5/24/2010

Getting Burned by Missing Evidence

Whether it’s by mistake or intent, spoliation of evidence can disintegrate subrogation claims.

By Richard J. Boyd, JR., Esq.

Missing evidence can be the dagger in the heart of a fire subrogation claim, even when spoliation of the evidence doesn't truly prejudice the defendant's case against subrogation. The court is permitted to severely penalize a spoliator, sometimes gutting the plaintiff's case. Because of the potential severity of punishment for spoliation of evidence, the subrogation professional must be aware of the laws and precedents in this area.

Since the 17th century, courts have admitted facts showing that a party destroyed evidence relevant to the dispute being litigated. Proof of spoliation legally permits an inference that the destroyed evidence would have been unfavorable to the spoliating party and that is why it was destroyed or not saved.

If spoliation is proven, an instruction may be provided at trial, which is almost always devastating to a case. In the instruction, the judge tells the jury that it should presume that the plaintiff failed to preserve evidence because it was detrimental to his case. As the instruction comes from the judge, it carries significant weight and demands adherence from the jury. This instruction has the effect of removing all credibility from the plaintiff and all but ensures a favorable defense verdict. To help prevent this nightmare scenario, subrogation professionals need to know what evidence should be preserved and for how long.

What Evidence to Preserve
As for what to preserve, the courts have fashioned fairly simple, straightforward rules. A party is to preserve the particular product or thing it believes was the cause of the loss. A party is also to preserve potential alternative causes of the loss. While these rules are relatively simple, their application may not be.

The most effective way to ensure that all relevant evidence is saved is to immediately notify potential defendants of a claim and to invite them to inspect the entire loss site. This action shifts the burden from the plaintiff to the defendant regarding what evidence to preserve.

It is imperative that any and all potential defendants are identified as quickly as possible after a claimed loss and are notified of their right to inspect the scene as quickly as possible. The site then needs to be preserved in as close to the immediate post-loss condition as possible. A good rule of thumb is to keep the scene in this condition for a minimum of 14 days—that would be 14 days from the date the opposing party receives notice of the loss and notice of their opportunity to inspect.
Indeed, courts have recognized the right of a homeowner to begin reconstruction work quickly because of the inconvenience and hardships one undergoes after a fire loss, so subrogation professionals do have the courts on their side when it comes to an expeditious review of site by the defendant. However, courts state that the opposing side must be given a "reasonable opportunity" to inspect the scene. There is no specific rule as to what constitutes a "reasonable opportunity," but the provision of two weeks has not been deemed insufficient.

Most courts permit a subrogation professional to rely to some extent on an independent fire official's findings when determining what evidence to save. If the public official states that a particular product or thing was the cause of a loss, then the subrogation professional may rely on that official, and preserve those items with little fear of being penalized for spoliation. Of note, one court has recognized the potential claim for spoliation against public officials for not preserving potentially relevant evidence; therefore, the law in each state should be thoroughly analyzed with regard to what degree, if any, a public official may be relied upon when deciding what evidence to preserve.

In most instances, however, public officials are an excellent source for what evidence to save. They are typically unbiased and independent from any party. Accordingly, courts have little reluctance in relying upon their findings. Further, if the public official is knowledgeable and experienced in fire origin and cause investigation, he can then become a most convincing witness for your case. Accordingly, a subrogation professional is wise to consult with public officials in the earliest stages of an investigation.

Many times, an opposing party doesn't respond to the prompt notice letter. The issue of what to preserve then becomes more critical to the subrogation professional. When the defendant does not come to the fire scene, a more thorough documentation of the site must be made.

With the advent of relatively inexpensive video-recording devices, subrogation professionals and their experts should be encouraged to clearly videotape the scene whenever possible. Investigators should be encouraged to fully photograph the scene as well. Once the loss scene is fully documented, potential sources of the loss can be removed and saved. Again, not only should the suspected source of the loss be preserved, but any other potential alternative sources should be saved.

The rule of thumb as to what constitutes alternative potential sources would be anything that can be reasonably argued to have started the fire or to have caused the loss. It is typically not enough to rely on retained experts to make this decision; the subrogation professional must also take the time to review the fire scene with the expert and preserve anything that could reasonably be argued to have started the fire or caused the loss.

Retaining and preserving multiple items of evidence can be costly. However, it can be even more costly to have a case dismissed by the courts for failure to preserve alternative potential sources of the fire. The few extra dollars that may be spent to preserve multiple items will be worth it when the case survives a spoliation attack by the opponent and a recovery is made.
How Long to Preserve?
Courts throughout the country provide guidance on the time-period for preservation. It is dictated by the composition of the evidence. Entire homes and business structures can be preserved only for a limited time since they need to be rebuilt and reconstructed after a loss. In these situations, courts recognize that time is of the essence, the insured needs to begin rebuilding, and the insurance carrier needs to mitigate damages. Therefore, the entire fire scene does not need to be preserved for an indefinite period. At a minimum, opposing parties need to be provided with reasonable opportunity to inspect the entire scene.

With regards to movable items, such as toasters, sprinkler heads, etc., a different standard for the amount of time they must be preserved is set forth. Generally, these items should be preserved until the case is over. Again, the product or item suspected of causing the fire must be preserved as well as any potential alternative sources. They need to be preserved, as best as possible, in their immediate post-fire condition for the duration of the litigation.

Preservation of evidence can be expensive, especially when it involves storing a large number of items for the duration of the litigation. To reduce the expense of storage, sharing costs with the other parties should be explored, especially when a defendant demands that multiple items of evidence be saved. As it is the plaintiff's burden to prove a case, it also bears the onus of paying for the retention of evidence it needs for trial. However, paying to store items that are not essential to proving the case is not the plaintiff's responsibility. Accordingly, a subrogation professional should encourage opposing parties who demand the retention of non-essential evidence to shoulder the costs.

If the opposing parties do not agree to pay these expenses, the subrogation professional should make the non-essential evidence available for them to retrieve. The opposing parties should be informed that the evidence is irrelevant to proving the plaintiff's case and they are encouraged to retrieve whatever non-essential evidence they may want. If the opposing parties do not retrieve the evidence within a 30-day period, it can be discarded.

The subrogation professional must be sure that any evidence that is discarded is not essential to proving the case. Such non-essential evidence would be those items that did not cause the loss and those items that are not reasonable, alternative sources. If there is any question, the item should be preserved.
Richard J. Boyd, Jr. is a partner at Nelson Levine deLuca & Horst concentrating on large-loss property subrogation matters. He regularly serves as an arbitrator in the courts and is active in the Pennsylvania Bar Association.


Richard J. Boyd, Jr. is a partner at Nelson Levine deLuca & Horst concentrating on large-loss property subrogation matters. He regularly serves as an arbitrator in the courts and is active in the Pennsylvania Bar Association.

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