State Farm Fire and Casualty Company v. General Motors LLC

Filing 55

MEMORANDUM DECISION AND ORDER. IT IS ORDERED that Defendant's Motion for Sanctions Due to Spoliation (Dkt. 49 ) is GRANTED. This action is DISMISSED with prejudice as a sanction for Plaintiff's spoliation of evidence. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (kt)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
STATE FARM FIRE AND
CASUALTY COMPANY, as
subrogee of George Adams,

Case No. 1:20-cv-00040-BLW
MEMORANDUM DECISION
AND ORDER

Plaintiff,
v.
GENERAL MOTORS, LLC, a
Delaware limited liability company,
Defendant.

INTRODUCTION
Before the Court is Defendant General Motors, LLC’s Motion for Sanctions
Due to Spoliation. (Dkt. 49.) GM contends that Plaintiff, State Farm Fire and
Casualty, wrongfully destroyed important evidence, namely, the vehicle at issue in
the lawsuit, and that the Court should impose sanctions on Plaintiff. The Court will
grant the motion for sanctions and impose the sanction of dismissal.
BACKGROUND
This subrogation lawsuit arises out of a fire at the home of Plaintiff’s
insured, George Adams. Plaintiff alleges that the fire was caused by Adams’ 2007
GMC Acadia (the vehicle) catching fire.

MEMORANDUM DECISION AND ORDER - 1

On May 4, 2019, Adams drove the vehicle from Boise, Idaho to his home in
Mountain Home, Idaho and parked the vehicle in the garage. A short time later, a
fire started in the garage, ultimately spreading to the house, and causing significant
damage to Adams’ house, business, and other property. Adams filed a claim for the
property damage with his insurer, State Farm Fire and Casualty (State Farm Fire),
and was paid insurance benefits. Adams’ vehicle was separately insured by State
Farm Mutual Automobile Company (State Farm Auto).
On May 6, 2019, a State Farm Fire representative visited Adams’s house.
The State Farm Fire representative had a telephone conversation with a State Farm
Auto claims representative regarding the vehicle and received permission to allow
State Farm Fire’s inspector to inspect the vehicle. Dkt. 50 at 4. The State Farm Fire
representative also requested that the vehicle not be sent to Insurance Auto
Auctions, Inc. (IAA) in Boise, but to a different holding facility.
State Farm Fire’s inspector, Shane Hartgrove, prepared a report, including
three photos of the vehicle, and “concluded that the fire must have been caused by
‘non-specific electrical failure’ at the connection point between the positive battery
cable and the fuse block” of the vehicle. (Dkt. 49-1 at 4.)
On May 8, 2019, State Farm Auto towed the vehicle from Adams’ residence
to IAA. Dkt. 49-1 at 4. On May 22, 2019, Hartgrove traveled to IAA to inspect the

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vehicle again. (Id.) He prepared a Fire Cause Analysis Report for State Farm Fire
on May 24, 2019. (Id.)
On either May 27, 2019, or June 28, 2019, the vehicle was sold at a salvage
auction by IAA. (Compare Def.’s Br., Dkt. 49-1 at 4, with Pl.’s Resp., Dkt. 50 at
4.) State Farm Fire alleges that it had no knowledge of the sale at the time, and that
it was informed sometime after June 28 that the vehicle had been sold. (Dkt. 50 at
4-5.) On August 21, 2019, almost a month after the vehicle had been sold, State
Farm Fire notified GM of its claim for subrogation.
ANALYSIS
A.

The sale of the vehicle constitutes spoliation of evidence.

The sale of the vehicle that is the subject of this lawsuit constitutes
spoliation of evidence under federal law. “Spoliation of evidence is the destruction
or significant alteration of evidence, or the failure to properly preserve property for
another's use as evidence in pending or reasonably foreseeable litigation.” Balla v.
Idaho State Bd. of Corr., 119 F. Supp. 3d 1271, 1282 (D. Idaho 2015). Where, as
here, spoliation of evidence occurs before the litigation is filed, the sanctions are
governed by the inherent power of the Court to make evidentiary rulings in
response to the destruction of relevant evidence. Performance Chevrolet, Inc. v.
Market Scan Info. Sys., Inc., No. CV-04-0244-BLW, 2006 WL 1042359, at *1 (D.
Idaho Apr. 18, 2006); see also Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir.

