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Universal Underswriters Insurance Co. v. Dedicated Logistics, Inc.

United States District Court, W.D. Pennsylvania

December 19, 2014

DEDICATED LOGISTICS, INC., Defendant/Cross Claimant/ Counterclaim Defendant, and PENNSYLVANIA POWER COMPANY, Defendant/Cross Claimant/ Counterclaimant.



I. Introduction

This civil action arises from a fire which occurred on May 19, 2011 at the dealership site of King Chrysler Jeep Dodge ("King") in New Castle, Pennsylvania. King's insurance carrier, Universal Underwriters Insurance Company ("Universal"), paid King's claim for property damage and then brought this subrogation action against Dedicated Logistics, Inc. ("Dedicated") and Pennsylvania Power Company ("Penn Power"), the two parties potentially responsible for the fire. Dedicated and Penn Power, in turn, asserted claims against each other.

During the course of this litigation, Universal entered into a settlement agreement with Dedicated, pursuant to which Dedicated agreed to pay $400, 000 to resolve the claims brought against it by Universal, and Universal executed a release that ostensibly reserved Dedicated's rights to pursue its claims against Penn Power. At this procedural juncture, Dedicated and Penn Power are the only remaining parties to the litigation. Dedicated has asserted a cross-claim for contribution against Penn Power, and Penn Power has asserted cross-claims against Dedicated for contribution and/or indemnity as well as a counterclaim based on Dedicated's alleged negligence in causing damage to Penn Power's utility equipment.

Presently pending before the Court are several motions relating to various evidentiary issues. Dedicated has filed a motion to dismiss and/or for a negative inference based on Penn Power's alleged spoliation of certain utility equipment (ECF No. 95). Penn Power, in turn, has filed its own motion for sanctions based on Dedicated's alleged spoliation of evidence relating to the tractor-trailer that was involved in the underlying accident (ECF No. 97). Finally, Dedicated has filed a motion to exclude the opinion testimony of Penn Power's experts (ECF No. 93). For the reasons that follow, these various motions will be denied.

II. Dedicated's Motion for Spoliation Sanctions

A. Background Facts

In the early morning hours of May 19, 2011, Dedicated's employee, Earnell Harris, drove one of Dedicated's tractor-trailers onto the grounds of the King dealership for the purpose of making a delivery. Also present in the vehicle was another Dedicated employee, Tom Lirette, who was being trained by Harris. Dedicated's tractor-trailer entered the grounds of the dealership via an alleyway over which various utility wires owned and maintained by Penn Power were hung. After completing his delivery, Harris attempted to exit King's parking lot via the same alleyway from which he had entered the dealership grounds. Factually, there is no dispute that, on its way out of the parking lot, the tractor-trailer struck the overhead wires, which resulted in Penn Power's utility pole breaking and falling onto the auto body shop building on King's property. The parties agree that, when the utility pole fell, the transformers attached to the pole broke off of the pole, fell onto the auto body shop, and ignited the fire.

What is principally disputed is the precise part(s) of the utility equipment that Dedicated's tractor-trailer first made contact with and the manner in which the contact occurred. Dedicated maintains that the first contact occurred when the top right corner of the trailer snagged an overhead service wire that was connected from the utility pole behind the body shop to an adjacent building, traversing the alleyway in question. According to Dedicated, this wire had been negligently maintained by Penn Power in that it hung below the required clearance of 16 feet, causing Dedicated's truck to strike the wire and pull down the utility pole. Penn Power, on the other hand, contends that the first contact occurred when the trailer's first-axle right-side tire made contact with the guy wire anchoring system that secured the utility pole. According to Penn Power, this contact caused the utility pole to tilt and the service wires to hang below the required clearance distance, resulting in the trailer snagging the wires when it attempted to exit King's parking lot via the alleyway.

