Cumberland Ins. v. Delmarva Power , 226 Md. App. 691 ( 2016 )

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 72
September Term, 2015
_________________________
CUMBERLAND INSURANCE GROUP
v.
DELMARVA POWER, D/B/A
DELMARVA POWER & LIGHT CO.
_________________________
Hotten,
Berger,
Nazarian,
JJ.
_________________________
Opinion by Nazarian, J.
_________________________
Filed: February 1, 2016
*Michele D. Hotten, while still a member of this
Court, participated in the hearing of this appeal
and approved the contents of this opinion but did
not participate in the decision to publish the
opinion.
David Wickwire’s house in Hurlock, Maryland sustained major damage from a fire.
His homeowner’s insurer, Cumberland Insurance Group (“Cumberland”), paid his claim,
and came to believe that the fire was caused by faulty wiring in the house’s electric meter
box. Cumberland seeks subrogation from Delmarva Power (“Delmarva”), Mr. Wickwire’s
electric company, but the Circuit Court for Dorchester County granted Delmarva’s motion
for summary judgment on the ground that Cumberland destroyed the fire scene, which
deprived Delmarva of the opportunity to investigate or defend the claim. Cumberland
appeals, and we affirm.
I. BACKGROUND
Mr. Wickwire insured his home with Cumberland, and Delmarva provided his
electric service. A fire broke out at the house on the morning of May 5, 2013, and local fire
department personnel responded and put out the fire. Delmarva also responded by sending
a lineman, Jeff Willoughby, to disconnect the power supply to the house, evidently at the
request of the fire department. Mr. Willoughby did not serve in any investigative capacity
that day1; his job was to “make things safe”—i.e., to “[m]ake sure the wire was dead going
to the house”—so he “[w]ent to the transformer, figured out which wire went to that house,
[and] disconnected it in the transformer . . .”
1
He testified at his deposition to that effect: “I’m not a professional in fires. I don’t know
where the fire started, how it started.”
Thomas Harr, a Senior Deputy State Fire Marshal, investigated the fire, and noted
significant smoke and water damage throughout the interior of the house. The worst fire
damage was in the utility room: “[t]he ceiling was down and the remains of the rafters were
exposed. The roof was consumed above this room extending up to the peak. The wires in
this are[a] suffered heavy fire damage.” The Fire Marshal concluded that the fire originated
in the meter box. He based his conclusion on burn patterns, witness statements, and the
heavy fire damage to the meter box (which showed that the contact lugs in the box were
loose at the point where they connected with the wire). He removed the meter and meter
box from the scene.
Cumberland retained a fire cause and origin expert, Timothy Hattwick, who
inspected the property on May 8, 2013, three days after the fire. He walked through the
house and took pictures, but he did not take any evidence from the scene.2 He reasoned
from what he saw “that the fire had moved in from the exterior[, and at] that point
combining that knowledge or that observation with what I observed on the exterior, I
refocused my examination on the exterior as the area of origin.” Mr. Hattwick concluded
that the fire “originated in the area of the meter.” He contacted Fire Marshal Harr and
asked him to return to the scene to bring with him the remains of the meter. The Fire
Marshal was unavailable, but the two spoke about the investigation. On May 24, 2013,
2
Ironically, he noted why he did not take the electrical distribution panel away: “That
would have been premature at that point in time. It would have spoliated the scene.”
2
Cumberland’s electrical engineering expert, Michael Wald, also inspected the house and
examined the remains of the meter and meter box (or, as he put it, a “paper bag with remains
of electrical devices in it”).
As the Cumberland investigation proceeded, it does not appear that Delmarva sent
any personnel to inspect the property. Nonetheless Cumberland got an estimate for
demolition of the property and issued a check to Mr. Wickwire on May 30, 2013, that
appeared to include the cost of demolition. The house and its contents were demolished
on July 3, 2013. We will discuss in greater detail below what Delmarva knew, and when
Delmarva knew anything, about its potential liability and the eventual destruction of the
scene. Delmarva concedes in its brief that “Delmarva knew about the fire on May 5, 2013,
and knew as early as May 29, 2013 that a claim may at some point be made against it.”
Beyond that, though, the parties dispute when, if at all, Cumberland notified Delmarva
about the fact that the house was to be demolished, and that question underlay Delmarva’s
motion for summary judgment (the “Motion”).
