The Plaintiffs, Wynmoor Community Council, Inc. et al., (Wynmoor) filed a Complaint alleging breach of an insurance contract against Defendant, QBE Insurance Corporation (QBE), in Broward County, Florida on October 22, 2010. (DE 1-4) On December 10, 2010, the case was removed to this Court. (DE 1) The Plaintiffs' Corrected Fourth Amended Complaint claims that they are entitled to payment for losses sustained as a result of damage caused by Hurricane Wilma on October 24, 2005. (DE 67) QBE filed its Answer and Affirmative Defenses to the Fourth Amended Complaint on February 1, 2012. (DE 72)

The instant motion was filed on April 13, 2012. The parties' briefs set forth the background and facts supporting their respective positions. QBE alleges that during the course of discovery, it requested documents regarding the condition, repair, replacement and maintenance of the insured buildings on the Wynmoor property. The documents requested, included meeting minutes, unit owner files, work orders, complaints, notices, proposals, bids, estimates, checks and pre-hurricane depictions of the buildings at Wynmoor Village. In response to its document requests, QBE has received very few work orders pre-dating the hurricane.

QBE contends that the Plaintiffs destroyed work orders pre-dating Hurricane Wilma, and, therefore has been deprived of evidence crucial to its defense that the alleged hurricane damage in this case was the result of excluded causes such as wear and tear, decay, deterioration, long term seepage or leakage, or faulty maintenance or repair. In support of its allegation of document destruction, QBE points to its accidental discovery that in the two weeks prior to its scheduled on-site document inspection at Wynmoor in October 2011, an unusually large number of documents had been shredded. Because of the timing of the shredding, and the fact that few pre-hurricane work orders have been produced by the Plaintiffs, QBE infers that the bulk of such work orders must have been destroyed at that time. It contends that without the missing work orders it is unable to support its affirmative defenses related to the pre-existing condition of the Wynmoor properties. QBE further asserts that the Plaintiffs acted in bad faith by destroying the documents and argues that the most severe sanction of dismissal is warranted under the circumstances. In the alternative, QBE requests the lesser sanction of a negative inference.

The Plaintiffs respond that they did not intentionally or negligently destroy any relevant evidence. According to the Plaintiffs, work orders are generated for minor maintenance issues; major maintenance problems are contracted out, and the records evidencing those repairs are maintained indefinitely. Therefore, assuming arguendo that work orders were destroyed, QBE was not prejudiced because the work orders were not the sole source or even the best source of information regarding the pre-hurricane condition of the buildings. Additionally, the Plaintiffs assert that as its insurer for the ten years prior to Hurricane Wilma, QBE had conducted multiple of its own pre-Wilma underwriting inspections of the property in connection with writing the insurance policies. Finally, although work orders are routinely purged after seven years, QBE had access to any documents it needed in the year after the storm, when QBE was conducting its claim investigation.

*2 In it's reply brief, QBE points out that the Plaintiffs were responsible for preserving the work orders. In fact, a litigation hold should have been implemented. The Plaintiffs should not be permitted to shift the responsibility onto QBE for not requesting the work orders sooner. Further, QBE contends that the missing work orders contain information critical to its affirmative defenses and is prejudiced without them. These documents would show, for example, the number of window leaks and their magnitude in the years prior to Hurricane Wilma. The relevance of this information is critical in light of the fact that, approximately $60 million of the Plaintiffs $126 million claim, is for replacement of windows necessitated by water penetration. Several of the few pre-Hurricane Wilma work orders that have been provided, show damage to windows, sliding glass doors and roofs, all damage that the Plaintiffs now attribute to Hurricane Wilma. Finally, QBE reiterates that the circumstances surrounding the destruction of the documents demonstrate bad faith.

The undersigned conducted an evidentiary hearing on the motion on June 6 and 7, 2012, during which each of the parties called several witnesses. However, prior to the start of the hearing, QBE's lawyers revealed that the Plaintiffs had just provided them with a box of documents containing work orders from prior to 2004.[1] Many of the documents contained in the box were in manila folders placed in green hanging folders designed to hang in a filing cabinet. Plaintiffs' counsel indicated that they were located in plain view in the storage shed a few days earlier. The box containing the documents had been found near the entrance to the shed, collapsed under some old human resources manuals. During the course of the hearing, a number witnesses testified as to the significance of the documents and the circumstances surrounding their discovery.

QBE called as its first witness, Christopher Rolf. Mr. Rolf testified that he is an attorney licensed to practice in the state of Florida. He has been employed by Deborah Bain, P.A. since March of 2005, where his duties involve legal research and the drafting of motions and pleadings. After Hurricane Wilma, Mr. Rolf and other attorneys working for Ms. Bain regularly went to condominiums to inspect records in connection with pre-litigation investigations or post-litigation discovery. He estimated that he has participated in 25-40 such inspections since Hurricane Wilma.

Mr. Rolf described the procedure that he and his co-workers followed in conducting document inspections. Once an inspection was scheduled, they would arrive as a team with their copy equipment. Mr. Rolf would make a detailed list of every item provided. He would go through each of the boxes, some of which might be in pristine condition, while others might be crushed or ripped. The team would be provided with memoranda setting forth the procedures to be followed during the inspection. The team would be looking for documents evidencing claimed damage or damage pre-existing the claim. They would request records dating back to the inception of the condominium, including meeting minutes, invoices, correspondence, work orders, incident reports, inspection logs, and financial statements.

Mr. Rolf stated that work orders are important because they provide more specific detail regarding a certain unit or portion of a building than other documents would supply. Work orders also would provide historical information important to establish wear and tear, deterioration and decay. A work order generally is drafted by someone in the maintenance department and details damage or describes the condition requiring repair, and as well as the inspection results. Mr. Rolf testified that contemporaneous information contained in work orders would provide the best evidence of the condition of the property at the time of Hurricane Wilma.

*3 Next, Mr. Rolf testified about the document inspection at Wynmoor in October of 2011. He was part of the team sent to inspect documents and estimated that the process took from October 27, 2011, until right before Christmas; approximately a month and a half. The team, which consisted of at least two attorneys, and sometimes as many as six or seven people, was on site from 9:00 a.m. until 5:00 p.m. most weekdays, excluding holidays. Wynmoor advised the team where the documents were located. Mr. Rolf was the person who initially would go through the boxes in the storage area. After he determined that a box contained relevant documents, he would bring it to the rest of the team, and another team member would go through the box and copy any records deemed relevant. The team brought their own copiers to the site, and a voluminous amount of documents were copied by a copy service on machines the copy service brought to the site.

Mr. Rolf testified that documents were located in filing cabinets in the maintenance department, as well as in a storage room with two fenced areas that contained hundreds of boxes, and a storage shed located just outside of the maintenance building which also contained a large number of boxes. Additional documents were located in the administration building, including unit owner files, and binders of meeting minutes. Mr. Rolf made a list of all boxes containing materials that the team reviewed. The other team members also kept their own lists of boxes, binders or drawers that they reviewed. These lists were consolidated into a master list, consisting of all of the materials inspected. The master list was received as evidence at the hearing as Defendant's Exhibit 17.

