820 North French Street, 5 th Floor,
Wilmington, DE 19801, Attorney for Plaintiff State of Delaware.
John v. Work, Esquire, LAW OFFICE OF JOHN V. WORK, 800 North King
Street, Suite 303, Wilmington, DE 19801, Attorney for Defendants Concrete
Technology Resurfacing & Design, Inc., Guinevere M. Kunkel, and Paul E.
Randall.

WHARTON, J.

                                    2
                                I.     INTRODUCTION

      Plaintiff, the State of Delaware, ex rel. Kathleen Jennings, Attorney General

of the State of Delaware (“State”) initiated this action against Defendants Concrete

Resurfacing Technology & Design, Inc. (“CTRD”), Guinevere M. Kunkel

(“Kunkel”) and Paul E. Randall (“Randall”) (collectively “Defendants”) alleging

violations of Delaware’s Consumer Fraud Act and Uniform Deceptive Trade

Practices Act. The State alleges that CTRD, which was in the business of providing

concrete resurfacing services, and its co-owners Kunkel and Randall: (1) misled

consumers regarding thew nature of its services and its affiliation with a third-party

manufacturer; (2) misrepresented that its projects were backed by a manufacturer’s

warranty; and (3) fraudulently substituted cheaper materials for the name-brand

products it claimed to be using. The State seeks a cease and desist order, civil

monetary penalties, disgorgement of profits, restitution, attorney fees, investigative

costs, and pre- and post-judgment interest.

      The Defendants answered and the Court entered a trial scheduling order, all

in due course. Then, as discovery commenced, the case quickly went off track. The

first hint of trouble was when a stipulated amended scheduling order was presented

to the Court due to the Defendants’ failure to respond to the State’s first set of

interrogatories and requests for production more than nine months after they were

served. Then, the State’s continued difficulty in securing relevant and necessary

                                          3
discovery, including depositions of the individual defendants, resulted in multiple

amendments to the trial scheduling order, three motions to compel discovery, and

two motions for sanctions for spoliation of evidence. The Court held a hearing on

the sanctions motions and the third motion to compel discovery.

      The State’s First Motion for Sanctions for Spoliation of Evidence (“First

Motion”) alleges that Kunkel and Randall dumped documents, including paper

customer files, customer complaints, warranty documents, emails, and other

discoverable information, into a large outdoor storage unit when the Defendants

abandoned their business in Wilmington. At their depositions, they testified that

when they returned to empty the unit six months later, they found it had been

penetrated by rain and snow destroying much of its contents. As a result, they

discarded virtually everything, including documents the State’s alleges are critical

to its case. In the State’s view, this conduct was worse that reckless – it was

intentional. As a result, the State asks the Court to enter a default judgment, or,

alternatively, to strike the Defendant’s defenses and order a trial on damagers only.

At a minimum, the State asks for an adverse inference instruction.

      The State’s Second Motion for Sanctions for Spoliation and Discovery Abuse

(“Second Motion”) also seeks a default judgment based on new discovery abuse

and newly demonstrated spoliation of evidence. The Second Motion is based on

Kunkel’s testimony that she withheld from the storage unit hardcopies of

                                         4
customers’ files within the last two years of CTRD’s operations where the work

was still under warranty. Those files were requested by the State in discovery, but

were not produced, or if they were produced, they were embedded in an

unsearchable 38 gigabyte hard drive. In the Second Motion the State asks for a

default judgment and attorney fees.

      The State’s Third Motion to Compel Discovery (“Motion to Compel”) seeks

three things. The State wants the defendants to produce: (1) the materials Kunkel

testified she withheld from the storage unit; (2) material Kunkel states she has been

storing on a hard drive in her kitchen drawer; and (3) a letter Kunkel sent to CTRD’s

Delaware clients announcing that the company would be moving to New Jersey but

would continue to service its Delaware clients.

      After carefully considering the Motions, the testimony at the hearing, and the

parties post-hearing submissions, the Court has determined that the Defendants

recklessly engaged in spoliation of evidence. The Court also finds that defense

counsel is largely to blame for the persistent failure of the Defendants to comply

with the State’s legitimate discovery requests, although the Defendants themselves

also are significantly blameworthy. Accordingly, the Motions for Sanctions are

GRANTED. The Court will not impose the most serious sanction of entering a

default judgment at this juncture. Instead, it will deem certain disputed evidence

related to the spoliated evidence established and/or preclude the defense from

                                         5
introducing evidence related to the spoliated evidence. Additionally, the Court will

give appropriate adverse inference instructions to the jury. The State’s Third

Motion to Compel Discovery is also GRANTED. The Court will award the State

reasonable attorney’s fees for the amount of time it has spent litigating two

meritorious motions for sanctions.

