The Law

Fired Up Over Destroyed Evidence by Ron Davis Destruction of a key piece of evidence has prevented the owners of a North Carolina shopping center from seeking compensation for damages caused by a fire at the facility. The shopping center, located in Fayetteville, sustained the fire damage at one of the stores located in the facility. The center’s owners, a husband and wife, operated the store and lost most of their inventory and were forced to relocate their business to a vacant space at the center until repairs were completed. Local authorities investigated to determine the cause of the fire. They concluded that the fire originated in the store’s office. There they found a device that served as a backup power supply in case of a power outage. But they were unable to determine conclusively if that device caused the fire. And they and simply recommended its further testing by its manufacturer. An independent consulting firm also investigated the fire. That firm specializes in assessing the causes of damage to machinery and equipment, and its findings were that the backup-power device used by the center’s owners sustained damage consistent with “a fire that begins inside a piece of equipment.” The firm’s investigator failed to blame the device for the shopping center fire, however. He stated only that the damage to the device “may indicate an incendiary failure.” The device ended up in storage at the office of the consulting firm, where two years later an employee contacted the shopping center’s insurance carrier, seeking permission for its disposal. Without notifying the center’s owners, the insurance company gave approval to dispose of the device. The center’s owners subsequently sued the manufacturer of the device, claiming that it was defective and caused the fire at the center. In response, the manufacturer argued that the destruction of the device rendered the company unable to mount an effective defense against the charges. A U.S. District Court agreed with the manufacturer, concluding that “without the device, the company has suffered irreparable prejudice in attempting to defend itself against the claims.” The court also decided that the center’s owners were “at least negligent” in failing to take steps to ensure that the device manufacturer received sufficient notice about the possibility of a lawsuit so the manufacturer could preserve the device. The court therefore dismissed the lawsuit. The center’s owners appealed. A U.S. appellate court concurred that the disposal of the key piece of evidence in the case “left the device manufacturer without any physical evidence” or possibility of further testing of the device. (King v. American Power Conversion Corp., 2006 WL 1344817 [4th Cir.(N.C.)]) Decision: May 2006 Published: June 2006