Plaintiff Hartford Fire Insurance Company ("HFIC") commenced the instant subrogation action against Defendant Henry Company ("Henry") seeking to recover monies HFIC paid to its insured, Colonie Youth Center ("CYC"), in connection with the delamination of Defendant's product, Air-Bloc 31, during the construction of the CYC. Presently before the Court is Defendant's Motion for summary judgment pursuant to Fed. R. Civ. P. 56 seeking dismissal of the Amended Complaint. Dkt. No. 29.
CYC contracted with Turner Construction Co., a general contractor, to construct a recreation center. The project architect specified that Henry's product, Air-Bloc 31, be applied to the exterior surface of the building's walls. Turner subcontracted Cornerstone Waterproofing to apply the Air-Bloc 31. Cornerstone had prior experience applying Air-Bloc 31.
The application of the Air-Bloc 31 commenced on May 4, 2006. It was first applied to the east elevation of the building. On May 5, 2006, there was a small amount of precipitation.*fn1 The application of the product continued on May 8, 9, 10 and 11th to the East, South and West walls of the building. On May 12, 2006, there was about 2.16 inches of rain. Additional Air-Bloc 31 was applied to the West wall on May 30, 2006. The parties dispute whether this last application of Air-Bloc 31 was applied while it was raining. Throughout the period during which the Air-Bloc 31 was applied, the relative humidity exceeded 50%. In late May and early June 2006, there was additional rain. During this rain, the Air-Bloc 31 was exposed and unprotected.
During the process of applying the Air-Bloc 31, the roof of the building was incomplete, thereby permitting rain to flow down the inside of the cinder block walls. Defendant claims that this condition permitted the water to migrate "from the back side through the concrete block to the exterior surface on which the product was applied, where it interrupted and reversed the curing process of Air-Bloc 31." Pl.'s Stmnt. of Mat. Facts at ¶ 15.
On June 1, 2006, delamination of the Air-Bloc 31 was observed. Henry paid $30,000 cash to Cornerstone and provided $9,000 in material credits to compensate Cornerstone for the cost of removing the Air-Bloc 31. The Air-Bloc 31 was removed by July 14, 2006. Defendant paid for all remediation except for the purchase and application of the new Air-Bloc 07 product.
Federal Rule of Civil Procedure 56 provides that summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In applying this standard, courts must "'resolve all ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party opposing summary judgment.'" Brown v. Henderson, 257 F.3d 246, 251 (2d Cir. 2001) (quoting Cifra v. General Electric Co., 252 F.3d 205, 216 (2d Cir. 2001)). Once the moving party meets its initial burden by demonstrating that no material fact exists for trial, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (citations omitted). Rather, the non-movant "must come forth with evidence sufficient to allow a reasonable jury to find in her favor." Brown, 257 F.3d at 251 (citation omitted). Bald assertions or conjecture unsupported by evidence are insufficient to overcome a motion for summary judgment. Carey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991); Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990).
a. Spoliation of Evidence
Defendant first moves for summary judgment on the ground that Plaintiff's suit is barred because of the spoliation of evidence. Defendant contends that Plaintiff anticipated litigation immediately after the delamination of the Air-Bloc 31, as evidenced by their quick retention of counsel in June 2006, but failed to preserve samples of the delaminated product for inspection and testing, thereby prejudicing Henry's defense. Plaintiff responds that Henry had ample opportunity to inspect the product, including the fact that its own employee witnessed the delamination on June 1, 2006 and advised that it be removed and reapplied. Plaintiff also contends that it did not retain counsel until late July 2006, after the Air-Bloc 31 had been removed.
"Spoliation is the destruction or significant alteration of evidence, or failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation." West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). "The obligation to preserve evidence arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation." Fujitsu, Ltd. v. Federal Exp. Corp., 247 F.3d 423, 436 (2d Cir. 2001). "Once a court has concluded that a party was under an obligation to preserve the evidence that it destroyed, it must then consider whether the evidence was intentionally destroyed, and the likely contents of that evidence. The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge." Id.
Here, assuming Plaintiff had a duty to preserve the evidence, and acknowledging that samples of the product may well be relevant to the claims at issue here, the Court finds that the sanction of dismissal is not warranted. This conclusion is supported by the facts that Defendant was well aware that there was a problem with its product; Defendant was involved in discussions as to how to remedy the problem; Defendant's agents visited the site on June 14 and observed the application and condition of the product; by June 20, 2006, Defendant had formed an opinion as to why the delamination occurred; and in its June 20, 2006 letter, Defendant itself recommended that "any delaminated, flaking or peeling Air-Bloc 31 material" be removed (see also Pl.'s Ex. H (recommending that any flaking material be removed). There are no facts suggesting that Plaintiff intentionally attempted to destroy ...