Spoliation Motion Mooted

In CSAA Affinity Insurance Company v. The Scott Fetzer Company, 2023 WL 2714026 (D. Md. Mar. 30, 2023), a subrogated insurer sued the manufacturer of a sump pump, alleging that the pump was defective and started a house fire.  The defendant-manufacturer asserted spoliation, and it moved for sanctions. However, defendant’s motion for summary judgment was granted and the spoliation motion was denied as moot.  In doing so, the Court was expressly skeptical of defendant’s request for a “death knell” sanction.

The chronology was uncomplicated.

A fire occurred in the insured’s basement on April 25, 2018.  The State fire marshal investigated that day and “concluded that the fire originated at a sump pump that was located in a corner of the basement and enclosed in a wooden box.”  The marshal relied on burn patterns and an examination of the sump pump.

The insurer retained an expert (Mr. Schlegel) to conduct a “fire study” on April 27^th. He relied on fire patterns and concluded that they were consistent with the sump pump being the cause of the fire.   The insurer also retained an electrical engineer (Mr. Graham) who investigated the scene on May 15, 2018.  His examination eliminated all electrical sources as the cause.  That pointed toward the sump pump as the cause.

The Court wrote:

The sump pump itself was removed from the basement before either Schlegel or Graham investigated the scene. Evidence Management Center—a company owned by Graham—received the sump pump on May 15, 2018. [cleaned up].

The manufacturer retained an expert (Mr. Peck). The Court further explained that:

By letter dated August 9, 2018, CSAA notified Wayne Water that it was “investigating a fire loss that occurred in [its] insured’s home involving a Wayne sump pump” and was “placing [Wayne Water] on notice of [CSAA’s] subrogation interest in the [ ] loss and request to coordinate a joint inspection of the failed unit.” On October 23, 2018, representatives of both parties jointly investigated the sump pump at Evidence Management Center’s facility. Graham participated in the examination on behalf of CSAA, along with Peck and other representatives of Wayne Water, including its Vice President of Engineering, a compliance engineer, and an attorney. [cleaned up; emphasis added].

Thus, as of October 23, 2018, the defendant was on notice and its expert had examined the removed sump pump.  The decision does not describe the condition of the fire scene at that time.

The sump pump was discarded pursuant to an Evidence Management Center disposal authorization form signed and dated September 6, 2019.  “Graham testified that Evidence Management Center ‘disposes of items according to the insurance company and their request to dispose of items’ and would not dispose of a device without being instructed to do so by the insurance company.”

Suit was filed in April 2021.  After discovery closed,[1] the manufacturer moved for sanctions and for summary judgment.  “As to spoliation, it contends that CSAA’s premature discarding of the sump pump, and failure to preserve other electrical devices from the fire scene, warrant dismissal of this case.”

The manufacturer’s expert (Mr. Peck) reviewed photos and wrote that “[w]ithout an opportunity to inspect the fire scene and the failure of the Plaintiff[’]s experts to document, test and preserve critical evidence from the area of the fire that sustained the longest burn time and most significant fire damage, it is nearly impossible … to establish the cause of this fire to any degree of scientific certainty.”

The manufacturer’s expert “pointed to the electrical power strip that was attached to the wall outside of the bathroom that “sustained heavy fire damage,’ as well as ‘damage to the plugs and electrical cords that were plugged into it’ and ‘[a]n extensively damage[d] electric heater [ ] to the left of the power strip’ as possible causes of the fire.”  He concluded that the fire did not originate with the sump pump.

The Court wrote:

The parties dispute whether these devices should have been preserved. Peck stated that the failure to preserve and test these items—specifically, the power strip, the electric heater, and the three electrical devices plugged into the power strip—did not comply with the “basic methodology of fire investigation outlined in NFPA 921[.]” …. Graham disagreed with Peck’s opinion that the “basic methodology of 921” was not followed because potential “ignition sources outside of the area of origin [ ] can be evaluated on-site” and “if they don’t exhibit [ ] that they’re a source of the fire, then they’re not collected.”

Applying a Fed.R.Evid. 702 analysis, the Court rejected Mr. Graham’s expert opinion.  Based on that decision, it held that CSAA failed to support its claim.[2]   The Court held that:

Graham’s testimony that the switch housing material “does not appear” to be thermoset plastic, and his failure to identify what material was used or its properties, renders his opinion as to the alleged design defect unreliable under Daubert.

The Court wrote:

Because the Court grants judgment in favor of Defendant Wayne Water and the case will not proceed to trial, it need not resolve Wayne Water’s Motion for Sanctions for Spoliation. … The Court is skeptical, however, that Wayne Water has sustained its burden to show that it suffered extreme prejudice that would warrant dismissal…. Based on its examination of the sump pump before it was discarded, and photographs of the fire scene, Wayne Water is “not without a defense.” [citations omitted].

The Court’s spoliation analysis is instructive.  While the Court was “skeptical,” it did not rule.

In Cumberland Ins. Grp. v. Delmarva Power, 226 Md. App. 691 (2016), sanctions were imposed where an insurer retained the box that it thought had caused the house fire, but demolished the house. The Appeals Court of Maryland wrote: “So although [plaintiff] sees its case as centering on the meter and the meter box, the destruction of the scene deprived [defendant] of any opportunity to look to other possible causes.” It explained:

“[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.”

Id. at 706.

As in Cumberland, in CSAA, the defendant-manufacturer was apparently denied the ability to examine the fire scene.

In CSAA,  one issue creating skepticism may have been the draconian relief requested. The Court expressed skepticism as to the dismissal request.  It is not known what the outcome would have been if a lesser sanction had been requested.

Further, there was a preservation dispute over the power strip, electric heater, and three plugged in devices.  Regardless of the requirements of the applicable scientific methodology, in a $520,653.98 case, it seems odd that they were not preserved.

It is interesting to speculate as to what the outcome would have been if Mr. Graham’s testimony had been admitted and if the sanctions motion had not been mooted.

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[1] As to the timing of the motion, see When Should a Spoliation Motion Be Filed and Decided?

[2] Barring experts in a “cause of fire” case is “tantamount” to dismissal. Cumberland Ins. Grp. v. Delmarva Power, 226 Md. App. 691, 712 n. 9 (2016), cert. denied, 447 Md. 298 (2016).