Mr. Rolf related that among the documents the team inspected, a small number of work orders from prior to 2004 were found in three boxes. Two of the boxes were not labeled as containing work orders[2], and although the label on the remaining box did indicate that it contained work orders, it had only one work order which was dated prior to 2004. Mr. Rolf testified that he had never before seen the documents contained in the box produced by the Plaintiffs just prior to the hearing. He also stated that none of the work orders that were located during the inspection were in hanging folders. They were simply placed in boxes without folders or in plain manila folders. The work orders in the box of documents produced just prior to the hearing, were the type of relevant documents for which Mr. Rolf and his team were looking. In fact, based upon his brief review of what was contained in the box, he would have copied all of the documents inside.

Mr. Rolf testified that when the team was finished with a box, they would put a checkmark on a yellow post-it note and attach the note to the box. This procedure made it easier for them to locate the boxes they had not yet gone through.

On cross examination, Mr. Rolf described a room in the maintenance building referred to as the “Hurricane Wilma room.” He stated that the room contained documentation compiled by Wynmoor relating to the hurricane and the damage it caused.

Plaintiffs' Exhibits 7, 8, 9 and 10 were introduced into evidence as examples of work order completion reports. Each contained a short description of the nature of the problem reported. Mr. Rolf testified that some of the pre-2004 work orders located by his team during the inspection contained more detailed descriptions of needed repairs. Mr. Rolf understood that work order service requests were created first, and work order completion reports were completed after repairs had been completed. He added that a work order service request contained more detail than a completion report. In most instances, the completion reports and the service requests were stapled together. Mr. Rolf also testified that a summary was created for each document copied by the team.

*4 Mr. Rolf estimated that there were between 50 and 100 boxes in the storage shed. He stated that he did not remove and copy documents from every box, but he did look at the contents of each box to ascertain whether it contained relevant documents. Mr. Rolf observed that some of the boxes had been crushed. While at Wynmoor for the inspection, Mr. Rolf was not shown any electronically stored records. He stated that if the documents that were produced by Wynmoor at the hearing had been in the storage shed during the inspection, he would have made copies of them since they contain clearly relevant information. Finally, Mr. Rolf testified that on the first day at Wynmoor he became aware of an issue concerning potential shredding of documents.

QBE's next witness was Rona Smith. She testified that she is an attorney who was employed by Deborah Bain, P.A. from August 2004 until April 2012. She was responsible for scheduling document inspections and coordinating the inspections with co-counsel and opposing counsel. In connection with its representation of QBE, the Bain firm was involved in pre-suit work and early litigation, including discovery. While employed at the Bain firm, Ms. Smith participated in 30-50 document inspections,

Ms. Smith was involved in setting up the document inspection at Wynmoor in October of 2011, coordinating with the Plaintiffs' representative, Jelena Bulbujasic. Ms. Smith stated that she first tried to schedule the inspection for early October, but was advised that Michael Duffy of Childress Duffy law firm had to attend the inspection, requiring that it be scheduled for later in the month. However, Mr. Duffy was not present for the inspection when it occurred.

Ms. Smith believes that documents establishing the history and maintenance of the property can make or break a case. She stated she also is interested in records reflecting which vendors were used by Wynmoor, as well as documents identifying board members who should be deposed.

Ms. Smith described the “hurricane room” located in the maintenance building as very small and containing a large number of binders. The inspection team set up in the hurricane room, but owing to its small size, only two or three people could work in there at a time. There was another room within the maintenance building called “the cage” and an outside shed, both of which also contained documents.

Ms. Smith outlined the procedure followed by the document team during the inspection. She stated that each team member would make his or her own list of boxes they inspected. After a box was examined, the team member would put a post-it note that said “done” on the box. That box would then be added to the team member's list. When the individual's list was complete, it would be given to Chris Rolf, who would check it off of a master list that he maintained.

Ms. Smith testified that the team encountered a problem when inspecting documents in a file cabinet located in Mary Marie Connelly's office within the maintenance building. Ms. Smith learned that her co-workers had not been given access to the documents in Ms. Connelly's file cabinet. They were able to see the documents only when Ms. Connelly brought them out and handed them to the team members. This was troublesome because there was no way to be certain that the team had reviewed all of the papers in the file cabinet.

Ms. Smith also related that on the morning of the first day of the inspection, she learned from one of her co-workers that documents might have been shredded prior to the team's arrival. She immediately reported this information to Deborah Bain.

Ms. Smith testified that some of the documents they inspected, including those provided by Ms. Connelly, were contained in hanging files. She did not recall any work orders in the hanging files supplied by Ms. Connelly. Those files primarily contained invoices, none of which were dated prior to 2010. Ms. Smith stated that work orders and work order completion forms usually were stapled together. The only difference between the two types of forms was the dates reflected on them.

*5 QBE called as its next witness, Hillary Lovelady. Ms. Lovelady testified that she is an attorney, and has worked for Deborah Bain, P.A. for the past six years. She participated in the document inspection at Wynmoor and had been involved in two other inspections prior to the one at Wynmoor. At each of these document inspections, there was an inspection sheet which detailed exactly what they were looking for.

When the inspection team arrived at the Wynmoor maintenance building, Mary Marie Connelly appeared to be the person in charge on behalf of Wynmoor, since it was she who told them where to set up. As they set up in the “hurricane room,” they discussed with Ms. Connelly how long they thought they expected to be at Wynmoor. Ms. Connelly said that Wynmoor's attorneys had finished going through the documents in two weeks. Ms. Connelly added that it should not take QBE's team as long, because since then, three truck loads of documents had been shredded. Ms. Lovelady could not believe what she had just heard, and she immediately alerted Rona Smith and Chris Rolf. Ms. Smith notified Deborah Bain of what had been said, and Ms. Bain asked Ms. Lovelady to get the full name of the woman who had mentioned the shredding, as well as the name of the shredding company. Ms. Lovelady noticed the shredding company's name on a console in the hallway, photographed the name with her cell phone, and sent it to Ms. Bain.

Ms. Lovelady testified that during the inspection of the boxes in the shed, Mr. Rolf moved each box and read its label aloud, while Ms. Lovelady wrote down what was in each box. Mr. Rolf and Ms. Lovelady looked at every box that had been made available, inlcuding those that were crushed and falling apart, but they only copied documents that were relevant. She stated that none of the boxes they inspected contained hanging folders or binders with computer printouts like those contained in the box the Plaintiffs brought to the hearing. Ms. Lovelady did see other types of computer printouts.

QBE's next witness was Patricia Cohen. She testified that she is a paralegal at the Wicker Smith law firm. Ms. Cohen has been a paralegal for 15 years, and has been working at Wicker Smith since May 2011. She has a Masters degree in Public Administration from FIU in addition to her paralegal certification. During her employment at Wicker Smith, Ms. Cohen has participated in two or three document inspections, and was involved in five other inspections earlier in her career.

Ms. Cohen stated that the document inspection at Wynmoor was led by representatives from Deborah Bain's law firm. Wicker Smith was asked to assist because they were expecting to go through a voluminous number of documents. Ms. Cohen recalled that the date of the inspection continually was pushed back.

