Souza v. Fred Carries Contracts, Inc., 2

• Decision Date: 17 April 1997
• Docket Number: CA-CV,No. 2,2
• Citation: 955 P.2d 3,191 Ariz. 247
• Parties: , 241 Ariz. Adv. Rep. 27 Donna M. SOUZA, Plaintiff/Appellant, v. FRED CARRIES CONTRACTS, INC., an Arizona corporation, Defendant/Appellee. 96-0260.
• Court: Arizona Court of Appeals

Page 3

955 P.2d 3

191 Ariz. 247, 241 Ariz. Adv. Rep. 27

Donna M. SOUZA, Plaintiff/Appellant, v. FRED CARRIES CONTRACTS, INC., an Arizona corporation, Defendant/Appellee.

No. 2 CA-CV 96-0260.

Court of Appeals of Arizona Division 2, Department B.

April 17, 1997.

Hovell & Heiney, P.C. by William P. Hovell and Clifford L. Heiney, Scottsdale, for Plaintiff/Appellant.

Turley & Swan, P.C. by Christopher J. Bork and Elizabeth Savoini Fitch, Phoenix, for Defendant/Appellee.

OPINION

PELANDER, Presiding Judge.

This case raises an issue of first impression in Arizona: the effect of unintentional destruction of relevant evidence after suit has been filed in a negligence action. ¹ Concluding that plaintiff/appellant Donna Souza's failure to preserve crucial evidence precluded her from establishing a prima facie case and deprived defendant/appellee Fred Carries Contracts, Inc. (FCCI) of an opportunity to mount an effective defense, the trial court granted summary judgment for FCCI. For the reasons stated below, we reverse and remand.

FACTS AND PROCEDURAL BACKGROUND

We view the evidence and any reasonable inferences in the light most favorable to the party against whom summary judgment was entered. Angus Medical Co. v. Digital Equip. Corp., 173 Ariz. 159, 840 P.2d 1024 (App.1992). In late January 1992, plaintiff bought a 1982 Ford Mustang from FCCI, a used car dealer. Two weeks later, after she had experienced three tire blow-outs and after FCCI had replaced the car's rear axle assembly ² with a used unit, plaintiff was injured when she had another blow-out, lost control of her car, and collided head-on with an oncoming vehicle. Plaintiff's car was totaled and towed to a storage yard, where it remained for two and one-half years. In February 1994, plaintiff retained counsel and sued FCCI, alleging it had negligently maintained or repaired the Mustang, resulting in its having a mechanically defective rear end which collapsed and caused the accident.

The storage yard owner ultimately obtained title to the Mustang under Arizona's abandoned vehicle statutes in April 1994. Unbeknownst to the parties, in September 1994, the storage company transferred title to an auto recycler, which had the Mustang destroyed on December 22, 1994, before either party had performed a mechanical inspection of it. In June 1995, FCCI moved for summary judgment and/or dismissal under Ariz.R.Civ.P. 56 and 37, 16 A.R.S. FCCI contended the permanent loss of the car precluded plaintiff from establishing a prima facie case, irreparably prejudiced its ability to defend, and warranted the sanction of dismissal for plaintiff's failure, albeit inadvertent, to maintain and preserve the evidence. The trial court granted summary judgment for FCCI, and this appeal followed.

DISCUSSION

I. Sanction for Destruction of Evidence

In its ruling, the trial court concluded plaintiff had failed to fulfill "her responsibility to assure that crucial evidence was preserved," infringed on FCCI's "right to inspect the vehicle to determine whether or not the alleged defect was in fact the cause of the accident," and thus "deprived [FCCI] of the ability to mount an effective defense." As both parties acknowledge, although the court granted summary judgment for FCCI, its ruling was "tantamount" to ordering a "dismissal sanction" for destruction of evidence. Thus, we must first determine whether the trial court abused its discretion in essentially dismissing the action on that ground.

"The sanction of dismissal, though within the sound discretion of the trial court, is 'harsh and not to be invoked except under extreme circumstances.' " Austin v. City of Scottsdale, 140 Ariz. 579, 581, 684 P.2d 151, 153 (1984), quoting Buchanan v. Jimenez, 18 Ariz.App. 298, 299, 501 P.2d 567, 568 (1972) (citation omitted). See also Groat v. Equity Am. Ins. Co., 180 Ariz. 342, 884 P.2d 228 (App.1994); Sears Roebuck & Co. v. Walker, 127 Ariz. 432, 437, 621 P.2d 938, 943 (App.1980) ("[T]he range of discretion for dismissal is narrow."); Golleher v. Horton, 119 Ariz. 604, 606, 583 P.2d 260, 262 (App.1978) (a trial court's discretion "as to the ultimate sanctions of dismissal and/or entry of default judgment[,] has been rather severely limited by the decisions of this state as well as courts of other jurisdictions").

