AMICA Mutual Insurance Company v. Brasscraft Manufacturing Company

Filing 19

ORDER granting 13 Motion to Dismiss. So Ordered by District Judge John J. McConnell, Jr. on 5/29/2018. (Urizandi, Nisshy)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
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AMICA MUTUAL INSURANC E
COMPANY a/s/o NADINE
PODGURSK I
Plaintiff,

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)

v.

BRASSCRA FT MANUFAC TURING,
COMPANY
Defendant.

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C.A. No. 17·103-JJM ·LDA

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_____________________________ )
ORDER

The above captioned case is a subrogation action. Arnica has sued BrassCraft
for reimbursem ent of a claim Arnica paid its insured, alleging that BrassCraft's faulty
product caused the damages to the insured's home. The problem here is that Arnica
no longer has the BrassCraft product; Arnica lost it before BrassCraft had the
opportunity to examine the allegedly failed product. Sophisticate d parties who sueor who expect to sue in the future-are expected to retain relevant evidence. Failure
to preserve crucial evidence subjects the party to a variety of sanctions including
exclusion of the evidence and the expert's testimony or report based on it, a jury
instruction describing the adverse inference a juror can draw from the absence of that
evidence, or, in extreme cases, dismissal of the case. Brasscraft seeks dismissal here,
arguing that it is unfairly prejudiced by the fact that it faces claims involving one of
its products that Arnica, through its negligence, failed to turn over and permit
BrassCraft to examine. There is no dispute that Arnica spoliated the product; the
only issue before the Court is what level of sanction the Court should impose.

FACTS
Arnica Mutual Insurance Company paid its insured on her insurance policy
after a flood damaged her home in West Warwick, Rhode Island in August 2013.
Arnica alleges that a BrassCra ft flexible water connector disconnec ted from a toilet
fitting in the second floor bathroom , releasing water into the insured's home. Arnica's
experts, Thomas Zarek and John Certruse, examined the connector and concluded in
a Septembe r 2013 report that the connector 's coupling nut failed because it was under
"loading stress" from bending, and that its material contained "void spaces" that "may
have reduced the strength under loading on the nut." The experts concluded, "It is
likely that the cause of the failure is a combinati on of the material deficienci es in the
plastics, combined with excess stress from the installatio n conditions ."

They

recommen ded further testing of the nut.
Two years later in 2015, Arnica sent a settlemen t demand to BrassCra ft.
BrassCra ft responded by asking for proof that the connector was the cause of the
damage. Arnica did not respond. Instead, a year later, Arnica sent another demand
with a series of photograp hs of the connector .

BrassCra ft again asked for the

connector and any expert reports Arnica had. Arnica responded that it would not ship
the connector and did not have an expert report. Both of these statemen ts now appear
to be less than truthful. In July of 2016, Arnica admitted that it did not have the
connector , which it appears to have lost or destroyed .
BrassCra ft denied Arnica's claim for subrogati on so Arnica filed this complain t
in state court in early 2017; BrassCra ft removed it here. In April 2017, Arnica's

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experts, Messrs. Zarek and Certruse, issued a joint affidavit opining, allegedly based
solely on their review of the series of photographs , that BrassCraft defectively
manufactur ed the connector. They did not mention that they had previously rendered
the same opinion after examining the actual connector.
BrassCraft now moves to dismiss the complaint, arguing that because Arnica
spoliated the product it claims was defective before it had a chance to examine it,
BrassCraft is prejudiced such that it cannot defend against Arnica's subrogation
Arnica admits that it lost or misplaced the connector, but counters that

claim.

dismissal is a drastic remedy for spoliation where there is no evidence of malicious
destruction, especially since BrassCraft is not prejudiced because its expert can use
the pictures and/or get an exemplar connector to examine.! Because the Court finds
that Brass Craft is left with no way adequately to defend itself against Arnica's claims,
even though Arnica's actions were not malicious, BrassCraft' s motion is GRANTED
and Arnica's case is DISMISSED .
ANALYSIS

Rule 37
At the outset, Arnica raises a procedural objection to BrassCraft's motion,
arguing that BrassCraft cannot rely on Rule 37 to advocate dismissal for spoliation.
The Court disagrees.

Brass Craft says, even if an exemplar would suffice, it cannot get an exemplar
because it does not make these connectors anymore.
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This Court's authority to impose the sanction of dismissal derives from
multiple sources in the Federal Rules of Civil Procedure. Arnica's failure to produce
the connector, evidence that is required to be disclosed to BrassCraft under Rule
26(a)(l), violates Rule 37(c)(l), warranting any of the potential sanctions provided in
Rule 37(b)(2)(A)(i)-(vi), which includes dismissal. See Fed. R. Civ. P. 26(a)(l)(A)(i i);
Fed. R. Civ. P. 37(c)(l)(C); Fed. R. Civ. P. 37(b)(2)(A)(v). A party's failure to produce
a product in response to an opposing party's request may violate Rule 37(d), which
grants a district court "broad power" to impose sanctions on a party that resists
discovery. See Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 564 F.3d 110, 118 (2d
Cir. 2009); see alsoR. W. Int'l Corp. v. Welch Foods, Inc., 937 F.2d 11, 18 n. 7 (1st Cir.
1991) (discussing the availability of sanctions under Rule 37(d) where theI written
response given is so lacking as to be no response at all).

Ultimately, the

determinati on of the appropriate sanction for spoliation is within the Court's
discretion, for it to assess based on the facts of the case. See Fujitsu Ltd v. Fed Exp.

Corp., 247 F.3d 423, 436 (2d Cir. 2001). The Court finds no procedural hurdle to
applying the rule under which BrassCraft chose to bring its motion.