                        II.   FACTS AND PROCEDURAL HISTORY.

         The following facts are taken from the State’s Complaint. CTRD is a defunct

Delaware corporation, having been incorporated in 2003 and having operated in

Delaware through 2014.1 It has not declared bankruptcy or filed a certificate of

dissolution.2 Kunkel was the president and 50% owner of CTRD.3 Randall was the

vice president and owner of the other 50% of CTRD.4        CTRD held itself out to

customers as able to restore and repair a variety of concrete surfaces, including

driveways, patios, decks, floors, and countertops, using what it claimed were

products supplied by Concrete Technology, Inc. (“CTI”), a Florida corporation, for

its resurfacing projects.5 The Complaint alleges that CTRD violated Delaware’s

Consumer Fraud Act by engaging in misleading advertising in a variety of ways

(Counts I, II, and III) as well as violating Delaware’s Uniform Deceptive Trade

1
  Compl., at ⁋ 9, D.I. 1.
2
  Id., at ⁋ 10.
3
  Id.,. at ⁋ 11.
4
    Id., at ⁋ 12.
5
    Id., at ⁋⁋ 15-17.
                                          6
practices Act Counts IV, V, and VI).6 The Defendants filed an Answer denying the

State’s allegations of wrongdoing and requesting that the Court dismiss the

Complaint.7

       On September 24, 2019, the Court issued a Trial Scheduling Order (“TSO”),

setting trial for March 1, 2021.8 The Court’s docket details the following history of

motion practice related to discovery. On June 17, 2020, the State submitted a

stipulated motion to amend the TSO.9 The stipulated reason necessitating an

amendment to the TSO was the Defendants failure to respond to discovery requests

made on September 13, 2019, nine months earlier.10 Next, the State moved to

compel discovery for the first time on July 2, 2020 because the Defendants had

failed to respond to the State’s discovery requests despite repeated promises by

counsel that they would.11     That motion was granted on August 26, 2020.12

Responses purportedly were served in compliance with the Court’s Order on

September 11, 2020.13 On October 10, 2020, the State submitted its second

stipulated motion to amend the TSO because the responses were not provided in

6
  Id.
7
  Ans., D.I. 5.
8
  D.I. 11.
9
  D.I. 14.
10
   Id.
11
   D.I. 16.
12
   D.I. 18.
13
   D.I. 20.
                                         7
fact until the State picked up a flash drive from defense counsel on September 28th.14

The third motion to amend the TSO was filed by the State on March 22, 2021.15

This motion was occasioned by a need to postpone the individual Defendants’

depositions due to deficiencies to the Defendants’ document production. 16 The

State filed its second motion to compel discovery on May 5, 2021 as a result of the

Defendants’ failure to produce requested discovery responses despite a promise by

defense counsel to provide them.17 On May 28th, the Court held its second

scheduling teleconference and set a new trial date of March 21, 2022.18 On July 26,

2021, the Court granted the State’s second motion to compel and directed the

Defendants to further respond to the State’s first set of requests for production

within 10 days.19 On August 17, 2021 the State moved for a rule to show cause as

a result of the failure of the Defendants to comply with the Court’s July 26 th Order.20

On August 20th, the Defendants served their supplemental responses to the State’s

first set of requests for production,21 causing the State to withdraw its motion for a

rule to show cause.22 On September 13, 2021, the State submitted another stipulated

14
   D.I. 21.
15
   D.I. 23.
16
   Id.
17
   D.I. 33.
18
   D.I. 41.
19
   D.I. 48.
20
   D.I. 49.
21
   D.I. 51.
22
   D.I. 52.
                                           8
amended TSO to allow for additional time to take the individual Defendants’

depositions.23 The Court granted the motion on September 15th.24 On November

12, 2021, the State moved to amend the TSO as a result of what it described as it

being “stonewalled” in its attempts to secure critical discovery from the

Defendants.25 On December 6th, Defense counsel failed to appear for the scheduled

presentation of the State’s motion causing the Court to suspend the TSO then in

place.26

      It was at this point that the State filed two of the pending motions. On

December 9th, it filed its third motion to compel discovery27 and its First Motion for

Sanctions for Spoliation of Evidence.28 On December 14th, the Court held a

teleconference at which it directed the Defendants to respond to the State’s motions

by December 31st.29 The Court also set a new trial date of July 5, 2022.30 On

January 10, 2022, the State wrote to the Court requesting a status conference

because the Defendants had not filed their responses to the State’s motions by

December 31st as ordered by the Court.31 The Court held a teleconference on

23
   D.I. 59
24
   D.I. 62.
25
   D.I. 68.
26
   D.I. 69.
27
   Pl.’s Third Mot. to Compel, D.I. 74.
28
   Pl.’s (First) Mot. for Sanctions, D.I. 75.
29
   D.I. 76.
30
   D.I. 77.
31
   D.I. 78.
                                            9
January 19, 2022 and permitted the Defendants to file their response by noon the

next day.32 The responses were filed as ordered.33 On February 15, 2022, the State

filed the third motion now under consideration – its Second Motion for Sanctions

for Spoliation of Evidence.34 After as teleconference, the Court set a hearing date

on the pending motions for April 22, 2022.35

      On April 21, 2022, the State filed a March 17th letter it wrote to defense

counsel.36 In it the State stated that it was returning the hard drive the Defendants

had provided because the State was concerned about reviewing “irrelevant, personal

and privileged material.”37 The State also declined to do what it described as the

Defendants’ job of making a proper production for them.38 The State further

inquired whether Defendants intended to make a proper production of the hardcopy

customer files Kunkel testified she withheld from the storage container.

