OLYMPIA — Contractors who built Seattle’s new Highway 99 tunnel may continue to sue the state for $500 million in cost overruns, despite losing steel-pipe fragments and boulders that are crucial evidence, a judge ruled Thursday.

However, jurors in the possible trial this October will receive “adverse instructions,” and Seattle Tunnel Partners (STP) could be limited in calling expert witnesses, said Judge Carol Murphy in Thurston County Superior Court.

But she stopped far short of tossing out the case entirely, as the state’s lawyer requested.

Murphy ruled this spring that STP committed “spoliation,” the legal term for losing or destroying evidence.

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The steel, boulders and a deputy project manager’s missing journal are relevant to the core argument pressed by STP: That an 8-inch-diameter steel pipe, buried by Washington state in 2002 for groundwater testing, caused the giant tunnel boring machine Bertha to stall next to the city’s waterfront in December 2013.

The state says it isn’t responsible for Bertha’s breakdown and cost overruns.

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The materials were stored outdoors on a pallet instead of a secure warehouse, until workers cleaning the job site one night disposed of both the metal and boulders. STP under contract was obligated to keep the evidence, and instead concealed the loss from the Washington State Department of Transportation for months, David Goodnight, an attorney for WSDOT, said in the hearing.

A deputy project manager’s journal that also went missing covered the time period during and after Bertha’s stall.

Asked afterward if Murphy’s ruling will coax the two sides into settlement talks, Goodnight said, “Not in our view. We want to forge ahead toward trial and try this case.”

The total claims by STP, to cover repairs to the 4 million-pound drill and more than two years of delays, exceed $500 million, he said, and court documents show figures as high as $642 million. Any state losses would likely be paid out of future gasoline-tax revenues, but for now WSDOT is aiming to hold its payments near the original $1.44 billion contract.

Whatever the outcome in the case, appeals to higher courts could follow for years.

Jury instructions have yet to be written, but Murphy said they’ll include highlights from her April spoliation findings.

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She reiterated a few Thursday: “By its actions and inactions, STP consciously disregarded the importance of the missing pipe pieces and boulders, in failing to preserve them,” or “STP acted in bad faith by concealing from WSDOT that it lost or destroyed the pieces of pipe and the boulders.”

However, she also appeared to accept the argument of STP’s attorney, John Dingess, that tossing out the case completely would be excessive punishment, because other pipe sections, data from within the machine, and experts are plentiful.

Dingess claimed the missing materials only answer a limited question of how Bertha’s 75-pound steel cutting bits, arrayed on a rotating disk, interacted with the pipe and rocks.

“The damage to the cutter bits was minimal. The damage to the machine was substantial,” he said. The machine stall on Dec. 6, 2013, was accompanied by overheating near the axle, grit that penetrated Bertha’s bearing seals, and cracked internal gears.

The four-lane, double-deck tunnel from Sodo to South Lake Union opened Feb. 4, and carries about 75,000 vehicles a day. Tolls ranging from $1 to $2.25 are scheduled to begin this fall.