27-35 JACKSON AVENUE, LLC VS. SAMSUNG FIRE & MARINE INSURANCE CO., LTD. (L-6049-17, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2925-19
27-35 JACKSON AVENUE, LLC,
Plaintiff-Appellant,
APPROVED FOR PUBLICATION
v. September 10, 2021
APPELLATE DIVISION
SAMSUNG FIRE & MARINE
INSURANCE COMPANY, LTD.,
Defendant-Respondent.
_____________________________
Submitted February 22, 2021 – Decided September 10, 2021
Before Judges Messano, Hoffman and Smith.
On appeal from the Superior Court of New Jersey,
Law Division, Bergen County, L-6049-17.
Varcadipane & Pinnisi, PC, attorneys for appellant
(Jeffrey William Varcadipane and Samuel S. Saltman,
on the briefs).
Fleischner Potash, attorneys for respondent (James P.
Ricciardi, Jr., on the brief).
The opinion of the court was delivered by
MESSANO, P.J.A.D.
Plaintiff 27-35 Jackson Avenue LLC owned commercial property in
Long Island City, New York. For no apparent reason, on January 8, 2015, a
sprinkler head discharged water on the second floor of the premises that
eventually damaged that floor and the one below. Plaintiff's principal tenant at
the time was the United States General Services Administration (GSA), which,
pursuant to a long-term lease, housed offices of the Department of Homeland
Security at the property. Within days, GSA served written notice that it was
terminating the lease because the premises were "untenantable." Plaintiff
claimed to have lost millions of dollars in rent, including recoupment of the
costs of improvements made to accommodate GSA's occupancy, because of
the flood. It filed suit against the federal government in the United States
Court of Federal Claims alleging breach of contract. 1
Defendant Samsung Fire & Marine Insurance Co., Ltd., issued a
commercial liability policy to plaintiff that was in effect at the time of the
sprinkler mishap. Plaintiff secured the sprinkler head and made a claim under
1
The Court of Federal Claims decision granted in part and denied in part the
Government's motion to dismiss plaintiff's complaint. See 27-35 Jackson Ave
LLC v. United States, No. 16-947C, 2017 U.S. Claims LEXIS 1204 (Fed. Cl.
Sept. 28, 2017). We have no further information on any developments in that
lawsuit.
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the policy. 2 Defendant's subrogation counsel and claims adjuster engaged a
professional engineer, Alan Fidellow, who inspected the premises and took
possession of the sprinkler head. On March 2, 2015, subrogation counsel
advised defendant that based on Fidellow's analysis, "there [wa]s no third party
available for subrogation."
Approximately three weeks later, plaintiff's counsel notified defendant in
writing that it should preserve any items removed from the premises "in their
original condition and that no destructive testing, or any other testing that
would alter these items, be performed." He advised that plaintiff intended to
pursue any claims it might have "to recover for any portions of its loss not
recoverable under the applicable insurance policies," and asked defenda nt "to
preserve those items in their original condition for purposes of future
litigation."
On May 20, 2015, defendant wrote plaintiff's counsel summarizing
Fidellow's opinions and stating, "The failed sprinkler head was retained by our
[a]djuster. To date no destructive testing was warranted or completed on the
sprinkler head." In October, plaintiff's counsel wrote to defendant advising of
the pending business interruption claim under the policy and requesting
2
Plaintiff subsequently filed a declaratory judgment suit against defendant
seeking coverage for business interruption losses. That suit settled.
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"access to the sprinkler head so that it may be examined by our expert." It was
not until March 2016 that defendant's newly-assigned claims manager
responded, writing that defendant did "not have in its possession any property
that may have been taken from this risk" and specifically did not have the
sprinkler head.
Plaintiff filed this complaint, alleging defendant intentionally or
negligently lost or destroyed the sprinkler head, and plaintiff suffered damages
as a result. Defendant filed its answer and discovery ensued, after which
defendant moved for summary judgment. Plaintiff opposed the motion and
cross-moved seeking "an [a]dverse [i]nference based on [d]efendant's
spoliation of evidence."
After hearing oral argument, the Law Division judge reserved decision.
She subsequently issued a written opinion in support of her order granting
defendant's motion and dismissing plaintiff's complaint with prejudice. The
judge subsequently denied plaintiff's motion for reconsideration, and this
appeal followed.
I.
When reviewing the grant of summary judgment, we limit our review to
the record before the motion judge, Ji v. Palmer, 333 N.J. Super. 451, 463–64
(App. Div. 2000), and apply the same standard that she did. Globe Motor Co.