Following the accident, William Glenn, Jr., the supervisor of Penn Power's New Castle line shop, arrived on scene to oversee remediation and repairs to Penn Power's electrical equipment. (Glenn Depo. 35-37, ECF No. 95-1.) During the course of these repairs, Glenn observed damage to a guy wire and guy wire anchor that had previously supported the utility pole in question. ( Id. at 58-59, 79-81, 157.) The pole itself had fractured and sustained fire damage after falling onto the auto body shop. ( Id. at 47, 71; Depo. Ex. 3.) Glenn and another crew member made the decision to preserve the damaged guy wire and anchor, but they made no arrangements to preserve the pole, the service wire which had been snagged on the tractor-trailer, or the remaining guy wires or anchors. ( Id. at 82-84, 157.)

That same morning, James Haberkorn, Dedicated's safety director, contacted the company's insurance carrier, CNA, and made arrangements for an independent claims adjuster - Chris McDermott of Crawford and Company - to adjust the loss. McDermott arrived at the scene of the accident at around 11:30 a.m. and received initial reports from dealership personnel (who did not witness the accident) that Dedicated's driver had struck a guy wire on the utility pole. (McDermott Depo. 12-14, 20, 39-40, ECF No. 95-4.)

While he was on scene, McDermott took numerous photographs to document the damage, but he could not inspect the pole up close because a Penn Power crew was conducting work on it, and McDermott did not consider the situation safe. He was able to view the pole from a distance of approximately 15 feet and took photographs of the pole, which was rather charred and broken at the base. McDermott did not ask Penn Power's crew to preserve the pole, nor did he make efforts to inspect the pole after the crew finished their work. (McDermott Depo. at 20-22, 42-45, 48.)

Five days later, on May 24, 2011, Haberkorn emailed a diagram depicting the accident scene to Jack Donovan, a representative from CNA's major case unit. In relevant part, Haberkorn's email related that Harris "came in off Wilmington Road, proceeded between two of the buildings, made the delivery, continued forward, turned around by going to the right side of the rear of the property and then a left turn back into the driveway, striking a guide wire leading to a power pole." (Haberkorn Depo. Ex. 5, ECF No. 95-3 at 132.) Later that same day, Haberkorn sent a follow-up email to Donovan, stating that he had "[t]alked to Harris again" and that Harris "believes he hit the wires NOT the guide wire coming off the pole." (Haberkorn Depo. Ex. 6, ECF No. 95-3 at 133.)

On May 26, Donovan emailed Haberkorn and McDermott advising them to identify the power company, photograph the pole in question, and identify the pole. (McDermott Depo. Ex. 6, ECF No. 95-4 at 237.) The following day, Haberkorn forwarded to Donovan and McDermott an image of the utility pole that he had obtained from a TV news report covering the fire. Haberkorn noted in his email: "This pole in question appears rotted out on the bottom. Is the pole still available? If not, do we have a spoliation issue here?" (Haberkorn Depo. Ex. 7, ECF No. 95-3 at 134.)

On May 29, 2011, McDermott returned to the King Dealership site in an attempt to measure the height of the utility wires that Penn Power had installed to replace the ones brought down by Dedicated's delivery truck. While he was at the site, McDermott looked around to see if there was any sign of the damaged utility pole, but he found none. McDermott reported this to Donovan and Haberkorn the next day, noting that Penn Power was the company that had responded to service the damaged utility equipment. (McDermott Depo. Ex. 6, ECF No. 95-4 at 235.) In reply, Donovan instructed McDermott to photograph and measure the height of the subject tractor-trailer and contact Penn Power so that the pole could be located and identified. Donovan further instructed McDermott to advise Penn Power "in writing not to destroy the pole." (McDermott Depo. Ex. 6, ECF. No. 95-4 at 234.)

On June 1, 2011, McDermott enlisted another Crawford adjuster, Mark Kepin, to assist on the claim. Among other things, Kepin was asked to put Penn Power on notice of Dedicated's defense concerning the height of the service wires and request preservation of the utility equipment in question. To that end, Kepins contacted Penn Power on Friday, June 3 and left a voice-mail message for Penn Power representative Nancy Frasco requesting that the damaged utility pole be preserved. (Kepins Depo. 13-15, 19-21, ECF No. 95-5.)