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1993).
The Ninth Circuit “has not set forth a precise standard for determining when
spoliation sanctions are appropriate,” but “the majority of trial courts have adopted
the following test: (1) the party having control over the evidence had an obligation
to preserve it at the time it was destroyed; (2) the [evidence] w[as] destroyed with a
culpable state of mind; and (3) the evidence was relevant to the party’s claim or
defense such that a reasonable trier of fact could find that it would support that
claim or defense.” Bell v. City of Boise, No. 1:09-cv-540-REB, 2015 WL
13778741, at *2 (D. Idaho Aug. 23, 2015) (quoting Justice v. Rockwell Collins,
Inc., No. 3:12-CV-01507-AA, 2015 WL 4507445, at *8 (D. Or. July 22, 2015))
(cleaned up). The party seeking spoliation sanctions has the burden of establishing
the elements. Id.
1. State Farm Fire had an obligation to preserve the vehicle.
With respect to the first element, “[a] party must preserve evidence it knows
or should know is relevant to a claim or defense of any party, or that may lead to
the discovery of relevant evidence.” Brown v. Reinke, No. 1:12-cv-262-BLW, 2016
WL 107926, at *5 (D. Idaho Jan. 8, 2016). The duty to preserve evidence exists
during litigation, and during the period before litigation “when a party should
reasonably know that evidence may be relevant to anticipated litigation.” Id.
The Court finds, and State Farm Fire does not dispute, that State Farm Fire

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had an obligation to preserve the vehicle at the time it was sold at the salvage
auction. (See Pl.’s Resp., Dkt. 50 at 7.) Nonetheless, State Farm Fire argues that
this element is not met because it did not have control over the vehicle at the time
it was sold and that, instead, it was State Farm Auto that had control over the
vehicle. State Farm Fire argues that it therefore cannot be sanctioned for spoliation
of the evidence.
The Court is not persuaded by this argument. State Farm’s own corporate
disclosure statement in this case failed to distinguish between State Farm Fire and
State Farm Auto. (See Pl.’s Corporate Disclosure Statement, Dkt. 7.) Indeed, the
corporate disclosure statement was titled “Plaintiff State Farm Mutual Automobile
Insurance Company’s Corporate Disclosure Statement,” and the document failed to
mention State Farm Fire and Casualty at all. Id. Further, State Farm’s website
identifies State Farm Mutual Automobile Insurance Company as “the parent
company of several affiliates and subsidiaries that provide property and life
insurance,” including State Farm Fire and Casualty.1 State Farm cannot benefit
from destruction of crucial evidence simply because it was a separate corporate

1

Fast Facts, STATE FARM, https://www.statefarm.com/about-us/companyoverview/company-profile/fast-facts (last visited May 27, 2021); see also State Farm
Companies, STATE FARM, https://www.statefarm.com/about-us/company-overview/companyprofile/state-farm-companies (last visited May 27, 2021).

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entity that had control of the vehicle at the time. This is particularly true when
State Farm itself discusses the two entities interchangeably.
Furthermore, even assuming that their relationship is such that State Farm
Auto’s actions cannot be directly attributed to State Farm Fire, the latter still had
indirect control over the vehicle. “[C]ourts have extended the affirmative duty to
preserve evidence to instances where that evidence is not directly within the
party’s custody or control so long as the party has access to, or indirect control
over, such evidence.” Cyntegra, Inc. v. Idexx Labs., Inc., No. CV 06-4170 PSG
(CTx), 2007 WL 5193736, at *5 (C.D. Cal. Sept. 21, 2007); cf. R.F.M.A.S., Inc. v.
So, 271 F.R.D. 13, 24 (S.D.N.Y. 2010) (“Evidence in a party’s ‘control’ has been
interpreted to mean evidence that the party has the legal right, authority, or
practical ability to obtain by virtue of its relationship with the party in possession
of the evidence.”).
In Cyntegra, the court held that the plaintiff had sufficient control over
documents stored on third-party computer servers, noting that “[b]ecause plaintiff
could have anticipated the possibility of litigation by this time, it had an
affirmative duty to . . . preserve the evidence. Plaintiff cannot bypass this duty by
abandoning its documents to a third-party and claiming lack of control.” Cyntegra,
Inc., 2007 WWL 5193736, at *5. The Cyntegra court stressed that “[r]eleasing

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Plaintiff from sanctions when it could have, but chose not to save information
would undermine the discovery process.” Id.
Similarly, releasing State Farm from sanctions here where it could have, but
chose not to, place a hold on the vehicle would undermine the discovery process.
(See Affidavit of IAA Representative, Dkt. 50-3 at 1 (“Our records do not indicate
that a hold to not sell the vehicle was ever placed on this vehicle prior to the
sale.”).) Regardless of which State Farm corporate entity made the decision to
bring the vehicle to IAA, State Farm Fire indisputably knew that it was there and
took no action to preserve it. Accordingly, the Court finds that GM has met its
burden in proving the first element of its spoliation of evidence claim.
2. State Farm Fire had the requisite state of mind.
GM has also met its burden in proving that State Farm was sufficiently
culpable. As a threshold matter, the parties disagree about whether the federal
standard or the Idaho standard should govern the culpability determination. The
Ninth Circuit has instructed that sanctions for spoliation may be imposed upon
“simple notice of potential relevance to the litigation,” and a finding of bad faith is
not required. Glover, 6 F.3d at 1329. In contrast, Idaho law requires a finding of
bad faith and “the merely negligent loss or destruction of evidence is not sufficient
to invoke the spoliation doctrine.” Courtney v. Big O Tires, Inc, 139 Idaho 821,
824 (2003).

