J.S. Sweet Co. Inc. v. Sika Chemical Corp ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-2871
J.S. SWEET COMPANY, INCORPORATED,
Plaintiff-Appellant,
v.
SIKA CHEMICAL CORPORATION, also
known as SIKA CORPORATION,
Defendant-Appellee.
____________
Appeal from the United States District Court for the
Southern District of Indiana, Evansville Division.
No. 99 C 168—Richard L. Young, Judge.
____________
ARGUED JANUARY 12, 2005—DECIDED MARCH 16, 2005
____________
Before FLAUM, Chief Judge, and EASTERBROOK and WOOD,
Circuit Judges.
FLAUM, Chief Judge. J.S. Sweet Company, Inc. (“J.S.
Sweet”) brought this diversity suit against Sika Chemical
Corp. (“Sika”), alleging that defendant committed the tort
of spoliation of evidence by failing to preserve materials rel-
evant to a lawsuit between J.S. Sweet and one of its cus-
tomers. Plaintiff also sued for breach of contract. The
district court granted summary judgment on both counts,
and Sweet appealed. We hold that Sika had no duty to
2 No. 04-2871
preserve the evidence in question, that its loss of the
evidence did not, as a matter of law, harm J.S. Sweet, and
that Sika did not breach its contract with plaintiff. Accord-
ingly, we affirm.
I. Background
In late 1994, the White County Bridge Commission
(“WCBC” or “Commission”) requested bids for repair work to
the surface of the New Harmony Toll Bridge. WCBC named
the engineering firm of R.W. Armstrong, Inc. (“Armstrong”)
to review bids, help select a winner, and oversee the con-
struction work. J.S. Sweet is a general contractor incorpo-
rated in Indiana. It bid on and won the contract, which
called for it to remove the top one-quarter inch of concrete
from the surface of the bridge, extract any faulty concrete,
fill the resulting holes, and seal the entire surface of the
bridge with an epoxy overlay. The epoxy would protect the
underlying concrete and act as a wearing surface.
Sika is a chemical manufacturing company based in New
Jersey which produces an epoxy designed for use in con-
struction projects. J.S. Sweet purchased over $100,000 worth
of Sika’s product from a third-party distributor and applied
the epoxy as the overlay on the New Harmony bridge. In
early 1995, however, the epoxy began to delaminate, or peel
away, from the surface of the bridge.
In May 1995, Fraser MacPhee, then a salesman for Sika,
drove to New Harmony to observe this phenomenon. He was
accompanied by Michael Magner, the project manager for
Armstrong. Both MacPhee and Magner took photographs of
the bridge. MacPhee also may have picked up some loose
pieces of epoxy from the bridge’s surface, but did not keep
the fragments or send them to anyone else for analysis. He
did not conduct any tests or use any special equipment to
examine the bridge or epoxy, nor does he have any technical
training or an advanced degree. MacPhee wrote a one-page
No. 04-2871 3
memorandum detailing his observations which he forwarded,
along with his photographs, to his supervisors. J.S. Sweet
contends that Sika also conducted an analysis based on
MacPhee’s report, although it is not clear whether this an-
alysis ever existed or, if so, what it entailed. In July 1995,
J.S. Sweet employees independently inspected and photo-
graphed the bridge.
Because of the problems on the bridge, WCBC refused
to pay J.S. Sweet for its work. On September 14, 1995,
J.S. Sweet sued the Commission in Indiana state court for,
among other things, breach of contract and unjust enrich-
ment. WCBC counterclaimed, alleging that J.S. Sweet had
failed to comply with the repair contract’s specifications by
misapplying the epoxy. At no point during the litigation
with WCBC, however, did J.S. Sweet subpoena Sika or re-
quest any of its records. The claims proceeded to a bench
trial where the court found in favor of J.S. Sweet on its
breach of contract claim and rejected the Commission’s
counterclaim. The Court of Appeals of Indiana affirmed the
judgment, although it remanded for proceedings not rel-
evant to our discussion. See J.S. Sweet Co. v. White County
Bridge Comm’n, 714 N.E.2d 219 (Ind. Ct. App. 1999).
On April 2, 1998, J.S. Sweet sued Armstrong for tortious
interference with contract, tortious interference with pro-
spective advantage, and defamation. J.S. Sweet alleged that
Armstrong had made knowingly false statements to WCBC
and Sika about J.S. Sweet’s performance in repairing the
surface of the bridge. Prior to filing suit against Armstrong,
J.S. Sweet’s counsel interviewed MacPhee (who by then had
left Sika) and learned that he had taken photographs and
written a memorandum of his observations on the bridge.
