IN THE TENTH COURT OF APPEALS
No. 10-16-00420-CV
IN RE XTERRA CONSTRUCTION, LLC, VENTURI CAPITAL, INC. D/B/A ARTISAN CABINETS AND KEITH D. RICHBOURG
Original Proceeding
OPINION
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.
Factual Background
Xterra entered into a commercial lease contract with Daniel Hull and William H.
Beazley, Jr., to rent the warehouse located at 224 Kelly Drive in Waco, Texas. Richbourg,
who testified that he is the sole owner of both Xterra and Venturi, signed the lease contract as Xterra’s representative. Richbourg also signed a personal guaranty 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, the term of the
lease contract was again extended, ultimately to 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 tenants 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. Soon after receiving the
email, Williams spoke with Richbourg and scheduled to meet him at the warehouse later
that day. Richbourg told Williams that the warehouse was secured. 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, before 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., LLC Page 2 Williams testified that she then met Richbourg on October 20 at the warehouse
and that everything was secured at that time. Richbourg unlocked the door to the
warehouse with a key, and they entered and walked through the building. There 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
testified 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.” Williams stated that she took
photos of the scene that day but that neither 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 23, 2014 and
suggested that Hull might want to have a representative from his insurance carrier look
at the warehouse as well. 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 taken 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 had
In re Xterra Constr., LLC Page 3 arranged to meet Richbourg 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 proceeded with his investigation, which Reil confirmed. Richbourg stated that
Reil had told him that 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 photos 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
paint room, one of which—AM1—was located at the fire’s point of origin. Reil testified
that it 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 &
Residential Solutions (Emerson) is the manufacturer of the portable air movers.
Reil testified that he eventually stopped his inspection because he recognized that
there were things that others might be interested in examining before the scene was
altered. Reil acknowledged that when he stopped his inspection, he made an effort 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, Reil
In re Xterra Constr., LLC Page 4 replied that 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 locked 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 Reil 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 this directive, stating that Reil instructed him
not to go into the finishing room and not to disturb the fire scene. Richbourg was sure
that he conveyed the 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 point, 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 that there were anomalies on AM1
that he believed were responsible for the fire. Williams testified that she thereafter
In re Xterra Constr., LLC Page 5 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 pursuing 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 the time and
recommended that Hull hire Johnson.
Johnson testified that on the morning of November 6, 2014, he spoke with
Williams, told 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 of 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 preserve 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 a
In re Xterra Constr., LLC Page 6 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 acknowledged 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” because 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 she 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 after
the meeting, 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
warehouse 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 workers
to stop, which they did. Johnson explained to them that it was a fire scene and that they
needed to stop immediately. According to Johnson, one of the workers told him that they
were there to clean the entire warehouse. Johnson then asked the workers who had
instructed them to be there, and they acknowledged that Richbourg had.
In re Xterra Constr., LLC Page 7 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 standing 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 that there
had been any charred materials was in the room where the fire had occurred and that any
charred materials must therefore have come from that room. Johnson stated that the
workers eventually moved away from the fire scene, and Johnson then went directly back
to his office.
Richbourg acknowledged that some sort of miscommunication 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. After 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
of November 6, he therefore met with several workers at the warehouse. Schraeder told
In re Xterra Constr., LLC Page 8 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 out 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 Schraeder that no
one was to go into the area where the fire had occurred. Schraeder stated that he 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 further explained that there
was nothing for the workers to salvage out of the room and that he 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
agreed that the workers disregarded 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 one 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 that it was expedient to transport
the materials through the room where the fire occurred. Wilkins stated that nothing was
In re Xterra Constr., LLC Page 9 taken out of the paint room though. The only thing that was thrown into the dumpster
that day was water-damaged or charred wood.
Johnson 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 also called Williams and left her a voicemail. The spoliation letter states: “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
the warehouse because what he had seen was contrary to what Williams had represented
to him. The spoliation letter states 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 states:
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 Warehouse 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 protect 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 replied, stating
that he needed confirmation from Williams that she had told the Xterra Defendants to
In re Xterra Constr., LLC Page 10 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 had forwarded his letter to
Richbourg and “ha[d] a call into him.” Williams stated 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 the spoliation letter to
Richbourg at 8:07 a.m. on November 10. Williams testified that that was the only way
Richbourg would have received the 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 had
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
proceeded 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 evidence
In re Xterra Constr., LLC Page 11 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.
After Richbourg left the warehouse, he emailed Williams, notifying her that he had
found AM2 on the floor about ten feet from its original location 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 terminated on November 14, 2014 and that Hull
needed to get his investigator out to the warehouse for his own investigation.