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v. Igdalev, 225 N.J. 469, 479 (2016). That standard mandates that summary
judgment be granted "if the pleadings, depositions, answers to interrogatories
and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact challenged and that the moving party
is entitled to a judgment or order as a matter of law." Templo Fuente De Vida
Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016)
(quoting R. 4:46-2(c)). We owe no deference to the motion judge's legal
analysis and "review issues of law de novo." The Palisades At Fort Lee
Condo. Ass'n v. 100 Old Palisade, LLC, 230 N.J. 427, 442 (2017) (citing
Zabilowicz v. Kelsey, 200 N.J. 507, 512 (2009)). Relevant to this appeal is
recognition that "[t]he practical effect of [Rule 4:46-2(c)] is that neither the
motion court nor an appellate court can ignore the elements of the cause of
action or the evidential standard governing the cause of action." Bhagat v.
Bhagat, 217 N.J. 22, 38 (2014).
A.
The motion record additionally reveals that after inspecting the sprinkler
head, Fidellow eliminated the possibility that the discharge resulted from a fire
or "freeze up." He noted that the building manager had not reported any
ceiling stains in the area nor accidental impact injuries to the sprinkler head.
Fidellow attributed some discoloration of the sprinkler head to its age, but he
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removed the heads of nearby sprinklers, and they did not exhibit similar
discoloration. He said that "the pipe dope 3 on the threads that were visible
appeared to have aged more than other areas which could mean that the head
had been existing or been reused."
Fidellow contacted the manufacturer which had discontinued the product
in 2013; there had been no reported recalls. He concluded in a February 28,
2015 email:
When the head discharges the guts of the head
are pushed out with the water release. Inspection of
the head did not show any distortion and therefore
there is nothing that can be determined from the head.
Without any physical evidence we can only
surmise that there was some weakness in the internal
elements of the head that eventually let loose allowing
the water to discharge. There is no way however of
proving this. The inspection reports of the sprinkler
system would not be able to locate this type of failure.
When deposed, Fidellow said he "got rid of" the sprinkler head "a little bit
later" but did not know the exact date. He had the head "for a couple of
days . . . maybe [until the] beginning of March [2015] . . . when [he was] told
to close the case." Fidellow had no protocol for preserving evidence, nor was
he was ever notified that "there was an obligation to preserve this evidence."
3
"Pipe dope" is a solvent-based adhesive that provides a seal between the
sprinkler head and the sprinkler system.
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Defendant's former claims manager testified at deposition that she
received plaintiff's counsel's March 2015 letter requesting preservation of the
sprinkler head and knew it was with Fidellow. She did not know he had
discarded it or when.
Plaintiff retained Klas Haglid, P.E., who rendered his opinions "to a
reasonable degree of engineering certainty." Haglid criticized Fidellow's
inspection and opinion, noting he "did not consider corrosion." Haglid
concluded it was "[m]ore likely than not" the potential cause of the sprinkler
head's failure was a manufacturing defect, improper installation, or improper
maintenance. However, "without the . . . sprinkler for inspection," he was
unable to determine the exact cause.
During his deposition, Haglid testified that Fidellow could have
performed further evaluations on the sprinkler head, including a "chemical
analysis, analysis of rust or debris, spectral analysis of the metallurgy and
chemicals left on what would be left of the valve body." Although Haglid
would not speculate that these would have led to a specific conclusion, he
affirmed "that if [he] had the [sprinkler] valve body and [he] did some of these
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analyses[, he] would more likely than not reach a conclusion as to what caused
it to discharge." 4
B.
We focus only on issues that arose during argument on the moti on and
plaintiff's cross-motion that are germane to the appeal. Defendant argued
plaintiff was "unable to make out the proximate cause link that's necessary
between [defendant's] conduct and [plaintiff's] supposed inability to prove
what would have been viable claims against third parties." 5 Plaintiff argued
that even though the target of its potential lawsuit was a third-party and not
defendant, a "negative inference" was appropriate based on defendant's failure
to preserve the evidence. Plaintiff further contended that it had established
defendant's spoliation of the sprinkler head proximately caused its inability to
pursue a culpable third-party and recoup its losses not covered by defendant's
policy.
4
Plaintiff also retained an attorney who opined that based on Haglid's
opinion, the failure to preserve the sprinkler head resulted in plaintiff's
inability to pursue "one or more parties who were responsible for the failure."
In the attorney's opinion, defendant's failure to preserve the evidence was "a
proximate cause of [plaintiff] losing the ability to bring viable legal claims."
5
Defense counsel specifically told the judge that defendant was not "moving
on [defendant's] legal obligation" to have preserved the sprinkler head.
Plaintiff conceded that the first count of its complaint, alleging intentional loss
or destruction of evidence, should be dismissed.
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In addressing count two of the complaint alleging negligent spoliation,
the judge cited our analysis in Gilleski v. Community Medical Center, 336 N.J.