Ms. Cohen met Ms. Connelly on the first day of the inspection. Ms. Connelly seemed surprised by how much equipment the team had brought with them, and had to clear more space for them to work. Ms. Connelly remarked that she did not think the team would be there very long because Wynmoor's lawyers recently had gone through everything very quickly. Ms. Connelly also said that they had shredded several truck loads of material.

Ms. Cohen corroborated prior testimony regarding the procedure the team used to examine the boxes and ensure that nothing had been missed. She also related the problem they encountered when attempting to inspect documents contained in Ms. Connelly's file cabinet. Ms. Connelly stated that initially team members had gone into the office and taken the files themselves. However, Ms. Connelly objected to this procedure, and began bringing the files to the team. The files Ms. Cohen went through contained work orders, which appeared to be very recent. None were from the 1990s.

*6 QBE's next witness was Darryl Boutin, who testified that he is an attorney employed by Deborah Bain, P.A. He graduated from law school in 2011 and began working for Ms. Bain in late October or early November 2011. The document inspection at Wynmoor was his first. Mr. Boutin was not present on the first day of the inspection. He stated that his task was to review and summarize the documents that had been copied.

Mr. Boutin testified that one of the summaries he created, was a list of the most relevant work orders, to which he attached the actual work orders. This list and the work orders attached to it were introduced into evidence. (Def. Ex. 16a) Mr. Boutin also prepared a continuation of the list, containing annotations relating to the Plaintiffs's expert reports. He did this in order to demonstrate the relationship of the work orders to damages identified by the Plaintiffs' experts. The list containing the annotations also was introduced into evidence. (Def. Ex. 16) Some of the work orders listed were dated prior to 2005. Mr. Boutin stated that he did not see any binder which contained a computer run for an entire year, such as those produced by the Plaintiffs at the hearing.

Mr. Boutin further testified that there are twelve boxes of copied documents in his firm's office. He also stated that most of the copies made by the copy service had been transferred to DVDs.

Finally, QBE introduced the Affidavit of Eric Konicki, Director of Operations at Shred-It. (Def. Ex. 18) In his Affidavit, Mr. Konicki avers that Shred-It was hired in January 2010 to shred documents contained in five consoles on the Wynmoor property. The shredding was done monthly at a cost ranging from $64.00 and $108.00 per month. On October 12, 2011, Shred-It received a call from Wynmoor requesting a non-scheduled purge of documents. In addition to shredding the material contained in the five consoles, Shred-It was to shred the contents of 18 file boxes and 12 banker's boxes located in the maintenance building. The total charge for that date was $264.69. On October 21, 2011, Shred-It received another call from Wynmoor requesting a second non-scheduled purge of documents. On that date, a Wynmoor representative instructed Shred-It to shred the contents of 79 banker's boxes and 29 file boxes. The total charge for shredding on that date was $756.63. Invoices evidencing the amounts charged are attached to Mr. Konicki's Affidavit.

The Plaintiffs called as their first witness, William Keith Arnold, Junior. Mr. Arnold testified that he is a CPA and has been employed as the Finance Director and CFO of Wynmoor Community Council since April of 2007. He stated that the Wynmoor Community Council is a master association which manages 44 separate condominium associations and employs approximately 200 people. Mr. Arnold is in charge of accounting functions, which includes preparing monthly financial statements for the council and associations, overseeing the receivable department, managing assessments, overseeing accounts payable, preparing bank reconciliations, preparing a budget each year and preparing financial statement audits.

Mr. Arnold testified that one of his responsibilities is to establish and monitor the document retention policies at Wynmoor. Each year Wynmoor boxes up the prior year's files for storage within the maintenance department. Mr. Arnold stated that in October 2011, he was notified by maintenance staff that there was no more room in the storage areas. As a result, Mr. Arnold went to the maintenance department to go through the boxes and mark some of them for shredding. In each of the three storage areas, he looked for boxes which contained documents more than seven years old. Mr. Arnold stated that he did not mark any maintenance records for shredding. Rather, he identified accounting records, which included cancelled checks, bank statements, bank reconciliations, payroll records, accounts receivable records and journal entries. Mr. Arnold also authorized the destruction of medical records that had come from a disbanded nurses' station. He stated that to his knowledge, no documents related to maintenance had been shredded in October 2011. However, Mr. Arnold did not open any of the boxes, relying instead on their labels.

*7 Mr. Arnold testified that he knew about the lawsuit between Wynmoor and QBE, but had not been informed of any order to retain documents. He did not notify Wynmoor's lawyers of the plan to shred documents because did not think QBE would be interested in accounting records from 2002 and 2003. He believes that the process of selecting the documents for shredding occurred during the first or second week of October 2011. In addition to creating more room in the storage area, one of the goals of the shredding process was to destroy documents that might contain personal information in order to prevent identity theft. Mr. Arnold also hoped to eliminate a fire hazard by getting rid of excess paper. He stated that neither Mr. Kubasek nor Ms. Connelley had assisted him in this process.

Mr. Arnold testified that the first time he saw the files, produced by the Plaintiffs on the day of the hearing, was when he marked the boxes to be shredded. He stated the documents were in a box which had items on top of it, and Mr. Arnold decided to let that box remain until the following year. Prior to the hearing, Mr. Arnold brought Wynmoor's lawyer to the storage area to show him where the files were kept. When they opened up the shed, Mr. Arnold saw the same box, which had binders on top of it. The box was located on the right side, about two inches from the door, and was very dirty. The binders on top were covered with dust and droppings. Mr. Arnold also observed three or four boxes labeled 2002, one of which they opened and found that it contained cancelled checks. Although the other boxes were not opened, Mr. Arnold later learned that they contained only accounting records.

Mr. Arnold testified that the binders which were on top of box found near the door contained work order completion reports, grounds maintenance work orders and other work orders. All of these were from 2005 or earlier.

On cross examination, Mr. Arnold acknowledged that at his deposition, he was designated as the Rule 30(b)(6) representative, with the most knowledge regarding Wynmoor's records. He clarified that in fact, he maintains only accounting records and has nothing to do with maintenance records. Mr. Arnold conceded that he destroyed financial records, but stated that he was not aware that QBE's request to produce included financial documents. Mr. Arnold also conceded that work orders could have been shredded if they were in a box that had not been labeled properly.

Although Mr. Arnold had estimated during his deposition that he had marked 40 boxes for shredding, he admitted at the hearing that he does not know how many boxes he marked because he did not keep count. He was willing to accept Shred-It's information that there were 130 boxes. Since Mr. Arnold was not present when Shred-It arrived, he has no way of knowing how many boxes were taken. Although it is possible that someone else from Wynmoor marked additional boxes for shredding, Mr. Arnold did not believe anyone in his office would do that. Mr. Arnold testified that after he marked the boxes, he told Ms. Connelley to contact the shredding company, and believed the total shredding charge was $756.00.