On March 11, 1998, counsel requested by letter that Sika
produce the memorandum, photographs, and any related
correspondence. Sika promptly advised J.S. Sweet that it
could not find any of the requested materials. On February
3, 1999, J.S. Sweet subpoenaed Sika and requested again
4 No. 04-2871
that it hand over the report and related materials. Sika
reiterated that it could not find the documents or photo-
graphs. Although it never obtained the requested materials,
J.S. Sweet deposed MacPhee about his observations,
recovered the photographs taken by Magners the day of
MacPhee’s visit, and relied on its own photographs taken of
the bridge in July 1995. J.S. Sweet’s suit against
Armstrong, nevertheless, was unsuccessful.
In November 1995, while the WCBC litigation was still
pending, J.S. Sweet and Sika signed an agreement pro-
viding that, in exchange for a $250 enrollment fee, Sika
would train one of J.S. Sweet’s employees in the use and
application of Sika’s products. Upon successful completion
of the training course, Sika would designate J.S. Sweet for
a period of two years as a “Sika approved contractor.” Sika
agreed to promote J.S. Sweet to the construction industry
as capable and experienced in working with Sika products,
furnish plaintiff with leads to possible construction con-
tracts, enter a joint advertising campaign, and provide them,
free of charge, with limited amounts of literature, data books,
and cured product samples. J.S. Sweet undertook to use
Sika’s products wherever appropriate. The agreement stated
expressly that J.S. Sweet would remain an independent
contractor and that “nothing contained herein shall be con-
strued as constituting [J.S. Sweet] as the agent, partner, or
legal representative of Sika.” (Pls.’ App. at 37.) The day the
parties signed the agreement, Sika gave to J.S. Sweet a
one-page document entitled “SIKA APPROVED CONTRAC-
TOR PROGRAM GUIDELINES 1995.” (Id. at 38.) The
document displays several bullet points that highlight in
general terms the features of the training program. The
document does not contain a signature line and was not
signed by either party.
On October 13, 1999, J.S. Sweet filed the two-count
complaint in this case. The first count alleges that Sika
No. 04-2871 5
tortiously interfered with the WCBC litigation by spoliating
evidence. The second count contends that Sika breached the
approved contractor agreement by failing to explain to J.S.
Sweet why Sika’s epoxy was delaminating from the bridge.
The complaint does not include a breach of implied war-
ranty or products liability claim against Sika arising out of
the sale of its epoxy. The district court initially denied
Sika’s motion for summary judgment as to the spoliation
claim. On a motion to reconsider, however, the court re-
versed itself and ruled in favor of defendant. The district
court later granted summary judgment on the breach of
contract claim as well, and entered judgment in favor of
Sika. J.S. Sweet appeals.
II. Discussion
A district court’s grant of summary judgment is reviewed
de novo. Carreon v. Ill. Dep’t of Human Servs., 395 F.3d 786,
790 (7th Cir. 2005). Summary judgment is appropriate only
where “the pleadings, depositions, answers to interrogato-
ries, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as
a matter of law.” Fed. R. Civ. P. 56(c). We draw all reason-
able inferences and resolve all disputed issues of fact in
favor of the nonmovant. Carreon, 395 F.3d at 790.
A. Spoliation of Evidence
J.S. Sweet contends that MacPhee’s report, photographs,
and Sika’s internal analysis of the report would have pro-
vided strong evidence that WCBC’s counterclaim for breach
of contract was unfounded. Although J.S. Sweet ultimately
prevailed on that claim, it argues that the materials in
Sika’s possession, if introduced at trial, would have brought
the WCBC litigation swiftly to an end. Plaintiff contends
6 No. 04-2871
that, instead, it was dragged through extended litigation
and forced to incur unnecessary legal fees. J.S. Sweet as-
serts that Sika is liable to it for the harm caused by Sika’s
failure to maintain and produce this evidence.
Sika rejoins that, absent a subpoena or other discovery
request, it had no duty to preserve the documents. It points
out that the materials sought by J.S. Sweet were misplaced
(or according to plaintiff, intentionally destroyed) long
before it ever received a subpoena. Defendant asserts,
moreover, that the loss or destruction of the materials could
not have harmed J.S. Sweet because all of the information
contained therein was available to plaintiff through other
avenues.
The parties agree that Indiana law governs. Indiana
courts define spoliation as “[t]he intentional destruction,
mutilation, alteration, or concealment of evidence, usually
a document.” Cahoon v. Cummings, 734 N.E.2d 535, 545
(Ind. 2000) (quoting Black’s Law Dictionary 1409 (7th ed.