Apparently in response, on April 22nd, prior to the hearing, the Defendants filed a

supplemental discovery response.39 That response purported to produce a copy of

a scanned “letter from New Castle Artisan to clients” which the Defendants claimed

32
   D.I. 81.
33
   D.I. 82 (Defs.’ Resp. to Mot. for Sanctions); D.I. 83 (Defs.’ Resp. to Mot. to
Compel.).
34
   Pl.’s Second Mot. for Sanctions, D.I. 90.
35
   D.I. 94.
36
   D.I. 95.
37
   Id.
38
   Id.
39
   D.I. 97.
                                         10
to have found in the hard drive it produced to the State which the State decline to

review.40 The production also stated that the Defendants had produced “all other

relevant documents which remained in their possession.”41

      On April 22nd, the Court heard testimonial evidence from three witnesses on

behalf of the State and also received 13 exhibits offered by the State.42 During

argument on the motions, a disagreement arose between counsel as to whether the

Defendants had already produced the files Kunkel had testified she withheld from

the storage unit and which the State was seeking. To resolve that dispute, the Court

ordered defense counsel to reproduce to the Court what he produced to the State. 43

On April 25th, the Defendants produced to the Court their lease, advertising and

contract materials, certain database entries, and seven customer contracts for six

customers.44 The same day, the State wrote to the Court disputing the adequacy of

the Defendants’ production, especially regarding the approximately 22 customers

for whom the Defendants did work in 2013 and 2014 and whose files the State

believes were withheld from the storage unit.45

40
   Id.
41
   Id.
42
   Tr. Evid. Hrg., Apr. 22, 2022, D.I. 105.
43
   Id., at 98-100.
44
   D.I. 100-09.
45
   D.I. 111.
                                         11
       Following argument by counsel, the Court directed the parties to submit post-

hearing briefs.46 The State submitted its brief on May 13, 2022.47 The Defendants

filed their brief on June 3rd.48

       On June 27th, the Court entered the current TSO.49 Trial now is scheduled

for January 17, 2023.50 On July 6th, the State wrote to the Court advising it that the

Defendants had not provided it with overdue discovery defense counsel had

promised he would produce by June 21st during a teleconference with the Court.51

       The Defendants served supplemental discovery responses on August 5 th.52

On August 18th, the Court directed the parties to advise the Court what effect, if

any, those responses had on the State’s Third Motion to Compel Discovery and its

Second Motion for Sanctions.53 The State’s response details the Defendants’

production and characterizes it as including some new, not particularly relevant

documents responsive to the State’s Request for Production, and other unresponsive

and irrelevant documents.54 Thus, it is the State’s position that the August 5 th

46
   Id., at 101-03.
47
   D.I. 113.
48
   D.I. 116.
49
   D.I. 119.
50
   Id.
51
   D.I. 120.
52
   D.I. 125.
53
   D.I. 127.
54
   D.I 128.
                                         12
production has no bearing on the pending motions.55 The Defendants describe their

latest production as including “promotional, business, and marketing materials

sought by Plaintiff, documentation to associated and related business efforts of

Defendants, photographs of various work done by defendants, and other documents

which may be of use during defense at trial.”56 The Defendants maintain that they

have provided “all information and documents still in their possession.”57 They do

not address the Court’s inquiry as to what effect this production has, if any, on the

Second Motion for Sanctions and the Third Motion to Compel Discovery.58

       With that procedural history, the Court turns to the facts necessary to resolve

the pending motions for sanctions for spoliation of evidence. Those facts come

principally from the individual Defendants’ depositions and are not complex.

Defendants Kunkel and Randall testified that they were forced on short notice to

vacate their rented space at First State Plaza in Wilmington due to adverse financial

circumstances.59 Their landlord permitted them to use a large outdoor container at

the back of the property for storage.60 The Defendants put documents, including

paper customer file folders, customer complaints, warranty documents, emails, and

55
   Id.
56
   D.I. 129.
57
   Id.
58
   Id.
59
   Pl.’s (First) Mot. for Sanctions, at 2, D.I. 75.
60
   Id.
                                            13
other information into the container along with equipment, and other company

property.61 There was no log, and Kunkel described their actions as “simply heave

ho-ing” materials into the container.62 Kunkel testified that she withheld from the

storage unit paper files for customers who had signed their contracts in 2013 and

2014 because those customers’ jobs would still have been within CTRD’s two-year

warranty.63

      The individual Defendants testified that in the spring of 2015, at least six

months after they put the materials into the container, they returned to empty it.64