Mr. Arnold recalled that when they found the files brought by the Plaintiffs to the hearing, the box in which they were contained was crushed and flattened, so the files had been placed in a new box. He did not recall seeing on the crushed box a label or a yellow post-it note with “done” written on it. Mr. Arnold did not photograph the crushed box. He stated that the documents found inside the box relate to roof work that had been done on 44 buildings, but there were no records pertaining to the remaining roofs in the complex or to sliding glass doors and windows.

On re-direct, Mr. Arnold testified that accounting records are kept in electronic, as well as hard copy form, and the bill associated with a maintenance repair would be maintained as an accounting record and as a maintenance record. However, Mr. Arnold did not believe the electronic accounting records go as far back as 2002-2003.

*8 The work order reports contained in the red binders which were on top of the crushed box include a summary made from the work orders, reflecting what had happened and what had been billed. This information was not as detailed as that contained in the work orders themselves.

The Plaintiffs next presented the testimony of Robert Sansone, QBE's corporate representative. He stated that he is employed by Interloss, Incorporated, which is an independent insurance adjusting company. Mr. Sansone is licensed to handle claims for insurance companies only. He stated that he also has an “all lines” insurance adjusting license. Interloss was hired by QBE to adjust the Hurricane Wilma losses at Wynmoor through Florida Intracoastal Underwriters, which is a managing general agent for QBE. Mr. Sansone is designated as an expert in connection with some of QBE's defenses in this lawsuit. The nature of his expertise includes knowledge of the claim, conditions of the building components and causation.

Mr. Sansone testified that the insurance policy in this case contains exclusions for losses caused by wear and tear and lack of maintenance, as well as for losses caused by defective design or construction. He further testified that he conducted an expert review of the Wynmoor property, and determined that the vast majority of the damage claimed and identified in Wynmoor's expert reports either does not exist or was not caused by Hurricane Wilma. Mr. Sansone was able to make this determination from a physical inspection and without benefit of pre-Wilma work orders. He arrived at his conclusions by following a protocol from the engineers and from his own experience inspecting well over 150,000 windows and 75,000 sliding glass doors.

Mr. Sansone also had inspected roofs at Wynmoor in connection with the original claim in 2005. At that time, he did not request historical records because he did not believe they were needed. He did, however, learn that some of the roofs were under contract for replacement prior to the hurricane, and he requested to see those contracts to avoid having to re-estimate the cost of replacement. Wynmoor resisted this request, taking the position that the insurer should pay prevailing rates even if Wynmoor had been able to negotiate discount pricing. Mr. Sansone also requested time records for the Wynmoor employees who were doing clean-up and temporary repairs, as well as invoices for architectural, engineering and permit fees, but the requests were denied.

Mr. Sansone testified that when he first investigated the claim, there was no need for historical documents because the parties had reached a compromise resolution, However, at the present time, the historical information is crucial to the determination of whether damage to the property was pre-existing or caused by the storm. Mr. Sansone's expert report has not been completed because he is awaiting further discovery and still is reviewing the work orders that have been provided. Mr. Sansone stated that in his opinion, work orders are the best evidence to persuade a jury to accept an expert report by demonstrating that a condition was pre-existing. Completion reports would be equally important to show that a pre-existing condition had been repaired before the hurricane.

*9 The Plaintiffs next called Mary Marie Connelly, who testified that she is a high school graduate and has worked in the Wynmoor Community Council maintenance office for twenty years. She has reported to Jack Kubasek since the time of Hurricane Wilma in 2005.

Ms. Connelly testified that documents relating to all the various departments at Wynmoor are stored in a caged area, in the rear of the maintenance building, and in a storage shed behind the building. At the end of each year, there is a need to eliminate boxes to make room for newer documents that must be stored. The determination as to which boxes to remove, is made by Keith Arnold. Ms. Connelly believed that the annual removal of documents for 2011 took place in October of that year. She stated that she supplied the workers who assisted Mr. Arnold in going through the boxes. Ms. Connelly did not participate in the destruction of documents and does not know which records were destroyed.

Ms. Connelly testified that although Wynmoor attempts to eliminate documents more than seven years old, she has seen in storage boxes with documents dated as early as 1991. Since Wynmoor does not keep an inventory, there is no way to positively know what is in storage at any particular time.

Ms. Connelly related that in October 2011, QBE sent representatives to copy Wynmoor's records. Ms. Connelly stated she had not destroyed any records other than phone bills, copies of which are kept on CDs. She stated that the team from QBE was given access to all the documents they wanted to copy. Ms. Connelly was upset by the behavior of the inspection team as they were loud and disruptive, and made a mess of the documents in her filing cabinet.

Ms. Connelly recalled that Shred-It also came in October 2011. She does not know which, or how many documents, they took away. Although, she testified in her deposition that a company automatically came each year to destroy stored documents maintained in storage that were more than seven years old, she testified at the hearing that she cannot say for certain that this was automatically done each year. Ms. Connelly also stated that none of the documents in the “hurricane room,” where Wynmoor maintains all documents related to Wilma, would have been shredded.

Ms. Connelly outlined the work order process, explaining that a work order is followed by a work order completion report, which is attached to the orginal work order. She testified that the computer-generated reports produced by the Plaintiffs at the hearing were work order reports and work order completion reports that had been created prior to Hurricane Wilma. The computer printouts contain different information from that contained on the work orders. Other documents contained in the newly-produced box of files are roofing work orders from 1995 through September 2004. Ms. Connelly stated that those documents had been located earlier in the week by Plaintiffs' counsel and one of her co-workers.

Ms. Connelly denied telling Ms. Lovelady or any other QBE representative that truck loads of documents had been shredded. She conceded that in her November 15, 2011 deposition, she wrongly testified that no records had been shredded, destroyed or discarded prior to the October 27, 2011, document inspection. Ms. Connelly explained that at the time, she believed the questions pertained only to documents related to Hurricane Wilma. She acknowledged that she also testified incorrectly during her deposition that she had not seen a Shred-It truck at Wynmoor during October 2011. Ms. Connelly did not remember calling Shred-It, but conceded that Mr. Arnold may have asked her to do so. She attributed the inconsistencies in her deposition testimony to her nervousness.

*10 Ms. Connelly related that the first time she saw the April 2011 Request for Production was at her November 2011 deposition. She stated that she had done nothing to prepare for the document inspection, and did not recall when she learned that people from QBE would be coming to Wynmoor.

Ms. Connelly testified that her practice was to keep records until the end of each year, after which they would be moved to storage. However, she acknowledged that October is not the end of the year. Ms. Connelly does not keep a record of which documents have been removed from her office and placed in storage.

Ms. Connelly testified that prior to Hurricane Wilma, unit owners consistently had complained about leaks and shattered glass. She stated that Wynmoor has had to repair window leaks every year since she began working there in 1991 or 1992. Ms. Connelly conceded that in order to determine whether a problem had occurred prior to Hurricane Wilma, she would have to look at work orders generated in 2004 or earlier. She noted that work orders are generated for window leaks, but not for shattered sliding glass doors. In cases of shattered doors, unit owners are instructed to contact outside vendors. Ms. Connelly explained that a work order is generated only when someone from Wynmoor's maintenance department handles the repair.

