Third Party Spoliation Claims Still Alive Despite Recent Case

Despite the Indiana Supreme Court’s recent decision in Glotzbach v. Froman, 854 N.E.2d 337 (Ind.2006), in which the Court held that there is no third party cause of action for spoliation against an employer of the injured party, Indiana still recognizes the cause of action of third party spoliation cases. The right of an injured party to bring claim for third party spoliation was first recognized by the Indiana Court of Appeals in Thompson v. Owensby, 704 N.E.2d 134 (Ind.1998) trans. denied. The Thompson case is particularly important to me because I was the attorney who argued before the Indiana Court of Appeals and then the Indiana Supreme Court that Indiana Insurance Company, whose adjuster lost the dog leash which was the subject of a product claim, should be liable for Nicole’s inability to prove her product claim against the manufacturer.

In Thompson, Nicole was severely bitten by a neighbor’s dog as she rode her bike down her street. The dog had a history of being vicious. That is the reason that his owners had leashed him inside a fenced yard. The dog broke the leash, ran out of the fenced yard, onto the street and attacked Nicole. Indiana Insurance Company, the insurer for the dog owners, took control of the defective leash when it learned of Nicole’s claim. During the course of the investigation, it lost the leash. We added the insurance company to the tort action against the property owners and claimed that to the extent Nicole was unable to prove her case of a defective product against the manufacturer due to the fact that the product was no longer available, then the insurance company should be responsible for what Nicole’s case would have brought had the absent leash were present.

The Indiana Court of Appeals found that there was a special duty on the part of the insurance company to preserve evidence. To do so, the court found that there was a special relationship between the claimant and the insurance company, that the harm involved in loss of evidence was foreseeable and that the recognition of duty is consistent with Indiana’s policy of accountability. The court wrote “[liability insurance carriers are no strangers to litigation, and it strains credulity to posit in a motion to dismiss that a liability carrier could be unaware of the potential importance of physical evidence..”

The Indiana Supreme Court, has a 2-2 tie vote on whether to accept transfer on Thompson. As a result, Thompson became the law in Indiana.

In Glotzbach, the Indiana Supreme Court considered whether to allow a third party claim for spoliation against an employer who lost critical evidence related to the injury. The Court reviewed Thompson and declined to apply it to claims against employers. This is not the first time that the Indiana Supreme Court has declined to allow a third party claim against employer (see Murphy v. Target Products, 580 N.E.2d 687 (Ind. Ct. App. 1991) trans. denied). Despite some dicta within Glotzbach regarding the difficulty of proving a third party spoliation case, Thompson still remains the law.

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