Delmarva filed the Motion in December 2014. Delmarva argued, among other
things, that Cumberland destroyed the fire scene and irreversibly crippled Delmarva’s
ability to mount a meaningful defense. The trial court held a hearing on January 22, 2015;
we will detail the dialogue below, but it will suffice for now that the court ruled from the
bench after argument and granted the Motion:
We’re here on a motion in limine and a motion to compel and
a motion for summary judgment. After reviewing the motions,
the exhibits attached thereto and the—considering the
3
arguments of Counsel there is—the Court is going to grant the
motion for summary judgment. Specifically without
addressing all of the various arguments the argument that the
Court is going to grant summary judgment on . . . the
destruction of the house.
The Court finds that based on the factors in Clumpt v.
Krongberg, [sic 3 ] which talk[s] about an act of destruction,
discoverability of the evidence, an intent to destroy the
evidence an occurrence of the act at a time when the filing of a
lawsuit is fairly perceived as imminent that [Delmarva] in this
case will not have the opportunity or did not have the
opportunity to adequately prepare a defense. Their experts did
not have an opportunity to review or to examine the house.
[Cumberland’s] position of we preserved what we thought
caused the fire and took a bunch of pictures I’m not persuaded
that that actually is fair to [Delmarva] in the preparation and
their experts’ preparation of their case.
Further I don't find that there was—that in effect what was a
constructive notice argument to [Delmarva] carries weight
especially in light of the fact that the demolition had
commenced not even sixty days after the fire. If we were six
months out maybe my feelings would be different, but I think
due to the close nature I think due to the fact that there was no
correspondence provided that actually in effect what I would
say put [Delmarva] on the clock as to the fact that demolition
was contemplated within a soon to be time period. And that,
you know, there was correspondence that put them on notice I
guess in effect that at some point litigation was being
contemplated or that liability was contemplated which is one
of the factors. So there was the idea that a lawsuit was
imminent but no effort to preserve the evidence that the other
side would need to be able to review to have a fair trial and a
fair proceeding.
3
Everyone agrees that the trial court was referring to Klupt v. Krongard, 126 Md. App.
179 (1999).
4
So for those reasons the Court grants the motion for summary
judgment in favor of Delmarva Power.
(Emphasis added.)
The court entered a written order on January 22, 2015. Cumberland moved for
reconsideration on January 30, 2015, and the trial court denied the motion on March 6,
2013. Cumberland filed a timely notice of appeal.
II. DISCUSSION
The doctrine of spoliation4 is grounded in fairness and symmetry. Stated simply, a
party should not be allowed to support its claims or defenses with physical evidence that it
4
Cumberland presented the issues—all revolving around the issue of spoliation—in its
brief as follows:
1. Did the lower Court err by granting appellee's motion for
summary judgment based on Klupt v. Krongard, 126 Md. App.
179 (1999) for the alleged “spoliation” of evidence?
2. Did the lower Court abuse its discretion by granting appellee’s
motion for summary judgment based on Klupt v. Krongard,
126 Md. App. 179 (1999) for the alleged “spoliation” of
evidence?
3. Did the lower Court abuse its discretion in determining that
“spoliation” occurred, where, as here: (1) appellee had
knowledge of the existence of the evidence; (2) the evidence
was a badly damaged building that could not be preserved
indefinitely; (3) appellee inspected the evidence; (4) appellee
was on notice of the potential claims against it; (5) appellee had
a statutory duty to investigate and report the on the evidence to
the PSC; (6) appellee was notified that the evidence (a fire
damaged building) would be demolished; (7) certain evidence
was removed from the fire scene and preserved by the Fire
5
has destroyed to the detriment of its opponent. In this case, Cumberland controlled the fire
scene and informed Delmarva for the purpose of pursuing its subrogation claim, but never
told Delmarva of the fire scene’s impending destruction. And as a practical matter, this
prevented Delmarva (and, perhaps more to the point, its experts) from assessing the causes
of the fire first-hand. Cumberland says, correctly, that it preserved the meter box, which
was the culprit in its view. But this case is not just about the meter box—it’s about the
cause of the fire, and specifically whether the cause, whatever it was, was attributable to
Delmarva. And the destruction of the scene deprived Delmarva of the opportunity to test
Cumberland’s hypothesis or establish the possibility that the fire was caused by anything
else.5
Marshal as part of the investigation, and subsequently
preserved by appellant for use in this litigation; (7) [sic] the
evidence was not destroyed by appellant; (8) appellant’s
subrogor notified appellee before demolition work began at the
subject property; and (9) there is no showing of bad faith and/or
intentional destruction of evidence by appellant?
4. Did the lower Court abuse its discretion by granting summary
judgment rather than imposing some lesser sanction, if any,
under the circumstances presented by this case?
