Hendricks v. Great Plains Supply Co.

• Decision Date: 26 April 2000
• Docket Number: No. 98-689.,98-689.
• Citation: 609 N.W.2d 486
• Court: Iowa Supreme Court
• Parties: Robert H. HENDRICKS and Sandra S. Hendricks, Appellees, v. GREAT PLAINS SUPPLY COMPANY, Appellant, v. Colony Plumbing & Heating, Inc., Appellant, and State Farm Fire & Casualty Company, Appellee.

609 N.W.2d 486

Robert H. HENDRICKS and Sandra S. Hendricks, Appellees, v. GREAT PLAINS SUPPLY COMPANY, Appellant, v. Colony Plumbing & Heating, Inc., Appellant, and State Farm Fire & Casualty Company, Appellee.

No. 98-689.

Supreme Court of Iowa.

April 26, 2000.

Michael McDonough of Moyer & Bergman, P.L.C., Cedar Rapids, for appellant Great Plains Supply Company.

Kevin H. Collins and Nancy J. Penner of Shuttleworth & Ingersoll, P.C., Cedar Rapids, for appellant Colony Plumbing & Heating, Inc.

David L. Riley of Yagla, McCoy & Riley, P.L.C., Waterloo, for appellees Hendricks and State Farm Fire & Casualty Company.

Considered by LARSON, P.J., and LAVORATO, SNELL, TERNUS, and CADY, JJ.

SNELL, Justice.

The defendants appeal and the plaintiffs cross-appeal from the entry of a judgment in an action arising from the destruction of the plaintiffs' newly constructed home. We affirm with respect to all issues except the district court's award of damages, and we remand for the entry of a judgment in accordance with this opinion.

I. Background Facts and Proceedings

Robert and Sandra Hendricks built a new home in Marion, Iowa. Great Plains Supply Company provided materials and labor for some of the construction, including the installation of cellulose insulation in the attic. Colony Plumbing & Heating, Inc. installed the fireplace and chimney. The Hendricks moved into the home around Thanksgiving 1993.

The home was destroyed by fire on Saturday, February 12, 1994. An investigation of the fire scene revealed no radiation shield had been installed to maintain clearance around the chimney flue where it passed into the attic, and insulation which had been improperly packed in around the flue had ignited.

An employee of Great Plains, Ivan Anderson, heard about the fire on the news and visited the scene on February 13. He spoke with Mrs. Hendricks and asked her if she knew what had happened. She indicated the fireplace was being considered as a cause of the fire. Within a short time after that, Anderson reported the incident to Linda Scott, the claims person for Great Plains at its home office in Minneapolis.

The Hendricks were insured under a homeowner's policy issued by State Farm Fire & Casualty Company. They contacted their insurance agent on February 13, and he informed the claims department about the fire. State Farm retained a fire investigator, John Woodland, to investigate the cause and origin of the fire. Woodland investigated the fire scene on February 15. Dick Seifers, an adjuster with Federated Insurance Company, Colony's insurer, was also on the scene of the fire on February 15, and he took thirty-two photographs. At some point while Woodland and Seifers were both at the fire scene, Woodland indicated to Seifers that it did not appear Colony was responsible for the fire.

Woodland sought authorization from State Farm to use the services of James Belina, an engineer, to investigate the fire. State Farm approved the request and Belina went to the scene of the fire investigation with Woodland on February 16.

State Farm paid the Hendricks for their loss. The remnants of the home were demolished approximately seven weeks after the fire to make way for the construction of a new home. On October 31, 1995, the Hendricks and State Farm filed a subrogation action against Great Plains, alleging its negligence in installing the insulation had caused the fire. Great Plains counterclaimed alleging the Hendricks had committed a breach of contract by failing to procure fire and extended coverage (builder's risk) insurance which named Great Plains as an insured.

On December 28, 1995, Great Plains filed a third-party petition for contribution against Colony Plumbing & Heating, claiming the fire was attributable to Colony's work in installing the fireplace and chimney flue. The Hendricks subsequently filed a cross-petition on April 4, 1996, against Colony asserting a similar negligence claim. Great Plains later filed a third-party cross-petition against State Farm, alleging State Farm had negligently misrepresented the existence of builder's risk insurance and that State Farm should be estopped from denying the existence of such coverage.

Following a bench trial, the district court found Great Plains and Colony were each fifty percent at fault and entered judgment against them for $378,969.21. The court dismissed all other claims. Great Plains and Colony separately appeal and the Hendricks cross-appeal.