FCCI contends plaintiff and her counsel had an affirmative duty to preserve relevant evidence within their control, and their negligent breach of that duty justified dismissal of the case. ³ We agree with the first proposition, but under the circumstances of this case, disagree with the second. Preliminarily, we note that litigants have a duty to preserve evidence which they know, or reasonably should know, " 'is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be requested during discovery and/or is the subject of a pending discovery request.' " Turner v. Hudson Transit Lines, Inc., 142 F.R.D. 68, 72 (S.D.N.Y.1991), quoting Wm. T. Thompson Co. v. General Nutrition Corp., 593 F.Supp. 1443, 1455 (C.D.Cal.1984). See also Unigard Security Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363 (9th Cir.1992); Baliotis v. McNeil, 870 F.Supp. 1285 (M.D.Pa.1994).

Although plaintiff does not dispute her duty to preserve relevant evidence, she maintains the extreme sanction of dismissal is warranted only in cases of intentional destruction of evidence (spoliation). Adopting inflexible, "bright line" rules in this area, in our view, would be ill-advised. Rather, issues concerning destruction of evidence and appropriate sanctions therefor should be decided on a case-by-case basis, considering all relevant factors. See Stubli v. Big D International Trucks, Inc., 107 Nev. 309, 810 P.2d 785 (1991) (setting forth nonexhaustive list of factors relevant to deciding whether dismissal is appropriate sanction). As the Sixth Circuit has noted: "Destruction of potentially relevant evidence obviously occurs along a continuum of fault--ranging from innocence through the degrees of negligence to intentionality. The resulting penalties vary correspondingly." Welsh v. United States, 844 F.2d 1239, 1246 (6th Cir.1988). Based on the totality of circumstances in this case, as discussed below, we agree with plaintiff that dismissal was too harsh a sanction for her negligently failing to preserve the Mustang.

First, plaintiff did not willfully or volitionally destroy the evidence or even know it was going to be destroyed. Although there is substantial evidence that plaintiff and her counsel were negligent, ⁴ their failure to retrieve or otherwise preserve the car was unintentional. Generally, an innocent failure to preserve evidence does not warrant the sanction of dismissal. See, e.g., Vodusek v. Bayliner Marine Corp., 71 F.3d 148 (4th Cir.1995); Beil v. Lakewood Eng'g & Mfg. Co., 15 F.3d 546 (6th Cir.1994); Gumbs v. International Harvester, Inc., 718 F.2d 88 (3d Cir.1983); Headley v. Chrysler Motor Corp., 141 F.R.D. 362 (D.Mass.1991); Beers v. Bayliner Marine Corp., 236 Conn. 769, 675 A.2d 829 (1996); cf. Martin v. Intex Recreational Corp., 858 F.Supp. 161 (D.Kan.1994).

Second, this case involves neither failure to comply with a court order nor abuse of discovery or disclosure procedures or requirements. Rule 37(a) and (b), upon which FCCI's motion for dismissal was based, "are designed to compel reasonable discovery and to provide sanctions when there has been a failure to comply with an order compelling discovery." Sears Roebuck, 127 Ariz. at 436, 621 P.2d at 942. See also Birds Int'l Corp. v. Arizona Maintenance Co., 135 Ariz. 545, 662 P.2d 1052 (App.1983). Although Rule 37(b)(2) "permits striking a claim when a 'party fails to obey an order to provide or permit discovery,' " Nesmith v. Superior Court, 164 Ariz. 70, 72, 790 P.2d 768, 770 (App.1990), in this case, as in Nesmith, "there is no clear evidence, and no clear finding, that the plaintiff or [her] counsel engaged in any conduct that would bring the rules that authorize dismissal into play." ⁵ Id. Cf. Beil, 15 F.3d at 552.

For example, the record does not indicate that FCCI ever asked plaintiff, formally or informally, to preserve the Mustang or make it available for inspection. Although FCCI's counsel, who was retained in mid-March 1994, knew the Mustang was in a storage yard and realized inspection of it would be necessary, she merely assumed plaintiff and her counsel would maintain it. FCCI's counsel, however, had reason to question that assumption by at least July 1994, when FCCI's automotive expert was erroneously informed by the storage yard that it no longer had the car because it had been sold to a dismantler. In addition, FCCI's president informed its counsel in July that he had received an abandoned vehicle notice for the Mustang in March.

Third, FCCI, as lienholder on the Mustang, had the right, opportunity, and ability to retrieve and preserve the car if it so chose. FCCI knew where the car was being stored after the accident. In fact, FCCI's president twice inspected the car there briefly, in March 1992 and again in February 1994, when he took some photographs. Shortly after being served with process in this action, FCCI received a "Notification of Abandoned Vehicle" from Arizona's Motor Vehicle Division, which indicated the car was still in the storage yard's possession.

It is undisputed that FCCI never performed a post-accident mechanical inspection of the Mustang, and particularly its pertinent rear end assembly. While FCCI understandably did not want to incur the substantial storage charges for re-claiming the totaled car, there is no evidence that it ever inquired about the possibility of, or sought a court order for, performing a full mechanical inspection of the car at the storage yard without having to pay exorbitant fees. See Beers. Despite considerable finger-pointing in this case, the trial court found "[t]he evidence was destroyed through the...