MetLife Auto & Home v. Joe Basil Chevrolet, 2004 WL 330073 (N.Y., February 24, 2004)

New York’s highest court decided not to recognize an independent cause of action for negligent spoliation of evidence under the facts of this particular case, though it left open the opportunity to allow such a claim under the proper circumstances. Nationwide, state courts are split on whether third parties to a claim can be sued for negligently losing, discarding or destroying crucial evidence. The decision implicitly identified ideal steps to take when interested parties must use someone else to preserve valuable evidence.

The underlying case facts were not unusual, though the relationships among the parties were somewhat confusing. A fire allegedly began in a truck parked in a residence’s garage, and ultimately destroyed the home. The homeowner’s employer owned the vehicle. Local officials determined the origin of the fire to be in the area of the truck’s dashboard. The homeowner's property insurance carrier, MetLife, paid for the damages, then sought to assert a subrogation claim against the truck’s manufacturer and the installer of a remote starting device in the truck’s dashboard.

The employer’s automobile carrier, Royal Insurance, indemnified the employer for the truck, and took possession of its remains, while orally agreeing to preserve it for future inspections. Nonetheless, before any inspection took place, the truck was disassembled and discarded.

MetLife later commenced a subrogation action against the truck manufacturer, the truck dealer, and the starting device installer. The lawsuit included a fourth claim, brought solely against Royal– which was the lone issue in this decision - alleging that "as a result of [Royal’s] negligence … necessary … evidence has been destroyed and lost, thereby irrevocably impairing [MetLife's] right to pursue successfully the [other] defendants…." The trial court refused to recognize this spoliation claim as valid; the lower appellate court upheld the dismissal of the claim; and the Court of Appeals agreed to review the issue.

The high court initially noted that an independent cause of action for spoliation of evidence is a relatively recent phenomenon in the law, and that courts around the country are split as to whether to recognize them. The court also noted that certain lower-level New York appellate courts had found that spoliation of evidence was a viable claim against an employer if the loss of evidence impaired an employee's right to sue a third-party tortfeasor, but that other lower level New York appellate decisions found that no such claim existed under circumstances where the party that destroyed the evidence was viewed as not having had a legal duty to preserve it.

The court then reviewed the facts of this case with an eye toward evaluating if Royal had a legal duty to preserve the discarded evidence. The court noted the following factors:

1. Royal owned the vehicle.

2. No relationship existed between MetLife and Royal.

3. MetLife made no effort to preserve the vehicle by written agreement.

4. Although MetLife orally requested that the vehicle be preserved, it never placed that request in writing or volunteered to cover the costs associated with doing so.

5. MetLife did not seek a court order to compel the preservation of the vehicle through pre-action disclosure or a temporary restraining order.

6. MetLife did not buy the vehicle from Royal, nor offer to pay the costs associated with preserving it.

7. MetLife could have promptly commenced suit and issued a subpoena to Royal to produce the vehicle, but it did not do so prior to its spoliation.

Finally, the court noted that “the burden of forcing a party to preserve [evidence] when it has no notice of an impending lawsuit, and the difficulty of assessing damages[i] militate against establishing a cause of action for spoliation in this case, where there was no duty, court order, contract or special relationship.” (emphasis added).

Thus, although the court rejected the claim under the facts of this case, it clearly left open the possibility for such a claim to prevail where a contractual or other more formalized relationship exists between the parties, where a court had orders the preservation of the evidence, or where the court otherwise concludes that a duty to preserve the evidence exists.

Practice Tips:

1. If and when important evidence is being retained by any third party, it is imperative that recovery professionals: (a) advise the party in writing of the evidence’s importance to anticipated litigation; (b) request in such written communication that the third party preserve it until advised otherwise (in writing); (c) offer to pay for the evidence’s preservation if the third party is not inclined to do so; and (d) try to obtain a written acknowledgement or response that such steps will be taken.

2. If a party that is retaining evidence fails to acknowledge a request to preserve it, then counsel should be contacted to file emergency motions or a lawsuit to ensure the property is retained properly.

3. In the end, if a third party fails to preserve important evidence, even though the actions mentioned above have been taken, there might be remedies depending upon the jurisdiction where the events take place. Still, every effort should be made to prevent a case from getting to the stage of having to request such relief. Compliance with the guidelines set forth by the New York Court of Appeals in this case should greatly assist in such prevention regardless of what jurisdiction controls the matter.