What Constitutes Spoliation of Evidence in Indiana and What Can be Done?

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by: Colin E. Flora

     Last week, we focused on the case Webb v. City of Carmel to discuss application of Trial Rule 15(C) for adding a defendant after the statute of limitations has run. But we just as easily could have discussed another case from the same day, which provides an excellent outline of the concept of spoliation of evidence under Indiana law. With this week being fairly quiet in the way of notable appellate decisions, we turn our attention back to NIPSCO. v. Aqua Environmental Container Corp. and examine spoliation of evidence under Indiana law and what remedies may be had.

     But before locking in on the NIPSCO decision, two decisions handed down by the Court of Appeals of Indiana from this week merit note. The first was Dehoyos v. Golden Manor Apartments authored by Senior Judge Carr Darden. Although the case broke no new meaningful ground, in reversing a grant of summary judgment from the trial court finding that an apartment complex was not liable for injuries resulting from a resident’s injury after slipping and falling on ice the court thoroughly outlined the history of Indiana cases on injuries from slipping on ice. And the second was Cosgray v. French Lick Resort & Casino, holding that the French Lick Resort & Casino did not owe a duty to a hotel guest who was raped by an intruder into her room because, in the court’s esteem, “the sexual criminal attack on Cosgray by another invitee in a room left intentionally unlocked [to allow a different guest to enter] was not normally to be expected, and thus not foreseeable, and therefore French Lick Resort did not owe a duty to Cosgray.” The decision stands as an informative juxtaposition to Hamilton v. Steak’n Shake Operations Inc., which we discussed last month.

     Now we return to the issue of spoliation of evidence. Let’s start with the obvious question: what is spoliation of evidence? As the court, quoting a prior decision from the Indiana Tax Court, wrote, “Spoliation is a particular discovery abuse that involves the intentional or negligent destruction, mutilation, alteration, or concealment of physical evidence.” It is a concept that must exist to prevent the willful destruction of evidence that does not favor a party’s case.

     What happened in NIPSCO was a warehouse fire caused a great deal of damage. The day after the fire, the fire inspector determined that the source may have been a ceiling-mounted furnace unit and its component parts. The fire inspector pointed out the unit and explained to the building owner that he thought it may be the source of the fire. The building owner transported the unit to storage, but not all of the component parts were preserved. The building owner sued the power company alleging that the provision of power caused the furnace unit to start the fire. After the case was filed, it was discovered that the portion of the unit that was preserved was not the piece actually at issue. As a result, the power company sought dismissal of the case for the plaintiff’s spoliation of evidence. The trial court denied the request and the appeal followed.

     In order to advance a claim for spoliation, a movant “must prove that (1) there was a duty to preserve the evidence, and (2) the alleged spoliator either negligently or intentionally destroyed, mutilated, altered, or concealed the evidence.” The court found that a duty arose when the owner was told by the fire inspector “that he suspected the fire originated in the furnace area” and when the owner was told by the fire marshal to preserve the furnace. Thus, spoliation would be found as long as the owner was either negligent or acted to intentionally destroy the rest of the evidence.

Having found . . . a duty to preserve the furnace, the next inquiry is whether [the owner] “either negligently or intentionally destroyed, mutilated, altered, or concealed the evidence.” There is no dispute that part of the Furnace Assembly, including the “firebox,” is no longer in existence. [Owner] maintains that it did not spoliate evidence because (1) it saved exactly what [was] recovered from the building, (2) [Owner] believed that what he moved to storage was exactly the same as what Fire Marshal Dean had pointed out to him, and (3) [Owner] did not know that any part of the Furnace Assembly was missing, until NIPSCO attorneys came to examine the remains approximately five years after the fire. . . . The trial court agreed and determined that there is no evidence that [Owner] “intentionally destroyed evidence” or “intentionally failed to save evidence.” We, too, find that the record does not support a finding that that [Owner] intentionally spoliated evidence; however, the inquiry does not end there.

The analysis then turned to whether the Owner was negligent. The court found that it did: 

That is, as discussed above, Aqua had a duty to preserve the entire furnace, but, as Aqua concedes, “apparently inadvertently, some of the furnace components were not saved.” Stated differently, Aqua negligently destroyed or failed to save — that is, spoliated — evidence relevant to its lawsuit.

     Just because the elements of spoliation were met does not mean, however, that sanctions were merited:

Our Supreme Court has recognized that “[t]he intentional or negligent destruction or spoliation of evidence cannot be condoned and threatens the very integrity of our judicial system.” However, a finding of spoliation alone does not necessarily require the imposition of sanctions. Rather, a trial court has broad discretion to redress spoliation of evidence; its power to sanction spoliation is derived from its broad and inherent discretionary powers to issue evidentiary rulings and to manage the orderly and expeditious disposition of cases. Indiana Trial Rule 37(B) also authorizes trial courts to respond to discovery violations with such sanctions “as are just,” which may include, among others, ordering that designated facts be taken as established, prohibiting the introduction of evidence, dismissal of all or any part of an action, rendering a judgment by default against a disobedient party, and payment of reasonable expenses including attorney fees. Additionally, if spoliation by a party to a lawsuit is proved, rules of evidence permit the jury to infer that the missing evidence was unfavorable to that party.

     When deciding whether to sanction a party for the spoliation of evidence, courts consider two primary factors: (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. Culpability can range along a continuum, from destruction intended to make evidence unavailable in litigation to inadvertent loss of information for reasons unrelated to the litigation. Prejudice likewise can range along a continuum, from an inability to prove claims or defenses to little or no impact on the presentation of proof. “[I]f there is an inadvertent loss of evidence but severe prejudice to the opposing party, that [] will influence the appropriate response, recognizing that sanctions (as opposed to other remedial steps) require some degree of culpability.” 

     Looking to the facts in NIPSCO, the court set to balancing culpability and prejudice. As to culpability, the court looked at the fact that the owner appeared to have preserved what was pointed out by the fire marshal and that the power company was aware of the need to inspect and was permitted to do so within a month of the fire yet waited five years to do so. As to prejudice, the answer was much less clear. The power company argued that it could not examine the cause without the missing evidence. The owner argued that it too was as equally harmed by not having the evidence. Instead of resolving the issue on appeal, the court decided:

We find that the culpability versus prejudice balancing act, namely, the prejudice to the non-spoliating party versus the culpability of the spoliating party, is best left to the trial court. And as we have observed, “[A] variety of spoliation remedies are available to a party to litigation, such as ‘potent’ discovery sanctions and an inference that the spoliated evidence was unfavorable to the party responsible.” 

Adhering to that view, the Court of Appeals sent the case back to the trial court to determine whether the balancing supported imposing sanctions.

     Join us again next time for further discussion of developments in the law.

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*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.