This is a case of first impression. State Farm Mutual Automobile Insurance Company (State Farm) brought this subrogation action on behalf of plaintiffs Sonia Hirsch and Irving Hirsch (plaintiffs). The causes of action alleged in plaintiffs' complaint arose from a fire that severely damaged plaintiffs' vehicle. Prior to filing the complaint, State Farm had experts inspect plaintiffs' vehicle and prepare a report. The vehicle was subsequently discarded.
Defendant Warnock Cadillac Oldsmobile, Inc. (Warnock) moves to dismiss plaintiffs' complaint for spoliation of evidence. Defendant
General Motors Corporation (General Motors) joins Warnock in its application, requesting that this court enter an order dismissing plaintiffs' complaint with prejudice against defendants General Motors and Warnock.
Plaintiffs object to defendants' motion. First, plaintiffs contend that New Jersey has not adopted California's independent spoliation tort approach. Second, plaintiffs contend that the loss of evidence was, at most, negligent. And under New Jersey law, civil litigants who negligently lose evidence are not barred from proceeding with their cases. Rather, upon completed discovery, and after the other party establishes substantial prejudice at an evidentiary hearing, the appropriate relief would be preclusion of the evidence. Third, plaintiffs contend that the out-of-state authorities cited in defendant Warnock's brief remedied spoliation by precluding evidence. Fourth, plaintiffs contend that spoliation of evidence is an affirmative defense, which was not specifically pleaded in defendants' respective answers. Fifth, plaintiffs contend that plaintiff Irving Hirsch notified defendants Warnock and General Motors of the fire involving their vehicle several weeks after its occurrence, and again by plaintiffs' insurer State Farm on April 3, 1991, and thus, defendants failed to timely request an inspection. Finally, plaintiffs contend that dismissal of the complaint, absent a court order to preserve the evidence, would be improper.
In reply, Warnock states that the evidence in this case was intentionally destroyed; the requisite intent level to establish intentional spoliation of evidence need not rise to a level of egregious conduct. In addition, General Motors states that, in light of the discovery already conducted, it is not premature to determine dismissal of plaintiffs' complaint (or preclusion of evidence).
Plaintiff Irving Hirsch purchased a 1988 Cadillac Sedan DeVille ("Cadillac") from Wells Cadillac on or about July 23, 1988. The Wells Cadillac dealership was later purchased by defendant Warnock.
Plaintiff Sonia Hirsch, plaintiff Irving Hirsch's wife, was the principal driver of the Cadillac, which was driven locally around West Orange, New Jersey, except for one trip to Atlantic City, New Jersey.
On July 9, 1990, Irving Hirsch brought the Cadillac to Warnock for air conditioning repair. The Cadillac's odometer reading was 14,899 miles. Warnock replaced an air conditioning hose, and upon authorization, Warnock also replaced the front brakes and cleaned and adjusted the rear brakes. John Pawlyk, the mechanic who performed the repairs, stated that the brake reservoir and lines were also inspected. (Depositions of John Pawlyk and William Hellman, p. 36, lines 15-23). The Cadillac had no other malfunctions or problems; the only prior maintenance services performed on the Cadillac were routine oil changes.
On August 31, 1990, the Cadillac was parked in the driveway of plaintiffs' home in West Orange, New Jersey. Plaintiff Irving Hirsch noticed flames emanating from the Cadillac's engine compartment. The Fire Department was summoned and arrived at about 2:20 p.m.
The August 31, 1990 West Orange Fire Department Fire Incident Report stated the fire originated in the engine compartment, the form of heat ignition and ignition factor were undetermined and the type of material ignited was wire insulation and cable insulation.
The August 31, 1990 West Orange Fire Department Fire Incident Report Supplement stated the fire engulfing the engine compartment and the underside of the dashboard was extinguished and there were no signs of fluid leaks.
On the same day, shortly after the incident, plaintiffs reported the fire to their automobile insurer, State Farm.
On September 5, 1990, a State Farm appraiser declared the Cadillac a "total loss." The Cadillac's odometer reading was approximately 16,000 miles. Thereafter, on September 6, 1990,
Tech-Cor, Inc. (Tech-Cor), a salvage company, in Carteret, New Jersey, took possession of the Cadillac.
On September 21, 1990, State Farm entered into an acknowledged agreement with Sonia Hirsch for $17,267.13, in settlement of the insurance claim.
On October 10, 1990, Peter Vallas Associates, Inc. (Vallas), inspected the Cadillac at State Farm's request. The October 12, 1990 Vallas Report concluded that a ruptured brake fluid line, emitting atomized brake fluid onto the exhaust manifold, caused the fire in the Cadillac's engine compartment. The Vallas inspectors eliminated other possible competing causes such as malfunctions of the oil, fuel and electrical systems. The Vallas inspectors found low fire patterns at the base of the Cadillac's firewall where the brake fluid lines were located and "severe discoloration [of] and direct flame impingement" on the left brake line.