The Plaintiffs' next witness was John Kubasek. He testified that he is employed by Wynmoor as Assistant Administrator, a position he has held for four years. He stated that Wynmoor is a retirement community situated on 500 acres of land. There are 144 buildings, 134 of which are residential. Wynmoor has 5,260 individual condoninium units and approximately 8,000 residents. There are 45 associations, including Wynmoor Community Council, which is the governing body of the property. The Council consists of members from each of the 44 other associations. Wynmoor employs about 200 people, and the Wynmoor Community Council has a management contract with the 44 associations.

Mr. Kubasek explained how “in-house maintenance” is performed, using a leak as an example. He stated that a resident would call to report the problem, and a work order would be generated. Someone from maintenance then would inspect and then make a recommendation on what should be done. Wynmoor would follow up until the problem was fixed, either by the maintenance department or an outside vendor. Mr. Kubasek stated that most work orders are completed within two or three weeks, and about 300 work orders are generated each week. Although the system has become better organized since Hurricane Wilma, it nevertheless was in place prior to the storm.

Mr. Kubasek also testified about general maintenance. He stated that in the past, the buildings were painted every seven years, at which time cracks were sealed and windows caulked. Currently, this maintenance is performed every five years. There are annual inspections to ensure that the buildings are kept in good shape. Mr. Kubasek expressed regret that the older work orders are missing because he believes they would demonstrate how well the buildings are maintained.

Mr. Kubasek then described the events at Wynmoor following the hurricane, including his involvement in the insurance adjustment process. He stated that QBE sent a representative within a day or two of the storm. Wynmoor's Management Committee and Board called an emergency meeting, during which, one of the residents insisted that they hire a public adjuster because the insurance company was not providing enough assistance. After the public adjuster was hired, Mr. Kubasek was advised that Wynmoor would no longer be dealing directly with QBE. During this time, QBE asked for access to documents maintained by Wynmoor. At first they requested the electronic documents, however, these were not available because there was no power. After power was restored, there still was no access to electronic documents. QBE was told that there were backup copies of documents that could not be accessed electronically.

*11 Mr. Kubasek stated that after Hurricane Wilma, he decided to set up a special room to keep all documents related the hurricane in one place, ensuring that there would be a permanent record of storm-related materials. The room he set aside was dubbed the “hurricane room.” Mr. Kubasek believed that it was important to segregate the documents related to Hurricane Wilma so that they would not be destroyed as part of the regular purging that occurs, to make room in storage. The documents in the “hurricane room” were provided to the Childress Duffy attorneys, who were representing Wynmoor, for copying. After Childress Duffy made their copies, Mr. Kubasek was notified that QBE would be doing the same. When QBE's team arrived, he learned that they wanted access to all documents, not just those in the “hurricane room.” Mr. Kubasek did not want to agree until he cleared it with the lawyers. Attorney, Mike Duffy, instructed him to allow QBE to copy whatever they wanted.

Mr. Kubasek then related how the recently discovered box of documents had been located. He testified that approximately a week before the hearing on the instant motion, one of Wynmoor's lawyers asked to see the storage area. Inside the area, Mr. Kubasek and the attorney noticed a box which contained documents from 2004 and a couple of boxes from 2003. They took about a dozen photographs, which were retained by Wynmoor's lawyers. A few days later, Mr. Kubasek met with Mr. Arnold and Mr. Mammel, the attorney who would be handling the hearing. Mr. Arnold offered to show the storage area to Mr. Mammel, after which a laborer brought a box containing old documents back to the maintenance department. Mr. Kubasek did not know how the box had been missed during the document inspections. He speculated that no one may have wanted to touch it because it was “pretty nasty looking.”

Mr. Kubasek stated the October 2011 document shredding, was Mr. Arnold's project. However, Mr. Kubasek was certain that work orders would not have been shredded. He acknowledged that work orders could be kept with finance documents which, he assumed, were destroyed after seven years to free up space in the storage room.

Mr. Kubasek stated that ordinarily he does not go to the storage area. On the day he went there with Mr. Mammel, Mr. Kubasek reached into the box containing documents from 2003 and pulled out work orders. He handed them to the lawyer, but does not know what happened to them after that.

Mr. Kubasek was not aware of QBE's April 2011 document requests until his deposition in November of 2011. No one ever instructed him not to destroy any records. He always assumed that the only documents relevant to the lawsuit were the Hurricane Wilma documents, since it was those records that the Childress Duffy lawyers had been interested in. The Childress Duffy lawyers did not come to Wynmoor to copy documents until just before QBE's lawyers came, arriving before Mr. Arnold began marking boxes for shredding.

Mr. Kubasek explained that the “hurricane room” is kept locked to protect the documents stored inside, but other records were not protected in the same way. Maintenance records are stored for seven years and then disposed of. However, Wynmoor staff members now know that they must not shred any more documents.

The Plaintiffs' last witness was Michael Duffy, Esqurie. Mr. Duffy testified that he has been a lawyer for 31 years. He joined the Childress Duffy law firm as a partner in 2002, with a background in products liability law. Mr. Duffy stated that at no time in his career has he had a discovery problem, because his philosophy is to produce everything to opposing counsel.

Mr. Duffy testified that his role in the Wynmoor case was to serve as a “concierge.” He recalled visiting the property to meet with the clients a few times, and on a few occasions he has been in Mr. Kubasek's office. Mr. Duffy has not been anywhere on the property other than the administration building. He believed that he first saw the “hurricane room” in the late spring or early summer of 2011, and that he visited it again in October of that year. Mr. Duffy did not have anything to do with the document inspections.

*12 Mr. Duffy stated that he had met Deborah Bain, at a mediation. He told her that all of Wynmoor's, Wilma-related documents, were in Mr. Kubasek's office. He recalled that Mr. Kubasek told him that many years worth of other records were stored in the cage. Mr. Duffy instructed Mr. Kubasek to produce them all.

Mr. Duffy testified that he first learned about the document shredding when he was advised of the subpoena which had been issued to Shred-It. He “swore on his children” that prior to then, he had no knowledge that documents had been shredded

Mr. Duffy identified an e-mail dated October 26, 2011, which had been sent to lawyers and paralegals in the Childress Duffy law firm indicating that all documents should be produced. Mr. Duffy noted that some of his condominium association clients retain no records, others keep some of their records and still others retain everything. Some of the associations destroy records after seven years.

Mr. Duffy testified that Wynmoor originally was represented by a different law firm, and that Childress Duffy took over some time in Spring 2011. He does not believe that his firm issued a litigation hold when they took over the case or that this had been done by the prior firm. Mr. Duffy conceded that it was his firm's responsibility to issue a litigation hold regardless of whether the prior firm had done so.

On cross examination, Mr. Duffy testified that he was in charge of discovery policy for at least one of the firms with which he had been associated. He emphasized that the Childress Duffy law firm presents seminars on the handling of first party cases. Mr. Duffy conceded that at the time his firm received QBE's April 2011 request for production of documents, someone in the firm should have instructed Wynmoor to retain all documents and begin gathering them for production. He added that his discussion with Ms. Bain about documents contained in Mr. Kubasek's “hurricane room” had not occurred in response to the document request.

