Hartford Ins. Co. of Midwest v. American Automatic, Civ No. AMD 97-976.

• Decision Date: 15 October 1998
• Docket Number: Civ No. AMD 97-976.
• Citation: 23 F.Supp.2d 623
• Parties: HARTFORD INSURANCE COMPANY OF THE MIDWEST, Plaintiff, v. AMERICAN AUTOMATIC SPRINKLER SYSTEMS, INC., Defendant.
• Court: U.S. District Court — District of Maryland

23 F.Supp.2d 623

HARTFORD INSURANCE COMPANY OF THE MIDWEST, Plaintiff, v. AMERICAN AUTOMATIC SPRINKLER SYSTEMS, INC., Defendant.

Civ No. AMD 97-976.

United States District Court, D. Maryland.

October 15, 1998.

Jeffrey Allan Wothers, Baltimore, MD, for Plaintiff.

Kevin Bock Karpinski, Allen, Johnson, Alexander & Karp, Baltimore, MD, for Defendant.

MEMORANDUM

DAVIS, District Judge.

This is a subrogation action based on diversity of citizenship brought by Hartford Insurance Company of the Midwest ("Hartford") against American Automatic Sprinkler Systems ("American"). Hartford seeks to recover 1.6 million dollars for damages caused by a sprinkler system leak and consequent flooding at the Holiday Inn in Timonium, Maryland. Hartford alleged that American's construction and installation of the sprinkler system in 1982 was responsible for the leak; in the alternative, Hartford alleged that American's renovations of the system in 1996 were the cause of the flooding. The suit is based on theories of negligence, strict liability, and breach of contract under Maryland law.

American has moved for summary judgment, contending first, that Hartford's claims based on American's installation and construction of the sprinkler system are barred by Maryland's statute of repose and second, that Hartford has insufficient evidence to sustain its burden of proof as to its remaining claims.

Hartford has cross-moved for summary judgment. Primarily, it contends that because American discarded critical evidence, including the coupling,¹ Hartford should be awarded judgment as a matter of law, in part through the doctrine of spoliation. For the reasons discussed below, I will grant American's motion for summary judgment and deny Hartford's cross motion.

I. FACTS

There is no dispute of material facts. In 1982, American designed and installed a sprinkler system at the Holiday Inn in Timonium, Maryland. The sprinkler system consists of three standpipe risers that are located in the hotel stairwells. Two of the three risers provide water to the sprinkler system. These two risers also contain valves which enable the fire department to connect hoses in case of a fire emergency.² The remaining riser does not supply water to the sprinkler system, but rather only connects to fire department hoses. The sprinkler system is designed with zone control assemblies that permit the system to be drained zone by zone, without disturbing the entire sprinkler system.

The system existed as it was initially installed by American until January 1996. At that time, the Holiday Inn sought to obtain "Select" status, which required that extensive renovations be completed.³ As a part of these renovations, American returned to the Holiday Inn to replace the escutcheon plates. Escutcheon plates are plates located underneath a sprinkler head. The renovations took approximately one week to complete and were finished on January 26, 1996.

On February 7, 1996, the cap and coupling separated from standpipe riser # 1, which caused water to escape from the pipe and flood into the Holiday Inn. Water leaked into many of the guest rooms, the main atrium, the stairwells, and cascaded onto the exterior facade of the building. The building engineer, Seekford, was able to shut off the water main. An extensive clean-up began immediately. As might be expected, Hartford's insured enlisted American to make repairs. Two American employees, Klender and Brunner, arrived at the Holiday Inn and made the necessary repairs. They replaced a damaged section of the pipe, the cracked fire hose, the coupling, and reinstalled the original cap in its proper place. Klender and Brunner concluded that the pipe had frozen, in part because of unusually cold winter temperatures, and in part because of inadequate heating in the stairwell.⁴ Seekford signed their work order and the employees left the Holiday Inn with the damaged materials.

Shortly thereafter, Hartford suggested to Seekford that he try to have the replaced pipe returned. Seekford, and later counsel for Hartford, contacted American and requested the return of the materials.⁵ American informed Hartford on February 15, 1996, that it was no longer in possession of the pipe, as it had been discarded in a trash dumpster and removed from the premises in the usual course of business. This subrogation action followed.