Reil testified that on November 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 that the fire scene had been
significantly altered since October 23. Two wall fans had been removed. The area that
In re Xterra Constr., LLC Page 12 Reil had identified as the point of origin of the fire had been swept. Reil stated, however,
that he did not consider that alteration of the scene to be very serious. Similarly, AM2
had been moved. But 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 considered 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 missing; 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. When 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 testified that all types of metal in the warehouse had
disappeared since the fire; therefore, he speculated that AM1 was pilfered 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 photo 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 Defendants had already started sweeping and moving the area and
accidentally swept up AM1 as part of that process than that AM1 was stolen. Ellington
In re Xterra Constr., LLC Page 13 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., estate1
and as co-trustee of the Bertie Lea Beazley 1998 Family Trust, (collectively, Hull and
Beazley) filed suit against the Xterra Defendants, asserting negligence and breach-of-
contract causes of action against them. 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 Beazley then filed a motion for sanctions against the Xterra Defendants
for spoliation of evidence. After several evidentiary hearings in which Emerson also
participated, the 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 possession 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., LLC Page 14 (3) that Plaintiffs [Hull and Beazley] and Emerson Defendants have been deprived by the Xterra Defendants’ 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 ability 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 Xterra 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 Court 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 spoliation 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 related to the filing of PLAINTIFFS’ MOTION FOR SANCTIONS FOR SPOLIATION OF EVIDENCE and hearing on the same;
(5) Emerson Defendants are hereby awarded $20,000.00 for reasonable attorney’s fees and expenses related to the filing of PLAINTIFFS’ MOTION FOR SANCTIONS FOR SPOLIATION OF EVIDENCE and hearing on the same.
In re Xterra Constr., LLC Page 15 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 TEX. R. APP. P. 52. The Xterra Defendants also filed a motion
for stay pending disposition of their 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). Hull
and 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 Court] 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., LLC Page 16 the party who failed to produce evidence must have had a duty to preserve the 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. (citation 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, the 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 Beazley 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 Xterra Defendants contend that any duty that they
had was therefore not triggered until “after the disappearance 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.
The 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 were
In re Xterra Constr., LLC Page 17 potentially pursuing a claim against the Xterra Defendants, and no 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 Defendants) 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
Hull and Beazley argue that the Xterra Defendants nevertheless reasonably should
have known much sooner than November 10 that there was a substantial chance that a
claim would be filed. Hull and Beazley first contend that 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. Walker court then concluded that based on the record as a whole, including the
In re Xterra Constr., LLC Page 18 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.
The 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 this case
does not involve a fatality or severe personal injury. Instead, this case involves property
damage. Furthermore, the evidence indicates that the damage was confined to one room
of the warehouse, not the entire warehouse. Accordingly, the evidence does not support
that a reasonable person would conclude 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 Defendants 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
condition 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 to
In re Xterra Constr., LLC Page 19 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 that 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 they
pursued their own insurance claim within forty-eight hours of the fire, Reil and Williams
instructed Richbourg to preserve the scene, and Richbourg 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 filed 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 owners of personal property in the warehouse, it
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 Beazley, 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 substantial
In re Xterra Constr., LLC Page 20 chance that a claim would be filed 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, there is no dispute that by the morning of 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 against them, 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 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 them. Emerson has not filed any claim against the Xterra
Defendants, and the Xterra Defendants have not filed any claim against Emerson. See
TEX. CIV. PRAC. & REM. CODE ANN. § 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 have filed a claim against
In re Xterra Constr., LLC Page 21 Emerson, and the issue is whether the Xterra Defendants had a duty to 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 would 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 against 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 of 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 against 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 evidence
In re Xterra Constr., LLC Page 22 from the fire scene for Emerson against Hull and Beazley. See Petroleum Solutions, 454
S.W.3d at 488. Moreover, in light of the foregoing, we 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 Adequate Remedy 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. TEX. R. CIV. 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 on 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, when a trial court imposes sanctions 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 does not result in
rendition of an appealable judgment, then the eventual remedy 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., LLC Page 23 The Xterra Defendants contend that the trial court ordered death penalty sanctions
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 claims against the Xterra
Defendants, the trial court also ordered that the portion of the Xterra Defendants’
pleadings denying the causation element of Hull’s and Beazley’s claims against them is
stricken and that the portion of the Xterra Defendants’ pleadings in which they designate
Emerson as a responsible third party is stricken.
Hull and 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 elements 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 remedy 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 to
vacate the “Order on Motion for Sanctions for Spoliation of Evidence” that was signed
In re Xterra Constr., LLC Page 24 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 Justice Gray, Justice Davis, and Senior Justice Scoggins2 (Chief Justice Gray dissenting with opinion) Petition granted Opinion delivered and filed May 15, 2019 [OT06]
2The Honorable Al Scoggins, Senior Justice of the Tenth Court of Appeals, sitting by assignment of the Chief Justice of the Texas Supreme Court. See TEX. GOV’T CODE ANN. §§ 74.003, 75.002, 75.003.
In re Xterra Constr., LLC Page 25