Hold the Wrecking Ball –
JUDGE PRECLUDES EXPERT TESTIMONY
IN SUBROGATION CASE WHERE PLAINTIFF
FAILS TO PRESERVE FIRE SCENE FOR INSPECTION
Last month, in Fischer v. Rheem Manufacturing Company, et al., 2004 WL 1088328 (D. Minn., May 13, 2004), the United States District Court for the District of Minnesota provided a not-to subtle reminder that failure to provide notice of, and access to, a fire scene to known potential defendants could result in the imposition of severe sanctions, including precluding the testimony of plaintiff’s experts who had the opportunity to inspect the scene. In doing so, the court in Fischer re-affirmed the idea that the fire scene itself is a unique piece of evidence which cannot be re-created by other means. The court also held that the appropriate sanction required to cure the prejudice to an excluded party, is to prevent the inspecting party from relying on evidence obtained from the fire scene to make its case. Because such a sanction is almost invariably a death knell for a fire-related subrogation matter, manufacturers, lawyers, fire experts, and insurance professionals should take the time to reacquaint themselves with the requirements for scene preservation and notification identified in Fischer.
The Fire
On March 10, 1999, a fire destroyed the home of Plaintiff Dennis and Judith Fischer. At the time of the fire, the Fischer home was insured by Western National Insurance Company ("Western"). Less than a week after the fire, Western’s investigators determined that the probable cause of the fire was a natural gas water heater located in the basement of the home. Western also determined that: (1) the water heater was designed, manufactured and distributed by Rheem Manufacturing Company ("Rheem"); (2) Robertshaw Controls Company ("Robertshaw") designed, manufactured, and distributed the gas control valve connected to the water heater; and (3) Reliant Energy Minnegasco ("Reliant") was responsible for the natural gas delivery system into the home, including the gas meter and the regulator.
After Western’s investigators determined the probable cause of the fire, it hired a company to demolish the fire scene. More than two months later, Western notified Robertshaw that its gas control valve was the likely cause of the fire. At the time Robertshaw was notified, all that remained of the fire scene was the foundation of the house, the water heater and control valve, and some wiring that was above the water heater.
The Lawsuit
Not surprisingly, Western eventually filed a subrogation action against Rheem, Robertshaw, and Reliant, claiming that the defendants were collectively responsible for the fire. While the majority of the claims in the lawsuit were resolved prior to trial, Robertshaw refused to settle with Western, believing that plaintiff’s destruction of the fire scene constituted spoliation of evidence which had prevented it from defending the case. In advance of trial, Robertshaw filed a motion with the court to preclude Western from introducing any evidence derived from the fire scene, including all opinions and testimony from both Western’s retained experts and the state fire marshal.
Western responded to the motion by admitting that, while it did not preserve the fire scene for inspection by known defendants, such an omission did not result in prejudice to Robertshaw. According to Western, it had preserved all of the "relevant" evidence from the scene (i.e., the water heater and gas control valve), and that since Robertshaw only needed to establish that its control valve was not defective, its inability to investigate other potential causes of the fire was immaterial to the defense of the case.
Analysis By The Court
In analyzing the motion, the court first looked to the standard for imposing spoliation sanctions on a party:
Sanctions for spoliation are not limited to bad-faith destruction of evidence, but are appropriate when the party destroying the evidence "knew or should have known" that the evidence was "relevant to imminent litigation." . . . The Court must examine the nature of the item lost in the context of the clams asserted and the potential for remediation of the prejudice caused to the opposing party.
Fischer, 2004 WL 1088328 at 2, citing, Dillon v. Nissan Motor Co., 986 F2d 263, 267 (8th Cir. 1993) and Patton v. Newmar Corp., 538 N.W.2d 116, 119 (Minn. 1995). The court then held that Western "knew or should have known that the fire scene itself was relevant to the potential litigation", based both on the admission of its investigator and on the fact that "courts recognize that a fire scene itself is the best evidence of the origin and cause of the fire." Fischer, 2004 WL 1088328 at 2, citing Hoffman v. Ford Motor Co., 587 N.W.2d 66, 71 (Minn. Ct. App. 1998). Based on these facts alone, the Fischer court found that spoliation had occurred.
The court next determined whether the destruction of the scene had prejudiced Robertshaw’s defense of the case, and if so, whether such prejudice warranted exclusion of Plaintiff’s experts. First, the court summarily rejected Western’s argument that Robertshaw needed only access to its product to adequately defend its interests. In doing so, the court relied on a basic tenet of products liability law; that the product at issue must have actually caused the injury. Gerhard v. Bell Helicopter Textron, 759 F. Supp. 552, 554 (D. Minn. 1991). By preventing defendants from viewing the scene and developing other possible causes for the fire, Fischer prejudiced Robertshaw by taking away its first line of defense - that something other than the control valve caused the fire.
As to whether the prejudice warranted the requested sanction, the Court held that the only way to truly level the playing field was to preclude Western from relying on any evidence obtained from the fire scene (including its expert opinions). In justifying its order, the court focused on the fact that prior to demolition, Western knew that Robertshaw’s valve was a likely cause of the fire. To provide guidance for similar situations in the future, the court made its position clear that, "In such a situation, it is incumbent on the insurance company to provide notice to the potential tortfeasor and to allow that tortfeasor the opportunity to conduct its own investigation of the fire scene." Fischer, 2004 WL 1088328 at 2.
Conclusion
So why is Fischer important? Three reasons:
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First, it reminds us of the importance of preserving a fire scene until all known potential defendants have been notified, and have had a reasonable opportunity to conduct an investigation.
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Second, it reaffirms the opinion of Minnesota courts that the fire scene itself is the best evidence of the cause and origin of the fire. As such, parties might be held to a standard that they "knew or should have known" that the scene was relevant to imminent litigation, and that premature demolition of the site without notice to known potential defendants may be deemed spoliation.
- In looking at the court’s holding in Fischer, it is clear that lawyers, manufacturers, fire investigators and insurance professionals must take significant precautions when deciding how and when to release a fire scene for demolition. Because this and many other decisions involved in processing a fire scene may have significant impact on later subrogation matters, it is imperative that parties retain and consult with an attorney experienced in fire litigation matters as soon as possible. Unfortunately, failure to do so at an early stage in the process may result in the unintended consequence of losing, what may have otherwise been, a strong subrogation matter.
About the Author: Dave practices in the areas of commercial litigation and products liability law at ACKS&P where he has represented numerous manufacturers and insurance companies in fire-related litigation. He is also one of only a handful of attorneys nation-wide to have completed an intensive two-year course on fire inspections and investigations that meet NFPA standards 1031 and1033. If you have any questions regarding fire-scene preservation or other issues, please contact Mr. Reddan at (612) 375-5916.