211 N.E.3d 564
Ind. Ct. App.2023Background:
- On October 31, 2019 a fire damaged Ramona Smith’s home; Safeco (insurer and subrogee) suspected a Cabela’s digital dehydrator caused the fire.
- Safeco and others conducted a preliminary scene exam on November 6, 2019; Michaelis (restoration contractor) was present, was verbally told to preserve the kitchen/origin area, and erected temporary tarping.
- Entrances to the kitchen were taped off for preservation; between Dec. 2, 2019 and Jan. 15, 2020 Michaelis allegedly demolished the kitchen and discarded the dehydrator and other artifacts.
- Safeco paid $510,861.46 in loss and sued the product manufacturers (principal defendants) and Michaelis, asserting third-party spoliation and negligence; Safeco amended its complaint alleging duty, breach, and harm from destruction of evidence.
- Michaelis moved to dismiss under T.R. 12(B)(6), arguing third-party spoliation is recognized only in narrow circumstances and the negligence claim was barred by the economic-loss doctrine; the trial court granted dismissal.
- The Court of Appeals reversed, holding Safeco’s complaint plausibly alleged duty, breach, and harm as to both the spoliation and negligence claims and remanded for further proceedings.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Viability of third-party spoliation claim | Safeco alleged Michaelis knew to preserve, took steps to protect scene, later demolished and discarded evidence, and caused harm — therefore duty, breach, harm alleged | Michaelis: third-party spoliation is recognized only in limited circumstances (narrow precedent); Safeco did not plead those circumstances | Court: Safeco’s complaint sufficiently alleged duty, breach, and harm; dismissal under 12(B)(6) was erroneous |
| Viability of negligence claim (economic-loss defense) | Safeco pleaded Michaelis owed a duty of care in restoration work, breached it by destroying evidence, and proximately caused Safeco’s loss/subrogated claim | Michaelis: economic-loss doctrine bars negligence recovery for purely economic/subrogation losses | Court: Complaint alleged duty, breach, and proximate harm adequately; negligence claim survives 12(B)(6) and dismissal was erroneous |
Key Cases Cited
- Cahoon v. Cummings, 734 N.E.2d 535 (Ind. 2000) (defines spoliation and its evidentiary use)
- Murphy v. Target Prods., 580 N.E.2d 687 (Ind. Ct. App. 1991) (declined to recognize spoliation tort absent special relationship)
- Thompson ex rel. Thompson v. Owensby, 704 N.E.2d 134 (Ind. Ct. App. 1998) (recognized limited third-party spoliation where insurer took possession and lost evidence)
- Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349 (Ind. 2005) (refused to recognize independent tort for first-party spoliation)
- Glotzbach v. Froman, 854 N.E.2d 337 (Ind. 2006) (declined broad third-party spoliation, noting policy concerns and alternative remedies)
- American Nat. Prop. & Cas. Co. v. Wilmoth, 893 N.E.2d 1068 (Ind. Ct. App. 2008) (refused spoliation claim where insurer lacked possession/exclusive control and duty would be unreasonably broad)
- Shirey v. Flenar, 89 N.E.3d 1102 (Ind. Ct. App. 2017) (allowed third-party spoliation where defendant had close relationship, knew of request, and foreseeably would harm claimant if records were not preserved)