Spoliation of Evidence in Tennessee: Intent v. Prejudice

What is it with drillers and spoliation of evidence cases?  First it was Cincinnati Ins. Co. v. Mid-South Drillers Supply, Inc. which is a Tennessee leading case on the subject.  And now, we have a new spoliation case with a different drilling company, Griffith Services Drilling, LLC v. Arrow Gas & Oil, Inc.   So, let’s drill down on this issue a bit, shall we? 

Griffith Services Drilling, LLC (Griffith Drilling) and its insurance carrier sued Arrow Gas & Oil, Inc. (Arrow) for $1.2 million in property damage caused by a fire.  On the day of the fire, an Arrow employee, Mr. Burress, delivered fuel to Griffith Drilling.  During the refueling, Burress walked away to converse with some of the Griffith Drilling employees.  Shortly thereafter, a Griffith Drilling employee yelled that fuel was spraying and a fire ignited.  When Burress moved the Arrow truck to get it away from the fire, the fuel nozzle broke off.  The next day, Burress took the broken nozzle to a retailer and traded it in for a new nozzle.  Griffith Drilling was not provided any notice of Arrow’s intent to replace the nozzle. 

After the fire and without notifying Arrow, Grifftih Drilling’s insurance carrier authorized clean up of the site and disposed of all evidence of the fire.  One month after the clean-up was completed, Griffith Drilling sent Arrow a notice of its intent to pursue a claim for the fire damage.  Suit was eventually filed and Arrow counterclaimed for breach of contract as Griffith Drilling had failed to pay for the fuel delivered to the site.   Thereafter, Arrow filed two motions: (1) a motion to dismiss for spoliation of evidence based on Griffith Drilling’s clean up of the site; (2) a motion for summary judgment on the breach of contract counterclaim.  The trial court granted both motions.  Griffith Drilling appealed alleging the trial court erred by granting both motions. 

The trial court granted the motion to dismiss based on Griffith Drilling’s clean up of the site.  Because Arrow had not been given advance notice of the clean-up, the trial court found that Arrow had lost the ability to investigate the cause of the fire.  As such, Arrow had lost its ability to mount a defense and no lesser sanction was appropriate.  The Court of Appeals began its analysis by reviewing Tennessee Rules of Civil Procedure 34 and 37 which authorize a court to impose a sanction for discovery abuses including spoliation of evidence.  The Court of Appeals’ analysis continued with a review of its prior decision in Cincinnati Ins. Co. v. Mid-South Drillers Supply, Inc..  Ultimately, the Court of Appeals distinguished Mid-South Drillers finding it significant that both Arrow and Griffith Drilling had destroyed evidence.  Griffith Drilling had cleaned up the site and Arrow disposed of the nozzle.  The nozzle was critical because Griffith argued the nozzle may have been defective which in turn caused the overflow leading to the fire.   Since both parties had destroyed evidence, the Court of Appeals concluded the trial court had abused its discretion in granting Arrow’s motion to dismiss as the sanction was too severe.  The Court of Appeals noted that if only one party had destroyed evidence then perhaps dismissal would have been the appropriate sanction.  Because the trial court’s grant of summary judgment was premised primarily on spoliation of evidence, the Court of Appeals reversed that ruling as well.  

This decision is interesting in that it seems to breath fresh life into some of the language in the 1991 decision of Thurman-Bryant Elec. Supply Co. v. Unisys Corp . In Thurman-Bryant, the court had stated: “[T]he trial judge has discretion to impose sanctions on a party for the destruction or loss of evidence. The severity of the sanctions, however, must necessarily depend upon the circumstances of each case, i.e., was the evidence lost negligently, inadvertently, intentionally, etc.”  In 2008, in the Cincinnati Ins. Co case, the Court of Appeals reasoned that intent was irrelevant. 

In other words, regardless of whether the evidence was destroyed inadvertently or intentionally, the court could dismiss the case or strike an answer if either party had been severely prejudiced in their ability to prosecute or defend the case and a lesser remedy would be inadequate.  Without question, the issue of spoliation of evidence is fact-specific, but it seems to me the inquiry should remain prejudice and not intent.  The Court of Appeals quoting of the Thurman-Bryant decision appears to re-open the door on intent and will likely cause litigants to have to chase down yet another rabbit during discovery.  

So, from a moral standpoint, intent to destroy evidence is very important.  And such might be relevant in a claim for punitive damages.  But in the normal civil case, is key issue is one of prejudice: did the loss of evidence materially affect the ability of the opposing party to bring (or defend) a civil claim?  If the answer is yes, prejudice is present and the appropriate sanction must be entered.