In the following episode of On Subrogation: Spoliation, Rathbone Group attorney Jason Sullivan discusses what to do when the other party in a subrogation case destroys or hides evidence. How do you win a subrogation case if you can’t properly argue it? As Jason describes, if you have the right strategy and the right knowledge of state subrogation laws, there is (almost) always a way forward.
Some subrogation cases hinge on physical evidence, and lack of access to it can cripple a solid argument. Spoliation of evidence is when crucial evidence has been hidden or destroyed and another party is responsible, either by negligence or malintent. This concept can apply to either party in a case; if someone loses, takes or destroys evidence, they have compromised the other party’s right to argue their case with all available resources.
So, what can a subrogation attorney do? Are you still able to pursue subrogation recovery from a defendant who has conveniently “misplaced” evidence damaging to their case?
Subrogation Laws by State: Spoliation isn’t Always a Cause of Action
As with many concepts in insurance law, courts and states are divided on how they handle what is essentially the civil version of evidence tampering. Some states allow spoliation as a cause of action, meaning a separate claim or lawsuit against the responsible party. This is so damaged parties have equal opportunity to argue their case.
Other states do not allow cause of action for spoliation. This is to avoid a cascade of finger-pointing as to who is responsible for the missing evidence, which can bog courts down in years of overlapping litigation about what should have been a simple subrogation lawsuit. But that does not mean these states do not care about the injured party; they instead use discovery sanctions to dissuade parties from getting rid of evidence harmful to their case.
The Subrogation Process: Components of Spoliation Explained
Say you are handling an insured auto subrogation claim. The defendant disposes of their vehicle because it held damaging evidence, but the plaintiff really needed the vehicle to prove the defendant was liable. Or say after the accident the vehicle is put in an impound lot and poor documentation leads the impound lot to destroy the vehicle. Is there cause of action under spoliation?
There are five criteria for a spoliation argument:
- There must be pending or probable litigation.
- The defendant must have knowledge of said pending or probable litigation.
- There must be willful (sometimes negligent) destruction or removal of evidence.
- This destruction/removal of evidence must disrupt the plaintiff’s case.
- Damages to the plaintiff’s case must result from the disruption.
If we recall, this directly reflects cause of action for negligence, which includes four criteria:
- Duty: The defendant knows the plaintiff is filing/has filed a case. They have a duty to preserve all evidence, regardless of whether it is harmful or helpful to them.
- Breach: The defendant negligently or intentionally hides or destroys evidence.
- Cause: This breach disrupts the plaintiff’s pursuit of subrogation recovery.
- Damage: This disruption results in an inability to properly argue their case and/or financial harm.
A court will consider additional factors when deciding whether to levy spoliation sanctions, including how culpable the party was. If destruction of evidence was unintentional, like the impound lot that crushed the car, courts are less likely to sanction. However, if it was intentional, like the defendant purposefully hiding or getting rid of the car, sanctions are much more likely.
Courts will also weigh the missing evidence. If the evidence was crucial to the plaintiff’s case, there are three general responses of the court in spoliation sanctions:
- The most serious response is automatic dismissal of the case or automatic judgment against the defendant without hearing the facts of the case.
- Less likely is a court might treat the plaintiff’s claims about the missing evidence to be true because neither the court nor the plaintiff was able to inspect/present the evidence. However, this is an extreme assumption, so not seen as often.
- Courts may include attorney fees in a spoliation sanction if the plaintiff accrued significant costs from pursuing evidence the defendant knew was no longer available.
Subrogation Strategy: Making Your Case for Spoliation
If you have a subrogation claim where you feel there is crucial evidence that needs protected, get on top of it as soon as possible. Make sure all involved parties are on notice that you will take the subrogation lawsuit to litigation if necessary, and be diligent about investigations, inspections and pursuit of the claim.
Most often, subrogation attorneys see spoliation problems arise in litigation over auto claims, where the vehicle in question is placed in an impound lot after the incident. Some of these cases take years; if you go to inspect an impounded vehicle 1.5-2 years after the incident occurs, there is a possibility it may not be there.
However, the problem of missing or destroyed evidence arises, knowing the specific state laws on subrogation and those all-important statutes of limitations are key to protecting the strength of your case. Statute of limitations for spoliation may start at:
- Date of destruction
- Date of knowledge of destruction
- Date of failure to win your case
It is never a bad idea to consult a subrogation company with insurance-focused attorneys, adjusters and specialists trained to deal with tricky issues like spoliation. The right subrogation strategy from the outset of a claim is likely to maximize recovery efforts, regardless of bad intentions or negligence of another party.
Have questions or want to learn more about subrogation of insurance disputes? Visit our blog for more articles, our YouTube channel for more video episodes of On Subrogation, or our subrogation podcast library for even more in-depth discussions on important topics like this one. And for more resources, or if you have a question/suggestion we have not yet covered, reach out at video@rathbonegroup.com or podcast@rathbonegroup.com to see it featured in a future episode.