5
In addition to responding to the substance of Cumberland’s brief, Delmarva filed a motion
to strike portions of Cumberland’s brief. Delmarva cites Md. Rule 8-504 and argues that
Cumberland failed to cite to any part of the record or record extract in its Statement of the
Case. We agree that the brief is non-compliant, but opt not to reach this question in light
of the outcome on the merits, and we deny the Motion to Strike as moot.
6
A. Standard Of Review.
Delmarva moved for summary judgment on a variety of grounds, and the circuit
court granted the motion as a discovery sanction, so we review its decision through that
lens. See Erie Insurance Exch. v. Davenport Insulation, Inc., 659 F. Supp. 2d 701, 702 (D.
Md. 2009) (granting summary judgment based on spoliation and dismissing case). We are
bound by a trial court’s factual findings in the context of discovery sanctions unless we
find them to be “clearly erroneous,” Md. Rule 8-131(c); see also Klupt, 126 Md. App. at
192-93. The trial court has broad discretion to impose sanctions for discovery violations,
“and the decision whether to invoke the ‘ultimate sanction’ [of dismissal] is left to the
discretion of the trial court.” Valentine-Bowers v. Retina Grp. of Washington, P.C., 217
Md. App. 366, 378 (2014).
Sanctions may be justified even without “‘willful or contumacious behavior’” by a
party. Warehime v. Dell, 124 Md. App. 31, 44 (1998) (quoting Beck v. Beck, 112 Md. App.
197, 210 (1996)). We explained in Sindler v. Litman that “[o]ur review of the trial court’s
resolution of a discovery dispute is quite narrow; appellate courts are reluctant to second-
guess the decision of a trial judge to impose sanctions for a failure of discovery.” 166 Md.
App. 90, 123 (2005).
B. The Spoliation Doctrine.
The spoliation doctrine is well-established in Maryland. See Klupt v. Krongard, 126
Md. App. 179 (1999). Klupt lays out the elements of spoliation (and we look at those
elements next), albeit in the context of a willful destruction of documents and recordings
7
unlike anything that occurred here. We have concluded in other contexts that destruction
of evidence is not an independent tort that itself gives rise to a cause of action. See Goin v.
Shoppers Food Warehouse Corp., 166 Md. App. 611, 613, 619 (2006) (affirming dismissal
of plaintiff’s claim and declining to recognize a separate cause of action for “[n]egligent
and/or reckless spoliation” by the defendant’s employee). And we have affirmed a
spoliation instruction that permits an adverse inference even without a showing of bad
faith. See Anderson v. Litzenberg, 115 Md. App. 549, 560 (1997) (permitting a jury
instruction stating that “‘destruction of evidence by a person gives rise to an inference or
presumption unfavorable to [the] spoiler, and . . . if the intent was to conceal the nature of
the defect the destruction must be inferred to indicate a weakness in the case’”).
But Maryland appellate courts have not established how to apply the spoliation
doctrine in the context of a situation, like this one, where the physical object (or in this
case, the building) that was destroyed is itself the subject of the case. We look below at
how other jurisdictions have applied the doctrine in that context, and we conclude that it is
appropriate to balance the degree of fault (or, in some instances, intent) on the part of the
spoliator, on the one hand, with the level of prejudice that inures to the defense because the
evidence has been destroyed, on the other. If a trial court finds that this balance favors
imposing some sort of sanction, the question then becomes what remedy is appropriate and
whether a remedy less drastic than dismissal can cure the prejudice to the defendant. See
Adkins v. Wolever, 554 F.3d 650, 652 (6th Cir. 2009) (“[A] proper spoliation sanction
should serve both fairness and punitive functions.”); Vodusek v. Bayliner Marine Corp., 71
8
F.3d 148, 156 (4th Cir. 1995) (fashioning a sanction to serve the “purpose[s] of leveling
the evidentiary playing field and . . . sanctioning the improper conduct”). It also recognizes
the common-sense principle that “one does not ordinarily withhold evidence that is
beneficial to one’s case.” Anderson, 115 Md. App. at 562.
1. Klupt—Establishing when spoliation takes place.
There is no suggestion in this case that Cumberland behaved anything like Mr. Klupt
in Klupt v. Krongard. That case related to Mr. Klupt’s invention of a disposable
videocassette and its licensing and production by other companies. 126 Md. App. at 184.
A number of corporations and counsel became embroiled in the litigation, and several of
Mr. Klupt’s one-time business partners sought a declaratory judgment against him and his
corporation, claiming that they were defrauded into investing in the manufacture and
distribution of his product. Id. at 184-85. Mr. Klupt filed a separate action claiming that
the plaintiffs and others had conspired to deprive him of the value of the invention, and the
actions were consolidated, with Mr. Klupt’s claim designated as a counterclaim. Id. at 185.
