Wagner v. Marshal Hotel & Resorts Inc. et al
Filing
139
MEMORANDUM ORDER Denying Sea Esta Defendants' Motion in Limine to preclude admissibility of evidence relating to the loss of the wooden railing and Grants plaintiff's request for an adverse inference. Signed by Judge Richard G. Andrews on 8/26/2014. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MARK WAGNER,
Plaintiff,
V.
Civil Action No. 13-81-RGA
SEA ESTA MOTEL I, MARSHALL
HOTELS & RESORTS, INC., CAROLYN
A. METZ, and GEORGE METZ, III,
Defendants.
MEMORANDUM ORDER
The Court DENIES the Sea Esta Defendants' Motion in Limine to preclude admissibility
of evidence relating to the loss of the wooden railing and GRANTS plaintiff's request for an
adverse inference with respect to the destruction of the wooden railing from the Sea Esta Motel I,
the central piece of physical evidence in this case, based on spoliation. The reasons for this
decision are as follows:
The Sea Esta Defendants' insurance carrier 1 permitted the railing and fasteners at issue in
this motion to be auctioned off despite a request from plaintiff's attorney to preserve this
evidence and numerous communications from the storage facility warning the insurance carrier
that its storage unit would be auctioned off if payment was not received.
As the Third Circuit has explained, spoliation arises where: ''the evidence was in the
party's control; the evidence is relevant to the claims or defenses in the case; there has been
1
The insurance carrier is ultimately responsible for any damages award against the Sea Esta Defendants. It is also
worth noting that the facts do not implicate either the Sea Esta Defendants themselves, or their counsel, in the failure
to preserve the railing.
1
actual suppression or withholding of evidence; and, the duty to preserve the evidence was
reasonably foreseeable to the party." Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir.
2012). Parties who breach this duty, either by destroying evidence or allowing evidence to be
destroyed, may be sanctioned by the Court. In re Wechsler, 121 F. Supp. 2d 404, 415 (D. Del.
2000). If the destruction is in bad faith, the Court may impose the most severe sanction,
dismissal of the claim. Id. The Court looks to three factors when determining whether to impose
a sanction for the spoliation of evidence:
1) the degree of fault of the party who altered or destroyed the evidence;
2) the degree of prejudice suffered by the opposing party; and
3) whether there is a lesser sanction that will avoid substantial unfairness to the
opposing party and, where the offending party is seriously at fault, will serve to
deter such conduct by others in the future.
Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994). Despite these factors, there
can be no unfavorable inference if the evidence is "lost or accidentally destroyed, or where the
failure to produce it is otherwise properly accounted for." Brewer v. Quaker State Oil Ref Corp.,
72 F.3d 326, 334 (3d Cir. 1995).
It does not appear that the factors required to establish spoliation are disputed.
Nonetheless, I will briefly address each of them to complete the record. First, the evidence was
indisputably in the control of the Sea Esta Defendants' insurance carrier as it was placed in a
storage facility paid for by the insurance company. (D.I. 129-5 (Tab 1 to Sea Esta Defendants'
Motion in Limine)). Second, the missing evidence is relevant-it is the wooden railing that gave
way when plaintiff leaned on it, causing him to fall three stories and suffer the injuries at the
center of this litigation. Third, there has been actual suppression or withholding of evidence; the
2
railing is gone. 2 Finally, the duty to preserve the evidence was reasonably foreseeable because
plaintiff's attorney sent two separate emails requesting that this critical evidence be preserved.
(D.I. 129-5 (Exhibit A to Plaintiff's Response)).
Based on this evidence, I conclude that spoliation has occurred, and my analysis turns to
the determination of the appropriate sanction using the Schmid factors. Under the first factor, the
degree of fault of the party who destroyed the evidence, I find resoundingly in the plaintiff's
favor. The railing system at issue here was destroyed-auctioned off by the storage facilitybecause the Sea Esta Defendants' insurance company repeatedly failed to pay the monthly rent
for storage. This occurred despite the fact that the storage facility sent the insurance company
numerous past due notices, issued a notice oflien in June 2012, and called twice, in August and
September of2012, to inform it that the unit's rent was past due and its contents would be
auctioned if payment were not received. (D.I. 137-1; D.I. 137-2). This conduct is intolerable.
