In RV Motors, LLC v. Forthe Insurance Agency, Inc., an errors and omissions lawsuit, the dispute was whether four high-end recreational vehicles (“RVs”) that had been vandalized could be repaired or if they needed to be sold as salvage. Plaintiff alleged that the damaged RVs were beyond repair, that even if they could be repaired, the manufacturer refused to warranty them and that their only value was if they were sold off as salvage. The problem was that after the claim was made, Defendant’s insurer repeatedly attempted to obtain information documenting the claims, including RV inspections, but these repeated requests were rebuffed by Plaintiff’s counsel. We later learned in discovery that the RVs were sold for salvage.
Plaintiffs claimed over $2,000,000.00 in damages including lost profits and lost business (claiming the dealership went bankrupt over this incident because the Plaintiff’s primary property insurer disclaimed coverage due to a policy exclusion). During discovery, Plaintiff produced a valuation and appraisal report from their expert who actually had inspected the vehicles prior to Plaintiff selling them for salvage in which he opined that the RVs were un-repairable and that the lost value was over $650,000.00.
We retained a valuation expert who provided an affidavit for us that stated that although a valuation and damage appraisal could be performed on the RVs, he was unable to do this because a personal inspection of the RVs was necessary and that opportunity was forever lost. He further testified that the pictures of the RVs that did exist could not substitute for a personal inspection.
Following the close of discovery, we moved the Court to sanction Plaintiff for the spoliation of evidence and went for the “home run swing” of dismissal of the Complaint. Recognizing that dismissal is typically reserved for cases where actual malice is demonstrated, we knew that dismissal was a long shot.
The oral argument at this motion hearing lasted well over two hours with the Plaintiff’s main argument being that because the manufacturer refused to warranty any repairs that might have been done, there was no prejudice suffered by the defense and the entire argument was a red herring. The thrust of our counter-argument was that the manufacturer’s decision was largely based on the opinions of Plaintiff’s expert who had gotten the chance to inspect the vehicles and that the entire case hinged on our ability to discredit that expert and the manufacturer – the ability to do so having been lost when the vehicles were sold by Plaintiff before allowing the defense the personal inspection needed.
The trial court agreed with our position. Applying the Bridgestone factors as required in Georgia, the trial court found: 1) the defense had been prejudiced; 2) the prejudice was incurable; 3) the evidence spoliated by Plaintiff was of extreme importance; 4) that Plaintiff had acted in bad faith by ignoring the repeated requests by the defense to inspect the vehicle; and 5) that the potential for abuse by expert witness testimony was extremely high as demonstrated by our arguments. Also of note is the fact that that Court indicated that even if the defense had not made repeated requests to inspect the RVs, Plaintiff should have known the importance of this evidence to the case and preserved it. Although the Court considered other less-severe sanctions, it ultimately concluded that any remedy it attempted to fashion would still deny the Defendant its constitutionally-required full and complete defense. “This Court prefers cases to be tried on its merits. Sometimes, that is just not possible.”
We are only aware of two other cases in Georgia where a Plaintiff was sanctioned with the dismissal of his Complaint. Why not more? The RV Motors case is a significant victory for the defense and just goes to prove that what is sauce for the goose can be sauce for the gander.
If you would like a copy of the Order dismissing the RV Motors case, or would like to discuss defensive spoliation strategy, please feel free to contact us.
–Matt Moffett – for the defense