In the course of discovery, the plaintiffs sought all documents between the parties,
including any records of phone conversations. It was discovered later that Mr. Klupt had
recorded a number of conversations with some of the plaintiffs, but destroyed the tapes—
along with memoranda he had written to memorialize their contents—early on in the
litigation and after the plaintiffs had sought them in discovery. Id. at 188. To make matters
worse, he did not admit to the destruction until his deposition three years into the litigation,
9
and after he attempted on numerous occasions to obstruct discovery and evade answering
questions seeking such information. Id. at 189-90.
The plaintiffs moved to dismiss Mr. Klupt’s counterclaim based on “discovery
abuse and contempt of court”:
The motion alleged [that] Klupt made surreptitious recordings
of telephone conversations from which he made memoranda;
he intentionally destroyed the tape recordings; he created
dummy versions from the original memoranda; he withheld
both the original and dummy memoranda; he falsely affirmed
in his deposition that he had produced all documents.
Id. at 190. The trial court granted the motion and Mr. Klupt appealed. We began our review
of the law by noting that Maryland’s discovery rules do not deal separately with the
destruction of evidence, but do permit dismissal based on failure to respond to discovery
requests. We pointed out that destruction of evidence would render meaningless a
discovery request, or render moot an order to compel:
If dismissal is permissible in those cases, it would seem to be
a fortiori permissible in a case of destruction of discoverable
evidence. Cf. White v. Office of the Public Defender for the
State of Md., 170 F.R.D. 138, 148 n. 8 (D. Md. 1997) (“A party
who has removed any possibility of warnings by destroying
evidence before a court order can be issued cannot in fairness
thereby immunize herself from the ultimate sanction of
dismissal.”).
Id. at 194. We concluded first that the Maryland discovery rules would permit sanctions
for destruction of evidence. Id. at 195-96. But we also looked to cases interpreting
analogous federal rules, and found “inherent authority” for the court to regulate discovery.
10
Id. at 196-97 (citing Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.
1991)).
From there, Klupt looked at whether the court could impose the sanction of
dismissal or was limited to the less severe sanction of permitting the fact-finder to “draw a
negative evidentiary inference or presumption against the spoliator.” Id. at 197. We opted
for the former for two reasons. First, we pointed out that the court (as opposed to a
subsequent trier of fact) was in charge of the discovery process, and therefore best suited
to fashion a remedy to address a discovery violation, rather than leaving it for a jury at trial.
Second, we noted that the spoliation doctrine was “flexible and versatile,” so it could be
perfectly appropriate to permit a sanction of dismissal when such an issue was addressed
during discovery, “while the same offense may raise only an evidentiary presumption when
dealt with during trial.” Id. at 198.
We ultimately adopted the test laid out in White v. Office of the Public Defender,
170 F.R.D. 138, 147-48 (D. Md. 1997), for determining whether spoliation had occurred:
(1) An act of destruction;
(2) Discoverability of the evidence;
(3) An intent to destroy the evidence;
(4) Occurrence of the act at a time after suit has been filed, or,
if before, at a time when the filing is fairly perceived as
imminent.
Id. at 199 (quoting White, 170 F.R.D. at 147). We approved the trial court’s finding that
Mr. Klupt had destroyed the tapes, which were discoverable. The trial court found that Mr.
11
Klupt had destroyed them intentionally, although we pointed out that constructive
knowledge could also suffice to satisfy this element. Id. at 200. Mr. Klupt also destroyed
the tapes not just after suit was filed, but possibly months after they had been requested in
the course of discovery. We concluded that the trial court’s findings were not clearly
erroneous, and then addressed the sanction of dismissal. Given that Mr. Klupt acted not
just willfully but “contumaciously,” deliberately concealing the existence of the tapes, and
given the timing of the destruction, we found no abuse of discretion in the trial court’s
decision to dismiss Mr. Klupt’s counterclaims. Id. at 203.
2. Fault on the part of the spoliating party.
From there, Klupt moved on to analyze the appropriate remedy, and held that
dismissal was appropriate given Mr. Klupt’s behavior, which fell at the far end of the
spectrum, where he wasn’t just at fault but acted intentionally, with bad faith and ill-will.
Id. Most plaintiffs probably aren’t as brazen as he was—he concealed and lied about the
tapes, then destroyed them with a hammer. But intent to destroy isn’t a prerequisite to a
finding of spoliation—courts look as often to fault. So, for example, in Silvestri v. Gen.