Mr. Duffy identified an October 26, 2011 e-mail sent to him by Ms. Bain, confirming their conversation of the preceding Monday, during which Mr. Duffy advised her that QBE's document inspection could commence on the following day. (Def. Ex. 20 and 22)

Mr. Duffy testified that he visited Wynmoor on either the 21st or 22nd of October, 2011. He has since learned that shredding occurred on October 21, 2011. Although he concedes he was on the premises at that time, he insisted that neither he nor anyone from his firm was there to coordinate the document inspection. Mr. Duffy recalled seeing an e-mail from Jelena Bulbujasic of his firm advising Rona Smith that the document inspection could not start until October 27, 2011, because Mr. Duffy needed to be there. However, Mr. Duffy stated that the e-mail was incorrect because he would not have had anything to do with the document inspection.

When confronted on cross-examination with several drafts of an e-mail that eventually went out in his name, Mr. Duffy conceded that he had some involvement with the scope of discovery in the Wynmoor case. (Def. Ex. 19 pp. 9, 11, 23) However, Mr. Duffy reiterated that he had nothing to do with the October document inspection.

On redirect, Mr. Duffy identified an e-mail dated October 26, 2011, which was sent by a Childress Duffy attorney to all members of the firm (Deft. Ex. 19, p. 6) which states: “In this case we are not limiting production of documents or objecting based on time .... In this case most documents were lost in the hurricane. From my point of view we should never object or limit to a time frame. I think there is a better way to achieve that. Our clients should not have records that far back. The client is obligated to have records dating back 7 years so those are the records we give them .... If the defendant feels there are other documents let them make it an issue.”

*13 “Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.” Graff v. Baha Marine Corporation, 310 Fed. Appx. 298, 301 (11th Cir. 2009) (citing West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)). “Federal law governs the imposition of sanctions for failure to preserve evidence in a diversity suit.” Flury v. Daimler Chrysler Corp., 427 F.3d 939 (11th Cir. 2005). The Flury Court noted that federal law in the Eleventh Circuit does not set forth specific guidelines with regard to when to impose sanctions for spoliation, however. In Flury, the Court looked to Georgia law for guidance, finding that the standards found in Georgia law were wholly consistent with federal spoliation principles. Id.

Although the Eleventh Circuit has not expressly found Florida law to be wholly consistent with federal spoliation principles, lower federal courts have routinely looked to Florida law for guidance on when to impose spoliation sanctions. Socas v. The Northwestern Mutual Life Insurance Company, 2010 WL 3894142 at *3 (S.D. Fla. 2010) (citations omitted). “Under Florida law, to establish spoliation, the moving party has the burden of proving ‘(1) the missing evidence existed at one time; (2) the non-moving party had a duty to preserve the evidence; and (3) the evidence was crucial to the movant being able to prove its prima facie case or defense.’ ” Id. (citing Sharp v. City of Palatka, 2008 WL 89762 (M.D. Fla. 2008)).

In addition, the Eleventh Circuit requires a finding of bad faith in order to impose the sanction of dismissal or the imposition of an adverse inference. Id. (Citations omitted.) Mere negligence is not sufficient to support a finding of bad faith because ‘it does not sustain an inference of consciousness of a weak case.’ Id. (citing Bashir v. Amtrak, 119 F.3d 929, 931 (11th Cir. 1997)). A determination of bad faith may be based upon circumstantial evidence if direct evidence is absent. Id. (citing Walter v. Carnival Corp., 2010 WL 2927962, at *2 (S.D. Fla. 2010)). Before finding bad faith based on based upon circumstantial evidence, a four-prong test must be met. The Court must find:

Id.

Potential sanctions for spoliation of evidence include, dismissal of the case, exclusion of expert testimony, or a jury instruction on spoliation of evidence which raises a presumption against the spoliator. Flury 427 F.3d at 945. (citing Chapman v. Auto Owners Insurance Co., 469 S.E. 2d 783, 784 (1996)).

It is undisputed that work orders generated prior to Hurricane Wilma did exist at one time. A small number of such work orders were produced to the Defendant, and a box of newly discovered pre-Hurricane Wilma work order completion reports and other historical documents were produced on the first day of the hearing. Moreover, a number of witnesses testified that work orders existed.

The most comprehensive testimony on the process by which work orders were generated, was provided by Mr. Kubasek, Wynmoor's Assistant Administrator. He stated that when a Wynmoor resident has a maintenance problem, the resident contacts the maintenance department, after which a work order is issued based upon the resident's complaint. He noted that about 300 work orders are generated in an typical week, with repairs completed within two or three weeks. The current process is better organized than it had been before Hurricane Wilma, but a system was in place prior to the storm.

*14 When a party reasonably anticipates litigation it must suspend whatever document retention/destruction policy is in place and put in place a “litigation hold” to ensure the preservation of relevant documents. Zubulake v. UBS Warburg LLC, 229 F.R.D. 422, 431 (S.D. N.Y. 2004). Furthermore, it is counsel's duty to oversee compliance with the litigation hold, which includes proper communication with the client to ensure (1) that all relevant information is discovered, (2) that relevant information is retained on a continuing basis and (3) that relevant non-privileged material is produced to the opposing party. Id. at 432.

This case was removed to Federal Court in December 2010. The Childress Duffy law firm took over as Plaintiffs' counsel in March 2011. Michael Duffy, a firm partner, testified that he does not believe his firm issued a litigation hold when it took over the case, nor does he believe that the firm that filed the case had done so. He conceded that it was his firm's responsibility to issue a litigation hold, regardless of whether the prior firm had issued one. Notably, Mr. Duffy was in charge of discovery policy for at least one of the law firms with which he has been associated, and that his professed philosophy (and that of his firm) regarding discovery, is to produce everything.

In April 2011, QBE served a Request for Production of Documents which was admitted into evidence as Defendant's Exhibit 1. Request Number 5 sought all records related to maintenance or repair of any of the “Plaintiffs' associations buildings, or replacement of any part of the buildings, including, but not limited to, work orders, log books, complaints, correspondence, notices, invoices, estimates, proposals, bids, notes, memoranda, checks, and the like, at any time.” Mr. Duffy conceded that at least after receiving QBE's document requests, someone from his firm should have advised the client to preserve documents and begin gathering them. Even if the duty to preserve did not attach at the onset of the litigation, it certainly attached when QBE served its Request for Production of Documents.

Nevertheless, it appears that Wynmoor was not advised of any duty to preserve documents, and in fact, conducted an apparently unprecedented purge immediately prior to QBE's scheduled document inspection in October 2011. Mr. Arnold testified that in early October 2011, when he selected documents for shredding, he was not aware that he was under a duty to preserve documents and did not advise Wynmoor's lawyers of his plan to clear out certain categories of records that were older than seven years. Ms. Connelly testified that the first time she saw the Request for Production of Documents was at her November 2011 deposition, after the purge already had occurred.[3] Mr. Kubasek likewise testified that he was not aware of the Request for Production of Documents until his November 2011 deposition. He was never told not to destroy records, and in fact, always believed that the only documents relevant to the lawsuit were the Hurricane Wilma documents maintained in the “Hurricane Wilma room.”