Super. 646, 652–53 (App. Div. 2001), and noted such a claim "require[d] a
showing of a causal relationship between the evidence negligently destroyed or
lost . . . and plaintiff's inability to prove damages in other third-party claims."
She concluded that because "Haglid present[ed] no facts to infer, and much
less, to support, that the event was probably caused by a manufacturing defect,
improper installation, or improper maintenance . . . . These are bare
conclusions." The judge likened plaintiff's argument to "an attempt to create a
strict liability claim." She entered an order dismissing plaintiff's complaint. 6
Plaintiff moved for reconsideration, asserting, among other things, that
the judge should have held a Rule 104 hearing before concluding Haglid's
opinion was a net opinion. It also argued that the judge's analysis of the
proximate cause issue "effectively abolishe[d] negligence -based spoliation
claims." 7 In denying plaintiff's motion, the judge distinguished out-of-state
decisions cited by plaintiff and concluded, "Plaintiff has done nothing to
6
The judge reasoned plaintiff's cross-motion was moot. There is no order in
the appellate record denying plaintiff's cross-motion.
7
Plaintiff did not include the motion for reconsideration or defendant's
opposition in its appendix. Defendant's appendix includes the judge's written
statement of reasons denying the reconsideration motion. We rely on that in
recounting the arguments made by the parties.
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demonstrate . . . a 'reasonable probability of succeeding' in an underlying suit
against the alleged responsible third-parties."
II.
Plaintiff contends the judge should have considered the cross-motion
"first," because with the benefit of an adverse inference against defendant,
plaintiff met its burden of establishing a prima facie case of negligence.
Plaintiff also argues that the judge misapplied the law regarding proximate
cause in negligence claims based on spoilation of evidence.
We have considered the arguments in light of the record and applicable
legal standards. We affirm, albeit in part for reasons other than those
expressed by the motion judge. See Hayes v. Delamotte, 231 N.J. 373, 387
(2018) ("[I]t is well-settled that appeals are taken from orders and judgments
and not from opinions, oral decisions, informal written decisions, or reasons
given for the ultimate conclusion." (quoting Do-Wop Corp. v. City of
Rahway, 168 N.J. 191, 199 (2001))).
A.
"Spoliation of evidence in a prospective civil action occurs when
evidence pertinent to the action is destroyed, thereby interfering with the
action's proper administration and disposition." Cockerline v. Menendez, 411
N.J. Super. 596, 620 (App. Div. 2010) (quoting Aetna Life & Cas. Co. v. Imet
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Mason Contractors, 309 N.J. Super. 358, 364 (App. Div. 1998)). "[T]o a great
extent our traditional approach to spoliation begins with identifying the
spoliator, because that, in and of itself, will impact on the available and
appropriate remedies." Robertet Flavors, Inc. v. Tri-Form Constr., Inc., 203
N.J. 252, 272 (2010) (citing Tartaglia v. UBS PaineWebber, Inc., 197 N.J. 81,
119–20 (2008)). When the spoliator is the defendant in the suit, the court is
empowered to fashion an appropriate remedy. See Cockerline, 411 N.J. Super.
at 620 ("Depending on the circumstances, spoliation can result in dismissal, a
separate tort action for fraudulent concealment, discovery sanctions, or an
adverse trial inference against the party that caused the loss of evidence."
(citing Jerista v. Murray, 185 N.J. 175, 201 (2005))).
We reject plaintiff's argument that the judge should have granted its
cross-motion and considered the record evidence with a jaundiced eye,
specifically by granting plaintiff an adverse inference. As the Court explained
in Rosenblit v. Zimmerman,
The best known civil remedy that has been
developed is the so-called spoliation inference that
comes into play where a litigant is made aware of the
destruction or concealment of evidence during the
underlying litigation. . . .
Courts use the spoliation inference during the
underlying litigation as a method of evening the
playing field where evidence has been hidden or
destroyed. It essentially allows a jury in the
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underlying case to presume that the evidence the
spoliator destroyed or otherwise concealed would have
been unfavorable to him or her.
[166 N.J. 391, 401–02 (2001) (emphases added)
(citations omitted).]
In other words, an adverse or spoliation inference may be utilized to address
the intentional or negligent spoliation of evidence by a party to the suit.
"[T]he factfinder is permitted to presume that the evidence the spoliator
destroyed or concealed would have been unfavorable to him or her." Bldg.
Materials Corp. of Am. v. Allstate Ins. Co., 424 N.J. Super. 448, 472 (App.
Div. 2012) (emphases added) (citing Robertet Flavors, 203 N.J. at 273;
Rosenblit,166 N.J. at 401–02).