Motors Corp., 271 F.3d 583 (4th Cir. 2001), the United States Court of Appeals for the
Fourth Circuit affirmed the District Court’s dismissal of a plaintiff’s claim against General
Motors, noting that “a court must find some degree of fault to impose sanctions.” Id. at
590. The court noted that bad faith need not be present, and that “even when conduct is
less culpable, dismissal may be necessary if the prejudice to the defendant is extraordinary,
12
denying it the ability to adequately defend its case.” Id. (emphasis added). As the court
explained,
sometimes even the inadvertent, albeit negligent, loss of
evidence will justify dismissal because of the resulting
unfairness: “The expansion of sanctions for the inadvertent
loss of evidence recognizes that such physical evidence often
is the most eloquent impartial ‘witness’ to what really
occurred, and further recognizes the resulting unfairness
inherent in allowing a party to destroy evidence and then to
benefit from that conduct or omission.”
Id. at 593 (quoting Kirkland v. New York City Housing Auth., 666 N.Y.S.2d 609, 611 (App.
Div. 1997)). Silvestri balanced the nature of the conduct and the effect of that conduct—a
lack of intent could yet be trumped by a high degree of prejudice and still support
dismissal. And in the specific context of preservation of a fire scene, the second half of that
balancing test becomes more important, i.e., where the defendant’s ability to mount a
defense can be obliterated by the spoliation of the scene.
Indeed, in Erie Insurance Exchange v. Davenport Insulation, Inc., 659 F. Supp. 2d
701 (D. Md. 2009), the United States District Court for the District of Maryland applied
Silvestri in a situation similar to this case. After a house fire, the insurer of the home, Erie
Insurance Exchange, sued the homebuilder, Builder Services Group (“BSG”), for
negligently installing a fireplace. Erie destroyed all physical evidence three months after
the fire took place—fully seventeen months before it notified BSG of its subrogation claim.
Id. at 706. The court read Silvestri to impose a two-part “either/or test” that warrants
dismissal if (1) “the spoliator’s conduct was so egregious as to make forfeiture of its claim
13
an apt remedy” or (2) “if the loss of the evidence is so prejudicial that it substantially denies
the defendant the ability to defend the claim,” id. at 707, and the court found both prongs
satisfied. First, it noted that Erie’s conduct justified forfeiture of its claim because it had
reports about a viable subrogation claim within weeks of the incident, saw the fireplace as
the likely cause, and still did not try to preserve the scene or notify the targets, decisions
that could “only be characterized as negligent.” Id. Second, the court noted that BSG would
have conducted a different, and more exhaustive, search of the scene to identify the safety
strip that allegedly was responsible for the fire, and that it also was deprived of the chance
to investigate other potential defenses either within the fireplace or outside of it, such that
BSG “can neither rule out nor advance an electrical theory of causation.” Id. at 708.
The court also concluded that there was no appropriate sanction short of dismissal.
It reasoned that permitting a jury instruction on spoliation still wouldn’t “level the playing
field,” because the record was compiled almost exclusively by Erie. And limiting Erie only
to the evidence that survived the fire was “tantamount to a dismissal,” because Erie would
be left with no expert to support its claim. Id.
3. Prejudice to the defendant.
Erie raises a good question—what puts a case in the dismissal-as-remedy camp
versus the jury-instruction-as-remedy camp? The courts that have affirmed dismissals have
zeroed in either on a high degree of fault that carries with it intent (Mr. Klupt, for example,
bashing the evidence with a hammer and then lying about it) or on a high degree of
prejudice (the legal impossibility of mounting a defense where the evidence that has been
14
destroyed lies at the core of the case). See, e.g., In re Wechsler, 121 F. Supp. 2d 404, 428
(D. Del. 2000) (“[T]he spoliation inference cannot serve as a substitute for actual
evidence.” (citations omitted)). In this context, the party seeking sanctions must be able to
demonstrate that the destroyed information is truly relevant to its case. See, e.g., Sampson
v. City of Cambridge, 251 F.R.D. 172, 183 (D. Md. 2008) (denying motion for sanctions
because the movant couldn’t show that the emails in question “would have produced
evidence which a reasonable factfinder could conclude supported her claims”). And
prejudice has degrees, ranging “along a continuum from an inability to prove claims or
defenses to little or no impact on the presentation of proof.” Rimkus Consulting Grp., Inc.
v. Cammarata, 688 F. Supp. 2d 598, 613 (S.D. Tex. 2010).
