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Bear River Mutual Insurance Co. v. Ford Motor Co.

United States District Court, D. Utah, Central Division

May 22, 2017

BEAR RIVER MUTUAL INSURANCE COMPANY, Plaintiff,
v.
FORD MOTOR COMPANY, a Michigan corporation, Defendant.

          MEMORANDUM DECISION & ORDER ON DEFENDANT'S RENEWED MOTION FOR SPOLIATION SANCTIONS

          Dee Benson United States District Judge.

         This matter is before the Court on Defendant Ford Motor Company's (“Ford”) Renewed Motion for Spoliation Sanctions (Dkt. No. 86), Defendant's Motion to Exclude Opinions of Jeff Morrill (Dkt. No. 80), and Defendant's Motion to Exclude Opinions of Tad Norris (Dkt. No. 81). At oral argument on the motions, Ford was represented by Clay A. Guise, Tracy H. Fowler and Paul W. Shakespear. Plaintiff Bear River Mutual Insurance Company (“Bear River”) was represented by Eric Olsen and Sarah Marie Wade. At the conclusion of the hearing, the Court took the matter under advisement. Now, having further considered the law and facts relating to the motions, the Court renders the following Memorandum Decision and Order.

         BACKGROUND

         The facts of this case are generally undisputed and have been set forth in detail, for the most part, in the Court's prior Order on Defendant's Motion for Spoliation Sanctions. (Dkt. No. 35.) In sum, Plaintiff Bear River claims that the speed control deactivation switch (SCDS) in the 1994 Ford F-150 pickup truck owned by its insureds, Jeff and Julie Schoepf, was defective and caused a fire that spread from the truck to the Schoepf's house.[1] Bear River's claim is based on an investigation conducted by Bear River's expert, Tad Norris, a fire investigator with IC Specialty Services, who was assigned to inspect the scene and determine the origin of the fire. On behalf of Bear River, Mr. Norris inspected the scene and decided what evidence should be preserved without Ford's presence, consent or input. As part of that investigation, Mr. Norris removed the SCDS' hexport and electrical housing and claims that he sent both to another expert, Jeff Morrill, who requested an examination of the hexport. Mr. Morrill acknowledged receipt of the hexport, but claims he never received the electrical housing. Following Norris' inspection and investigation, the scene of the fire was destroyed. Additionally, Plaintiff lost the hexport before it could be inspected and tested by Ford, and Plaintiff lost the electrical housing before inspection and/or testing by anyone.

         At the outset of this case, given Plaintiff's failure to include Ford in the scene inspection combined with Plaintiff's loss of critical evidence, Ford filed a Motion for Spoliation Sanctions, requesting dismissal of the case in its entirety. (Dkt. No. 20.) At that same time, the parties filed a “Joint Motion to Stay Discovery” in order to “conserve resources while the parties and Court address the viability of this case.” (Dkt. No. 18.)

         On August 12, 2014, following briefing and oral argument on Ford's Motion for Spoliation Sanctions, the Court entered an order that granted, in part, Ford's motion for spoliation sanctions. (Dkt. No. 35, Order on Defendant's Motion for Spoliation Sanctions.) The Court's Order recognized the culpability of Bear River and the resulting prejudice to Ford, but stopped short of dismissing this action based on the information that was then-known regarding Mr. Norris'scene inspection and the loss of the SCDS.

         Over two years later, and following the completion of expert discovery, Ford filed the motion now before the court - a Renewed Motion for Spoliation Sanctions - once again requesting dismissal of the case. Bear River opposed the motion, arguing that Ford's “renewed” motion “proffers no substantial new evidence or arguments” and is therefore an improper motion to reconsider that should be denied. (Dkt. No. 98, Pl.'s Opp'n at 6, 11.) Ford acknowledges that its initial motion for spoliation sanctions generally identified the same issues - Bear River's failure to preserve the scene and the inadequate testing and subsequent loss of the hexport for the SCDS. However, Ford asserts that during the two and one-half years since Ford filed its initial motion the evidence relating to those issues has developed and significantly changed. According to Ford, these subsequent developments fundamentally alter the spoliation analysis and merit dismissal of the case.