Here, plaintiff complains about the chance it allegedly lost to prove a
third-party was responsible for the sprinkler head's release and resulting flood.
Whatever an inspection of the sprinkler head may have shown would not have
been "unfavorable" to defendant, because defendant played no role in the
happening of the flood. Moreover, the loss of the sprinkler head was irrelevant
to plaintiff's declaratory judgment suit in which it sought coverage from
defendant. Plaintiff cites no published decision in which an adverse or
spoliation inference was used as a remedy in similar circumstances, and our
research reveals none. The adverse or spoliation inference had no place in this
litigation.
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B.
We address the judge's determination that Haglid's opinion was not
entitled to any consideration because it was essentially a net opinion. In our
review, we apply a "deferential approach to a trial court's decision to admit
expert testimony, reviewing it against an abuse of discretion standard."
Pomerantz Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371–72 (2011)
(citing Kuehn v. Pub Zone, 364 N.J. Super. 301, 319–21 (App. Div. 2003)).
"However, no deference is accorded when the court fails to properly analyze
the admissibility of the proffered evidence." E&H Steel Corp. v. PSEG Fossil,
LLC, 455 N.J. Super. 12, 25 (App. Div. 2018) (citing Konop v. Rosen, 425
N.J. Super. 391, 401 (App. Div. 2012)).
"The net opinion rule is a 'corollary of [N.J.R.E. 703] . . . which forbids
the admission into evidence of an expert's conclusions that are not supported
by factual evidence or other data.'" Townsend v. Pierre, 221 N.J. 36, 53–54
(2015) (alteration in original) (quoting Polzo v. Cnty. of Essex, 196 N.J. 569,
583 (2008)). "An expert's conclusion 'is excluded if it is "based merely on
unfounded speculation and unquantified possibilities."'" Id. at 55 (quoting
Grzanka v. Pfeifer, 301 N.J. Super. 563, 580 (App. Div. 1997)). "The
admissibility rule has been aptly described as requiring that the expert 'give the
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why and wherefore' that supports the opinion, 'rather than a mere conclusion.'"
Pomerantz Paper Corp., 207 N.J. at 372 (citing Polzo, 196 N.J. at 583).
Here, Haglid's opinions, as set forth in his report and deposition
testimony, were not net opinions. He reviewed Fidellow's report and
deposition testimony, including the photos Fidellow took of the sprinkler head
while in his possession. Haglid reviewed other documents regarding the flood.
He explained, however, that the photos and Fidellow's analysis were
inadequate, primarily because Fidellow failed to consider or test for corrosion.
He also considered Fidellow's conclusions that freezing or a mechanical blow
did not cause the sprinkler head to release. Haglid explained the mechanism
and operation of the sprinkler head. The transcript of Haglid's deposition is
literally hundreds of pages.
The essential basis for the judge's criticism of Haglid's opinion was not
the lack of explanation supporting his conclusions, i.e., " the why and
wherefore," but rather her determination that Haglid's opinion was "devoid of
any factual support regarding the proximate cause element of" plaintiff's
negligent spoilation claim. In other words, because Haglid could not say
within a reasonable degree of engineering certainty that the sprinkler head
failure was the result of a product defect, or was caused by faulty installation
or maintenance, his opinion was inadmissible. Of course, this overlooked the
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obvious — Haglid said he could not reach a definitive conclusion precisely
because he could not examine the sprinkler head.
We move on to address the adequacy of plaintiff's proximate cause
proofs in the context of a negligent spoilation claim.
C.
Our courts "have also concluded that a separate claim may be
appropriate if the spoliator is not a party to the litigation." Robertet Flavors,
203 N.J. at 272 (citing Jerista, 185 N.J. at 203). See, e.g., Gilleski, 336 N.J.
Super. at 652 (where alleged spoliator was the defendant-hospital that failed to
preserve chair which collapsed, causing plaintiff's injuries, thereby impeding
his claim against the chair's manufacturer). Such a claim is "designed to
remediate tortious interference with a prospective economic advantage. The
prospective economic advantage being protected is a plaintiff's opportunity to
bring a cause of action for which damages may be awarded." Fox v.
Mercedes-Benz Credit Corp., 281 N.J. Super. 476, 482 (App. Div. 1995)
(citations omitted).
Our courts have not recognized a separate tort for negligent spoliation of
evidence but rather have applied traditional negligence principles. Gilleski,
336 N.J. Super. at 648–50. "[N]egligent destruction of evidence against a third
party may be resolved by applying traditional negligence principles of a duty
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of care, breach of that duty by defendant, and an injury to plaintiff proximately
caused by defendant's breach." Swick v. New York Times Co., 357 N.J.
