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State Farm Fire and Casualty Co. v. Hamilton Beach Brands, Inc.

United States District Court, W.D. Kentucky, Paducah

April 4, 2018




         This matter comes before the Court on Defendant Hamilton Beach Brands, Inc.'s, (“Hamilton Beach”), Motion to Dismiss the Litigation as a Sanction for Plaintiff's Spoliation. [R. 24.] Plaintiff State Farm Fire and Casualty Company, (“State Farm”), responded, [R. 28], and Hamilton Beach replied, [R. 29]. Fully briefed, this matter is now ripe for adjudication. For the reasons stated herein, Hamilton Beach's Motion to Dismiss the Litigation as a Sanction for Plaintiff's Spoliation, [R. 24], is GRANTED IN PART AND DENIED IN PART.


         On September 6, 2014, a fire started in the laundry room of Maxwell's home in Almo, Kentucky. [R. 1-1 at 5 (Complaint).] After learning of the fire, Maxwell contacted State Farm, his homeowner's insurance carrier. [R. 28-2 at 9 (Maxwell Depo.).] State Farm then contacted SERVPRO of Paducah about restoring the property. [Id. at 10.] Two days later, State Farm retained Origin & Cause Investigative Resources, LLC, (“Origin”), to conduct an origin and cause investigation of the fire at Maxwell's home. [R. 24-3 at 2 (Origin and Cause Summary Letter).] On September 9, 2014, State Farm hired EFI Global, Inc., (“EFI”), to perform an engineering evaluation of the house fire. [R. 24-4 at 2 (EFI Summary Report).]

         James Jennings, a certified fire investigator, conducted an investigation at Maxwell's home on September 9, 2014. [R. 24-3 at 2.] In a letter to Merle Gambrill of State Farm, he explained that the fire originated in the laundry room. [Id.] He noted that two items that were plugged into the receptacle on the north wall of the laundry room, a clothing iron and a garment steamer, were collected by Matt Forbes of EFI for further examination. [Id.] He concluded that “[t]he classification of the fire based on current evidence is Undetermined. This classification may change, pending the results of the examination of evidence to be conducted by Matt Forbes PE.” [Id.]

         Matt Forbes performed an evaluation at Maxwell's home on September 12, 2014, and summarized his findings in a report dated November 17, 2014. [R. 24-4 at 2.] Forbes stated that the fire patterns in the laundry room indicated that the origin of the fire was placed around the outlet and items surmised by Jennings. [Id.] He noted that he collected the outlet, iron, garment steamer, and circuit breaker from Maxwell's home for laboratory analysis. [Id.] Ultimately, Forbes concluded that “[t]he fire patterns and electrical activity show an ignition internal to the [garment steamer]. The fire progressed from that point and spread up the wall of the laundry room to consume ordinary combustible material.” [Id. at 4.]

         On September 18, 2014, SERVPRO began restoring the property. [R. 24-2 at 29-30 (State Farm File Notes).] On June 30, 2015, State Farm sent a letter to Sunbeam Products, Inc., to inform them of “a loss caused by a faulty iron made by [their] company, ” and asking for reimbursement for the loss to the insured, Maxwell. [R. 28-8 at 1 (Letter to Sunbeam).] According to State Farm's claim notes, a representative from Walmart Stores, Inc.-the retailer of the garment steamer-informed State Farm on August 13, 2015 that the company Hamilton Beach manufactured the garment steamer at issue. [R. 28-9 at 1 (State Farm Aug. 13 Note).] The next day, State Farm sent notice of the fire and damages to Hamilton Beach. [R. 28-10 at 1 (Letter to Hamilton Beach).] On August 24, 2014, Hamilton Beach requested to conduct a nondestructive examination of the evidence collected by State Farm. [R. 28-11 at 2 (Fax to State Farm).]The evidence was received by Hamilton Beach in time for a senior staff engineer, Michael Sandford, to inspect it and write a report dated October 27, 2017. [R. 24-9 at 2 (Sandford Report).] Sandford concluded that “the Maxwell garment steamer did not have a defect that would have caused ignition of the thermoplastic housing and/or surrounding combustibles.” [Id. at 19.] He also lamented that the

lack of recorded analysis or documentation as to the cause of the other 5 circuit breakers in a tripped OFF position, a lack of recorded analysis or documentation of the clothes washer or dryer, and a lack of preservation of any other evidence from the determined area of origin . . . makes identifying and/or ruling out other possible causes for his fire nearly impossible.


         On September 29, 2016, this matter was removed to federal court by Hamilton Beach. [R.1.] On December 24, 2017, Hamilton Beach filed this Motion to Dismiss Litigation as a Sanction for Plaintiff's Spoliation. [R. 24.]


         In deciding whether to assess sanctions for spoliation, the Court conducts a two-step inquiry. In re Black Diamond Min. Co., 514 B.R. 230, 237 (E.D. Ky. 2014). First, the Court must determine whether sanctions are appropriate at all. Id. A spoliation sanction is warranted where the moving party establishes:

(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the [evidence was] destroyed “with a culpable state of mind”; and (3) that the destroyed evidence was “relevant” to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.

Beaven v. U.S. Dep't of Justice, 622 F.3d 540, 553 (6th Cir. 2010) (quoting Residential Funding Corp. v. DeGeorge Fin. Corp.,306 F.3d 99, 107 (2d Cir. 2002)); see also Adkins v. Wolever,692 F.3d 499, 504 (6th Cir. 2012) (holding all three-factors must be satisfied before spoliation sanction is permitted). Second, upon finding that sanctions are warranted, the Court enjoys considerable discretion in fashioning a suitable remedy. See Adkins v. Wolever,554 F.3d ...

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