On November 1, 1990, Tech-Cor received title to the Cadillac. Tech-Cor sold the Cadillac to King George Auto Sales in Rahway, New Jersey, on December 10, 1990. This is the Cadillac's last known whereabouts.
In the meantime, on or about September 17, 1990, plaintiff Irving Hirsch contacted General Motors Cadillac Motor Division and reported the fire incident. Subsequently, William Hellman, Warnock's parts and service director, referred plaintiff Irving Hirsch to Cadillac District Service Manager Larry Swift. Mr. Swift and plaintiff Irving Hirsch met at Warnock's premises in South Orange, New Jersey, on or about October 15, 1990, and discussed the fire incident.
There was no further contact between plaintiffs and defendants until April 1991. Two identical State Farm letters, dated April 3, 1991, addressed to Warnock and to General Motors, stated that "[o]ur investigation indicates that you are responsible for this damage, and we are looking to you for reimbursement."
A letter from the Cadillac Motor Car Division of General Motors to State Farm, dated April 11, 1991, acknowledged receipt
of the April 3, 1991 letter and informed State Farm that General Motors' insurance carrier was Royal Globe Insurance Company, and requested that further correspondence be directed to them.
State Farm then addressed a letter, dated May 1, 1991, to Royal Globe Insurance Company, stating that "[w]e would appreciate hearing from you at your earliest opportunity in order to avoid placing this matter in the hands of our attorneys."
Crawford & Company addressed a letter to State Farm, dated June 21, 1991, stating that they were an independent adjusting firm assigned to handle the Hirsch claim on behalf of Warnock; and that they were denying State Farm's subrogation claim because the brake pads were replaced two months before the fire, there was no proof that Warnock's negligence caused the fire, and "anything could have severed the [Cadillac's] brake line . . . ."
III. Procedural History and Discovery
Plaintiffs filed suit on October 25, 1991. Their complaint states claims for breach of a sales contract and breach of a service contract; careless, reckless and negligent design, manufacture, service, etc. of a 1988 Cadillac; strict products liability for placing a defective Cadillac into the stream of commerce; and vicarious liability of General Motors for the breach of contract, negligence and strict products liability of defendants Cadillac Motor Car Division, Wells Cadillac, and John Does 1-20.
On December 26, 1991, the office of Richard A. Merkt, Esquire, filed an answer on behalf of Warnock. On June 3, 1992, the firm of Bumgardner, Hardin & Ellis filed a Substitution of Attorney on behalf of Warnock, and filed an amended answer on July 8, 1992.
After a January 2, 1992 Stipulation Extending Time For Answer, General Motors filed an answer on January 9, 1992. Although Warnock's answer and amended answer as well as General Motors' answer state various separate defenses, spoliation of evidence was not raised until this motion.
On January 9, 1992, General Motors inquired as to the Cadillac's location. Plaintiffs (State Farm as subrogee) furnished that information
via an April 13, 1992 reply letter, stating that "the vehicle in question was sold to King George Auto Sales . . . on or about December 10, 1990."
On May 18, 1992, plaintiffs duly served General Motors with answers to interrogatories.
On June 9, 1992, Warnock made a Demand For Production of Documents on plaintiffs. Plaintiffs' June 12, 1992 reply letter provided information as to the Cadillac's location.
On June 17, 1992, plaintiffs' oral depositions were taken.
On June 24, 1992, Warnock sent certified answers to interrogatories and responses to plaintiffs' Notice to Produce (plaintiffs' Notice to Produce was originally sent to Richard A. Merkt's office on March 23, 1992).
On August 11, 1992, depositions of John Pawlyk and William Hellman were taken.
On September 30, 1992, General Motors sent its verified answers to plaintiffs' initial and supplemental interrogatories.
This court heard oral argument on defendant's motion to dismiss plaintiffs' complaint on March 12, 1993.
To date, defendants believe King George Auto Sales to be out-of-business, and efforts to locate the Cadillac have been unsuccessful.
There are several issues raised in this motion. The first issue is the present state of spoliation law in New Jersey, and whether New Jersey recognizes the independent tort of spoliation of evidence. Second, whether spoliation of evidence is an affirmative defense which must be raised in the answer. Third, whether plaintiffs (State Farm as subrogee) engaged in spoliation of evidence. Finally, assuming that plaintiffs did engage in spoliation of evidence, this court must ascertain the appropriate remedy for the spoliation.