Super. 371, 378 (App. Div. 2003) (citing Gilleski, 336 N.J. Super. at 652). In
Gilleski, we never addressed the issue of proximate cause in a negligence suit
based on spoliation of evidence because our focus was on whether the
defendant owed the plaintiff a duty to preserve the evidence. 336 N.J. Super.
at 654–55. If we view the proximately caused injury as simply plaintiff's
inability to bring any lawsuit against a potentially liable third-party, without
the need to demonstrate the likelihood of success in such an action, i.e., an
award of actual damages, then plaintiff carried its burden for purposes of
summary judgment.
However, our decision in Swick implies there is more to the prima facie
case. There, the plaintiff injured his arm while working on a newspaper
conveyor system for his employer, the New York Times (the Times), and he
sued the successors-in-interest of the manufacturer of the machine and the
company responsible for its maintenance and repair. 357 N.J. Super. at 373 –
74. Despite the plaintiff's repeated requests to inspect the machine, the Times
sold the machine to a newspaper in the Philippines. Id. at 374.
The trial court concluded the Times had a duty to preserve the machine,
and the matter proceeded to trial against all defendants. Id. at 375. However,
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on the first day of trial, the plaintiff dismissed all claims against all other
defendants, except the Times, because "[t]he manufacturer of the machine . . .
had declared bankruptcy . . . and did not have any insurance, and . . . the
remaining defendants had been dismissed allegedly because plaintiff could not
establish a case against them without the opportunity to inspect the conveyor."
Ibid. The Times moved to dismiss the complaint, arguing the plaintiff "could
not establish a prima facie case of spoliation" because he could not prove
damages; the trial court agreed and dismissed the complaint. Id. at 375–76.
On appeal, the plaintiff argued, among other things, that the judge erred
in dismissing the complaint because any uncertainty regarding his damages
was not a bar to recovery because the Times was responsible for his inability
to proceed against the other defendants. Id. at 376. In writing for our court,
future Justice John Wallace recapped the elements of a negligence claim based
on spoliation of evidence. Id. at 378. Noting that neither party challenged the
trial court's conclusion that the Times owed a duty to the plaintiff to preserve
the conveyor machine, we noted "assuming the Times breached that duty, the
crucial issue is whether plaintiff can demonstrate damages caused by that
breach." Id. at 378–79 (emphasis added). We noted that the plaintiff failed to
first pursue a discovery sanction, such as ordering the Times to pay for the
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plaintiff's expert to fly to the Philippines and inspect the machine. Id. at 379.
In affirming the dismissal of the plaintiff's complaint, we said:
We turn now to whether plaintiff presented any
evidence of injury or damages proximately caused by
the Times's alleged breach of a duty to preserve the
equipment. As the trial court noted, plaintiff
dismissed his complaint against all defendants except
the Times. The proofs showed that . . . the
manufacturer of the machine, was out of business, and
there was no insurance coverage. Thus, even if the
machine had been available for plaintiff's expert to
examine, and even if plaintiff obtained a judgment
against [the manufacturer], it was not disputed that
plaintiff could not recover damages from [the
manufacturer]. Under these circumstances, the
evidence was clear that plaintiff could not prove that
the Times's conduct in failing to preserve the machine
proximately caused any injury to plaintiff.
Consequently, judgment was properly entered in favor
of the Times.
[Ibid.]
In Swick, therefore, we concluded that the negligence action failed
because the plaintiff could not prove that the injury the plaintiff suffered from
the defendant's negligence, i.e., the loss of evidence, proximately caused the
plaintiff any damage. We have, in other cases, included the requirement of
proximately caused damages to the prima facie elements of negligence in
spoliation cases. See Hewitt v. Allen Canning Co., 321 N.J. Super. 178, 183
(App. Div. 1999) ("[T]he tort action for spoliation affords damages to a
plaintiff where the spoliator knows that litigation exists or is probable, the
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spoliator . . . negligently destroys evidence . . . where such disruption is
foreseeable, plaintiff's case is in fact disrupted, and plaintiff suffers damages
proximately caused by the spoliator's acts." (emphasis added) (citing Hirsch v.
Gen. Motors Corp., 266 N.J. Super. 222, 234–37, 242–43 (Law Div. 1993)));
Viviano v. CBS, Inc., 251 N.J. Super. 113, 126 (App. Div. 1991) (including
"damages proximately caused by the defendant's acts" as an element of prima
facie case). Indeed, prima facie proof of actual damages is an element of all
successful negligence actions. See, e.g., Coleman v. Martinez, 247 N.J. 319,
337 (2021) ("The fundamental elements of a negligence claim are a duty of
care owed by the defendant to the plaintiff, a breach of that duty by the
defendant, injury to the plaintiff proximately caused by the breach, and
damages." (emphasis added) (quoting Robinson v. Vivirito, 217 N.J. 199, 208
(2014))).
