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Allstate Insurance Co. v. Gonyo

July 1, 2009

ALLSTATE INSURANCE COMPANY AS SUBROGEE OF THOMAS LOTHRIDGE, PLAINTIFF,
v.
ALBERT GONYO, DEFENDANT.



The opinion of the court was delivered by: Randolph F. Treece United States Magistrate Judge

MEMORANDUM DECISION and ORDER

In seeking summary judgment dismissing this fire subrogation Complaint, Gonyo raised a two pronged attack, the latter of which asserted spoliation of evidence. Dkt. No. 44, Def.'s Mot. for Summ. J, dated Oct. 3, 2008. The crux of this spoliation assertion was that critical evidence, the fire-damaged cabin, was destroyed before Gonyo had an opportunity to have an expert conduct an investigation as to the origin of the fire, thus depriving him of a viable defense. The origin of the fire is a critical linchpin in this case.

This Court issued a Memorandum-Decision and Order (MDO) denying Gonyo's Motion for Summary Judgment, and addressing, to some degree, the spoliation doctrine. Dkt. No. 52, Mem.-Dec. & Order, dated Apr. 8, 2009, at pp. 12-17. Succinctly, based upon the record, this Court found that the issue of spoliation in this case posed a question of fact, "the most prominent and material issue of fact [being] the date when the cabin was actually demolished." Id. at p. 15. If the destruction of the cabin occurred prior to April 12, 2006, the date when Gonyo received official notice from Allstate that his conduct in lighting the cabin's wood burning stove caused the conflagration, a significant issue would have been created in that he was not provided an opportunity to have an expert of his choosing investigate the origin of the fire. Conversely, if the razing of the damaged cabin occurred after this correspondence, there would be a strong inference that Gonyo had an opportunity to inspect with the assistance of an expert but either declined to pursue it or failed to make the request. Consequently, the Court stated that we have a question of fact, which must be resolved before the Court could consider any form of sanction. Id. at p. 17. However, since the Court did not find in the record any willfulness or bad faith in the destruction of the cabin, the Court immediately declined "to impose the nuclear option of dismissal[,]" id. at p. 14, leaving all other conceivable sanctions, including an adverse inference instruction, in play to rectify any finding of spoliation.

Within days after the MDO was issued, Gonyo served upon Allstate several Requests for Admissions, to which Allstate objected as being untimely and in violation of this District's Local Rule 16.2. The Court convened a telephone conference on May 1, 2009, to address this disagreement. The Court found that Gonyo had established good cause to serve requests to admit that spoke to whether the cabin was demolished or most of the fire debris had been removed prior to April 12, 2006, a pivotal fact in our spoliation analysis. Dkt. No. 58, Order, dated May 1, 2009. Further, the Court directed the parties to submit legal memoranda addressing whether the factual issues regarding spoliation should be handled prior to or during the jury trial. Id. at p. 2. Pursuant to this directive, both parties have respectfully filed a letter-memorandum. Dkt. Nos. 60, Def.'s Lt.-Br., dated June 4, 2009, 62, Pl.'s Lt.-Br., dated June 5, 2009, & 63, Def.'s Reply Lt.-Br., dated June 8, 2009.

The only issue to which both parties concur is that the Court should resolve the factual issues surrounding spoliation and what sanction, if any, should be imposed in advance of the jury trial. See Dkt. Nos. 60 at p. 6, & 62 at p. 1. The Court accepts their concurrence.

A. ADDITIONAL FACTS

The parties' familiarity with the facts are presumed. See Dkt. No. 52, Mem.-Dec. & Order at pp. 2-6. Nonetheless, both parties submitted with their respective Letter-Briefs additional facts, the most salient being Allstate's recent Admissions.*fn1 Dkt. No. 60-2, Pl.'s Admits. It is now confirmed that the subject fire-damaged cabin was razed and all of the debris removed prior to April 12, 2006. Id. Furthermore, we now know that Dennis Ware, Plaintiff's expert, did not preserve any evidence nor play any role, or have any say, on whether the fire-damaged cabin would be preserved for Gonyo's inspection. See generally Dkt. No. 60-3, Dennis Ware Dep., dated May 21, 2009 (excerpts). Yet, when questioned by Allstate's attorney, Ware opined that an expert could determine the cause of a fire solely by looking at the photograph, absent a visit to the scene, and such documentation and analysis remains available in this case. Dkt. No. 62, Ex. C, Ware Dep. (excerpts) at pp. 98-99.

In the MDO, the Court stated that the issue of spoliation posed a question of fact. Dkt. No. 52 at p. 15. In our view, at that time, it was "far from conclusive as to whether Gonyo was indeed prevented a reasonable opportunity to inspect the fire scene." Id. at p. 17. We further stated that if sanctions are appropriated, the degree of those sanctions warranted further consideration. Id. at p. 16. Weighing the additional facts, the Court is now in a position to rule on spoliation and sanctions.

B. ANALYSIS

Even though the Court discussed in detail the law pertaining to spoliation, it deserves reiteration that "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." In re Terrorist Bombings of United States Embassies in East Africa, 552 F.3d 93, 148 (2d Cir. 2008) (quoting Allstate Ins. Co. v. Hamilton Breach/Proctor Silex, Inc., 473 F.3d 450, 457 (2d Cir. 2007) (citation omitted)). The obligation to preserve evidence "arises when the party has notice that the evidence is relevant to the litigation or when a party should have known that the evidence may be relevant to future litigation." Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423, 436 (2d Cir. 2001). In fire cases, the National Fire Protection (NFPA) standard 921, section 4.4.4 requires fire evidence to be preserved for further testing and courtroom purposes. Dkt. No. 41-10. Key to the duty to preserve is knowing when it attaches. In our case, the duty could have attached on the day after the fire, November 15, 2005, or probably after Allstate's expert Dennis Ware had inspected the destroyed premises, but certainly after Allstate's decision to pursue Gonyo to recover for the damages.

Based upon these new revelations that the cabin was razed or substantially renovated prior to April 12, 2006, as well as those facts previously disclosed, the clear implication is that Gonyo, who was unaware that he would be a potential litigant in this case until April 12, 2006, was unable to hire a fire expert of his choosing to inspect the premises in order to determine the origin of the fire. Whether the destruction of material evidence in this case was caused through malfeasance or misfeasance is of no critical moment. It is clearly established that spoliation has occurred at the hands of Allstate.

Anticipating that there may be a finding of spoliation, Gonyo renews his quest for summary judgment. Dkt. No. 60 at pp. 4-6. The Court remains steadfast that a dismissal of the actions under these circumstances is too drastic and extreme a remedy and does not appropriately "serve the prophylactic, punitive, and remedial rationales underlying the spoliation doctrine." West v. Goodyear & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999). That is,

[t]he sanction should be designed to: (1) deter parties from engaging in spoliation; (2) place the risk of an erroneous judgment on the party who wrongfully created the risk; and (3) restore "the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party."

West v. Goodyear Tire & Rubber Co., 167 F.3d at 779 (citing Kronisch v. United States, 150 F.3d ...


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