4. The remedy of dismissal.
As Wechsler pointed out, the sanction of imposing an adverse inference at trial
“possesses no punitive or deterrent value.” 121 F. Supp. 2d at 428. And while the sanction
of an adverse inference or jury instruction is an alternative, Klupt never suggested that it
was an exclusive remedy in any particular factual circumstance. The trial court is vested
with broad discretion, and Klupt tells us that dismissal is available as a sanction. Courts
have not hesitated to dismiss a case when nothing less will do, see, e.g., Robertet Flavors,
Inc. v. Tri-Form Const., Inc., 1 A.3d 658 (N.J. 2010); Ihli v. Lazzaretto, 864 N.W.2d 483(N.D. 2015), even when the destruction was simply neglectful, without bad faith. Fines v.
Ressler Enters., Inc., 820 N.W.2d 688 (N.D. 2012); but see Wechsler, 121 F.2d 404 (D.
Del. 2000) (entering “interlocutory finding of liability” against spoliating party attempting
15
to defend a claim, due to prejudice that stemmed from destruction of boat that caused
marina fire).
C. The Trial Court Properly Applied Klupt And Did Not Abuse Its
Discretion By Granting Summary Judgment.
1. Cumberland “destroyed discoverable evidence.”
Although the factual circumstances of this case differ from Klupt, we look there first
to determine whether Cumberland’s actions led to the destruction of discoverable evidence.
First, there’s no doubt that there was an act of destruction. Second, the evidence was
unquestionably discoverable. Third, there was an “intent to destroy the evidence,” Klupt,
126 Md. App. at 199—we’ll talk below about who intended it, but no one mistakenly
demolished the fire scene. And finally, the destruction took place “when the filing [of suit
was] fairly perceived as imminent.” Id. On that point, the trial court pointed to several
factors, most obviously the fact that this suit involved an experienced insurance company
that had an expert appear on the scene within days of the fire. See Allstate Insurance Co.
v. Sunbeam Corp., 865 F. Supp. 1267, 1278 (N.D. Ill. 1994), aff’d, 53 F.3d 804 (7th Cir.
1995) (noting that the doctrine was “especially applicable” to a subrogee insurance
company “since it all along intended to proceed in a subrogation suit”). The parties
obviously disagree about the degree of discoverability of the “fire scene,” and the trial court
framed the issue well in the following exchange with counsel for Cumberland:
[Counsel for Cumberland]: Your Honor, the really major and
sole piece of evidence in this case is the meter and the meter
box. And that’s preserved. And—
16
THE COURT: Well, as it relates to your case.
(Emphasis added.)
So although Cumberland sees its case as centering on the meter and the meter box,
the destruction of the scene deprived Delmarva of any opportunity to look to other possible
causes.6 See Hoffman v. Ford Motor Co., 587 N.W.2d 66, 71 (Minn. App. 1998) (“[A] fire
scene itself is the best evidence of the origin and the cause of a fire,” and the fire scene is
of “unquestionable relevancy.”). That comes up shortly, when we look at the degree of
prejudice to Delmarva. But first, we examine the degree of fault on the part of Cumberland.
2. Cumberland was at fault for allowing demolition to go
forward.
Cumberland was at fault for the destruction of the fire scene, and it cannot defend
on the basis that Delmarva had notice. Cumberland points to what were really no more than
notices of the loss and a potential claim, and it attempts to transform them into notices
about destruction of the property. And an important preliminary point came out at oral
argument—counsel for Delmarva explained that the notice it first received, through the
employee it dispatched to the fire, informed the company that the Fire Marshal believed
the fire to have started in the meter box. As counsel explained, and as nobody disputes, the
6
Cumberland might say the evidence goes merely to the box, but its own pretrial motions
suggest that there were other theories at play. It filed motions in limine to bar information
to the effect that a firefighter told a witness that the fire started in the attic, and also to bar
testimony that Mr. Wickwire had run all the electricity to the house on his own.
17
meter box is the customer’s property and is installed by the customer (presumably through
the services of a private electrician). This is distinct from the meter itself, which plugs into
the meter box and is the only property of Delmarva’s at the home or element that Delmarva
controlled. See COMAR 20.50.01.03 (defining “electric distribution plant” as “all electric
company plant used to distribute electricity to its customers, including covers and
protective structures and excluding customer meters and meter enclosures”). This
distinction matters, because it means that Delmarva had no reason to believe that it faced
liability for the fire based on that report from the scene.