They testified that rain and snow had penetrated the unit and destroyed or damaged

much of the contents causing them to discard virtually everything, including all of

the documents.65

                        III.   THE PARTIES’ CONTENTIONS.

      In its First Motion for Sanctions, the State alleges that the Defendants

intentionally destroyed critical documents despite being on notice of their legal duty

to preserve them.66 The First Motion cites a number of named customers who

complained to the Better Business Bureau (“BBB”), to the Consumer Protection

61
   Id.
62
   Id., at 3.
63
   Id.
64
   Id., at 4.
65
   Id.
66
   Pl.’s (First) Mot. for Sanctions, at 17, D.I. 75.
                                            14
Unit of the Delaware Department of Justice (“CPU”), and to the Defendants

themselves.67 The First Motion contends that, “despite having firsthand knowledge

of numerous customer complaints – to the BBB, to the CPU, and to the Defendants

themselves - [Kunkel and Randall] cast critical and relevant customer files into an

outdoor storage bin and ignored them for at least six months, while they shut down

their business in Delaware.”68 The State argues these actions were reckless, at least,

but, when coupled with the defendants consistent refusal to provide discovery, were

intentional in fact.69 The State allowed at the evidentiary hearing that one could

argue that placing the documents in a storage container was not evidence that the

Defendants intended to destroy them.70 But, at the very least the Defendants met

the recklessness standard for spoliation when they failed to make a single effort to

salvage anything upon returning to the container in the spring.71 While maintaining

that position in its post-hearing submission, the State argues strongly that in the

context of this case, it was not the Defendants’ intent to preserve the documents.72

Instead, the Defendants planned to abandon their Delaware customers and move to

New Jersey.73 The State posits that the Defendants would have taken the documents

67
   Id., at 9-16.
68
   Id., at 5-6.
69
   Id.
70
   Tr. Evid. Hrg., Apr. 22, 2022, at 89, D.I. 115.
71
   Id.
72
   Pl.’s Mem. in Support of Mots. for Sanctions, at 5-9, D.I. 113.
73
   Id., at 6-7.
                                          15
back to New jersey if they intended to preserve them, just as Kunkel claimed she

did with the files of customers whose work was still under warranty.74

      The State’s Second Motion for Sanctions alleges what it describes as the

Defendants’ continued misconduct since the Court held a status conference on

January 19, 2022.75 It claims newly demonstrated spoliation of evidence and

discovery abuse.76 In particular, the Second Motion focuses on files Kunkel claims

she withheld from the storage container. The State represents that those documents

do not appear to be included in an approximately 38 gigabyte flash drive the

Defendants “dumped” on the State, nor have the Defendants explained what

happened to those files.77    The State references the Defendants’ “history of

dilatoriness in this litigation” and their “willfulness and bad faith in failing to

provide discovery” and argues that nothing less than default would be a meaningful

sanction.78

      Based on Kunkel’s deposition testimony, the State’s Third Motion to Compel

Discovery seeks: “(1) files that Defendant Kunkel avers that she withheld from the

storage container; material the Defendant Kunkel states that she has been storing on

a hard drive in her kitchen drawer; and (3) a letter that Defendant Kunkel claims to

74
   Id., at 7.
75
   Pl.’s Second Mot. for Sanctions, D.I. 90.
76
   Id., at 1.
77
   Id., at 4.
78
   Id., at 7.
                                         16
have provided in discovery and that cuts to the heart of the issues in this case.”79

The “letter” is the so-called “exciting news” letter that Kunkel testified went out to

all current customers advising them that CTRD would be moving to New Jersey,

but would continue to service them.80 The State represents that none of these

materials have been produced as of the date of the motion (December 9, 2021)

despite defense counsel’s repeated broken pledges to retrieve the hard drive, review

it for production, and produce discoverable the materials on it.81

      As noted, the Defendants did not respond to the State’s First Motion for

Sanctions and its Third Motion to Compel by December 31, 2021 as ordered by the

Court.82 Finally, after another conference with counsel, the Defendants responded

to both motions on January 20, 2022.83

      In response to the First Motion for Sanctions, the Defendants maintain that

they did not intentionally or recklessly cause the destruction of evidence.84 Instead,

they argue that the undisputed fact that they placed the items in a storage container

to which they intended to return refutes the conclusion that they intended the

79
   Pl.’s Third Mot. to Compel, at 2, D.I. 83.
80
   Id., at 4.
81
   Id, at 2-3.
82
   D.I. 79.
83
   Defs.’ Resp to Pl.’s Mot. for Sanctions, D.I. 82; Defs.’ Resp. to Pl.’s Third Mot.
to Compel, D.I. *3.
84
   Defs.’ Resp. To Pl.’s Mot. for Sanctions, at 2-3, D.I. 82.
                                          17
documents to be destroyed.85 Further, their actions were not reckless because they

were unaware that the storage container was subject to leaking. 86 Finally, they

argue that the destroyed materials were not relevant to an existing legal dispute at

the time of their destruction, nor did the Defendants have any duty to preserve

them.87

      The Defendants’ Response to the State’s Third Motion to Compel Discovery

argues that while they may have been poor record keepers, their actions do not show

that they are resisting the discovery process.88 With respect to the particular items

the State seeks, the Defendants argue that items that were destroyed cannot be

produced; the hard drive is in the possession of counsel and will be produced no

later than January 21, 2022; and the “exciting news” letter would have been in

documents already produced if they retained a copy.89

      The State’s Second Motion for Sanctions was filed on February 15, 2022.90

The Defendants did not file a response to that motion. Instead, the Court scheduled

an evidentiary hearing on both motions for sanctions and the State’s Third Motion

