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Court Considers Spoliation Sanction Motion Re Loss of Photographs Taken by Adjuster in Insurance Claim Case

Posted on May 2nd, 2018

Photo of the Scales of Justice and a Gavel

In Keathley v. Grange Insurance Company of Michigan, No. 15-cv-11888, (E.D. Mich. 2018), the United States District Court E.D. Michigan, Southern Division considers the Plaintiff’s motion for spoliation sanctions.  Plaintiff Timika Keathley submitted an insurance loss claim under Defendant Grange Insurance Company of Michigan’s policy, for a loss she alleges arose from water damage to her home in early 2014. Plaintiff filed a motion for spoliation sanctions based on Defendant’s alleged destruction or failure to preserve photographs taken by its insurance adjuster, Jason May (“May”). Plaintiff claims that these missing photographs would have substantiated her claim of extensive damage in her home.

Jason May visited Plaintiff’s home in May of 2014 and photographed every room. He testified that he met Plaintiff at the property, along with Plaintiff’s public adjuster and Plaintiff’s contractor. May testified that they walked together through every room, and that the contractor explained that the remediation work had already been performed on the home. He further stated that the home appeared to have been remodeled and that any damage allegedly relating to Plaintiff’s claim had been repaired. May also noted in his claim file notes that he could not do a preliminary estimate due to “no observable damage.”  May testified that he uploaded all the photographs from his digital camera to Defendant’s claims handling system, the “CHIP” system. In opposition, Plaintiff’s contractor testified that he always left burst pipes in place so that the adjustor could see them.  The contractor also testified that he removed the burst pipe debris after May’s visit to photograph the property, and disposed of the pipe debris in a dumpster.

In considering Plaintiff’s spoliation motion, the court reviewed the three prong standard required for Plaintiff to be entitled to the relief she sought by her motion, advserse inference instruction.  To be entitled to adverse inference instruction based on the destruction of evidence, Plaintiff must establish: (1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the records were 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.

The Court then applied this standard to the circumstances relative to the photographs taken by the adjuster that were no longer available.  The Court found that Defendant explained that when data is logged into CHIP by a claims adjuster, it cannot be deleted. Photographs then are stored in a product called a Content Manager. A photograph that is uploaded to the Content Manager remains there for a period of eight years, unless it is deleted. Defendant produced undisputed evidence that identified each photograph marker and the claim it matched. Defendant claims that due to employee attrition or computer re-formatting, some photographs may have been inadvertently deleted.  Plaintiff speculates in her Reply that evidence of the missing photographs may have remained on May’s digital camera and/or laptop, which May returned to Defendant’s office according to company policy when he left. It is the Plaintiff’s burden to establish Defendant’s culpable destruction of evidence. When material is destroyed in the normal course of business and without evidence of a culpable motive, spoliation sanctions in the form of adverse inference instructions are not appropriate. The Plaintiff’s motion is denied.

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