II. Scope of Review

This case was tried to the court as a law action and our review is for the correction of errors at law. Hamilton v. First Baptist Elderly Hous. Found., 436 N.W.2d 336, 338 (Iowa 1989). The district court's findings of fact have the effect of a jury verdict and are binding on us if supported by substantial evidence. Grinnell Mut. Reins. Co. v. Voeltz, 431 N.W.2d 783, 785 (Iowa 1988). Evidence is substantial when a reasonable mind would accept it as adequate to reach the same findings. Id. Evidence is not insubstantial merely because it would have supported contrary inferences. Id.

We construe the district court's findings broadly and liberally. Id. In case of doubt or ambiguity we construe them to uphold, rather than defeat, the judgment. Id. A corollary rule prohibits us from weighing the evidence or the credibility of the witnesses. Id.

III. Causation

Both defendants contend the evidence was insufficient to support the district court's finding that the fire was caused by the ignition of insulation which had been packed in around the chimney flue. There was evidence that the manufacturer's instructions called for the installation of an attic radiation shield around the chimney flue to maintain a safe clearance from combustibles. Likewise, the insulation packages warned that barriers should be used to keep the insulation away from light fixtures and flues. No radiation shield was installed and no barriers were used to keep the insulation from being packed around the chimney flue. There was also evidence indicating inadequate vertical support caused a separation in the seam of the chimney flue which could have allowed flue gases to escape and contribute to the fire.

When the fire was first discovered, the plaintiffs observed it coming from the roof area in the back of their home. This was consistent with the physical, photographic, and expert evidence which indicated that heat from the chimney flue ignited the cellulose insulation. There was sufficient evidence to support the trial court's findings of causation, and we affirm.

IV. Spoliation of Evidence

The defendants contend the district court erred by not sanctioning the Hendricks and State Farm for spoliation of evidence. They argue Woodland's and Belina's testimony should have been excluded because State Farm failed to notify defendants they were targets of a subrogation claim until nearly a year after the fire, and after the fire scene had been demolished. The defendants contend the trial court should have held State Farm had a duty to preserve the evidence.

The defendants also dispute that a finding of bad faith is required before sanctions may be imposed for spoliation of evidence in a civil action. They ask that the standard be modified to allow for the imposition of sanctions in the absence of bad faith or an intent to destroy evidence. The defendants alternatively argue the record does not support the trial court's finding of a lack of bad faith by State Farm.

The intentional destruction of evidence is referred to as spoliation, and when it is established the fact finder may draw the inference that the evidence destroyed was unfavorable to the party responsible for its spoliation. State v. Langlet, 283 N.W.2d 330, 333 (Iowa 1979).

Spoliation involves more than destruction of evidence. Application of the concept requires an intentional act of destruction. Only intentional destruction supports the rationale of the rule that the destruction amounts to an admission by conduct of the weakness of one's case.

Id. Iowa remedies for spoliation of evidence include imposing discovery sanctions, barring duplicate evidence where fraud or intentional destruction is indicated, and instructing on an unfavorable inference to be drawn from the fact that evidence was destroyed. Meyn v. State, 594 N.W.2d 31, 34 (Iowa 1999).

We agree with the trial court's assessment that the evidence does not support a finding of an intentional destruction of evidence. Woodland and Belina extensively photographed the fire scene and preserved portions of the flue pipe, wire, and insulation located in the area of the fire's origin. This evidence was preserved and available for examination by the defendants.

The defendants argue the fire started elsewhere in the home and the entire fire scene, not just evidence from where the fireplace flue entered the attic, should have been preserved. Three days after the fire, Colony had an insurance adjustor present at the scene who took thirty-two photographs. Ivan Anderson, a representative of Great Plains, was also present at the fire scene and was told the fireplace may have been involved. Both Colony and Great Plains were aware a fire had destroyed a new home for which they had recently provided construction services. Nothing in the record suggests they would have been precluded from further visiting the fire scene and conducting an additional investigation had they sought to do so. The plaintiffs were not required to preserve the fire scene indefinitely, and the demolition of the home in April 1994, did not constitute the spoliation of evidence.

Given the facts of this case, we need not reach the question of whether the bad faith element required in criminal spoliation claims also applies in civil actions. Likewise, we need not determine whether under different circumstances a plaintiff might be obligated to notify potential defendants of possible claims and give them a reasonable opportunity to examine a fire scene...