The degree of prejudice suffered by the opposing party, the plaintiff, also supports an
adverse inference instruction. The plaintiff alleges that: the wooden railing, posts, and fasteners
where plaintiff fell were rotted and deteriorating; the defendants should have been aware of this
dangerous condition; and the defendants did not act prudently and with reasonable care in
keeping the premises safe for guests. The defendants contest each of these points. Although the
plaintiff has pictures of the railing, posts, and fasteners where he fell, that is no substitute for
being able to present the jury with the actual wooden railing for them to see in person. The
disappearance of the railing has thus prejudiced the presentation of plaintiff's case. 3
2
To the extent it is necessary to support a finding of spoliation, I conclude that the insurance company's repeated
failures to respond to notices regarding the looming auction of its unit's contents establishes that the insurance
company's actions were intentional. (D.I. 137-1 (detailing communication attempts made by storage facility with
the insurance company, including multiple late payment notices, notice of lien, and two phone calls prior to the
auction)).
3 Plaintiff is seeking punitive damages. The actual railing would have been a powerful piece of evidence in support
of that argument. The photographs do not have the same impact.
3
The final prong, the availability of lesser sanctions that will achieve the same deterrent
effect, also weighs in favor of granting an adverse inference instruction here. An adverse
inference instruction is a mild sanction compared to the alternatives, such as judgment against
the spoliating party, suppression of evidence, fines, or a dismissal of the spoliating party's claim.
Moreover, the offending party, in my view, is seriously at fault for losing the railing, and its
conduct is deserving of a sanction. If the Court declined to impose a sanction here, it would
serve to give future litigants an implicit stamp of judicial approval to engage in similar conduct. 4
It cannot be the case that a party can promise to preserve critical evidence, take possession of
that evidence, and later allow it to be destroyed due to an inexcusable failure to act. In my
opinion, no lesser sanction will avoid substantial unfairness to the plaintiff while at the same
time preventing analogous conduct in the future.
Nonetheless, Third Circuit law is clear: ''No unfavorable inference arises when the
circumstances indicate that the document or article in question has been lost or accidentally
destroyed, or where the failure to produce it is otherwise properly accounted for." Brewer, 72
F.3d at 334; Bull, 665 F.3d at 79 ("[A] finding of bad faith is pivotal to a spoliation
determination."). The circumstances here do not indicate that the evidence has been lost or
accidentally destroyed. In the face of persistent notices and attempts to elicit monthly rent
payments for the storage unit, the Sea Esta Defendants' insurance carrier refused to act. Missing
a notice or filing a payment late happens, and if the railing had been lost because of a single
mishap along these lines I might be willing to find that the loss was accidental. How an
insurance carrier involved in litigation can ignore countless notices and several phone calls
warning of the lack of payment and attendant consequences for a piece of evidence in that same
4
I expect insurance companies follow what happens in litigation involving other insurance companies, and thus the
impact on the behavior of future litigants is a real concern.
4
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litigation, however, is baffling. I am left to conclude that its lack of action can only be the result
of bad faith. 5 The insurance company's conduct, therefore, supports a finding of spoliation and
an adverse inference instruction. 6
Entered this
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of August, 2014.
5
I vacillated regarding whether the plaintiff would be able to make out a case for bad faith during the pre-trial
conference. Upon further examination of the insurance company's utter disregard for the notices and phone calls
regarding the storage unit, I am convinced that bad faith was at play.
6
In a previous decision, I determined that the Third Circuit case law could support an adverse inference instruction
based on a finding that a party was willfully blind to the destruction of evidence. See Robocast, Inc. v. Microsoft
Corp., 2014 WL 789086, at *2 (D. Del. Feb. 24, 2014). The facts in Robocast did not rise to the level of bad faith or
willful blindness, however, and I declined to give a spoliation instruction in that case. Id. By contrast, the facts of
this case are sufficient to conclude that the insurance company was not only willfully blind, but indeed acting in bad
faith.
5
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