Spoliation and the Sanction Therefor
Arnica spoliated evidence in this case; it had notice of the claim or the potential
for the claim, the evidence is relevant to the claim, and the evidence was lost and/or
destroyed. The only real debate here is over what the Court should do about Arnica's
loss of crucial evidence.

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"While a district court has broad discretion in choosing an appropria te sanction
for spoliation , 'the applicable sanction should be molded to serve the prophylac tic,
punitive,

and

remedial

rationales

underlyin g

the

spoliation

doctrine.'" Silvestri v. General Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001)
(quoting West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)). The
Court considers a few factors in determini ng the appropria te sanction for Arnica's
spoliation of evidence: (1) whether the defendan t was prejudice d because of the loss
of the evidence; (2) whether the prejudice can be cured; (3) the practical importanc e
of the evidence; (4) whether the plaintiff was in good faith or bad faith; and (5) the
potential for abuse if the evidence is not excluded. Allstate Ins. Co. v. Creative Env't

Corp., Civ. No. 92-0467T , 1994 WL 499760, (D. R.I. Apr. 1, 1994) (relying on a fivefactor test set forth in Lewis v. Darce Towing Co., Inc., 94 F.R.D. 262, 266-267 (W.D.
La. 1982)). "Fairness to the opposing party

0 plays a substanti al role in determini ng

the proper response to a spoliation motion, and punishme nt for egregious conduct is
not the sole rationale for the most severe sanction of exclusion. " Trull v. Volkswag en

ofAm., Inc., 187 F.3d 88, 95 (1st Cir. 1999).
There is no dispute that the connector was an importan t piece of evidence in
this case. In fact, it is the key piece of evidence that forms the basis of Arnica's claim.
The rest of the inquiry turns on prejudice, whether it can be cured, and Arnica's
conduct. Arnica argues that BrassCra ft has not been prejudice d by not being able to
physically examine the nut and coupling because it has provided the high-reso lution
digital images and BrassCra ft's expert can cure the issues he raises in his affidavit

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by using an exemplar. But according to BrassCraft's expert's assertions, BrassCraft
is unable to mount an effective defense without its expert being able to render
opinions after physically examining the connector.
BrassCraft makes the strongest case that it was prejudiced by the loss of the
connector and Arnica's suggested cures fail to provide an effective antidote.
BrassCraft's expert, Mr. Scott Meek of Forensic Engineering , LLC, submitted an
affidavit indicating that he could not determine the connector's role in the flood, if
any, without physically examining it. He asserts that the pictures Arnica provided
as a substitute are not clear enough and do not provide an adequate look at the
connector. While there appears to be a dispute over the quality of the photographs ,
(Arnica says they are high resolution and BrassCraft says they are unclear and
unusable), BrassCraft's expert should not be stuck with pictures that it finds
inadequate with no opportunity to take its own pictures to interpret.

This is

prejudicial. Although Arnica's 2015 expert report allegedly is based only on the
examination of the photographs , not the connector itself, the fact that these same
experts did have the opportunity to study the actual connector and BrassCraft's
expert did not, unfairly prejudices BrassCraft. See Trull v. Volkswagen ofAm., Inc.,
187 F.3d 88, 95 (1st Cir. 1999), certified question answered, 145 N.H. 259 (2000)
(citations omitted) (the First Circuit upheld the district court's ruling precluding
evidence of the condition of seatbelts when the plaintiff was the only one to examine
the seatbelts prior to the car being destroyed). Finally, BrassCraft's assertion is
correct that it cannot obtain an exemplar because BrassCraft no longer makes that

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connector. Neither the pictures nor the exemplar provide an appropriate cure for the
prejudice caused by the destruction of the connector.
Arnica next argues against the sanction of dismissal because there is no
evidence that the loss or destruction was malicious or that it intended to keep the
connector from BrassCraft.2 BrassCraft argues that Arnica as an insurance company
and frequent subragor should suffer an extreme sanction because, in essence, "it
should have known better." Courts have considered the position of the party accused
of spoiling the evidence in finding a sophisticate d insurance company's spoliation of
evidence "reckless." Northern Assur. Co. v. Ware, 145 F.R.D. 281, 283 (D. Me. 1993).
There can be no doubt that Arnica considered the possibility of seeking
subrogation when it had its two experts examine the connector and produce a report
on that examination in September 2013-nearly two years before its first settlement
demand to BrassCraft and four years before filing suit.

It seems reasonable to

determine that Arnica knew it needed to preserve the connector, as evidence for its
subrogation case and its loss of the connector was reckless even if it was not
intentional. Id ("Insurance companies are no strangers to litigation, and it seems
likely that Plaintiff had litigation in mind when, very soon after the fire, it had its
own expert examine the site. The information provided by Plaintiff's expert made the
commencem ent of litigation a distinct possibility, if not a likelihood.")

2 It is possible that one could infer malicious actions by Arnica in light of the
apparent lack of condor by Arnica to BrassCraft's initial inquiries about the connector.
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In light of the fact that Arnica is an insurance company and in a unique position
to be the first in line to collect evidence that may ultimately be relevant to a
subrogation case, there is a potential for abuse without a significant sanction for
spoliation. The Court cannot permit Arnica to lose or destroy evidence, whether
recklessly or intentionall y, and then later bring a claim for subrogation , forcing a
defendant to defend its case without the opportunity to have its expert examine and
offer a competing opinion on the evidence.
The Court GRANTS Defendant's Motion to Dismiss. ECF No. 13.

John J. McConnell, Jr.
United States District Judge
May 29,2018

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