85
   Id.
86
   Id.
87
   Id., at 3.
88
   Defs.’ Resp to Pl.’s Third Mot. to Compel, at 1-2, D.I. 83.
89
   Id., at 2-3.
90
   Pl.’s Second Mot. for Sanctions, D.I. 90.
                                         18
to Compel Discovery.91 At the hearing, the Defendants maintained that they have

already produced everything they retained from the storage unit.92

       In their post-hearing submission, the Defendants acknowledge that

documents destroyed by water damage likely would have been relevant to this

litigation, but they reiterate their position that they did not intentionally or recklessly

destroy evidence.93 They also dispute the State’s argument that their failure to parse

through the water damaged materials to attempt to salvage relevant documents is

evidence of the ill intent necessary for spoliation.94 Finally, on the issue of

spoliation, the Defendants maintain that, if the Court were to impose sanctions for

spoliation, the proper sanction would be appropriate adverse inference

instructions.95   Lastly, with respect to document production, defense counsel

accepts responsibility for slow and delayed production, and for his failure to

“properly record the mailing” of the Defendants’ supplemental production.96

                     IV. STANDARD AND SCOPE OF REVIEW

       Sanctions for spoliation of evidence are appropriate “where a litigant

intentionally or recklessly destroys evidence, when it knows that the item in

91
   D.I. 94.
92
   Tr. Evid. Hrg, Apr. 22, 2022, at 69-70.
93
   Defs.’ Resp. to Pl.’s Mem. in Support of Mots. For Sanctions, D.I. 116.
94
   Id., at 3-4.
95
   Id., at 4.
96
   Id., at 5.
                                         19
question is relevant to a legal dispute or it was otherwise under a legal duty to

preserve the item.”97 Once the Court determines that spoliation has occurred, the

Court looks to the following factors approved in Minna v. Energy Coal S.p.A.98 to

determine an appropriate sanction:

             (1) the extent of the party’s personal responsibility; (2)
             the prejudice to the adversary caused by the failure to meet
             scheduling orders and respond to discovery; (3) a history
             of dilatoriness; (4) whether the conduct of the party or the
             attorney was willful or in bad faith; (5) the effectiveness
             of sanctions other than dismissal, which entails an analysis
             of alternate sanctions; and (6) the meritoriousness of the
             claim or defense.98

      “When faced with a motion to compel discovery, the Court determines

whether the discovery sought is reasonably calculated to lead to admissible, non-

privileged evidence.”99    The scope of permissible discovery is “broad” and

objections to discovery requests, in general, will not be allowed. 100 The objecting

party bears the burden to show why the information is improperly requested.101

Once an objection is lodged, “the party seeking the information must provide some

minimal explanation as to why the discovery satisfies the requirements of relevance

97
   Sears, Roebuck & Co. v. Midcap, 893 A.2d 542, 552 (Del. 2006); Foreman v.
Two Farms, 2018 WL 4846341 (Del. Super. Ct. 2018)
98
   984 A.2d 1210, 1215 (Del. 2009).
99
   Henlopen Hotel, Inc. v United National Ins. Co., 2019 WL 3384843 (Del.
Super. Ct. July 26, 2019) (citing Del. Super. Ct. Civ. R. 26(b)(1)).
100
    Id., (citing Hunter v. Bogia, 2015 WL 5050648, at *2 (Del. Super. Ct. July 29,
2015).
101
    Id.
                                         20
and conditional admissibility.”102 Superior Court Civil Rules 16(f) and 37 authorize

the Court to sanction a non-compliant party by: (1) requiring the party or attorney

to pay the moving party “reasonable expenses in obtaining the order;” 103 (2)

“deem[ing] the disputed facts to be established, prohibit[ing] the party from

introducing evidence on the disputed facts, strik[ing] all or portions of the

pleadings, or enter[ing] a default judgment against the disobedient party;104 and (3)

require[ing] the party or the attorney representing the party, or both, to pay the

reasonable expenses on any noncompliance with [the ] the Rule” for failing to obey

a scheduling order.105 The trial court has discretion in selecting the appropriate

sanction, but the sanction of dismissal should not be applied except as a last

resort.106 In exercising its discretion in choosing an appropriate sanction, the Court

considers the same six factors it considers when imposing sanctions for spoliation