But even putting aside the meter v. meter box distinction, there is no evidence to
suggest that Delmarva had reason to think that the property was at risk of destruction until
it was too late. Cumberland points to two letters it sent notifying Delmarva of its intention
to assert a claim, but these miss an important point: these notices said nothing about the
fire scene’s impending demolition, nor did any of the evidence to which Cumberland
pointed in the circuit court. The Fire Marshal, Mr. Wickwire, and Cumberland had
identified Delmarva as a potential target of liability—Delmarva doesn’t dispute that it
knew of the possibility of a claim as early as May 29, 2013. But knowing that a claim could
potentially be filed didn’t give Delmarva any reason to think anything one way or the other
about the (non)preservation of the scene. And the only Delmarva employee at the scene,
Mr. Willoughby, simply turned off the electrical supply to the house.
Cumberland also pointed to notes memorializing some conversation between the
homeowner and Delmarva, but these also are silent about the imminent demolition of the
18
property. While Delmarva does have one record suggesting that Mr. Wickwire asked about
demolition—that he “needed info on demo”—the circuit court correctly declined to
surmise anything from this about the schedule for the demolition. And although another
Delmarva note says that “claimant wants to turn garage into new living space but with no
cost due to our fault,” it would take a tremendous inferential leap for Delmarva to conclude
from there that destruction of the property was imminent.
Cumberland’s counsel’s written correspondence did not even hint at destruction of
the scene. The primary purpose of the June 4, 2013 letter7 appears to have been to put
Delmarva on notice that it could be responsible for the fire and, ironically, to ensure that
Delmarva not destroy any items relating to the scene:
We wish to cooperate with your company in the investigation
of this loss, and especially regarding preserving and inspecting
all items retained from the scene. It is in this connection that I
am contacting you, and looking for your company and/or its
insurance company to likewise cooperate in the investigation
process. Furthermore, to the extent that your company is in
possession of, or is otherwise aware of, any items retained
from this scene, or otherwise potentially relevant to this matter
(including physical materials as well as electronic and
hardcopy documents), I must insist that such items/
materials/documents be preserved unaltered so that my client's
representatives may examine and/or test them.
(Emphasis added.)
7
The fact that Cumberland sent the June 4 letter to five different corporate addresses
doesn’t cure the problem, i.e., that the letters never mention the possibility or timing of the
demolition.
19
If anything, Cumberland knew that demolition was imminent—the check it issued
to Mr. Wickwire covered an estimate for demolition. And then, once demolition had begun,
Cumberland sent a second letter on July 3, 2013, in which it casually mentioned that
demolition had begun:
We advised that we intended to pursue recovery from the
parties responsible for the subject fire. We believe that your
company is responsible for the subject fire and the resultant
damages. You failed to respond to our prior correspondence,
in which we offered to make the subject premises available for
your inspection. While you waived your rights to inspect the
premises (demolition has begun) we have preserved those
items identified as the cause and origin of the subject fire. If
we do not receive a response to this letter within fourteen (14)
days of the above date, then we will be left with no choice but
to take appropriate action without further notice.
(Emphasis added.) And while it’s true that Cumberland did not directly engineer the
demolition, it was heavily involved in, aware of, and financed the process that Mr.
Wickwire put into place.8 The circuit court did not resolve a dispute of fact—it found,
from the undisputed paper trail, that Delmarva did not have an opportunity to prepare a
defense.
3. Delmarva’s defenses were fatally prejudiced, and dismissal
was the appropriate remedy.
Delmarva’s two defense experts, Christoph Flaherty and Walter Rothfuss, prepared
a report dated October 5, 2014, that opined that the fire “originated in the attic and was
8
We don’t address here whether fault would still be imputed to Cumberland had it not been
so closely involved in that process.
20
electrical.” When Cumberland’s expert, Michael Wald, responded to the October 5 Report
in his deposition, he attacked their opinions as “speculation and conjecture,” thereby (if
unwittingly) highlighting the prejudice to Delmarva:
Q. What opinions do you have in response to the defense
report?
A. Where do I . . . start? That report appears to be a fire report,
a fire origin and cause report. It opines at the end on the area
of origin and the cause. In no place in that report does it state
that either Mr. Rothfuss or Mr. Flaherty examined any of the
site, examined any of the components other than the ones that
are in the possession of Mr. Wald.
It opines that there was a circuit, a branch circuitry failure in
the attic. Yet it does not say what branch circuit or where it
failed. The attic is pretty big on that house in those terms. It
doesn’t say what caused the failure. It doesn’t list a specific
point of origin. Because they did not get an opportunity or did
not examine the area below the meter outside the house, their
theory of drop down is just a hypothesis. It does not stand up
to questioning.
So there are many factors in that report that are speculation or
conjecture. Therefore, they cannot make a definitive origin and
cause determination. They can certainly offer one idea as to
what happened, but that would not be a definitive origin and
cause report that met the [applicable] standards.