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As this Court has previously held, where “spoliation occurs before the
litigation is filed, the sanctions are governed by the inherent power of the Court to
make evidentiary rulings in response to the destruction of relevant evidence.”
Performance Chevrolet, 2006 WL 1042359, at *1. To the extent that State Farm
invites the Court to change its position on this issue, the Court declines. Thus,
federal law on spoliation applies and a finding of bad faith is not required.
There is no dispute that State Farm had notice that the vehicle was relevant
to the litigation, yet State Farm caused the vehicle to be brought to an auto auctions
facility and failed to take any action to prevent it from being sold at auction. “As a
large insurance company, Plaintiff is a sophisticated litigant aware of its
obligations to preserve relevant evidence.” State Farm Fire & Cas. Co. v. Broan
Mfg. Co., 523 F. Supp. 2d 992, 998 (D. Ariz. 2007). Therefore, the Court finds that
the vehicle was destroyed with the required state of mind.
3. The vehicle was relevant to the claims at issue in the case.
Finally, there is no dispute that the vehicle was relevant to both parties’
claims and defenses in the case. See Def.’s Br., Dkt 50 at 8. Accordingly, the Court
finds that GM has met its burden in proving that spoliation sanctions are
appropriate.
B.

The appropriate sanction is dismissal.

Because the Court finds that sanctions are appropriate, the remaining

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question is the severity of the sanction. GM urges three possible sanctions: a nonrebuttable adverse inference, exclusion of State Farms’ evidence regarding the
vehicle, or outright dismissal of the case. However, it argues that State Farm’s
destruction of evidence warrants the severest possible sanction: dismissal. The
Court agrees.
The Court has wide discretion in imposing sanctions, which “can range in
severity from minor sanctions, such as awarding attorneys’ fees, to more severe
sanctions including permitting a jury to draw an adverse inference against a party
responsible for the destruction of evidence, ordering the exclusion of evidence, or
even dismissal of claims.” Dickinson Frozen Foods, Inc. v. FPS Food Process
Solutions Corp., No. 1:17-cv-519-DCN, 2019 WL 2236080, at *6 (D. Idaho May
21, 2019). At the end of the day, the choice of an appropriate sanction “must be
determined on a case-by-case basis, and should be commensurate to the spoliating
party’s motive or degree of fault in destroying the evidence and the degree of
prejudice suffered by the movant.” Balla, 119 F. Supp. 3d at 1282 (citation and
internal quotation marks omitted).
A court considering dismissal as a sanction for a party’s spoliation of
evidence must weigh several factors: “(1) the public's interest in expeditious
resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of

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prejudice to the party seeking sanctions; (4) the public policy favoring disposition
of cases on their merits; and (5) the availability of less drastic sanctions.”
Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir.
1995). For dismissal to be proper, the conduct must be due to “willfulness, fault, or
bad faith.” Id.
“A party’s destruction of evidence qualifies as willful spoliation if the party
has some notice that the evidence was potentially relevant to the litigation before it
was destroyed.” Broan Mfg. Co., 523 F. Supp. 2d at 996 (citing Leon v. IDX Sys.
Corp., 464 F.3d 951, 959 (9th Cir. 2006)). As previously discussed, there is no
dispute that State Farm knew that the vehicle was relevant to potential litigation.
Despite that knowledge, it caused the vehicle to be taken to IAA where it was sold
at a salvage auction and failed to place any type of hold on the vehicle. The Court
finds that State Farm’s conduct was willful.
The first and second Anheuser-Busch factors support dismissal where the
destruction of evidence “obscures the factual predicate of the case and consumes
months of sanction-related litigation.” Broan Mfg. Co., 523 F. Supp. 2d at 997
(citing Leon, 464 F.3d at 958 n.5). In Broan, the court found that these two factors
weighed in favor of dismissal where “Plaintiff’s spoliation of the fire scene
obscures and affects the very heart of the matter in dispute: whether Defendant’s