A. Liability for spoliation of evidence.
"Spoliation" is defined as "[t]he destruction of evidence . . . . The destruction, or the significant and meaningful alteration of a document or instrument." Black's Law Dictionary 1257 (5th ed. 1979) (citation omitted). Spoliation of evidence in a prospective civil action occurs when evidence pertinent to the action is destroyed, thereby interfering with the action's proper administration and Disposition. See Bondu v. Gurvich, 473 So. 2d 1307, 1312 (Fla.Dist.Ct.App.1984); see also Nancy Melgaard, Note, Spoliation of Evidence -- An Independent Tort?, 67 N.D.L.Rev. 501 (1991).
Spoliation of evidence, as an independent tort, has been officially recognized in at least three states. See e.g. Smith v. Superior Court, 151 Cal.App. 3d 491, 198 Cal.Rptr. 829 (1984) (intentional spoliation); Bondu v. Gurvich, supra (negligent spoliation); Hazen v. Municipality of Anchorage, 718 P. 2d 456 (Alaska 1986) (intentional spoliation). Litigants have asserted spoliation of evidence as a cause of action in other states, however, its recognition was declined. See e.g. Murphy v. Target Products, 580 N.E. 2d 687 (Ind.1991); Dunlap v. City of Phoenix, 169 Ariz. 63, 817 P. 2d 8 (1990); Koplin v. Rosel Well Perforators, Inc., 241 Kan. 206, 734 P. 2d 1177 (1987); Pharr v. Cortese, 147 Misc. 2d 1078, 559 N.Y.S. 2d 780 (1990).
Many states, including New Jersey, have criminal statutes proscribing destruction of evidence. "[A] number of courts have relied on the existence of these criminal penalties in refusing to recognize tort actions for the intentional spoliation of evidence." Pati Jo Pofahl, Note, Smith v. Superior Court: A New Tort of Intentional Spoliation of Evidence, 69 Minn.L.Rev. 961, 966 (1985) (citations omitted).
The federal courts also fail to recognize an independent tort for spoliation of evidence. See e.g. Wilson v. Beloit Corp., 921 F. 2d 765
(8th Cir.1990); Headley v. Chrysler Motor Corporation, 141 F.R.D. 362 (D.Mass.1991) (subject matter jurisdiction based on diversity of citizenship); Computer Associates Intern. v. American Fundware, 133 F.R.D. 166 (D.Colo.1990); Akiona v. U.S., 938 F. 2d 158 (9th Cir.1991); Austerberry v. U.S., 169 F. 2d 583 (6th Cir.1948); Wong v. Swier, 267 F. 2d 749 (9th Cir.1959); Vick v. Texas Employment Commission, 514 F. 2d 734 (5th Cir.1975); Boyd v. Ozark Airlines, Inc., 568 F. 2d 50 (8th Cir.1977); S.C. Johnson & Son, Inc. v. Louisville & Nashville R. Co., 695 F. 2d 253 (7th Cir.1982); Coates v. Johnson & Johnson, 756 F. 2d 524 (7th Cir.1985); Nation-Wide Check v. Forest Hills Distributors, 692 F. 2d 214 (1st Cir.1982).
a. Intentional spoliation of evidence.
Intentional spoliation of evidence was first recognized as a separate tort in Smith v. Superior Court, supra. In Smith v. Superior Court, supra, plaintiff Phyllis Smith was injured when a wheel from a van sailed through her automobile's windshield. Fifteen days after the accident, defendant Abbott Ford, the automobile dealer that equipped the van with customized tires and wheels, agreed with plaintiff's counsel to preserve certain van parts relevant to the case. However, Abbott Ford later lost or destroyed the evidence.
In Smith v. Superior Court, supra, the California Court of Appeal recognized the tort of intentional spoliation of evidence, reasoning that intentional interference with a prospective civil action is analogous to the tort of intentional interference with contractual relations. The court concluded that the right to bring a personal injury lawsuit was a legally protectable interest, and interference with that interest is tortious conduct.
California has criminal statutes proscribing destruction of evidence.*fn1 However, the Smith Court reasoned that the policy and deterrence considerations behind these criminal statutes do not
adequately protect a plaintiff's interest to bring a lawsuit. First, the court noted that criminal statutes are designed to prevent spoliation of evidence from invading the public interest in the administration of Justice, which differs from the private interest in receiving compensation through a personal injury action. Accordingly, the court held it was necessary to provide a plaintiff with a complete remedy by recognizing a separate tort for spoliation of evidence. Id., at 835.
1) Intentional spoliation of evidence in New Jersey.
In Trump Taj Mahal v. Costruzioni Aeronautiche Giovanni, 761 F. Supp. 1143 (D.N.J.1991), the court declined to adopt the independent tort of intentional spoliation of evidence, stating that "that role is better suited to New Jersey state courts." Id., at 1162. About four months later, litigants asserted intentional spoliation of evidence as "fraudulent concealment of evidence" in Viviano v. CBS, Inc., 251 N.J. Super. 113, 597 A.2d 543 (App.Div.1991), certif. denied, 127 N.J. 565, 606 A.2d 375 (1992).