The following Monday, after placing a second call to Penn Power, Kepins was contacted by Frasco and Flora Canty, a senior claims processor for Penn Power. Canty advised Kepins that the damaged anchor and guy wire had been preserved, but she thought the pole might have been disposed of. Canty informed Kepins that she would check with the line supervisor about the utility pole and other equipment. (Kepins Depo. at 21-23, ECF No. 95-5; Canty Depo. at 15-18, ECF No. 95-2.)

Kepins proceeded to send Penn Power a formal letter on June 7, 2011 requesting preservation of the utility pole and other equipment. After consulting with Glenn on the matter, Canty emailed Kepins on June 10, 2011 and confirmed that the damaged pole had been sawed into 5-foot sections, placed into the company's scrap bin, and hauled away by Waste Management. The other wires had similarly been scrapped, and the transformers had been shipped to Ravenna. (Kepins Depo. at 24, 54; Canty Depo. at 18-20, 44.)

Glenn claims that he made the decision to keep the anchor and guy wire because they were damaged; "some force pulled them out of the ground" and "[he had been] told that a truck had come through there." (Glenn Depo. 83:16-23, 84:4-5, 157:17-21, ECF No. 95-1.) He did not preserve any of the other utility equipment because, in his opinion, "[n]othing else there was relevant to anything." ( Id. at 83:18.) With respect to the utility pole in particular, Glenn did not see any need to keep it because it was "[j]ust another broken pole." ( Id. at 158:10-13.) Glenn could not recall any other occasion where he had responded to an incident involving a broken pole and had decided to preserve the pole. ( Id. at 158:14-17.) He recalled approximately two or three previous occasions where he had preserved a guy wire and anchor, and he explained that "[t]his [was] kind of an unordinary incident, ... [b]ut for the poles, .. if we kept every pole that got broke off, we'd have more broken poles than we have new poles, and we only have so much room to keep what we got." ( Id. at 158:23-159:4.)

B. Discussion

Dedicated's motion is predicated on the theory that Penn Power committed spoliation of evidence by failing to preserve the broken utility pole and remaining wires which, it argues, is relevant to its claim that Penn Power improperly constructed, maintained, and inspected the utility equipment located at the King dealership. Both of Dedicated's experts have testified that an inspection of the pole would have aided their analyses of the accident. Dedicated argues that Penn Power was aware of the potential for poles to rot or become defective due to increasing age and deterioration, and Penn Power was further aware of the need to preserve relevant evidence, as is evidenced by Glenn's preservation of the damaged guy wire and anchor. Dedicated maintains that, by preserving only the evidence that supports its theory of liability while discarding other relevant evidence, Penn Power has demonstrated bad faith suppression of evidence justifying an inference of spoliation.

Penn Power contends that the facts at issue here do not give rise to actionable spoliation. According to Penn Power, the decision to save only the damaged guy wire and anchor was based on a general perception in the immediate aftermath of the fire that the accident had been caused by Dedicated's tractor-trailer running over the guy wire securing the utility pole. Seeing no need to preserve the damaged pole, the company simply disposed of it in accordance with its normal practice. Penn Power further maintains there is no support for the theory that rot inside the pole caused the accident, nor is there any evidence to suggest that the pole would have been found to be outside acceptable safety standards.

"Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation.'" Swindell Dressler Int'l Co. v. Travelers Cas. and Surety Co., 827 F.Supp.2d 498, 505 (W.D. Pa. 2011) (quoting Victor v. Lawler , Civil Action No. 3:08-cv-1374, 2011 WL 4753527, *1 (M.D. Pa. Oct. 7, 2011)). In order for spoliation to be established, it must be shown that: (1) the evidence was in the party's control; (2) the evidence is relevant to the claims or defenses in the case; (3) there has been actual suppression or withholding of evidence; and (4) the duty to preserve the evidence was reasonably foreseeable to the party. Bull v. United Parcel Serv., Inc., 665 F.3d 68, 73 (3d Cir. 2012) (citation omitted). The party who seeks a spoliation sanction bears the burden of proving these factors. See McCann v. Kennedy Univ. Hosp., Civ. No. 12-1535, 2013 WL ...

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