United States District Court, N.D. Illinois
May 11, 2004.
The opinion of the court was delivered by: PHILIP REINHARD, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Liberty Mutual Insurance Co., as subrogee of Donna Duty,
its insured, filed a diversity action against defendant, Ecowater
Systems, Inc., the manufacturer of a water softener that plaintiff
alleges caused a fire in the Duty home. Defendant has filed a motion for
sanctions pursuant to Fed.R.Civ.P. 37, contending that plaintiff
failed to produce a water heater located near the suspect water softener
and which may have provided evidence of an alternative cause of the fire.
Defendant seeks as a sanction either the dismissal of the law suit or
preclusion of any evidence related to the softener as the cause of the
It is undisputed that a fire occurred in the Duty home. The fire
originated and was limited to an area of the basement where the softener
and the water heater were located. Duty contacted plaintiff who sent a
claims adjuster, Jody Martin, to inspect the fire scene.
According to Martin, it appeared from the condition of the softener,
which had extensive fire damage, that the softener caused the fire.
Immediately adjacent to the softener was the water heater that had
sustained some fire damage, including melting of the insulation on some
of the wiring.
Martin hired another company to conduct a fire scene investigation. The
investigator also concluded that the fire originated in the softener.
At Martin's direction, the softener was removed and sent to Kragh
Engineering where it was inspected. The engineer who inspected the
softener also concluded the fire started in the softener.
There are also numerous photographs of the fire scene that show the
extensive damage to the softener as well as the damage to the water
Martin did not request an inspection of the water heater, nor did she
preserve it. It was subsequently lost when it was replaced.
Defendant's expert was allowed to examine the softener as well as view
the photographic evidence, including that of the water heater. In his
affidavit submitted in support of defendant's motion, defendant's expert
states that based on his investigation and inspection of the softener
that it "was not likely the cause of the fire." He further asserts that
"[w]ithout examination and inspection of the gas water heater, [he] [is]
unable to determine if the gas water heater did cause the fire."
The thrust of defendant's motion for sanctions is that even though
plaintiff preserved the water softener and its expert had an opportunity
to inspect it, the failure to preserve the damaged water heater precluded
defendant obtaining evidence to show that the fire was actually caused by
the water heater.
In a diversity case, the federal rules of procedure and evidence
apply. See Allstate Ins. Co. v. Sunbeam Corp., 53 F.3d 804, 806 (7th Cir.
1995). A party's pre-suit duty to preserve evidence is substantive, so
Illinois law applies to that issue. Lawrence v. Harley-Davidson Motor
Co., No. 99 C 2609, 1999 WL 637172, * 2 (N.D. Ill. Aug. 12, 1999). Rule
37 applies where a party fails to produce an item for inspection pursuant
to a discovery request even in the absence of court order. Langley v.
Union Electric Co., 107 F.3d 510, 514 (7th Cir. 1997). Rule 37 sanctions
may only be imposed where a party displays wilfulness, bad faith, or
fault. Langley, 107 F.3d at 514. Fault is determined by the
reasonableness of the conduct, or the lack thereof, that culminated in
the discovery violation. Langley, 107 F.3d at 514. A particular sanction
under Rule 37 must be proportionate to the circumstances surrounding the
failure to comply with discovery. Langley, 107 F.3d at 515.
In this case, it is apparent that plaintiff is at fault for the failure
to preserve the water heater as it was plaintiff who controlled the fire
scene and whose agents investigated the scene. Plaintiff had the
authority and ability to preserve the water heater but failed to do so.
That does not necessarily dictate a sanction, let alone a severe one
such as dismissal or preclusion of evidence. Defendant's expert had ample
opportunity to inspect the suspect softener and opined that it was not
likely the cause of the fire. The expert also had the benefit of the
photographs and descriptions of the fire scene to support his theory that
the water heater was in fact the cause. This case might be different had
plaintiff inspected the water heater then discarded it, thereby preventing
defendant from having an equal opportunity to inspect it. While the court
does not approve plaintiff's failure to preserve potentially relevant
evidence, especially in light of well-established Illinois law that
strongly suggests that other items in the vicinity of the fire should be
preserved when litigation is contemplated, see, e.g., American Family
Insurance Co. v. Village Pontiac-GMC, Inc., 223 Ill. App.3d 624,
585 N.E.2d 1115 (1992); Graves v. Daley, 172 Ill. App.3d 35, 526 N.E.2d 679
(1988), the negative impact in this particular case is minimal at best
and does not warrant dismissal or evidence preclusion as a sanction. The
court will, however, address prior to trial what evidence and
instructions to give to the jury regarding plaintiff's failure to
preserve the water heater.
For the foregoing reasons, the court denies defendant's motion for
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