27-35 Jackson Avenue, LLC v. Samsung Fire & Marine Ins. Co., Ltd., ___ N.J. Super. ___ (App. Div. 2021). This opinion, issued today and authored by Judge Messano, is the first published Appellate Division of the new Term. It arose from unusual circumstances.
Plaintiff owned a commercial building in which the United States General Services Administration (“GSA”) was a tenant. “For no apparent reason,” a sprinkler head in the building discharged water, in such amounts that that floor and the one below were damaged. Due to that occurrence, the GSA terminated its lease because its premises were “untenantable.” Plaintiff sued the GSA in the United States Court of Claims, and separately sued the defendant insurance company on a commercial liability policy.
Plaintiff had preserved the sprinkler head, but later turned it over to defendant for analysis by a professional engineer. The engineer advised defendant that there was “no third party available for subrogation.” Plaintiff then demanded that defendant retain the sprinkler head and not perform any destructive testing on it. Defendant agreed, but months later, after plaintiff had made a claim under the policy and demanded the sprinkler head for analysis by plaintiff’s own expert, defendant stated that it had no longer had the sprinkler head.
Plaintiff then sued, asserting that defendant’s failure to preserve the sprinkler head caused plaintiff damage, in that plaintiff lost the chance to pursue potentially responsible parties, such as the manufacturer of the sprinkler head, the installer, or the company that plaintiff hired to inspect and maintain the sprinkler system.
Defendant moved for summary judgment, and plaintiff cross-moved for an adverse inference against defendant based on the spoliation of the sprinkler head. Plaintiff demanded that its cross-motion be decided first, so that plaintiff could have the benefit of the adverse inference in opposing defendant’s motion for summary judgment. The Law Division declined to do that and granted defendant’s motion, based largely on the finding that the opinion of plaintiff’s own expert was an inadmissible net opinion. Today, the Appellate Division affirmed, applying de novo review, but on grounds different than those of the Law Division.
Judge Messano first rejected plaintiff’s argument that the Law Division should have taken up plaintiff’s cross-motion first and then applied an adverse inference in considering defendant’s motion for summary judgment. Citing prior cases, he said that “the factfinder is permitted to presume that the evidence the spoliator destroyed or concealed would have been unfavorable to him or her” (emphases by Judge Messano).
Here, however, “[w]hatever an inspection of the sprinkler head may have shown would not have been ‘unfavorable’ to defendant, because defendant played no role in the happening of the flood. Moreover, the loss of the sprinkler head was irrelevant to plaintiff’s declaratory judgment suit in which it sought coverage from defendant.” There was no authority for an adverse inference in such circumstances, and Judge Messano found that the inference “had no place in this litigation.”
Applying the abuse of discretion standard applicable to decisions about expert testimony, Judge Messano differed with the Law Division’s net opinion ruling. As he explained in detail, the expert had reviewed the report and deposition of defendant’s expert who had examined the sprinkler head, and the expert had “explained the mechanism and operation of the sprinkler head.” His was not a net opinion.
The bulk of Judge Messano’s opinion addressed the issue of whether plaintiff had shown proximate cause. Damages, Judge Messano said, were not the issue, since the law allows “considerable speculation” as to the amount of damages. But plaintiff had not shown proximate cause. All that plaintiff had done was to point to the three potential culprits regarding the sprinkler head. That did not suffice, since plaintiff’s expert had not “explained why any one of those defendants’ product, installation, or maintenance caused plaintiff’s damages.”
In reaching that decision, the Appellate Division canvassed cases from other jurisdictions that had employed varying tests for proximate cause in a spoliation context. But Judge Messano noted that the Supreme Court of New Jersey had “yet to speak directly to the proximate cause issue in negligence cases based on spoliated evidence, for purposes of avoiding summary judgment,” and the Appellate Division, as an intermediate court, would not import a test from elsewhere into New Jersey law for the first time. Based on that, plaintiff might be able to interest the Supreme Court in the issue. Time may tell.