Terra Management Group, LLC v. Keaten.

2025 CO 40. 23SC272. Sanctions—Spoliation—Adverse Inference—Causation—Duty to Preserve Evidence—Pending or Reasonably Foreseeable Litigation.

June 23, 2025

The supreme court held that a court may sanction a party for the destruction of evidence if the party knew or should have known that (1) litigation was pending or reasonably foreseeable and (2) the destroyed evidence was relevant to that litigation. Accordingly, the court further held that a party has a duty to preserve evidence relevant to litigation when the party knows or should know that litigation is pending or reasonably foreseeable. The court provided considerations for determining whether litigation is reasonably foreseeable and for imposing sanctions for the destruction of evidence.

The court declined to remand for application of this standard because it concluded that any error by the trial court in applying an adverse inference against the Keatens for the destruction of evidence in this case was harmless. The court therefore affirmed the court of appeals’ judgment.