In Kranz v. Tiger, the plaintiff sued his attorneys and the expert doctor
they retained, claiming the attorneys' failure to properly communicate and
schedule the expert's appearance at trial, and the doctor's negligence in
conveying his schedule to the attorneys, resulted in the doctor's failure to
appear at trial and a settlement far below the actual value of plaintiff's injuries.
390 N.J. Super. 135, 140 (App. Div. 2007). In reversing the trial judge's
directed verdicts in favor of the defendants, we noted that "[t]he most common
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way to prove the harm inflicted by malpractice or other misconduct that
adversely affected the outcome in the underlying action is a suit-within-a-suit."
Id. at 145 (emphasis added) (citing Garcia v. Kozlov, Seaton, Romanini, &
Brooks, PC, 179 N.J. 343, 358 (2004)). The plaintiff must demonstrate, at the
least, "he would have recovered a judgment in the action against the main
defendant [and] the amount of that judgment." Ibid. (quoting Garcia, 179 N.J.
at 358). However, proving damages via the suit-within-a-suit method is "not
the only course." Id. at 146 (citing Garcia, 179 N.J. at 358–61). In Kranz, the
plaintiff was able to demonstrate actual damages utilizing the suit -within-a-suit
method even though the critical evidence, i.e., the doctor's testimony, was
absent from the underlying trial.
We recognize the difficulty in using the suit-within-a-suit method to
prove damages in a negligence case based on spoilation of critical evidence
because the lost evidence impedes the plaintiff's ability to prove both
proximate cause for the underlying event and proximately caused damages.
Other jurisdictions have wrestled with this knotty issue.
In Boyd v. Travelers Insurance Company, a case cited by plaintiff, a
propane heater exploded causing severe burns to the plaintiff, and the
defendant-insurer failed to preserve the heater. 652 N.E.2d 267, 269 (Ill.
1995). The court recognized the plaintiff's claim against the insurer for
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spoliation of evidence applying traditional negligence principles, stating "in a
negligence action involving the loss or destruction of evidence, a plaintiff must
allege sufficient facts to support a claim that the loss or destruction of the
evidence caused the plaintiff to be unable to prove an underlying lawsuit." Id.
at 270–71. Noting "[a]ctual damages must be alleged as well," the court held:
"Consequently, a plaintiff is required to allege that a defendant's loss or
destruction of the evidence caused the plaintiff to be unable to prove an
otherwise valid, underlying cause of action. A plaintiff must prove this before
the harm has been realized." Id. at 272 (emphasis added).
In other words, contrary to the argument plaintiff makes in its brief,
Boyd held that the plaintiff must demonstrate likely success in the underlying
case, i.e., the suit-within-a-suit. See id. at 271 n.2 ("A plaintiff must
demonstrate, however, that but for the defendant's loss or destruction of the
evidence, the plaintiff had a reasonable probability of succeeding in the
underlying suit." (emphasis added)).
The Supreme Court of Alabama took a different tack in Smith v.
Atkinson, also cited by plaintiff. 771 So.2d 429 (Ala. 2000). There, the
defendants, an insurance company and its adjuster, failed to preserve a
minivan involved in an accident in which the plaintiff's wife was killed. Id. at
431. On certification from the federal district court, the Supreme Court of
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Alabama recognized that the plaintiff had a cause of action under traditional
negligence principles. Id. at 432. The court defined the elements of such a
claim, namely, that the spoliator had knowledge of pending or potential
litigation, owed the plaintiff a duty to preserve the evidence, and "the missing
evidence was vital to the plaintiff's pending or potential action." Ibid. The
Smith court, however, parted company with Boyd on the issue of proximate
causation and damages, concluding the need to prove an "'otherwise valid'
[claim] places too heavy a burden on the plaintiff. Without the lost or
destroyed evidence, the plaintiff cannot show that the underlying claim was
valid." Id. at 434 (quoting Boyd, 652 N.E.2d at 272).
The court resolved the proximate cause issues by concluding: "Once all
three . . . elements are established, there arises a rebuttable presumption that
but for the fact of the spoliation of evidence the plaintiff would have recovered
in the pending or potential litigation; the defendant must overcome that
rebuttable presumption or else be liable for damages." Id. at 432–33. "The
third party can overcome the presumption by producing evidence showing that
the plaintiff would not have prevailed in the underlying action even if the lost
or destroyed evidence had been available." Id. at 435.
