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Destruction of loan documents not spoliation

Where a dispute arose over whether a loan guarantee was forged and the lender’s practice was to scan and shred loan documents within a month of being signed, the documents here were executed/shredded in 2005 while the litigation did not commence until 2018, there was no spoliation.


On July 10, 2018, appellant filed a Chapter 7 bankruptcy petition with the bankruptcy court. Thereafter, appellee filed the five claims against appellant’s bankruptcy estate: claims 3-3, 4-3, 5-3, 6-3 and 7-3. Appellant objected to each of those claims.

At an evidentiary hearing, it was established that on July 6, 1991, appellant married Lisa David. Ms. David was involved in three real estate ventures in which appellant seemed to have had no involvement. On Aug. 29, 2012, Ms. David took her life.

Over a period of time, appellee issued five loans to the David entities. According to appellant, he did not know about the loans until after Ms. David died. However, appellee maintained that appellant was listed as the guarantor for each of the loans, as reflected by a series of notary-acknowledged guarantees and allonges. Appellant maintained that his signatures were forged on those documents.

The bankruptcy court overruled appellant’s objection to claim 4-3 and sustained his objections to the other claims. Appellant has appealed the bankruptcy court’s determination as to claim 4-3.


Appellant argues that appellee’s “intentional and purposeful destruction of [ ] [an] original guarant[ee] instrument underlying [ ] [one of] [appellant’s claims][ ](if any original ever existed) constituted sanctionable spoilation of evidence.” Appellee maintains this argument was not raised in the order being appealed from, and is incorrect. Because appellant has appealed the bankruptcy court’s order denying his second motion to amend, that ruling merges with the prior determination under Rules 59(e), which included the spoilation analysis, and thus this court may address the bankruptcy court’s decision on the question of spoliation.

The court finds the substantive spoilation argument is without merit. While appellee could not establish with certainty precisely when the guarantee in question was destroyed, appellant’s typical policy was to scan and shred supplemental loan documents within a month of them having been signed. Where the guarantee at issue was apparently signed in 2005, and where this litigation did not even commence until 2018, this court finds that the bankruptcy court did not err with respect to its finding as to spoilation.

Claim 4-3

Appellant contends that “the Bankruptcy Court erred in admitting into evidence the Claim 4-3 Guarantee in violation of” Federal Rules of Evidence 1002 and 1003 and that the bankruptcy court also erred when it “admitted that instrument into evidence without authentication as required by” Federal Rule of Evidence 901.

In light of Federal Rule of Evidence 1004, this court finds that the bankruptcy court did not err in admitting the guarantee supporting claim 4-3. Although it was not the original guarantee, the evidence reflected that the original was destroyed and that appellee did not destroy that document in bad faith.

Also, the bankruptcy court did not err in admitting the claim 4-3 guarantee pursuant to Rule 1003. Appellant’s concerns go to the weight of the evidence, and not its admissibility. Moreover, simply because the bankruptcy court found that the evidence tended to show that some documents were fabricated while another document was not, does not necessarily indicate that the bankruptcy court’s ruling as to the nonfabricated document was “arbitrary and irrational.”

The bankruptcy court explained that in reaching its decision as to the authenticity of the claim 4-3 guarantee, it “made factual findings based on the exhibits and the testimony of the experts and the parties in this case” and based upon that, it determined that appellant, as a matter of fact, signed the claim 4-3 guarantee. The bankruptcy court’s findings are supported by the record in that appellee presented evidence that appellant had, on previous occasions, admitted to signing the claim 4-3 guarantee.

Relatedly, appellant contends that it was reversible error for the bankruptcy court to rely on appellant’s discovery response in that separate state court proceeding. Even so, there was an abundance of evidence suggesting that appellant signed the guarantee supporting claim 4-3. Furthermore, the bankruptcy court’s decision as to claim 4-3 did not rely solely on appellant’s admission.

Affirmed in part, reversed in part and remanded.

David v. Summit Community Bank, Case No. 1:20-cv-00721, May 4, 2021. EDVA at Alexandria (Alston). VLW 021-3-232. 17 pp.

VLW 021-3-232