of evidence.107

                                    V. DISCUSSION

      A.     The State’s First Motion for Sanctions for Spoliation of Evidence.

102
     Id.(citing Hunter, at *6, n.54).
103
     Super. Ct. C. R. 37(a)(4)(A).
104
     Super. Ct. C. R. 37(b)(2).
105
     Super. Ct. C. R. 16(f).
106
     Drejka v. Hitchens Tire Service, Inc. 15 A.3d 1221, at 1224 (Del. 2010).
107
    Id. (citing Minna, at 1215).
                                           21
      The State’s First Motion for Sanctions concerns materials the Defendants put

in the storage container when they lost their lease. Most of the facts are not in

dispute. It appears that when the Defendants lost their lease and ceased Delaware

operations they simply “heave ho-ed” documents, including paper file folders for

each customer, customer complaints, warranty documents, emails, equipment,

product, and other company property into an outside storage container.108 Kunkel

and Randall were in a rush and did not document, log, or otherwise inventory what

they put in the container. It is obvious that relevant, discoverable materials were

among the items the Defendants put into the container. When they returned to the

container the next spring, the Defendants discovered that snow and rain had

penetrated container causing extensive water damage to the contents. Instead of

making any attempts to salvage any of the documents or materials relevant to their

Delaware business, the Defendants simply discarded virtually everything, including

all of the documents. There was no attempt made to salvage anything, nor did the

Defendants make any effort to document what they discarded.

108
    Attached to the State’s First Motion for Sanctions is a photograph of three
virtually identical storage containers. The Court assumes one of them is the one
into which the Defendants put the materials. The containers appear to be the type
used for shipping on cargo vessels or on trains. Pl.’s (First) Mot. for Sanctions, at
Ex. 1, D.I. 75.
                                         22
          Despite the Defendants’ tepid contention to the contrary,109 there is more

than ample evidence in the record for the Court to conclude that the Defendants

knew that documents they put in the storage container were relevant to legal

disputes or that they were otherwise under a legal duty to preserve them. The First

Motion for Sanctions identifies a number of customers who had complained to the

BBB, to the CPU, and/or to the Defendants, and who either threatened or initiated

legal action.110 Notably, the Defendants were aware of most if not all of these

complaints because they responded to them in one form or another.111 Further, the

First Motion for Sanctions identifies credible reasons to believe that documents

related to these complaints were in the storage container.112

109
    See, Defs.’ Resp. to Pl.’s Mot. for Sanctions, at 3-4, D.I. 82.
110
    Pl.’s (First) Motion for Sanctions, at 9-16, D.I. 75 (citing customers Joseph
Crawley who complained to the BBB and the CPU; Charles Johnson who
complained to the BBB and the CPU; William T. Johnson who complained
Defendant Randall, CTRD, threatened legal action, and filed an action in JP Court,
although the Defendants were unable to be served; Rosemary and John Peden who
complained to CTRD and the CPU; Kim Calvetti who complained to the BBB,
threatened legal action, and filed an action in JP Court; Velma Masto who
complained to Defendant Randall in writing, copying the BBB, and directly to the
BBB; Thomas Shrewsbury who complained to CTRD, saying he would complain
to the BBB and consult an attorney; Bill and Donna Gunkel who complained to
CTRD and the BBB; Irene Shestock who complained to CTRD; and Stephen Davis,
whom Defendant Kunkel knew was an attorney, who complained to CTRD and
threatened to escalate his complaint.)
111
    Id.
112
    Id.
                                          23
      All of the foregoing brings the Court to the most substantially controverted

issue – the Defendants intent. The State claims the Defendants intentionally

destroyed relevant documents, if not by the manner in which they discarded them,

then certainly by their failure to make any salvage attempts after discovering the

damage the snow and water damage had caused. The Defendants contend that they

would not have put the documents in the container in the first place if they intended

to destroy them. Further, since the documents were destroyed without ill intent,

discarding the destroyed documents is immaterial to the Defendants intent.

      In the spoliation context, Delaware courts have defined recklessness as a

conscious awareness of the risk that one’s action or inaction may cause evidence to

be despoiled.113   Intentional destruction means that the spoliator acted “with

purpose.”114   The Court is not persuaded by the State’s arguments that the

Defendants intentionally destroyed discoverable materials. There were obvious

options available to the Defendants to destroy the documents if that was their intent.

Keeping them in a storage container was not one of them. Contra the State’s

contention, the Court finds that the Defendants’ failure to take steps to preserve the

113
    TR Investors, LLC v. Genger, 2009 WL 4696062 at *1 (Del. Ch. Dec. 9, 2009)
(citing Beard Research v. Kates, 981 A.2d 1175, 1192 (Del. Ch. May 29, 2009)
(“Reckless conduct reflects a knowing disregard of a substantial and unjustifiable
risk. It amounts to an ‘I don’t care attitude.’”).
114
    Id., at 1191.
                                           24
documents does not demonstrate the same purposeful state of mind as affirmatively

intending to destroy them.     Nevertheless, the Court does conclude that the

Defendants did act recklessly. It is difficult to imagine a clearer demonstration of

an “I don’t care attitude” than that demonstrated by the Defendants when they

cavalierly “heave ho’ed” important documents relevant to legal disputes or that they

otherwise were under a legal duty to preserve into an outdoor metal storage

container. They made no record or log of the documents, and, apparently the files

were not in any sort of cabinet or container which might have withstood the leaks

that later occurred. The Defendants exacerbated their reckless behavior when, some

six months later, after discovering that snow and rain had penetrated the storage

container, they made no effort to salvage any potentially salvageable documents.