Additionally, the court noted that "[t]he appropriate measure of damages
is difficult to determine in spoliation cases because, without the missing
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evidence, the likelihood of the plaintiff's prevailing on the merits cannot be
precisely determined." Id. at 436. The court rejected a method adopted by
another court, where the "measure of damages . . . could be the damages that
would have been obtained in the underlying lawsuit, multiplied by the
probability that the plaintiff would have won the suit had he had the spoliated
evidence." Id. at 437 (quoting Petrik v. Monarch Printing Corp., 501 N.E.2d
1312, 1320 (Ill. App. 1986)). Ultimately, the Smith court concluded,
without the spoliated evidence, the plaintiff's
probability of success is too tenuous a measure to be
consistently applied and that any attempt to apply it
would constitute pure speculation. Therefore, in
determining damages, we reject the use of probability
of success as a benchmark, in favor of the use of
compensatory damages that would have been awarded
on the underlying cause of action, if the defendant
cannot overcome the rebuttable presumption.
[Id. at 438.]
Other jurisdictions have adopted the Smith court's use of a rebuttable
presumption on the issue of proximately caused injury and damages in
spoliation litigation. See Rizzuto v. Davidson Ladders, Inc., 905 A.2d 1165,
1178–82 (Conn. 2006) (applying presumption as to proximate cause and
damages while recognizing independent tort of intentional spoliation of
evidence); Hannah v. Heeter, 584 S.E.2d 560, 569–71 (W.Va. 2003) (applying
Smith standards to negligent spoliation claim).
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Other courts have rejected the creation of any presumption in the
proximate cause analysis and followed some modification of Boyd's
"reasonable probability of succeeding" burden. For example, in Holmes v.
Amerex Rent-A-Car, the District of Columbia Court of Appeals, in
recognizing a separate tort for negligent spoliation of evidence, concluded a
plaintiff must demonstrate in addition to the existence of a duty and breach of
that duty, "the underlying lawsuit was significantly impaired, that the spoliated
evidence was material to that impairment and that the plaintiff enjoye d a
significant possibility of success in the underlying claim." 710 A.2d 846, 850
(D.C. Cir. 1998) (emphasis added). The court explained the difficulty in
defining the plaintiff's proximate cause burden:
These countervailing interests — the plaintiff's
interest in recovery for lack of ability to prove the
underlying case, and the defendant's interest in only
compensating plaintiff for defendant's harmful
negligence or recklessness — must be balanced in
determining the standard of proof for causation in an
independent action for negligent or reckless spoliation
of evidence.
This adds a unique characteristic to the tort.
Not only must the plaintiff show that an expectancy of
recovery was harmed, but also that such an expectancy
realistically existed. Specifically, proximate cause
must include two showings. First, it must be shown
that the defendant's actions proximately caused some
level of impairment in the plaintiff's ability to prove
an existing underlying civil claim. Second, in order to
show that defendant's actions proximately caused any
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damages, it must be shown that plaintiff's underlying
claim was, at some threshold level, meritorious.
[Id. at 850–51.]
After surveying decisions from other jurisdictions applying diverse standards
for determining proximate cause in spoliation litigation, the court held
in order to demonstrate causation, a plaintiff must
demonstrate that (1) the underlying claim was
significantly impaired due to the spoliation of
evidence; (2) a proximate relationship exists between
the projected failure of success in the underlying
action and the unavailability of the destroyed
evidence; and (3) that the underlying lawsuit would
enjoy a significant possibility of success if the
spoliated evidence were still in existence.
[Id. at 852 (emphasis added).]
Interestingly, the Holmes court nonetheless applied the discount method for
determining damages, where the total damages are multiplied by the
probability of success in the underlying lawsuit. Id. at 853.
The Supreme Court of Montana adopted the same "significant possibility
of success" causation standard. Oliver v. Stimson Lumber Co., 993 P.2d 11,
20–21 (Mont. 1999) (adopting Holmes' analysis). That standard was "lower
than the standard of 'preponderance of the evidence.' . . . [A] plaintiff must
demonstrate a substantial and realistic possibility of succeeding, but need not
demonstrate that such success was more likely than not." Id. at 21. The court
in Oliver also applied a discount formula to the calculation of damages. Ibid.A-2925-19
25
Plaintiff contends the motion judge should not have required that it
demonstrate a likelihood of success in an underlying suit against the sprinkler
manufacturer, installer, or maintenance company. It argues, quite
descriptively, that adopting such a standard means "the damages element is
thus pit against the proximate cause element." Although not specifically
urging adoption of the Smith presumption in spoliation situations, plaintiff
contends it sufficiently demonstrated defendant's negligence pr oximately
caused its injury and damages to permit the case to proceed to a jury.