         DISCUSSION

         Federal courts possess inherent powers necessary “to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). Among those inherent powers is “the ability to fashion an appropriate sanction.” Id. at 44; see also Smith v. Northwest Fin. Acceptance Inc., 129 F.3d 1408, 1419 (10th Cir. 1997 (“[A] federal court possesses the authority to impose . . . sanctions under its inherent power to control and supervise its own proceedings.”); Martinez v. Roscoe, 100 F.3d 121, 123 (10th Cir. 1996) (providing a district court's imposition of sanctions under its inherent power is reviewed for abuse of discretion).

         “When deciding whether to sanction a party for the spoliation of evidence, courts have considered a variety of factors, two of which generally carry the most weight: (1) the degree of culpability of the party who lost or destroyed the evidence, and (2) the degree of actual prejudice to the other party.” Jordan F. Miller Corp. v. Mid-Continent Aircraft Services, Inc., 139 F.3d 912, 1998 WL 68879 (10th Cir. 1998) (unpublished) (citing Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 79 (3d Cir. 1994)); Dillon v. Nissan Motor Co., 986 F.2d 263, 67-68 (8th Cir. 1993); Vasquez-Corales v. Sea-Land Serv., Inc., 172 F.R.D. 10, 13-14 (D.P.R. 1997) (collecting cases). In applying this standard, the Court remains mindful that “a court should impose the least onerous sanction that will remedy the prejudice and, where applicable, punish the wrongdoer and deter future wrongdoing.” Jordan F. Miller Corp., 139 F.3d 912, 1998 WL 68879, at *6. And “dismissal is usually appropriate only where a lesser sanction would not serve the interest of justice.” Id. (quoting Meade v. Grubbs, 841 F.2d 1512, 1520 (10th Cir. 1988). Nonetheless, dismissal as a sanction is clearly within the district court's discretion. See Chambers, 501 U.S. at 44 (“[O]utright dismissal of a lawsuit . . . is a particularly severe sanction, yet is within the court's discretion.”).

         In this case, Ford claims that since the initial motion to dismiss for spoliation sanctions, Bear River's experts have been deposed and their testimony has revealed new facts that alter the spoliation analysis, warranting dismissal. Specifically, Ford claims it has obtained new and significant information regarding: (1) Plaintiff's failure to follow National Fire Protection Association (NFPA) codes and standards resulting in a failure to properly document and preserve evidence at the scene, (2) the lack of reliability and conclusiveness of the SEM testing, and (3) the significance of the loss of the electrical housing. Having carefully reviewed Ford's renewed motion, the written submissions of the parties, and the arguments of counsel, the Court agrees.

         1. The Spoliation of the Scene

         Since Ford's initial motion and the Court's August 2014 Order, new evidence has been discovered regarding Mr. Norris' failure to follow proper procedures with regard to his investigation of the fire. National Fire Protection Association (NFPA) 921 is a scientific-based investigation standard which requires an investigator to identify and evaluate all potential causes of a fire. See NFPA 921, § 19.2. Although Mr. Norris purported to follow NFPA 921, discovery has revealed multiple times when Mr. Norris failed to meet his obligations.

         For example, under NFPA 921, Mr. Norris had a duty to notify all parties of his investigation. See NFPA 921, § 15.2.8.2. During his first inspection of the Schoepf's garage, Mr. Norris determined the area of origin was in the northwest corner. Because this “first inspection” revealed and/or identified other interested parties, consistent with his obligations under NFPA 921, Mr. Norris “preserved the scene” and “didn't do any destructive further examination at that time.” (Dkt. No. 86-3, Norris Dep. at 73.) Mr. Norris knew that in order to proceed, a “joint inspection” was necessary and “potential parties needed to be put on notice and given an opportunity” to inspect the scene. (Norris Dep. at 73, 95.) Thereafter, Mr. Norris notified his client, Bear River, but otherwise did nothing to notify Ford or others of the second scene inspection. (Norris Dep. at 95-96.) When Ford did not appear for ...


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