The purge may have gone undiscovered had members of QBE's document inspection team not been told by Ms. Connelly that several truckloads of documents had just been shredded. Although Ms. Connelly denied making such a statement, the Court finds the testimony of Hillary Lovelady and Patricia Cohen to be more credible.[4] Both women heard Ms. Connelly state that she did not think QBE's team would need as much time to conduct their inspection as Wynmoor's lawyers, owing to the large number of documents which had just been shredded, This admission was a surprise, and led to QBE's subpoena of Shred-It, which resulted in the discovery that on two separate dates in October 2011, approximately 130 boxes of materials were shredded.

*15 QBE contends that documents of crucial relevance to its affirmative defenses in this case were almost certainly destroyed in the October 2011 purge. These would include work orders documenting the condition of the Wynmoor property prior to Hurricane Wilma. QBE points to recent decisions in this District acknowledging the importance of historical documents for purposes of analyzing causation. In 2000 Island Boulevard Condominium Assoc. Inc. v. QBE Insurance Corp., the Court ordered the Plaintiffs to provide information going back ten years prior to the date of the claim, noting that “[l]imiting the scope of the request to a particular time period would prevent Defendant from obtaining information regarding historical problems with the relevant building components, which may date back to the time of construction or installation.” 2011 WL 341621 at *2 (S.D. Fla. 2011) (citing Meridian of Palm Beach Condominium Association, Inc. v. QBE Insurance Corp., Case No.: 0681108-Civ-Ryskamp/Vitunac (S.D. Fla. Jan. 22, 2008) (ECF No. 41)). Notably, the plaintiffs in the 2000 Island Boulevard case were represented by the same counsel as the Plaintiffs in the instant case. QBE contends that the prior decision put Plaintiffs' counsel on notice of the particular importance of preserving and producing the types of documents at issue here.

Additionally, numerous witnesses emphasized the significance of historical documents. Members of QBE's document inspection team testified about the importance of work orders in providing a contemporaneous record of wear and tear, deterioration, and decay of the buildings and their components. Christopher Rolf testified that work orders would constitute the best evidence of the condition of the various components of the property at the time of Hurricane Wilma. Rona Smith stated that documents which establish the history and maintenance of the property can make or break a case. Darryl Boutin testified about the relevance of work orders predating Hurricane Wilma to damage identified by the Plaintiffs' experts. Older work orders would be useful to show that in some cases, damage the Plaintiffs attribute to the Hurricane actually predated the hurricane.

Robert Sansone, who is a designated as an expert on some of QBE's defenses in the lawsuit, also testified about the relevance of historical documents. He indicated that he has conducted an expert review of the Wynmoor properties, which consisted of a physical inspection without the benefit of pre-Hurricane Wilma work orders. Based upon his inspection, Mr. Sansone was able to determine that the vast majority of the damage identified in the Wynmoor expert reports either does not exist or was not caused by Hurricane Wilma. He testified that he did not request historical records in 2005, when he initially adjusted the Wynmoor claim, because he did not feel they were needed at that time since the parties had reached a compromise resolution. However, the historical information now is crucial because it is needed to establish whether damage to the property pre-existed Hurricane Wilma. In Mr. Sansone's opinion, a work order is the most effective support of an expert report during a jury trial.

The Court agrees that historical documents, including work orders pre-dating Hurricane Wilma, are highly relevant in this case. Such documents could show pre-existing conditions evidencing wear and tear in support of QBE's affirmative defenses, and they could also demonstrate proper maintenance of the premises, supporting Wynmoor's assertion that damage was caused by the hurricane. In a case where the experts' opinions are apt to cancel out one another before a jury, it is extremely beneficial to have evidence to support or refute the experts' conclusions. Furthermore, “[i]n spoliation cases, courts must not hold the prejudiced party to too strict a standard of proof regarding the likely contents of the destroyed evidence because doing so allows the spoliators to profit from the destruction of evidence.” Southeastern Mechanical Services, Inc. v. Brody, 657 F.Supp.2d 1293, 1300 (M.D. Fla. 2009) (citing Kronisch v. United States, 150 F.3d 112, 128 (2d Cir. 1998)). The Court finds the missing work orders, which would contain evidence of the condition of the properties prior to Hurricane Wilma, would be highly relevant to the Defendant's defenses in this case.

*16 Nevertheless, absent a finding that the circumstances surrounding the destruction of the work orders show bad faith, the Court cannot infer that they were unfavorable to the Plaintiffs. Bashir v. Amtrak, 199 F.3d 929 (11th Cir. 1997).

Even when all of the other factors are present, this Court cannot impose sanctions of dismissal or adverse inference without a finding of bad faith. Socas v. The Northwestern Mutual Life Insurance Company, 2010 WL 3894142 (S.D. Fla. 2010). If direct evidence is absent, a determination of bad faith may be based on circumstantial evidence. Bashir v. Amtrak, 119 F.3d at 931.

The Court has already determined that evidence existed that could fairly be supposed to have been material to the proof or defense of a claim at issue in this case. In fact, the missing work orders could fairly be supposed to have been material to either side's case. They may have supported the Plaintiffs' claim that the conditions for which they are seeking coverage did not exist prior to Hurricane Wilma or shown pre-existing conditions which would support the QBE's defenses. There is no way to know for certain whether the work orders would have been more beneficial to the Plaintiffs or the Defendant, but there is no question they would be material to the parties' claims and defenses.

Regarding the second prong of the test, there is no doubt that the Plaintiffs engaged in an affirmative act which resulted in the evidence being lost, and they did so while they should have known of their duty to preserve the evidence. Twice during the month of October 2011 and just prior to the Defendant's scheduled on site document inspection, the Plaintiffs engaged in the purging of documents. As a result, approximately 130 boxes of materials were destroyed. Although it appears that the individuals responsible for the purge were not informed by their attorneys of a litigation hold, there is no question that they should have been so advised. The Plaintiffs certainly were aware of the importance of preserving evidence beneficial to their case, as evidenced by the care taken to preserve the documents stored in the “hurricane room.” Although present counsel took over from the case in March 2011, they should not have assumed prior counsel had instructed the Plaintiffs to preserve evidence. In any event, counsel were under a continuing obligation to impress upon their client the importance of suspending any document destruction policy and retaining all arguably relevant information. Zubulake v. UBS Warburg, 229 F.R.D. 422, 431-432 (S.D. N.Y. 2004). Mr. Duffy of the Childress Duffy law firm testified at length about his experience handling discovery matters in civil litigation, and about his philosophy about the importance of turning over all evidence to the other side; a philosophy he testified was shared by all in his firm. Nevertheless, the policy was overlooked in the instant case. Even in the absence of a litigation hold entered when the case was filed, once QBE served its first request for production in April 2011, the Plaintiffs were on notice of a duty to preserve evidence.

