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Brown v. Certain Underwriters at Lloyds

United States District Court, E.D. Pennsylvania

June 9, 2017

COREY BROWN, Plaintiff,
v.
CERTAIN UNDERWRITERS AT LLOYDS, LONDON, Defendants.

          MEMORANDUM

          Joyner, J.

         Before the Court are Plaintiff's Objection to Request to Produce Cell Phone for Examination by Expert (Doc. No. 27), Defendants' Response to Plaintiff's Objection to Request to Produce Cell Phone for Examination by Expert, and Defendants' Resulting Motion for Spoliation Sanctions (Doc. No. 29), Defendants' Supplemental Memorandum in Support of Defendants' Motion for Spoliation Sanctions (Doc. No. 36), Plaintiff's opposition thereto (Doc. No. 39), and Defendants' reply in further support thereof (Doc. No. 41). For the reasons below, Plaintiff's Objection is overruled and Defendants' Motion is granted in part and denied in part.

         I. Facts and Procedural Background

         This case arises out of an incendiary fire that occurred on May 1, 2015 at Plaintiff's property located at 1220 South 50th Street in Philadelphia. (Complaint (“Compl.”), Doc. No. 1-1, at ¶ 9). The Plaintiff, Corey Brown (“Mr. Brown”), filed a lawsuit in state court alleging that his insurers, Defendants Certain Underwriters at Lloyds, London and Underwriters at Lloyds, failed and refused to compensate him for losses incurred as result of that fire in breach of his insurance policy. Defendants removed the case to federal court and promptly filed their Answer to Plaintiff's Complaint in June 2016. After several months of discovery, Defendants moved for leave to amend its answer to assert various counterclaims. Defendants sought leave to allege, inter alia, that Plaintiff breached the terms of his insurance policy contract and violated the Pennsylvania Insurance Fraud Statute. (Doc. No. 23). The Court granted leave over Plaintiff's objection, and Defendants filed its amended answer on March 24, 2017. (Doc. No. 30; Doc. No. 31).

         Meanwhile, on March 9, 2017, Defendants requested that Mr. Brown produce on March 21, 2017 the cell phone used by him at the time of the May 1, 2015 fire. Defendants suspect that Mr. Brown was involved in setting the fire to his property himself, (Doc. No. 29, at ¶ 14), and so they are interested in examining his cell phone to determine whether it contains any evidence that would tend to corroborate their suspicion. This request for production should not have come as a surprise to Mr. Brown, as the Defendants had previously announced their interest in that cell phone as far back as August 12, 2015. On that date, before the filing of any court proceedings, counsel for Defendants took the testimony of Mr. Brown under oath, in order to preliminarily investigate Mr. Brown's insurance claim, and requested on the record that Mr. Brown preserve any evidence existing on his cell phone for potential future discovery.[1] (Doc. No. 29-3; Doc. No. 41).

         On March 20, 2017, the day before Mr. Brown was scheduled to produce his cell phone, Mr. Brown filed an Objection stating that he lost the cell phone “months ago.” (Doc. No. 27). Defendants thereafter moved for spoliation sanctions. (Doc. No. 29). After Plaintiff failed to respond within the time provided by the Local Rules, the Court ordered Plaintiff to file a brief in opposition or risk the Court granting Defendants' Motion as uncontested. (Doc. No. 38). Plaintiff thereafter filed a response in opposition and Defendants filed a reply memorandum in further support thereof. (Doc. No. 39; Doc. No. 41).

         II. Legal Standard

         “[T]here is some authority suggesting that spoliation of evidence, and the sanctions that such spoliation may give rise to, are matters appropriately governed by state law.” Schmid v. Milwaukee Electric Tool Corp., 13 F.3d 76, 78 (3d Cir. 1994). “On the other hand, there is also authority suggesting that the possible preclusion of evidence in cases such as this is governed by federal law as part of the inherent power of a district court to sanction parties.” Id.; see also Adkins v. Wolever, 554 F.3d 650, 652 (6th Cir. 2009) (applying federal law for spoliation sanctions); King v. Illinois Cent. R.R., 337 F.3d 550, 556 (5th Cir. 2003) (same). We will follow the Third Circuit's lead in considering precedent from both jurisdictions in our discussion of spoliation and its sanctions. See Capogrosso v. 30 River Court E. Urban Renewal Co., 482 F. App'x 677, 682 (3d Cir. 2012). In any event, the parties have cited no case law-and the Court has found none-suggesting that there are any material differences between state and federal law.

         Spoliation occurs where “the evidence was in the party's control; the evidence is relevant to the claims or defenses in the case; there has been actual suppression or withholding of evidence; and, 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). Failure to produce evidence can have the same practical effect as destroying it and so, “under certain circumstances, nonproduction of evidence is rightfully characterized as spoliation.” Id.

         The determination of an appropriate sanction for spoliation, if any, rests with the discretion of the trial court. First Sr. Fin. Grp. LLC v. Watchdog, No. 12-CV-1247, 2014 WL 1327584, at *10 (E.D. Pa. Apr. 3, 2014). The Court has authority to sanction litigants from the joint power of the Federal Rules of Civil Procedure and the Court's inherent powers. Id. Potential sanctions for spoliation include dismissal of a claim or granting judgment in favor of the prejudiced party, suppression of evidence, an adverse inference, fines, and attorneys' fees and costs. Id. Dismissal or suppression of evidence are the most drastic sanctions. Id. In considering what sanctions to impose, the trial court should consider “(1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3) whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future.” Bull, 665 at 73 n.5; Schmid, 13 F.3d at 79; see also Schroeder v. Dep't of Transp., 551 Pa. 243, 250-51 (1998) (adopting the Third Circuit's approach to the spoliation of evidence in Schmid).

         III. Analysis[2]

         1. Whether Spoliation Occurred

         Spoliation occurs where (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. Bull, 665 F.3d at 73.

         We need not linger long on the first, second, and fourth elements. Mr. Brown obviously had control over his own cell phone. The Court also finds that the evidence lost is relevant to this case. The contents of Mr. Brown's cell phone, including location information, the substance of text messages, and search history would be important evidence as to whether Mr. Brown was involved in setting the May 1, 2015 fire, which is hugely relevant to both parties' claims. It is also plain that the duty to preserve his cell phone and its contents was reasonably foreseeable to Mr. Brown. In the course of examining Mr. Brown under oath before this litigation commenced, counsel for Defendants requested on the ...


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