On September 10, 2021, the Appellate Division issued a decision in 27-35 Jackson Avenue, LLC v. Samsung Fire & Marine Ins. Co., Ltd., 469 N.J.Super. 200 (App. Div. 2021) that considered plaintiff’s burden of proof in a negligence claim based upon spoliation of evidence.  These issues often arise in areas of construction defects and product liability cases.

In 27-35 Jackson Avenue, the plaintiff was a commercial landlord with a property in Long Island City, New York.  Allegedly, a sprinkler head at the property malfunctioned and discharged water throughout the second-floor offices.  As a result, the plaintiff lost a long-term tenant.  The plaintiff made a claim under a commercial liability policy that it had with the defendant carrier.  The defendant investigated the claim and hired an engineering expert to inspect the sprinkler head to assess whether a subrogation claim could be asserted.  The plaintiff requested that the defendant ensure that the sprinkler head was not disposed of, in case the plaintiff needed it for a subsequent claim against a third party.

The defendant’s engineer inspected the sprinkler head and concluded that the malfunction was not determined by a fire or a freeze-up, but he could not determine exactly what caused the sprinkler head to fail.  Once testing was complete, the defendant’s expert disposed of the sprinkler head.  Shortly thereafter, the plaintiff requested the sprinkler head.  The defendant responded months later, informing the plaintiff that it no longer had possession of the sprinkler head.  The plaintiff then filed suit against the defendant, alleging intentional or negligent loss or disposal of the sprinkler head.  Plaintiff retained an engineering expert who opined that the defendant’s expert had not sufficiently tested the sprinkler.  Plaintiff’s expert concluded that there were three possible parties the plaintiff could have asserted a claim against: the sprinkler manufacturer, the installer, and the maintenance contractor.  After discovery was complete, the defendant moved for summary judgment on the basis that the plaintiff could not prove a causal connection between its conduct and the plaintiff’s inability to substantiate a claim against a third party.  The plaintiff cross-moved for an adverse inference against the defendant based on the defendant’s spoliation of evidence.  The trial judge granted the defendant’s motion dismissing the case and the plaintiff appealed.

The Appellate Division upheld the lower court’s decision.  The Appellate Division held that the adverse inference of spoliation was inapplicable to the defendant in this matter because the issue of whether the sprinkler was defective was irrelevant to the defendant and thus could not be viewed in an unfavorable light against it.  The Appellate Division noted that there is no separate tort for spoliation of evidence, but rather, traditional negligence principles apply.  To prove negligence with regard to the destruction of evidence, the Appellate Division held that a plaintiff is required to show that a defendant’s destruction of evidence proximately caused real damages to the plaintiff.  As such, the Court held that the plaintiff had failed to show proximate damages because plaintiff was unable to prove which third party, if any, it could have asserted a claim against.

Significantly, this holding places a high threshold on an insured who seeks to sue their insurance carrier for disposal of evidence collected during a claims investigation.  The claimant must make a showing that in disposing of the evidence, their carrier prevented them from asserting a claim against a specific party that would have otherwise been liable for the claimant’s loss, and the related damages.

The 27-35 Jackson, LLC decision can be found here.

For additional questions, please contact Philip D. Priore, Esq. and/or Scott J. Tredwell, Esq.

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