Furthermore, the document purge which resulted in the loss of the work orders cannot be credibly explained in any way which avoids an inference of bad faith. The Plaintiffs suggest that they merely ran out of space in their storage facility and needed to create room by conducting a year-end shredding of documents older than seven years. However, the October 2011 purge which occurred just prior to the Defendant's scheduled document inspection, was unprecedented. With the exception of the two dates in October of 2011, Shred-It visited the Plaintiffs' property on a monthly basis beginning in January of 2010, and shredded documents at a cost ranging from $64.00 to $108.00 per visit. The dates in October resulted in charges of $264.69 and $756.63, respectively.

*17 Mr. Duffy testified that he was on the Wynmoor property on October 21 or 22, 2011, and it is undisputed that approximately 100 boxes of documents were shredded on October 21, 2011. Mr. Duffy claims to have had nothing to do with any preparation for the document inspection in spite of an e-mail from his firm to Rona Smith, stating that the inspection must to be scheduled for October 27, 2011, because Mr. Duffy needed to be there.

Mr. Arnold believed he selected documents for shredding sometime during the first two weeks of October and did not know for sure how many boxes were marked, despite his deposition testimony that he thought the number was approximately 40. At the hearing, Mr. Arnold stated that if the Shred-It invoices indicate that there were 130 boxes, he would take them at their word. As he was not present when Shred-It arrived, he had no way of knowing how many boxes had been taken. Although Mr. Arnold did not believe anyone from his office would have added boxes to those he had selected, he conceded it was possible that someone had done so. Accepting Mr. Arnold's testimony that he primarily selected financial documents for destruction[5], coupled with the fact that Shred-It issued invoices for two separate dates, it appears likely that someone other than Mr. Arnold selected additional documents for shredding.

Finally, in spite of Mr. Arnold's testimony that he selected for destruction only financial documents older than seven years, the fact remains that only a small percentage of the work orders, which were generated by Wynmoor at the rate of 300 per week, have been produced to the Defendant. Under the circumstances, and based upon the evidence and testimony heard at the hearing, the Court finds that there is strong circumstantial evidence of bad faith.

Factors to be considered in determining sanctions are: “(1) the willfulness or bad faith of the party responsible for the loss or destruction of the evidence, (2) the degree of prejudice sustained by the opposing party and (3) what is required to cure the prejudice. “ Fleury v. Biomet, Inc. 865 So.2d 537, 539 (Fla. 2d DCA 2003).

The Court has already determined that the Plaintiffs' conduct demonstrates more than mere negligence and the facts support a finding a bad faith. It must now assess the degree of prejudice sustained by the Defendant and what is required to cure the prejudice.

The Plaintiffs concede that the Defendant is prejudiced by the absence of the historical work orders, but point out that they are subject to this Court's prior Order compelling forensic examination of the their computers in an attempt to recover electronic documents which the Plaintiffs contend were lost owing to damage to its computer system which occurred during Hurricane Wilma.[6] (DE 85) Plaintiffs argue that if the forensic examination results in the recovery of the missing work orders in electronic form, the prejudice to the Defendant would be cured.

*18 The Court ordered the forensic examination on March 5, 2012. At the hearing on the instant motion on June 6 and 7, 2012, Plaintiffs' counsel reported that the forensic expert was expected to begin a rolling production of what he found in the near future. As of this date, the parties have not advised the Court of the results of the examination. This case is currently on the January 7, 2013, trial docket. Even if every missing work order were to be produced immediately in electronic format, the dispositive motion deadline has passed and QBE will have been substantially prejudiced by the delay.

Nevertheless, under these circumstances, the Court is reluctant to recommend the most drastic sanction of dismissal. “Dismissal is only appropriate where alternative lesser sanctions will not suffice.” St. Cyr v. Flying J, Inc., 2007 WL 1716365 (M.D. Fla. 2007) (citing Flury, 427 F.3d at 944.) Ordinarily, cases should be decided on their merits, and dismissal works against the goal of providing each party its fair day in court. Id. (citing Telectron, Inc. v. Overhead Door Corporation, 116 F.R.D. 107, 129 (S.D. Fla. 1987)). Plaintiffs' counsel failed to instruct them to suspend destruction of documents pending the outcome of this case, and it was evident at the hearing on the instant motion that at least some of the Plaintiffs' witnesses did not understand the significance of the missing work orders. Also, of the few work orders which have been provided, some support the Defendant's contention that some of the damage claimed by the Plaintiffs, predated Hurricane Wilma. Further, the Defendant's expert, Robert Sansone, testified that without the benefit of the work orders, he has been able to determine that the claimed damage was not caused by Hurricane Wilma, although he stressed that the historical work orders would be very important evidence to a jury.

Although dismissal is not warranted, a remedy must be fashioned which helps alleviate the substantial prejudice to the Defendant as a result of not having relevant historical information to support their expert's opinion. Considering all the facts and circumstances of this case, the undersigned concludes that a negative inference is the appropriate sanction and the jury should be instructed to infer that the destroyed work orders pre-existing Hurricane Wilma would have been beneficial to QBE.

This Court having considered carefully the pleadings, arguments of counsel, and the applicable case law, it is hereby

RECOMMENDED that the Defendant, QBE Insurance Corporation's Motion for Sanction of Dismissal or Negative Inference Based upon Destruction and Spoliation of Evidence (DE 106) be GRANTED. It is further RECOMMENDED that an adverse inference jury instruction be given in this case, instructing the jury to infer that the destroyed work orders would have been beneficial to QBE.

The parties will have 14 days from the date of being served with a copy of this Report and Recommendation within which to file written objections, if any, for consideration by The Honorable William P. Dimitrouleas, United States District Judge. Failure to file objections timely shall bar the parties from attacking on appeal factual findings contained herein. LoConte v. Dugger, 847 F.2d 745 (11th Cir. 1988), cert. denied, 488 U.S. 958 (1988); RTC v. Hallmark Builders, Inc., 996 F.2d 1144, 1149 (11th Cir. 1993).

DONE AND SUBMITTED at Fort Lauderdale, Florida, this 2nd day of November, 2012.

The Plaintiffs contended that these documents had been made available to QBE during the document inspection in October of 2011. QBE's counsel responded that they had never seen them before.

One box was labeled “1602 ABACO Harvey Krupnick Papers 2002-2009, and the other was labeled “20400-22100 Work Orders, Completion Sheets.”

Although Ms. Connelly testified in deposition that no documents had been shredded, destroyed or discarded prior to the October 27, 2011, document inspection, she conceded at the hearing, her testimony was incorrect.

It is now undisputed that a purge of documents did occur shortly before QBE began its document inspection on the Wynmoor property. Further, Ms. Connelly's hearing testimony was inconsistent with her prior deposition testimony in several other respects, which she attributed to nervousness.

The Court notes that although such documents are not the focus of the Defendant's motion, the Plaintiffs were under an obligation to preserve even the older financial documents that Mr. Arnold testified were the focus of his selection process.

The Court notes that this Order was necessitated by the Plaintiffs' complete failure to produce any electronic documents in response to the Defendant's Second Request for Production of Documents. The Plaintiffs asserted that they suffered a massive loss of data on the drive containing all of their pre-Hurricane Wilma maintenance work orders in electronic format as a result of Hurricane Wilma.