1999)). The concept of spoliation has at least two distinct
applications. The first is as a permissive evidentiary in-
ference. See, e.g., Morris v. Buchanan, 44 N.E.2d 166, 169
(Ind. 1942). That is, if there is reason to believe that a party
to a lawsuit has suppressed evidence within its peculiar
possession, the trial court has discretion to instruct jurors
that they may infer that, had the evidence been produced,
it would have been unfavorable to that party’s case. See Ind.
Pattern Jury Instruction (Civil) 3.11 (2003); Cahoon, 734
N.E.2d at 545.
The second application—at issue in this case—is where
spoliation is alleged as an independent tort. Indiana is one
of few jurisdictions that recognizes the tort, which is an-
alyzed either as a species of negligence or under the rubric
of intentional interference with prospective or actual civil
litigation. See Murphy v. Target Prods., 580 N.E.2d 687,
688-90 (Ind. Ct. App. 3d Dist. 1991). Negligent or inten-
No. 04-2871 7
tional spoliation is actionable as a tort only if the party
alleged to have lost or suppressed the evidence owed a duty
to the person bringing the spoliation claim to have preserved
the material. Id. at 690; see also Levinson v. Citizens Nat’l
Bank of Evansville, 644 N.E.2d 1264, 1268 (Ind. Ct. App.
5th Dist. 1994). Plaintiff must also show that the duty was
breached and that it was harmed as a result. Thompson v.
Owensby, 704 N.E.2d 134, 140 (Ind. Ct. App. 1998).
1. Duty
Whether a duty exists is a question of law decided by the
court after balancing three factors: “1) the relationship be-
tween the parties, 2) the reasonable foreseeability of the
type of harm to the type of plaintiff at issue, and 3) the
public policy promoted by recognizing an enforceable duty.”
Id. at 136; see also Webb v. Jarvis, 575 N.E.2d 992, 995
(Ind. 1991). The Indiana courts have refused to recognize a
duty to preserve evidence absent “an independent tort,
contract, agreement, or special relationship.” Murphy, 580
N.E.2d at 690.
J.S. Sweet contends that its purchase of over $100,000
worth of Sika’s epoxy and its status as a Sika approved
contractor establish a special relationship between the par-
ties. It argues, furthermore, that Sika knew or reasonably
could have foreseen that the MacPhee report, photos, and
Sika’s internal analysis of the report were critical to the
WCBC litigation, and that the loss or destruction of those
materials would have harmed J.S. Sweet. It asserts that
imposing a duty in this case would enhance motorists’ safety
by preserving evidence that will expose those at fault when
public works projects go awry.
We decline to recognize a duty under these circumstances.
First, we disagree with plaintiff’s contention that a special
relationship exists between the parties. J.S. Sweet pur-
chased Sika’s epoxy through a third-party distributor in an
8 No. 04-2871
arm’s-length transaction in the same way as any of Sika’s
other customers. An arrangement as ordinary as this cannot
be considered special. Nor does the approved contractor
agreement help J.S. Sweet’s argument. Plaintiff concedes
that the agreement does not expressly obligate Sika to pre-
serve evidence. Moreover, the contract forecloses the possi-
bility that it creates a special relationship by implication:
“[J.S. Sweet] is, and in all events shall be, an independent
Contractor and nothing contained herein shall be construed
as constituting [J.S. Sweet] as the agent, partner, or legal
representative of Sika or [sic] any purpose whatsoever.”
(Pls.’ App. at 37.)
Second, Sika could not reasonably have foreseen that its
failure to maintain the evidence would harm J.S. Sweet.
MacPhee’s report was merely a summary of what an inter-
ested layperson observed on the bridge. His photographs
were equally commonplace. Sika could anticipate reasonably
that J.S. Sweet would do its own investigation, make its own
observations, and take its own photographs. (And as it
turned out, plaintiff did.) Plaintiff emphasizes, however,
that it was damaged by the loss or intentional destruction
of Sika’s internal analysis of the report, rather than by the
disappearance of the report itself, and that Sika should have
foreseen this harm. We find this argument unpersuasive.
By plaintiff’s allegations, the internal analysis relied on
observations made in the MacPhee report, which were readily
available to Sweet. Sika could justifiably expect Sweet to do
its own homework and come to its own conclusions.1
1
J.S. Sweet heavily emphasizes evidence that, in 1996, Sika’s
corporate counsel informed one of plaintiff ’s employees that he
had “the Sweet file” on his desk. Plaintiff claims that this demon-
strates that Sika had conducted an internal analysis of MacPhee’s
observations and knew that its analysis would be important to
J.S. Sweet in the WCBC litigation. There is no indication, how-
(continued...)