Accordingly, the State’s First Motion for Sanctions for Spoliation of Evidence is

GRANTED.

      B.     The State’s Second Motion for Sanctions for Spoliation of
             Evidence and Discovery Abuse.
       The State’s Second Motion for Sanctions for Spoliation of Evidence and for

Discovery Abuse addresses discoverable materials purportedly withheld from the

storage container by Defendants. Specifically, the Motion recites that defendant

Kunkel “testified, repeatedly, that she withheld from the storage container hardcopy

files of customers within the last two years whose work was still within

                                        25
warranty.”115 According to the State, none of these files, save one, have ever been

produced.116 In their response to the Court’s inquiry concerning the Defendants’

August production, the Defendants do not dispute that they have not produced the

files purportedly withheld from the storage container.117 They also advise the Court

that they have provided all information and documents in their possession. 118 The

Defendants do not attempt to reconcile Defendant Kunkel’s previous testimony that

she withheld files with their failure to produce those files. The files obviously

existed at one time, but where they are now, or what happened to them is unknown.

      Several hypothetical possibilities present themselves, all of which point to

spoliation.119 First, Defendant Kunkel either mistakenly or falsely testified that the

files were withheld from the storage container when in fact they were among the

documents put in the container. In that instance, the Court’s determination that the

defendants recklessly despoiled relevant, discoverable materials applies to these

files as well. Second, the files were withheld from the container, but were lost

115
    Pl.’s Second Mot. for Sanctions, at 2, D.I. 90.
116
    See, D.I. 125.
117
    See, D.I. 129. In fact, the response does not speak directly to the question of
whether the withheld files have been produced, but it does describe what was
produced and the files are not identified in the description of the production. Nor
do the Defendants contest the State’s assertion that the files have not been produced.
118
    Id.
119
    The fact that the Court has identified certain hypothetical possibilities should
not be taken as an expression of a conclusion by the Court that any one of them is
the true explanation for the Defendants’ failure to produce the files.
                                          26
somehow or intentionally destroyed.        In that instance, the Defendants either

recklessly or intentionally despoiled the evidence. Finally, the files were not

destroyed and remain in the Defendants’ possession. In that instance, the Court

would consider the failure to produce the files despoliation, at a minimum.

Therefore, in the absence of any other explanation proffered by the Defendant’s,

the State’s Second Motion for Sanctions and Discovery Abuse is GRANTED.

      C.     The State’s Third Motion to Compel Discovery.

      The State’s Third Motion to Compel Discovery seeks an order compelling

the Defendants to “further respond to the State’s First Requests for production of

Documents Directed to Defendants.”120 In particular, the State seeks to compel

production of: (1) the files that Defendant Kunkel testified she withheld from the

storage container; (2) additional materials from a hard drive defendant Kunkel

testified she kept in her home kitchen drawer; and (3) the so called “exciting news”

letter sent to customers advising them that CTRD would be moving to New Jersey

and that it would continue to service their warranties.121 After considerable motion

practice, a hearing, and a directive from the Court,122 the Defendants served on the

State supplemental discovery responses.123 The Defendants maintain that they have

120
    Pl.’s Third Mot. to Compel, D.I. 74.
121
    Id.
122
    See, D.I. 124.
123
    D.I. 125.
                                           27
no more information or documents in their possession.124 The State represents that

the August 5th production did not include what it considers the most important

documents it seeks - the files purportedly withheld from the storage container.125

Those files apparently are irretrievably missing. The Court considers the other

materials that were produced in the August 5th supplemental production to have

been produced in response to the State’s Third Motion to Compel Discovery,

rendering that motion MOOT.

         D.       Sanctions.

          The Court next turns to the imposition of appropriate sanctions. The State

ask the Court to grant it a default judgment and award it attorney’s fees for its

motions. With respect to spoliation, the Court has considered the six Minna factors:

(1) the extent of the Defendants’ personal responsibility; (2) the prejudice to the

State caused by the failure to meet scheduling orders and respond to discovery; (3)

the Defendants’ history of dilatoriness; (4) whether the Defendants’ conduct was

willful or in bad faith; (5) the effectiveness of sanctions other that dismissal after

analyzing alternate sanctions; and (6) the meritoriousness of the defense.

124
      D.I. 129.
125
      D.I. 128.
                                          28
      First, the Defendants bear full individual responsibility for despoiling the

evidence. The evidence was in their exclusive custody and control and it was their

reckless actions or lack of action that resulted in depriving the State of material

evidence to which it was entitled.

