Can you prove it? New Jersey court rules plaintiff alleging negligent destruction of evidence was not sufficient to prove immediate cause of underlying claim | White and Williams LLP

In 27-35 Jackson Ave., LLC v. Samsung Fire & Marine Inc. Co., No. A-2925-19, 2021 NJ Super LEXIS 120, the New Jersey Superior Court, Appeal Division (Appeal Division) considered whether the lower court properly allowed the defendant’s motion for summary judgment. In its petition, the defendant argued that the plaintiff could not establish an immediate cause between the defendant’s alleged conduct in destroying or losing evidence and the plaintiff’s inability to prove liability against other responsible third parties. The Appeal Division upheld the lower court’s decision, finding that the plaintiff had not provided sufficient evidence of a viable liability claim against potentially liable third parties in the underlying action.

In 27-35 Jackson Ave., LLC, the plaintiff suffered water damage at his commercial property located in Long Island City, New York in January 2015. The water damage was the result of a second stage sprinkler head discharging. The plaintiff reported the claim to its property insurer, Samsung Fire & Marine Inc. Co. (Samsung). Upon receipt of the claim, Samsung hired a forensic engineer to inspect the site for the loss and the evidence. Samsung also retained the services of a subrogation lawyer to assist with the origin and cause investigation. The engineer performed his site inspection and took possession of the sprinkler head. It ruled out the possibility that the nozzle discharge was due to fire or frost. Although he noted some discoloration on the nozzle head, he attributed this to the age of the nozzle head. He also noted that the internal components of the sprinkler head had been pushed out of the weir and that the remains of the head showed no signs of deformation. The engineer ultimately determined that the cause of the sprinkler discharge could not be determined. Samsung’s subrogation lawyer said that based on the engineer’s analysis, no responsible third party was available for the subrogation.

Approximately three weeks after the loss, plaintiff’s attorney sent Samsung a written notice requesting that all items removed from the site of the loss be kept in their original condition. The notice expressed the plaintiff’s intention to seek recovery of any part of his loss not covered by insurance. In late May 2015, Samsung informed counsel for the plaintiff that the sprinkler head had been retained by the claims adjuster and that no destructive testing had been performed. It was not until March 2016 that Samsung notified the complainant that the evidence had not been kept. As a result, the plaintiff brought legal action against Samsung, alleging that Samsung intentionally or negligently lost or destroyed the sprinkler head and that the plaintiff suffered damages as a result.

Beforehand, the applicant produced an expert engineer who considered that the cause of the discharge of the nozzle was probably related to a manufacturing defect, improper installation or poor maintenance. After the discovery, Samsung filed a motion for summary judgment. The plaintiff has filed a counterclaim seeking an inference based on the alleged theft of evidence by Samsung. The lower court allowed Samsung’s motion for summary judgment, finding that since the plaintiff’s expert could not identify any probable cause for the sprinkler activation, the plaintiff failed to demonstrate a “reasonable likelihood of success. in an underlying action against the alleged responsible third parties “. The lower court chose not to consider the plaintiff’s counterclaim and dismissed the plaintiff’s request for reconsideration. The applicant appealed to the Appeal Division.

The Appeal Division upheld the lower court’s decision, but in part for different reasons. The court first considered whether the lower court should have considered the plaintiff’s counterclaim, which sought to draw a negative conclusion from the alleged spoliation. The Appeals Division acknowledged that New Jersey courts have issued negative deductions as a remedy against spoliation by the allegedly responsible party. However, the court ruled that a negative inference would only be available as a remedy against the third party alleged to be responsible for the underlying cause of action. Since Samsung played no role in the underlying water loss, the court ruled that Samsung could not be subject to a negative deduction.

With respect to Samsung’s motion for summary judgment, the Court of Appeal recognized that the courts of New Jersey have recognized an independent cause of action for the negligent destruction of evidence if the alleged despoiler is not a party to the underlying claim. The plaintiff’s prima facie case is similar to a claim for ordinary negligence; require proof that the defendant owed a duty of care, breached that duty and that this breach closely caused the plaintiff’s damages. The tribunal considered the evidence required for the claimant to establish the prima facie case of immediate cause of a claim for negligent destruction of evidence. The court noted that some jurisdictions, such as Illinois, require the plaintiff to demonstrate that he or she would likely be successful in the underlying case, which the court called requiring “a trial within a trial.” Other jurisdictions, such as Alabama, create a rebuttable presumption that, without the theft of the evidence, the plaintiff would have acquitted against the responsible third parties.

Here, the court refused to go so far as to adopt a rebuttable presumption or a prosecution requirement in the lawsuit. Thus, the court disagreed with the lower court’s ruling that the plaintiff was required to prove a prima facie case that he likely would have succeeded in obtaining the underlying action. However, the court agreed that the plaintiff had failed to meet its prima facie burden of establishing that Samsung’s destruction of the evidence directly caused the plaintiff’s damage. The court simply ruled that the plaintiff must do more than just identify three possible causes of the underlying claim and three possible targets. The court concluded that since the plaintiff was unable to establish a more defined theory of liability in the underlying claim, the plaintiff was unable to establish damages. The Appeal Division upheld the lower court’s decision granting Samsung’s summary judgment motion.

The 27-35 Jackson Ave., LLC The decision does not provide much clarity as to what a claimant must prove to satisfy the prima facie case of immediate cause. However, the decision establishes that a plaintiff’s inability to bring legal action against potentially liable parties is not sufficient prejudice to establish damages. The ruling also states that a claimant must do more than just point fingers at possible responsible parties. This case suggests that a claimant asserting a claim for negligent destruction of evidence must have a more developed theory of liability against the party or parties potentially responsible for the underlying claim in order to establish the element of immediate cause. While the claimant is not required to prove that he was likely to have succeeded in the underlying claim, he must do more than just speculate on the possible causes of the claim.

While Samsung prevailed over summary judgment, this case serves as a warning to all professionals in subrogation regarding the proper handling and retention of evidence. Had the plaintiff been able to better establish a potential theory of liability in the underlying claim, Samsung could have been held liable for failing to preserve the evidence in question. It is important that subrogation professionals make every effort to determine whether the insured or any other potentially interested party wishes evidence to be retained before any evidence is excluded. It is also important to maintain a chain of custody of evidence and to require written approval before discarding it. Failure to do so could expose the carrier to a claim for negligent destruction of evidence in jurisdictions which recognize such claims.

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