The Colorado Supreme Court on Monday upheld a judge’s $10.5 million award to a woman and her daughter for their injuries stemming from toxic exposure from a suspected downstairs meth lab in their Littleton apartment building.

The court originally took up the appeal to decide when a person or entity is required to preserve evidence if a lawsuit has not yet been filed. Although the justices clarified the standard going forward, Chief Justice Monica M. Márquez noted the legal issue did not actually affect the outcome, as the trial judge relied on other sources of evidence when ruling in favor of Kathleen and Delaney Keaten.

“Put differently, the trial court’s causation finding linking toxic fumes in Unit 203E to the Keatens’ injuries did not rest on the negative inference the court drew from Defendants’ destruction of evidence,” she wrote in the June 23 opinion.

In 2017, the Keatens noticed a chemical smell in their Unit 203E in Littleton’s Main Street Apartments. They reported the fumes to the property manager. Continuing into 2018, the Keatens suspected they were being exposed to methamphetamine from the unit below them and reported burning sensations, dizziness, bloody noses and difficulty breathing.

The now-bankrupt Terra Management Group evicted the downstairs tenant, renovated the unit and re-leased it. They did not document the contents of the apartment, including gas canisters and a propane tank, even though company policy required otherwise.

Only in response to a court order did testing uncover multiple areas of highly concentrated meth that apparently seeped into the Keatens’ apartment. Both women suffer from permanent brain injuries and signs of dementia.

In an August 2021 order after trial, then-District Court Judge Frederick T. Martinez awarded the Keatens $10.5 million in damages, finding the defendants unreasonably left the women to suffer the severe consequences of meth exposure despite being aware of the problem for months. He further slammed Terra Management for failing to document or preserve the evidence of meth-making.

The defendants attempted to “cover up, hide or destroy evidence when they knew of the Keatens’ claims and the threat of potential liability,” he wrote.

A three-judge panel of the Court of Appeals took no issue with Martinez’s conclusion that the defendants destroyed evidence, even though the Keatens would not file suit for more than a year afterward.

“Plaintiffs were vocal and persistent in their complaints related to the toxic fume exposure they were experiencing,” wrote retired Supreme Court Justice Alex J. Martinez, sitting on the panel at the chief justice’s assignment. It was reasonable to assume “the evidence destroyed would have shown what defendants did not want it to show.”

Terra Management then appealed to the Supreme Court over an issue the justices had not yet addressed: when an entity must begin to preserve evidence before a lawsuit is filed. Multiple outside organizations weighed in to the Supreme Court.

The Colorado Defense Lawyers Association and U.S. Chamber of Commerce pointed to the substantial cost and interference to business of preserving evidence in the absence of any threatened litigation. On the other side, the Colorado Plaintiff Employment Lawyers Association and Colorado Trial Lawyers Association emphasized the imbalance between defendants who hold key evidence and plaintiffs who must rely on that evidence to prove their claims.

During oral arguments, some of the justices were skeptical the Keatens’ legal claims blindsided their landlord to the point that the company was justified in neglecting to preserve relevant items.

“There was ample evidence you were already in possession of that meth had been manufactured in the unit beneath and had migrated,” observed Justice William W. Hood III to Terra Management’s attorney. “Why isn’t that enough to trigger an obligation to preserve?”

At the same time, some justices were sympathetic to Terra Management’s observation that the Keatens had only lodged complaints of fumes up to the time of eviction, then stopped communicating for more than a year before filing suit.

“Isn’t the silence for a year tantamount to an implicit statement, ‘We’re not gonna file a suit?'” wondered Justice Melissa Hart.

Ultimately, the court concluded that even if Judge Frederick Martinez incorrectly penalized Terra Management for failing to hold onto evidence of a meth lab, it did not matter because he rested his decision on other evidence linking the Keatens’ injuries to the fumes.

Going forward, “the duty to preserve evidence arises when the party knows or should know that litigation is ‘reasonably foreseeable’; this standard encompasses litigation that is imminent, likely, or reasonably anticipated,” wrote Márquez.

She added that a “large-scale disaster” could suggest to a potential defendant that litigation is imminent. Or a potential plaintiff’s representation that their issues are resolved may indicate they do not plan to sue after all.

The case was one of the longest-pending appeals currently at the Supreme Court, having been argued in May 2024.

The case is Terra Management Group, LLC et al. v. Keaten et al.