In Viviano v. CBS, Inc., supra, plaintiff, a CBS employee, lost three and a half fingers when a pressing machine malfunctioned on December 1, 1978. CBS immediately removed the timer on the machine and discarded it. Plaintiff filed a personal injury suit naming only fictitious parties and later amended her complaint on September 10, 1981 to include her employer CBS as a defendant. In May 1982, plaintiff discovered a memorandum describing the results of Mr. Ronald Brandt's investigation ("Brandt memorandum"), which stated that the "old Taylor Timers" on the pressing machines were defective and that CBS was in the process of replacing them with safer timers. Id., 251 N.J. Super. at 118-19, 597 A.2d 543. Plaintiff's attorney later received a copy of that memorandum, and subsequently, plaintiff again amended her complaint to include Sybron Corporation, successor of the Taylor Timers manufacturer.
Subsequently, plaintiff commenced a suit against CBS and certain supervisory employees for unreasonable interference with discovery and fraudulent concealment of evidence. In February
1987, plaintiff settled with Sybron and the personal injury suit was dismissed with prejudice.
In the lower court, the jury found all defendants liable for fraudulent concealment of evidence, and awarded plaintiff compensatory and punitive damages.
The Appellate Division held that defendants*fn2 who fraudulently conceal evidence relevant to a lawsuit are liable in damages. Id., at 117, 597 A.2d 543. The Viviano Court stated that "[p]laintiff's cause of action in the present case is analogous to a recently recognized cause of action for the destruction of evidence which has been dubbed 'spoliation of evidence.'" Id., at 125, 597 A.2d 543 (footnote omitted). The court listed the elements of the tort of intentional spoliation of evidence espoused in County of Solano v. Delancy, 215 Cal.App. 3d 1232, 264 Cal.Rptr. 721 (1989). It further stated that "[i]f 'concealment of evidence' is substituted for 'destruction of evidence,' all those elements were covered by the trial court's concealment of evidence charge in the present case and all of them are amply supported by the evidence." Viviano v. CBS, Inc., supra, 251 N.J. Super. at 126, 597 A.2d 543.
Accordingly, New Jersey recognizes a tort analogous to intentional spoliation of evidence. In Viviano v. CBS, Inc., supra, plaintiff did recover damages for defendants' fraudulent concealment of evidence. A recovery for damages supports the existence of an independent tort, whereas sanctions for interference with discovery would suggest otherwise. New Jersey, however, may not fully embrace the California approach for intentional spoliation of evidence, discussed infra.
2) Elements of fraudulent concealment of evidence.
The Smith Court applied the traditional tort elements of intent, causation and damages to spoliation of evidence. See Smith v.
Superior Court, supra. The five elements of intentional spoliation of evidence were elaborated in County of Solano v. Delancy, supra. In that case, defendant Brian Delancy was driving on a County of Solano road. Plaintiff Faith Owens was thrown from defendant's automobile, and subsequently brought a personal injury suit against Brian Delancy, his parents and the County of Solano. Approximately six weeks after the accident, the Delancys and their insurer destroyed the automobile. County of Solano v. Delancy, supra, 264 Cal.Rptr. at 728.
"The elements of intentional spoliation would have been identified by analogy to intentional interference with prospective economic advantage, and they would have included: (1) pending or probable litigation involving the plaintiff; (2) knowledge by the defendant of the existence or likelihood of the litigation; (3) intentional 'acts of spoliation' on the part of the defendant designed to disrupt the plaintiff's case; (4) disruption of the plaintiff's case; and (5) damages proximately caused by the acts of the defendant." Id., at 729 (footnote omitted).
The Viviano Court applied similar elements to fraudulent concealment of evidence. See Viviano v. CBS, Inc., supra. The theory of fraudulent concealment requires that plaintiff show the following: (1) that defendants had a legal obligation to disclose the evidence to plaintiff; (2) that the evidence was material to plaintiff's case; (3) that plaintiff could not have readily learned of the concealed information without defendants disclosing it; (4) that defendants intentionally failed to disclose the evidence to plaintiff; and (5) that plaintiff was harmed by the relying on the nondisclosure. Id., 251 N.J. Super. at 123, 597 A.2d 543 (citation omitted).
a) Legal obligation to disclose the evidence to plaintiff.
In Viviano v. CBS, Inc., supra, "[t]he trial Judge charged the jury that the defendants had the duty to provide plaintiff with any documents called for by the deposition subpoena served on defendant Joseph Kroll, the manager of the plant at which [plaintiff] ...