Q. And why is that?
A. For everything I just said. They did not examine the physical
evidence, except for the meter. They did not go to the scene.
They have a theory that the fire damage on the exterior was
caused by drop down, yet they did not examine the area
beneath the soffit, which I did; and as I characterized earlier, it
did not have a fuel load or a fuel package that was consistent
with the damage that we saw on the exterior or with the ability
21
to set that fire at the back of the house—or I’m sorry, to have
done that damage to the meter.
At the same time, they did not examine, to my knowledge, the
branch circuits, with the exception of looking at photographs.
In one particular area I think Mr. Rothfuss, if I’m correct,
makes the statement that the wires are pulled, which is the
result of resistance heating. I don’t know how he can make that
statement because the wires could have done that from heating
from the fire as well. So it could be external fire. Again, they
do not offer succinct facts for their conclusions. They offer
speculation and conjecture.
Q. In your experience if an expert doesn’t review the physical
evidence but only photographs, is his opinion not compliant
with 921?
A. That’s not always the case. There are times when a—the
body of physical evidence may be such that a case review could
allow an investigator to render an opinion. In this particular
instance, I don’t believe that is the case.
Q. Why is that?
A. They simply do not have enough to review. They would have
had to have been at the site. They would have had to have
looked at the ground, the damage to the rear.
In addition to examining the interior of the panel box, he makes
the statement that the breakers tripped because of short
circuiting. You can’t know that without examining the
breakers. Heat can cause the breakers to trip as well, which is
most likely what happened in this instance.
(Emphasis added.)
Mr. Hattwick’s testimony proves the point. Delmarva’s experts’ theory was flawed
because they did not perform a thorough investigation of the fire scene. But they didn’t
perform a thorough investigation because they couldn’t do so once the house had been
22
demolished. On the other hand, Mr. Hattwick had the opportunity to take in the full scene
and draw his own independent conclusions about the area of origin. The defense, and
especially its experts, never had the opportunity affirmatively to rule in or rule out the other
parts of the house as the area of origin, which irreparably prejudiced their ability to defend,
and which made dismissal altogether appropriate.
We disagree that Charter Oak Fire Insurance Co. v. Marlow Liquors, LLC, 908 F.
Supp. 2d 673 (D. Md. 2012), compels a different result. There, the insurer-subrogee filed
suit against an electrician (among many others) claiming that his installation of undersized
meter conductors caused a fire in several businesses in a shopping center. Id. at 677. The
electrician sought summary judgment based on various parties’ failure to preserve circuit
breaker panels from the fire. The trial court denied the motion, applied the Silvestri
analysis, and found that certain parties had “willfully discarded” relevant evidence. Id. at
683-84. But when it came to the electrician’s ability to prepare a defense, his spoliation
motion broke down:
[The electrician] can defend this case without the missing
evidence. As noted, his expert . . . opined that the most likely
cause of the fire was an electrical failure in [the power
company’s] metering equipment. [The expert] does not rely on
the [destroyed evidence]. [A second expert] also points to an
electrical fault within the meter base and cabinet [and]
identified multiple potential sources of this electrical fault, all
of which exculpate [the electrician], and none of which
requires the [destroyed evidence] in order to be persuasive.
23
Id. at 685 (emphasis added). The same can’t be said here, where the experts were left with
no evidence to rule out or rebut any of Cumberland’s theories.9 And importantly, that the
trial court in Charter Oak reached a different, more lenient result does not mean that the
trial court abused its discretion for deciding not to fashion that same result.
JUDGMENT OF THE CIRCUIT COURT FOR
DORCHESTER COUNTY AFFIRMED. COSTS
TO BE PAID BY APPELLANT.
9
While barring the testimony of a plaintiff’s expert could conceivably be considered a
“more lenient” sanction than dismissal, it would have the same result here. Barring
Cumberland’s experts would have left it with nothing to establish the elements of its claim
in any event, and would be “tantamount to a dismissal” of Cumberland’s case. See Erie,
659 F. Supp. 2d at 708; Unigard Sec. Insurance Co. v. Lakewood Eng’g & Mfg. Corp., 982
F.2d 363, 369 (9th Cir. 1992) (granting summary judgment following exclusion of experts
given spoliation of relevant evidence); see also Schmid v. Milwaukee Elec. Tool Corp., 13
F.3d 76, 79 (3d Cir. 1994) (where circular saw case involved allegation of a design defect—
which would have been inherent in all saws of a particular model—rather than a
manufacturing defect—which would have been present only in the saw at issue—the
prejudice to defendant was not extreme because the “need for immediate access to the
particular saw involved in the accident was greatly diminished”).
24