SDI Operating Partnership, L.P. v. Neuwirth, s. 91-2921

• Decision Date: 25 August 1992
• Docket Number: Nos. 91-2921,91-2925,s. 91-2921
• Citation: 973 F.2d 652
• Parties: SDI OPERATING PARTNERSHIP, L.P., a Delaware partnership, Appellant, v. James NEUWIRTH, d/b/a/ ABC Nursery, Appellee. NORTHWEST PIPE FITTINGS, INC., Appellant, v. James NEUWIRTH, d/b/a/ ABC Nursery, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 652

973 F.2d 652

SDI OPERATING PARTNERSHIP, L.P., a Delaware partnership, Appellant, v. James NEUWIRTH, d/b/a/ ABC Nursery, Appellee.

NORTHWEST PIPE FITTINGS, INC., Appellant, v. James NEUWIRTH, d/b/a/ ABC Nursery, Appellee.

Nos. 91-2921, 91-2925.

United States Court of Appeals Eighth Circuit.

Submitted June 10, 1992.

Decided Aug. 25, 1992.

Robert Paul Chaloupka, Scottsbluff, Neb., argued (Robert A. Winner, on the brief), for appellants.

Douglas L. Curry, Lincoln, Neb., argued (David C. Mussman and Thomas J. Culhane, Omaha, Neb., on the brief), for appellee.

Before BOWMAN and LOKEN, Circuit Judges, and LARSON, ^* Senior District Judge.

LARSON, Senior District Judge.

Appellants, SDI Operating Partnership, L.P., and Northwest Pipe Fittings, Inc., challenge a ruling of the district court, ¹ modifying a previous order of the magistrate judge regarding discovery matters, and allowing certain expert testimony as to the cause and origin of a fire which destroyed appellants' property. We affirm the judgment of the district court.

I.

On October 30, 1988, a fire destroyed the ABC Nursery ("ABC"), owned by appellee, and caused considerable damage to adjacent buildings, owned by appellants. Appellants alleged that the cause of the damage to their buildings was the negligent design and maintenance of the electrical system inside the ABC building. ABC denied negligence and affirmatively alleged that the cause of the fire was an electrical service line located above the roof outside the building. The principal issue at trial was the origin and cause of the fire.

Shortly after the fire, the site was investigated by representatives of the fire marshal's office, who gathered certain physical evidence, including portions of the internal electrical wiring. Subsequently, investigator Boh, retained by ABC's insurance carrier, also conducted an on-site investigation. After the fire marshal had determined that the fire was not of suspicious origin, that office relinquished to Boh the physical evidence it had obtained during its investigation. In return, Boh agreed to provide a copy of his final report to the fire marshal.

In November of 1989, Boh notified the insurance company that he intended to dispose of the evidence in thirty days if he received no further correspondence from it. Boh testified at his deposition that he had no copy of this letter, and testified that he received no response to the letter. The evidence was not destroyed within thirty days, but was destroyed in September of 1990, when Boh's office moved locations. Boh testified that he believed that the matter had been settled and would not go to court. Boh, himself, apparently did not discover that the evidence had been destroyed until February 1991, when arrangements had been made for the appellants' experts to receive the items for inspection.

An additional examination of the electrical wiring was conducted at Boh's request, by Foley, an electrical engineer. The purpose of the examination was to determine whether the wire was energized at the time of the fire. Foley's examination included photographing and microscopically examining the wire, and Foley was listed as a defense expert witness. Boh and Foley opined that the internal wires were not energized at the time of the fire and, thus, could not have been the heat source for the fire. Rather, both opined that the fire started from the overhead service line, which was in an energized state.

Neither appellants nor their experts ever examined either the internal wiring or the electrical service line. The fire marshal testified as to his examination of the physical evidence, and expressed the opinion that the internal wires were energized and did cause the fire. Appellants' experts' testimony at trial was based upon their examination of Boh's photographs.

The magistrate judge determined that the appellants were placed at a severe disadvantage because the destruction of the evidence precluded the opportunity for examination of the wires by appellants' expert witnesses. He concluded that appellants would likely be prejudiced because, "if the defendant's experts are permitted to testify, it is highly foreseeable that the defendant's experts' opinions will be given more weight than the plaintiff's [sic] expert opinions, simply because the defendant's experts have undertaken a much more thorough examination." Order of Magistrate Judge, May 2, 1991, at 4. In addition, he stated that there was no indication that the destruction of the items had been wilfully carried out in order to thwart appellants' efforts to prove their case. The magistrate judge granted appellants' motion for sanctions and, in an effort to "level the playing field," imposed the following sanctions: 1) striking Boh and Foley from ABC's expert witness list, thereby precluding their testimony at trial; and 2) ordering that ABC be prohibited from using at trial any evidence, opinion, or inference arising from the physical examination by ABC's experts of the evidence which was destroyed.

The district court found that appellants' arguments focused upon their inability to conduct a microscopic examination of the physical evidence. Therefore, the court modified the magistrate judge's order to allow Boh to testify only to information contained in Boh's report prepared on ...