Sears, Roebuck & Co. v. Midcap - 893 A.2d 242 (Del. 2006)

Rule:

Before issuing a missing evidence adverse inference instruction, a trial court must first determine that a party acted willfully or recklessly in failing to preserve evidence. It is the duty of a court to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit. An adverse inference is consistent with human nature and common sense: if a party intentionally destroys evidence, it is reasonable to infer that the evidence was not favorable to that party. The general rule is that an adverse inference is appropriate where a litigant intentionally suppresses or destroys pertinent evidence, but held that absent evidence of intentional conduct, no such inference was warranted.

Facts:

On April 8, 1999, a gas explosion occurred at the Midcap home in Dover, Delaware. Terry Midcap died as a result of that explosion, which demolished the family home and left "a mere hole in the ground." The explosion resulted from a propane leak that originated from a kitchen range that the Midcaps had purchased from Sears in November 1995. Southern States, which was the Midcaps' gas supplier, owned the propane cylinders and the regulator components of the Midcaps' propane system. Terry Midcap's Estate; Maria Midcap, his widow; and the Midcaps' three daughters, Carla, Sharon and Natalia, filed a survival and wrongful death action in the Superior Court against Sears and Southern States. Allstate Insurance Company, the Midcaps' insurance carrier, also brought a separate subrogation action against the defendants. Those actions were consolidated for trial. Because the Midcaps' theory of liability against Sears was that the kitchen range had been improperly installed, the issue of who installed the range became a central issue at trial and was the subject of conflicting testimony. The plaintiffs claimed that Sears had installed the range; Sears claimed that an independent contractor had performed the installation. Sears was unable, however, to produce any documents evidencing who actually delivered the range and installed it at the Midcap home. In part because of the absence of such documents, the trial court instructed the jury that if it found that Sears had not adequately explained the absence of the documents, the jury could draw an inference that the evidence, if produced, would not have been favorable to Sears. The plaintiffs' claim against Southern States was that Southern States had not exercised due care in inspecting the Midcaps' propane supply system. The plaintiffs urged that if such an inspection had occurred, Southern States would have discovered the deficiencies in the Midcaps' system, and specifically, the improper fittings that connected the kitchen range to the propane system. The jury returned a verdict in favor of Southern States, and against the plaintiffs, on all claims. The jury also returned a verdict against Sears and in favor of the plaintiffs.

Issue:

Did the trial court err in instructing the jury to find the missing evidence unfavorable to Sears?

Answer:

Yes.

Conclusion:

In Collins v. Throckmorton, this Court upheld the Superior Court's refusal to issue an adverse inference instruction where there was no evidence that the plaintiff had intentionally destroyed the records in dispute. It was recognized in Collins that as a general rule, an adverse inference is appropriate where a litigant intentionally suppresses or destroys pertinent evidence, but held that absent evidence of intentional conduct, no such inference was warranted. Here, neither the judge's findings, nor the instruction given, applied or even alluded to the intentional or reckless standard. The trial judge made no finding that Sears had acted intentionally or recklessly, nor did the issued instruction require the jury to so find. All that the jury was instructed was that it could draw an adverse inference if Sears had not adequately explained the absence of the record. The standard that the trial court adopted would penalize businesses and individuals simply because they failed to retain documents they were under no legal obligation to preserve. In this case, for example, the explosion occurred four years after Sears sold the range in question. To fault Sears for failing to retain the record of that sale would create an inefficient incentive scheme, whereby all records that might ever become evidence in a legal dispute would have to be perpetually retained, in order to avoid an adverse inference instruction. In our view, the better balance is to continue to embrace an adverse inference standard that requires a showing that a party acted with a mental state indicative of spoliation. By this means, the bad faith destruction of probative evidence will be discouraged without penalizing innocent persons who simply seek to get rid of old files in the ordinary course of business that they have no duty to retain. The decisions of this Court and of the federal courts require a preliminary finding of intentional or reckless destruction of evidence as a predicate to an adverse inference instruction. The plaintiffs cannot point to any such finding being made in this case.

The risk of prejudice resulting from the adverse inference instruction was especially critical here, because this case was close: two of the plaintiffs testified that they recalled seeing Sears deliver and install the range. Sears countered with testimony that under its policy in effect at the time the range was delivered, no Sears employee or contractor would have been allowed to install the range. With the evidence in such equipoise, the adverse inference instruction was all the more likely to tip the balance in favor of the plaintiffs. Given the state of the evidence, and the recognized potential for prejudice that an adverse inference instruction creates, the plaintiffs cannot fairly claim that the erroneous adverse inference instruction was harmless. An adverse inference instruction is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item. Before giving such an instruction, a trial judge must, therefore, make a preliminary finding that the evidence shows such intentional or reckless conduct. Absent such a finding, an adverse inference instruction is not justified.