      Second, the State has suffered considerable prejudice caused by the

Defendants’ failure to meet scheduling orders and deadlines as evidenced, for

example, by the need to file two motions for sanctions and three motions to compel

discovery. Additionally, depositions of the defendants were postponed due to

untimely discovery production. The TSO had to be amended repeatedly due to the

defense’s inability to meet deadlines. Further, the manner in which the defense

provided discovery was prejudicial to the State. Instead of responding to specific,

itemized requests for production, the defense “dumped” an unedited hard drive on

the State that contained irrelevant, personal, and privileged material. Finally, the

spoliation of evidence has prejudiced the State in the presentation of its case. The

State has been unable to obtain customer files (which include records of complaints,

complaint dispositions, and warranty information), product records related to the

State’s allegation that the Defendants substituted inferior product for the brand

                                        29
name product from CTI promised to customers, and bank records. The State deems

these records “critical to the heart of [its] case” and “irreplaceable.”126

          Third, the extensive history of dilatoriness on the part of the Defendants

and/or defense counsel is set out in Section II, above, and need not be repeated here.

          Fourth, the Court makes no determination as to whether the conduct of the

Defendants or defense counsel was willful or in bad faith. At a minimum, their

conduct failed to meet the expectations the Court has for litigants and attorneys.

          Fifth, sanctions other than default the Court has analyzed include: (1)

monetary sanctions; (2) deeming the disputed facts to be established or prohibiting

the defense from introducing evidence on the disputed facts; and (3) giving

appropriate instructions to the jury that it should draw certain inferences adverse to

the defense. Here, the Court finds that the extreme remedy of default can be avoided

for now, and the defense can be effectively sanctioned, by a combination of all three

of these lesser sanctions.

          With respect to monetary sanctions, the Court orders the Defendants and/or

defense counsel to pay the State’s attorney’s fees incurred in connection with

litigating the State’s First and Second Motions for Sanctions for Spoliation of

Evidence. The Court directs the Defendants and defense counsel to attempt to

126
      Tr. Evid. Hrg., Apr. 22, 2022, at 93-97, D.I. 115.
                                            30
apportion their respective responsibilities for the monetary sanction. Should the

Defendants and defense counsel fail to agree on their respective portions of the

defense’s obligation for the State’s attorney’s fees, the Court will conduct a hearing

after the case is resolved. The Court does not order attorney’s fees in connection

with the State’s Third Motion to Compel Discovery because the Court deems that

motion moot. By imposing monetary sanctions, the Court intends to deter future

misbehavior by the defense and to compensate the State for its efforts in seeking

sanctions.

      As an additional sanction, the Court is prepared to deem certain contested

facts related to the spoliated evidence to be established and/or to prevent the defense

from introducing evidence on certain disputed facts related to the spoliated

evidence.    The Court also will give the jury appropriate adverse inference

instructions related to the spoliated evidence. The parties are directed to meet and

confer so as to submit with the pretrial stipulation: (1) a stipulation of facts deemed

established and/or evidence the defense is precluded from introducing; and (2)

proposed adverse inference jury instructions. If the parties are unable to agree on a

stipulation of facts and adverse inference jury instructions, they shall submit their

respective proposals along with the pretrial stipulation required by the TSO. In this

way, the defense will be prevented from benefitting from its spoliation and the State

will not be disadvantaged by it.

                                          31
         Sixth, the defense represents that its defense is twofold – first, that certain

allegedly injured parties were out of warranty, both as to time and scope, and

second, CTRD sought to remedy problems at every turn.127 But it appears that the

Defendants have caused any records that might support those defenses to be

unavailable to the State for inspection and/or cross-examination of the Defendants.

                                        VI. CONCLUSION

         THEREFORE, Plaintiff State of Delaware, ex rel. Kathleen Jennings,

Attorney General of the State of Delaware’s First and Second Motions for Sanctions

for Spoliation of Evidence are GRANTED. The Court imposes the following

sanctions against Defendants Concrete Technology Resurfacing & Design, Inc.,

Guinevere M. Kunkel, Paul E. Randall, and/or John V. Work, Esquire:

         1.         The Defendants, and/or John V. Work, Esquire shall pay the State its

reasonable attorney’s fees incurred in connection with litigating State’s First and

Second Motions for Sanctions for Spoliation of Evidence. The State shall submit

the amount of attorney’s fees it requests together with appropriate supporting

information no later than 15 days from the date of this Order. The defense shall

submit any objections to the State’s request no later than 15 days after the State’s

submission.

127
      Id., at 82.
                                              32
       2.     The Court will deem certain disputed evidence related to the spoliated

evidence established and/or preclude the defense from introducing evidence related

to the spoliated evidence after receiving submissions from the parties along with

the pretrial stipulation.

       3.     The Court will give the jury appropriate adverse inference instructions

related to the spoliated evidence after receiving proposed instructions from the

parties along with the pretrial stipulation.

       4.     The State’s Third motion to Compel Discovery is MOOT.

IT IS SO ORDERED.

                                                        /s/ Ferris W. Wharton
                                                        Ferris W. Wharton, J.

                                          33