METLIFE v. BASIL CHEVROLET

• Decision Date: 24 February 2004
• Parties: METLIFE AUTO & HOME, as Subrogee of MICHAEL BASIL, Appellant, v. JOE BASIL CHEVROLET, INC., et al., Respondents, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

1 N.Y.3d 478

807 N.E.2d 865

775 N.Y.S.2d 754

METLIFE AUTO & HOME, as Subrogee of MICHAEL BASIL, Appellant, v. JOE BASIL CHEVROLET, INC., et al., Respondents, et al., Defendants.

Court of Appeals of the State of New York.

Argued January 7, 2004.

Decided February 24, 2004.

Regan & Regan, Buffalo (Lawrence J. Regan of counsel), for appellant.

Kenney, Shelton, Liptak & Nowak, L.L.P., Buffalo (Nelson E. Shule, Jr., Joanneke K.M. Brentjens and Michael C. O'Neill of counsel), for Joe Basil Chevrolet, Inc., respondent.

Gibson, McAskill & Crosby, LLP, Buffalo (Victor Alan Oliveri and Timothy J. Graber of counsel), for Royal Insurance Company, respondent.

Chief Judge KAYE and Judges CIPARICK, ROSENBLATT, GRAFFEO and READ concur; Judge R.S. SMITH taking no part.

OPINION OF THE COURT

G.B. SMITH, J.

The primary issue here is whether New York State should recognize a cause of action for third-party negligent spoliation of evidence and impairment of a claim or defense as an independent tort. We decline to recognize it on these facts.

In March 2000, a fire started in a 1999 Chevrolet Tahoe owned by defendant Joe Basil Chevrolet, Inc., and used, with permission, by Michael Basil. At the time of the fire, the vehicle was parked in the garage attached to the home of Faith and Michael Basil in Clarence, New York. The fire caused over $330,000 in property damage to their home. Plaintiff-appellant, MetLife, Michael Basil's homeowners' insurance carrier, paid the homeowners' claim.

Fire and sheriff investigators determined that the fire originated on the driver's side of the vehicle dashboard. After indemnifying Chevrolet, Royal (Chevrolet's insurance carrier) took possession of the vehicle, and a representative of Royal agreed in a telephone conversation to preserve the vehicle. Representatives of MetLife, defendant General Motors Corporation (which manufactured the vehicle), Speaker Shop, Inc. (which installed a remote starting device in the dashboard) and Royal arranged for a joint inspection and testing of the vehicle in early November 2000 at the lot where Royal stored the vehicle. Before an inspection took place, Royal notified the parties that the vehicle had been disassembled and disposed of and that scientific analysis and examination were no longer possible.

As Michael Basil's subrogee, MetLife then commenced this action for money damages. MetLife brought the first three causes of action for negligence, breach of warranty and strict liability against Chevrolet, GMC and Speaker Shop. The fourth cause of action, the sole cause at issue on this appeal, brought solely against Royal, alleged that "as a result of the negligence, carelessness and recklessness of [Royal], invaluable, necessary and important evidence has been destroyed and lost[,] thereby irrevocably impairing [MetLife's] right to pursue successfully the defendants, Joe Basil Chevrolet, Inc., General Motors Corporation and Speaker Shop, Inc."

In lieu of answering, Royal moved to dismiss MetLife's complaint, as well as all cross claims interposed against it, arguing that MetLife failed to state a cognizable cause of action. MetLife cross-moved to dismiss Royal's affirmative defenses or for summary judgment as against defendants Royal and Chevrolet. Supreme Court granted Royal's motion to dismiss the complaint, holding that no action against a third party for spoliation of evidence exists in New York, and the Appellate Division affirmed. The Court concluded that Supreme Court properly dismissed the complaint because no cause of action exists in New York for "third-party spoliation" of evidence/impairment of claim or defense, either under the principles of negligence law or as an independent tort. This Court granted leave to appeal.¹ We now affirm.

On this appeal MetLife argues that Royal had a duty to preserve the damaged vehicle and that Royal's failure to preserve the vehicle supports a cause of action for spoliation of evidence as an independent tort. Even if there were no duty to preserve the evidence, MetLife argues, Royal assumed that duty by agreeing in a telephone conversation that it would preserve the evidence and MetLife detrimentally relied on that promise. Defendants counter that a cause of action for spoliation should not be recognized as an independent tort or under a contract theory, that the burden of preserving evidence should be upon the party seeking its preservation and that no policy reason exists for making a third party liable for spoliation of evidence. There is no allegation in this case that the vehicle was deliberately destroyed in order to prevent an examination. Rather the allegation is that the evidence was destroyed "as a result of the negligence, carelessness and recklessness of the defendant."

DISCUSSION

A cause of action for spoliation of evidence is a relatively recent phenomenon in the law (see Benjamin T. Clark, The License to Spoliate Must Be Revoked: Why Missouri Should Recognize a Tort for Third-Party Spoliation, 59 J Mo B 308 [2003]; Stefan Rubin, Tort Reform: A Call for Florida to Scale Back Its Independent Tort for the Spoliation of Evidence, 51 Fla L Rev 345 [1999]; Bart S. Wilhoit, Spoliation of Evidence: The Viability of Four Emerging Torts, 46 UCLA L Rev 631 [1998]).²

One traditional method of dealing with spoliation of evidence in New York has been CPLR 3126 where sanctions, including dismissal, have been imposed for a party's failure to disclose relevant evidence (see e.g. New York Cent. Mut. Fire Ins. Co. v Turnerson's Elec., 280 AD2d 652 [2d Dept 2001]).

Similarly, the Appellate Divisions have held that spoliation of evidence by an employer may support a common-law cause of action when such spoliation impairs an employee's right to sue a third-party tortfeasor. For example, in DiDomenico v C & S Aeromatik Supplies (252 AD2d 41 [2d Dept 1998]), the Appellate Division invoked the rule against plaintiff's employer, United Parcel Service, after the employee's eye was damaged by...