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fan caused the fire.” Id. Moreover, the Broan court noted that “the Court has spent
significant resources investigating and resolving the spoliation issues.” Id.
Here too, the sale of the vehicle affected the very heart of the dispute:
whether the vehicle caused the fire. GM cannot now discover any facts regarding
the vehicle beyond the photographs taken by State Farm and the report prepared by
State Farm’s inspector. In essence, State Farm’s actions forces GM to defend itself
with one hand tied behind its back. Additionally, the Court has spent significant
time resolving this dispute. The first two Anheuser-Busch factors thus support
dismissal.
The third factor requires consideration of the risk of prejudice to GM. The
prejudice inquiry “ ‘looks to whether the [spoiling party's] actions impaired [the
non-spoiling party's] ability to go to trial or threatened to interfere with the rightful
decision of the case.’ ” Leon, 464 F.3d at 959 (quoting United States ex rel. Wiltec
Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 604 (9th Cir. 1988)).
In Broan, the court noted that “the origin and causes of the fire would be
determined through expert witnesses” and that the spoliation of evidence deprived
Defendant’s experts “of the ability to determine whether the evidence would have
supported their theory of the case.” Broan Mfg. Co., 523 F. Supp. 2d at 997.
Further, evidence of the fire scene was “limited to that which Plaintiff chose to

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preserve,” and Defendant was unable to conduct an independent investigation. Id.
The court thus found that the spoliation “threatens to interfere with the rightful
decision of the case by preventing full development of the alternative theories of
causation,” and that the sanction of dismissal was warranted. Id.
Here, as in Broan, the defendant (GM) is severely prejudiced by the inability
to conduct its own investigation to determine the cause of the fire. The fact that
State Farm has taken several hundred photographs of the vehicle and offered this
evidence to GM does not eliminate the severe prejudice to GM of not having the
opportunity to conduct its own investigation. See Silvestri v. General Motors
Corp., 271 F.3d 583, 594 (4th Cir. 2001) (“To require General Motors to rely on
evidence collected by [Plaintiff’s] experts in lieu of what it could have collected
would result in irreparable prejudice.”); Flury v. Daimler Chrysler Corp., 427 F.3d
939, 946 (11th Cir. 2005) (“[D]irect examination of the vehicle’s condition was
critically important to this case. Spoliation of the vehicle forced experts to use
much less reliable means of examining the product’s condition. The district court
thus erred in concluding that a simple jury instruction could cure the resulting
prejudice to defendant.”). Accordingly, the third Anheuser-Busch factor weighs in
favor of dismissal.
The fourth Anheuser-Busch factor— the public policy favoring disposition

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of cases on their merits—weighs against dismissal because the sanction of
dismissal is case-dispositive. However, this factor standing alone is insufficient to
outweigh the other factors. Leon, 464 F.3d at 960-61. “Nor is the Court inclined to
give great weight to this factor when the spoliation hinders [GM’s] ability to
investigate and present the merits of the case.” Broan Mfg. Co., 523 F. Supp. 2d at
997-98.
Finally, the Court must consider the availability of less drastic sanctions.
The Court finds that neither an adverse inference instruction to the jury, nor the
exclusion of the relevant evidence, would be adequate to cure the prejudice
suffered by GM.
In Dickinson Frozen Foods, this Court found that a non-rebuttable adverse
inference instruction was adequate where the plaintiff destroyed the evidence that
was the subject of the litigation after the defendant had been notified of the claim
and had had an opportunity to inspect the evidence. Dickinson Frozen Foods, 2019
WL 2236080, at *9. The Court distinguished the case from Unigard and Broan,
noting that those cases “both involved a party’s destruction of key evidence before
the injured party had notice of a potential claim against it,” and thus warranted
harsher sanctions. Id. at *16 (discussing Unigard Sec. Ins. Co. v. Lakewood Eng’g
& Mfg. Corp., 982 F.2d 363 (9th Cir. 1992) and Broan Mfg. Co., 523 F. Supp. 2d

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992).
The present case involves the destruction of evidence that affects the very
heart of the matter in dispute prior to GM even being notified of the claim against
it, much less having had an opportunity to inspect. Thus, unlike Dickinson Frozen
Foods, an adverse inference instruction in the present case would not be sufficient.
Nor would the exclusion of State Farm’s evidence relating to the vehicle be
adequate here. As the Broan court noted: “Although lesser sanctions are feasible,
they do not cure the prejudice caused to this litigation. Specifically, these lesser
sanctions do not address the fact that Defendant has limited evidence available
upon which to construct its defense.” Broan Mfg. Co., 523 F. Supp. 2d at 998. Here
too, exclusion of State Farm’s evidence gathered on the vehicle would not address
the fact that GM was unable to examine the vehicle with its own experts and is
unable to adequately prepare a defense to State Farm’s products liability claims.
Thus, this final factor also weighs in favor of dismissal.
Accordingly, the Court will grant GM’s motion for sanctions, and order that
the case be dismissed as a sanction for Plaintiff’s spoliation.
ORDER
IT IS ORDERED that:
1. Defendant’s Motion for Sanctions Due to Spoliation (Dkt. 49) is
GRANTED.

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2. This action is DISMISSED with prejudice as a sanction for Plaintiff’s
spoliation of evidence.

DATED: June 3, 2021

_________________________
B. Lynn Winmill
U.S. District Court Judge

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