II. SUMMARY JUDGMENT STANDARD

Pursuant to Fed.R.Civ.P. 56(c), summary judgment is appropriate "if the pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In considering a motion for summary judgment, the facts, as well as the inferences to be drawn therefrom, must be viewed in the light most favorable to the nonmovant. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A party moving for summary judgment is entitled to a grant of summary judgment only if no issues of material fact remain for the trier of fact to determine at trial. Id. at 587, 106 S.Ct. 1348. A fact is material for purposes of summary judgment, if when applied to the substantive law, it affects the outcome of the litigation. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "Summary judgment is not appropriate when there is an issue of fact for a jury to determine at trial, which is the case when there is sufficient evidence favoring the non-moving party upon which a jury can return a verdict for that party." Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir.1991).

A party opposing a properly supported motion for summary judgment bears the burden of establishing the existence of a genuine issue of material fact. Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505. The nonmovant "cannot create a genuine issue of fact through mere speculation or the building of one inference upon another." Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985). See O'Connor v. Consolidated Coin Caterers Corp., 56 F.3d 542, 545 (4th Cir.1995), rev'd on other grounds, 517 U.S. 308, 116 S.Ct. 1307, 134 L.Ed.2d 433 (1996). "When a motion for summary judgment is made and supported as provided in [Rule 56], an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in [Rule 56] must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 6(e). See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Shealy, 929 F.2d at 1012.

III. SPOLIATION OF EVIDENCE

Hartford argues that it is entitled to judgment as a matter of law because American intentionally destroyed evidence that was critical to a determination of the cause of the water leak. Thus, Hartford contends that American's behavior warrants "application of the evidentiary spoliation doctrine." See generally Anderson v. National R.R. Passenger Corp., 866 F.Supp. 937, 945 (E.D.Va. 1994), aff'd, 74 F.3d 1230 (4th Cir.1996).

The evidentiary spoliation doctrine is a rule of evidence, administered at the discretion of the trial court to respond to circumstances in which a party fails to present, loses, or destroys evidence. Id; see also Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156 (4th Cir.1995). The spoliation doctrine authorizes a court to order dismissal, to grant summary judgment, or permit an adverse inference to be drawn against a party, as a means to "level the evidentiary playing field and for the purpose of sanctioning improper conduct." Vodusek, 71 F.3d at 156. The application of this rule "must take into account the blameworthiness of the offending party and the prejudice suffered by the opposing party." Anderson, 866 F.Supp. at 945. Additionally, whether or not a party has notice of the evidence's relevance to a lawsuit must be considered. See id.

Hartford seeks judgment as a matter of law against American because of its allegedly willful destruction of the pipe, as evidenced by its conflicting explanations as to the whereabouts of the pipe, and its resistance in helping to locate the pipe. Imposition of this drastic sanction, however, is plainly unwarranted on this record. The Fourth Circuit has held that it was error for a lower court to grant judgment against a spoliator, where that party did not destroy evidence intentionally and in the absence of bad faith. See Cole, 132 F.3d at 1047 (noting that the remedy of dismissal was "simply too severe" in a case where the plaintiff, without bad faith, destroyed the ladder at issue in the case). Cole recognized that the weight of authority indicated that "absent bad-faith conduct, applying a rule of law that results in dismissal on the grounds of spoliation of evidence is not authorized." Id. at 1047.⁶ See also Schmid v. Milwaukee Elec. Tool Corp., 13 F.3d 76, 78-81 (3d Cir.1994) (reversing the district court's judgment for the defendant because the plaintiff did not intentionally destroy the evidence at issue, nor had a suit been filed at the time the evidence was destroyed).

Hartford has proffered no probative evidence supporting its claim that American destroyed the pipe willfully and in bad faith. In fact, it is undisputed that when Seekford initially requested the return of the pipe, he did not inform American of the possibility of a lawsuit, he did not mention the amount of damage to the Holiday Inn, and he did not explain why he wanted the materials returned. Moreover, American's witnesses testified, without contradiction, that American discarded the damaged pipe in the ordinary course of business. Thus, no substantial evidence supports the assertion that American willfully destroyed evidence it knew was relevant to a lawsuit....