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Spoliation – The oft mispronounced Rule of Evidence that Every Business Person Needs to Know

The Court of Special Appeals of Maryland issued an opinion this week that serves as a reminder that a party’s simple failure to preserve evidence can sometimes snatch defeat from the jaws of victory. The case (and link) is Cumberland Insurance Group v. Delmarva Power.

The short version of the case: A home sustained major damage from fire. The homeowner’s insurance company [Cumberland] paid the claim. Most serious fires are investigated for origin and causation of the fire. The insurance company’s investigation in this case led it to conclude that the fire was caused by faulty wiring in the house’s electric meter box. The Insurance Company preserved the meter box; but demolished the property before the Power Company [Delmarva] had opportunity to have its own expert examine the scene and test the Insurance Company’s theory of origin and cause. The Insurance Company made a subrogation claim for damages against the Power Company. The trial court dismissed the suit on the basis that the Insurance Company had made no effort to preserve the evidence that the Power Company would need to evaluate to defend the claim.

The Court of Special Appeals upheld the trial court, explaining:

The doctrine of spoliation is grounded in fairness and symmetry. Stated simply, a party should not be allowed to support its claims or defenses with physical evidence that it has destroyed to the detriment of its opponent. In this case, Cumberland controlled the fire scene and informed Delmarva for the purpose of pursuing its subrogation claim, but never told Delmarva of the fire scene’s impending destruction. And as a practical matter, this prevented Delmarva (and, perhaps more to the point, its experts) from assessing the causes of the fire first-hand. Cumberland says, correctly, that it preserved the meter box, which was the culprit in its view. But this case is not just about the meter box-it’s about the cause of the fire, and specifically whether the cause, whatever it was, was attributable to Delmarva. And the destruction of the scene deprived Delmarva of the opportunity to test Cumberland’s hypothesis or establish the possibility that the fire was caused by anything else
The take-aways for Business people: 1) If there is a potential suit and something may be relevant evidence, you will probably be best served to preserve it. If it is not preserved, its absence will probably be used against you in a more damaging way than the evidence could ever have been used. The time for preservation often occurs before you have lawyers involved. 2) If you have noticed that there is no “i” in the first syllable of spoliation, you will be well ahead of about 50% of the lawyers who talk about it.

Silverman Thompson Slutkin & White, LLC handles business disputes of all nature, and equally important, provides advice and counseling in the hope that litigation can be avoided. If you would like to discuss the Cumberland Insurance case, or generally a business matter that may be affecting you, please call (410) 385-2225 and ask to speak with Gar Robins or email him directly at grobbins@mdattorney.com.