No. 04-2871 9
Third, public policy considerations counsel strongly
against recognizing a duty under these circumstances. A
ruling in favor of J.S. Sweet would impose a significant
but undefined burden on an unpredictable class of persons.
Plaintiff has not proposed, nor can we divine, any principled
way to decide which records should be maintained, for how
long, or by whom. A rule of such uncertain scope appears
especially ill-advised given that J.S. Sweet had the option of
subpoenaing Sika, thereby putting it on notice that it
possessed evidence relevant to the WCBC litigation. See
Ind. Trial P. R. 34(C) (allowing for the subpoena of non-
parties); see also Murphy, 580 N.E.2d at 690 (“Prior to
receiving a request as contemplated under [Rule 34(C)], the
non-party ought to have no legal concerns about potential
evidence in his possession, absent any promises, contracts,
statutes or special circumstances.”). What we can say with
certainty is that any holding in favor of plaintiff would
require us to expand the spoliation tort vastly beyond where
the Indiana courts have been willing to go. See, e.g., id.(refusing to impose a duty on an employer to preserve
evidence relevant to its employee’s lawsuit against a third
party); Levinson, 664 N.E.2d at 1268-69 (holding that the
tort of spoliation does not include a duty to avoid causing a
mistrial); Loomis v. Ameritech Corp., 764 N.E.2d 658, 663-
64 (Ind. Ct. App. 2002) (spoliation tort does not apply to
testimonial evidence).
We have located only one reported case where an Indiana
court has recognized a duty to preserve evidence under the
1
(...continued)
ever, that “the Sweet file” contained an analysis of the MacPhee
report. Assuming that it did, corporate counsel’s statement that
he possessed the file establishes at most that he had a copy of the
analysis as late as 1996. It says nothing about the content of the
analysis. Thus, it does not undermine our conclusion that Sika
would have been reasonable to expect J.S. Sweet to conduct its
own investigation.
10 No. 04-2871
tort of spoliation. See Thompson, 704 N.E.2d at 139. The
plaintiffs in Thompson were the parents of a young girl who
had been mauled by a dog after it broke free of its chain.
The parents sued the chain manufacturer, the dog’s owners,
and the owners’ landlords. The landlords’ insurance com-
pany took possession of the allegedly defective chain before
anyone had an opportunity to examine it. When the insur-
ance company lost the chain, the parents sued it, claiming
that its failure to preserve the evidence undermined the
parents’ case against the chain manufacturer, dog owners,
and landlords. The appellate court reversed the trial court’s
dismissal of the spoliation claim and held that the insur-
ance company had a duty to preserve the evidence.
Thompson is plainly distinguishable from this case. In
Thompson, the party alleged to have spoliated the evidence
had a direct financial stake in the outcome of the under-
lying litigation. Had the landlords been found liable, the
insurance company would have had to indemnify them. And
if the key evidence implicating the landlords disappeared,
but for spoliation liability, the insurer would have been off
the hook. We have no similar reason to be suspicious of
Sika’s motives because WCBC’s counterclaim could have
been resolved on a number of grounds that would not have
impacted Sika financially. Moreover, the broken dog chain
was obviously critical to the plaintiffs’ case in Thompson,
and the insurance company’s decision to take exclusive pos-
session of the chain shows that it recognized that fact. By
contrast, Sika could have expected J.S. Sweet to obtain the
information found in MacPhee’s report elsewhere. Given our
reluctance as a court sitting in diversity to expand state
law, see, e.g., King v. Damiron Corp., 113 F.3d 93, 97 (7th
Cir. 1997), we refuse to recognize a duty in this case.
2. Harm
Even if Sika had a duty to preserve the evidence, J.S. Sweet
No. 04-2871 11
would also have to show that the duty was breached, that
it was harmed by the breach, “and that the harm resulted
in damages that can be proven with reasonable specificity.”
Thompson, 704 N.E.2d at 140. A spoliation claim is viable
only if the party who allegedly failed to preserve the evi-
dence possessed it exclusively. Loomis, 764 N.E.2d at 663.
Many of the considerations that informed our duty an-
alysis also lead us to conclude that the destruction or loss
of the report and related materials did not, as a matter of
law, harm Sweet. Anything MacPhee observed on the bridge
could have been (and likely was) observed by J.S. Sweet.
There is no indication that the conditions on the bridge
changed between MacPhee’s visit in May 1995 and plaintiff ’s
arrival two months later. Even if things had changed, J.S.