We would not presume to adopt such a far-reaching approach as that
endorsed by the Alabama Supreme Court in Smith. "[O]ur role as an
intermediate appellate court is to follow the dictates of the Supreme Court
. . . ." RSB Lab'y Servs., Inc. v. BSI, Corp., 368 N.J. Super. 540, 560 (App.
Div. 2004) (citing Nixon v. Lawhon, 32 N.J. Super. 351, 355 (App. Div.
1954)). Our restraint is particularly warranted when it comes to expansion of
"established law." Rodriguez v. Cordasco, 279 N.J. Super. 396, 405 (App.
Div. 1995). Nor, for the same reasons, do we specifically adopt the
"significant possibility of success" standard adopted by the court in Holmes.
Although the Court has yet to speak directly to the proximate cause issue
in negligence cases based on spoliated evidence, for purposes of avoiding
summary judgment, the well-established elements of a negligence claim
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26
required plaintiff to marshal sufficient proof to have avoided dismissal at trial
under Rule 4:37-2(b). Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,
536 (1995). Dismissal under Rule 4:37-2(b) is only appropriate "where no
rational juror could conclude that the plaintiff marshaled sufficient evidence to
satisfy each prima facie element of a cause of action." Smith v. Millville
Rescue Squad, 225 N.J. 373, 397 (2016) (quoting Godfrey v. Princeton
Theological Seminary, 196 N.J. 178, 197 (2008)). Plaintiff's burden included
proof of proximately caused damages. Robinson, 217 N.J. at 208; see also
Model Jury Charges (Civil), 1.12O, "Damages" (approved Nov. 1998)
(explaining that plaintiff has the burden of showing "the damages were the
natural and probable consequences of the defendant's negligence. . . .
Damages may not be based on conjecture or speculation.").
Plaintiff may have presented a prima facie case that it suffered an
"injury" proximately caused by defendant's negligence beca use it could not
initiate a lawsuit against a potential third-party without the ability to inspect
the sprinkler head; however, Haglid's opinions did no more than point a finger
at three possible defendants potentially responsible for the untimely sprinkle r
discharge. The opinions did not explain why any one of those defendants'
product, installation, or maintenance caused plaintiff's damages.
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One possible defendant was the manufacturer of the sprinkler head, who
advised Fidellow the product was no longer produced and never recalled.
Fidellow, who actually examined the sprinkler head, explained "that there was
some weakness in the internal elements of the head that eventually let loose"
when the sprinkler head discharged. That seemingly pointed to a possible
product defect, yet the record is devoid of any further attempts by plaintiff to
develop through discovery or otherwise additional information about the
device from the manufacturer. Nor did Haglid explain why Fidellow's opinion,
albeit insufficient in his mind to prove a product defect, was not significant
enough to help Haglid limit the likely cause of the discharge.
Another candidate was the installer of the system, which plaintiff itself
engaged as part of the improvements done for the GSA lease. The installer
had actually started suit against plaintiff in New York courts to recover monies
it claimed were owed by plaintiff. However, the record lacks any information
demonstrating plaintiff took additional steps to discover whether the general
contractor or subcontractor it engaged were potentially responsible, or at least
provide Haglid with additional information in that regard.
The third candidate was the inspection/maintenance service plaintiff
hired to routinely inspect and service the sprinkler system. The record
includes the contract with that company and some of its inspection reports.
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There is nothing else demonstrating plaintiff's efforts to obtain further
information for Haglid's consideration, nor did Haglid rebut Fidellow's
conclusion that the inspection reports were not helpful in determining the
cause of the discharge.
We hasten to add that plaintiff's failure was not as to the amount of
damages it allegedly sustained by being unable to litigate its claims against
any of the three potential third parties Haglid identified. Our courts have
permitted "considerable speculation" by the fact finder in that regard. V.A.L.
Floors, Inc. v. Westminster Cmtys., Inc., 355 N.J. Super. 416, 424 (App. Div.
2002). However, "[t]he rule relating to the uncertainty of damages applies to
the uncertainty as to the fact of damage and not as to its amount." Tessmar v.
Grosner, 23 N.J. 193, 203 (1957) (emphasis added) (citing Oliver v.
Autographic Reg. Co., 126 N.J. Eq. 18, 25 (Ch. 1939)).
Plaintiff was required to demonstrate not only the lost opportunity to
pursue a case against the manufacturer, installer, or maintenance provider
because of defendant's spoliation of the sprinkler head, but also that it suffered
actual damages because of defendant's negligence. As to this second aspect of
the proximate cause element, plaintiff was not required to demonstrate the
underlying suit would have succeeded, but it needed to marshal more than
simply an expert's opinion that there could have been three reasons for the
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sprinkler head's failure and, hence, three possible target defendants. Plaintiff
failed to do so, and, as a result, the judge properly granted summary judgment.
Affirmed.
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