The opinion of the court was delivered by: Oliver W. Wanger United States District Judge
MEMORANDUM DECISION ON NATIONWIDE MUTUAL INSURANCE COMPANY'S MOTION FOR SANCTIONS FOR SPOLIATION OF EVIDENCE (Doc. 21)
Before the court for decision is Defendant Nationwide Mutual Insurance Company's "Motion for Sanctions for Spoliation of Evidence." (Doc. 21.) Defendant seeks dismissal of Plaintiff's mold damage claim because Plaintiff "knowingly and willfully destructed relevant and material evidence." In the alternative, Defendant seeks evidentiary sanctions and to recover legal fees and costs.
Plaintiff Bruce Kopitar has filed opposition, to which Defendant has replied. (Docs. 27 & 30.)
This matter involves an insurance coverage and payment dispute between Plaintiff Bruce Kopitar ("Kopitar") and Nationwide Mutual Insurance Company ("Nationwide"), an insurance and financial services company headquartered in Columbus, Ohio. The dispute concerns the February 20, 2004 flooding of Plaintiff's home, which allegedly occurred as a result of a malfunctioning steam room (the "steam incident"). The Complaint alleges that Plaintiff's home was covered under a pre-existing "farm package plus" policy underwritten by Nationwide. According to Plaintiff, after receiving notification of Plaintiff's water damage, Nationwide "commenced an effort deliberately designed to deprive plaintiff of the full and complete benefits to which he was and is entitled to under the policy for his suffered and covered loss."
On May 8, 2007, Plaintiff filed this case in the Superior Court of California, County of Tulare, alleging two causes of action: (1) Breach of Contract; and (2) Breach of the Implied Covenant of Good Faith and Fair Dealing. (Doc. 1, Exh. A.) Plaintiff alleges that he initiated a lawsuit because Nationwide "continuously refused to comply with its obligations [...] and otherwise fail[ed] to move the claim along and keep plaintiff apprised of the claim process, in the hopes that plaintiff would abandon his claim and thereby allow Nationwide to profit from its improper, unreasonable, and illegal conduct." Plaintiff requests general, special, economic, consequential, and punitive damages.
On June 21, 2007, this case was removed on the basis of diversity jurisdiction. (Doc. 1.) The notice of removal provides that removal is proper because "this is action is between citizens of different states, and the matter in controversy exceeds the sum or value of $75,000." (Id. ¶ 10.) Defendant filed its answer on June 26, 2007. (Doc. 5.)
Defendant Nationwide filed this motion on September 30, 2009. (Doc. 21.) Defendant moves to dismiss Plaintiff's mold damage claim because "Plaintiff destroyed components of [his] residence which [he] contends contained the alleged mold without the opportunity of defense experts to inspect and observe." Defendant contends that Plaintiff did so knowing that the parties agreed "to allow Nationwide's experts to observe the destructive testing and repairs to the areas of the home where the mold was alleged to exist."*fn1
Plaintiff filed his opposition on November 20, 2009. (Doc. 27.) Plaintiff responds that Nationwide "had access to Plaintiff's home, and despite Plaintiff's request that it do so, refused to conduct further destructive testing and advised Plaintiff that no such further testing was necessary or required." According to Plaintiff, this case does not involve deliberate and knowing spoliation of evidence and Defendant "could not have been prejudiced because it made the determination that no further destructive testing was required or necessary."
The Ninth Circuit has held that a district court has the authority to impose sanctions for spoliation pursuant to: "the inherent power of federal courts to levy sanctions in response to abusive litigation practices, and the availability of sanctions under Rule 37 against a party who fails to obey an order to provide or permit discovery." Leon v. IPX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (citing Fjelstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337-38 (9th Cir. 1985); Fed. R. Civ. P. 37(b)(2)(c)). In the present case, because Plaintiff's alleged actions did not violate a discovery order, any sanction must be imposed pursuant to the district court's inherent power.
Defendant has proposed the following sanctions for Plaintiff's spoliation of the evidence contained in Plaintiff's walls and home: dismissal of Plaintiff's claims for alleged mold damages; and precluding Plaintiff from arguing or presenting any evidence concerning the alleged mold damage and related repairs. The exclusion of evidence is tantamount to a terminating sanction. See, e.g., Ware v. Rodale Press, Inc., 322 F.3d 218, 221 (3rd Cir. 2003). All of the sanctions that Defendant seeks are terminating sanctions or the equivalent thereof; making applicable the standard for the imposition of dismissal as a sanction for spoliation.
The Ninth Circuit stated:
Dismissal engaged deliberately is an available in deceptive sanction when a party has undermine the integrity of judicial practices that
because when courts have proceedings action a inherent power and engaged in party has willfully to dismiss the an conduct utterly deceived administration with court orderly justice. inconsistent the
Before imposing court should consider the following factors: the district the harsh sanction of dismissal, of however,
public's litigation; interest
(2) the in court's expeditious resolution
risk of prejudice need to to manage
seeking sanctions; (4) the the party disposition of cases on their public policy favoring availability of less drastic sanctions. merits; and (5) the Leon, 464 F.3d at ...