Sweet deposed MacPhee and asked him about his recollec-
tions. Moreover, plaintiff obtained photographs taken the
same day as MacPhee’s visit. None of the allegedly
spoliated evidence, therefore, was in Sika’s exclusive
possession. See id. Nor could the loss or suppression of Sika’s
internal analysis have harmed J.S. Sweet. As explained
above, that analysis was based on observations that plaintiff
could have made. J. S. Sweet also had the opportunity to
depose Sika employees about what conclusions, if any, they
drew from MacPhee’s report. The district court held cor-
rectly that J.S. Sweet failed, as a matter of law, to establish
that it was harmed by the loss of this evidence.
B. Breach of Contract
J.S. Sweet relies on the approved contractor agreement,
not only to support its argument that a special relationship
existed between the parties, but also as the basis for its
breach of contract claim. Plaintiff contends that Sika vio-
lated the agreement by failing to provide it with technical
12 No. 04-2871
support.2 “The primary and overriding purpose of contract
law is to ascertain and give effect to the intentions of the
parties.” Indiana-American Water Co. v. Town of Seelyville,
698 N.E.2d 1255, 1259 (Ind. Ct. App. 1998). “In interpreting
a written contract, the court should attempt to determine
the intent of the parties at the time the contract was made
as discovered by the language used to express their rights
and duties.” Id. (internal citations omitted). “When the
language of a written contract is not ambiguous . . . its
meaning is a question of law ‘for which summary judgment
is particularly appropriate.’ ” Hyperbaric Oxygen Therapy
Sys., Inc. v. St. Joseph Med. Ctr. of Ft. Wayne, Inc., 683
N.E.2d 243, 247 (Ind. Ct. App. 1997) (quoting Fetz v. Phillips,
591 N.E.2d 644, 647 (Ind. Ct. App. 1992)).
Although not entirely clear from its papers, J.S. Sweet
appears to argue that the obligation to provide technical
support requires that Sika explain to it why the epoxy was
peeling away from the surface of the New Harmony bridge.
As support for this argument, plaintiff points not to the
terms of the approved contractor agreement, but to the
following language from the one-page flyer distributed by
Sika:
- ANNUAL CONTRACTOR REVIEW TO BE HELD
WITH EACH SIKA APPROVED CONTRACTOR
COVERING:
....
2
Plaintiff also alleges that Sika breached the contract by failing
to enter a joint advertising campaign and provide it with cured
product samples. These arguments were not developed in J.S.
Sweet’s lead brief and, although discussed in its reply, are for-
feited. See Employers Ins. of Wausau v. Browner, 52 F.3d 656,
665-66 (7th Cir. 1995) (arguments pressed before the district court
but not raised in appellant’s opening brief are forfeited even if
developed in reply brief).
No. 04-2871 13
- DISCUSSION OF CONTRACTOR NEEDS (TRAIN-
ING, PRODUCTS INFORMATION, FIELD SUPPORT,
ETC.).
(Pls.’ App. at 38.)
This argument suffers from numerous flaws. First, there
is no indication from the face of either the approved contrac-
tor agreement or the flyer that the flyer modifies the
contract between the parties. The flyer is not signed, and
neither instrument explicitly incorporates the other.
Second, assuming that the flyer comprises a portion of the
contract, it mentions only “field support”; neither document
refers to “technical support.” Nevertheless, J.S. Sweet
points to the deposition testimony of one of its employees
stating that he thought the flyer guaranteed technical
support. Plaintiff argues that summary judgment was
improper because a jury must decide whether the em-
ployee’s interpretation was correct. But the employee’s
misapprehension about what the flyer says cannot be used
to rewrite the terms of the document or create an issue of
fact for trial. See, e.g., Heredia v. Sandler, 605 N.E.2d 1212,
1216 (Ind. Ct. App. 5th Dist. 1993) (“[T]his court will not
rely on, nor are we bound by, an erroneous construction
placed upon the contract by a party.”).
Third, even if “field support” means “technical support,”
the flyer does not obligate Sika to provide this service.
Rather, it merely contemplates that Sika’s annual review
with Sweet will “COVER[ ]” a “DISCUSSION OF CON-
TRACTOR NEEDS,” including the need for field support.
Although plaintiff asserts that the flyer is ambiguous and
therefore must be construed against Sika, its drafter, we
hold that the document cannot reasonably be interpreted as
obligating Sika to explain the problems on the bridge.
Accordingly, the district court properly granted summary
judgment in favor of defendant on the breach of contract
claim.
14 No. 04-2871
III. Conclusion
For the reasons stated herein, we AFFIRM the district
court’s grant of summary judgment.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-16-05