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Insurance Company’s Financing of Home Demolition after House Fire Precluded Future Suit against Party That Allegedly Caused Fire

Cumberland Insurance Group v. Delmarva Power
(February 1, 2016) Court of Special Appeals of Maryland

by Matthew J. McCloskey, Associate
Semmes, Bowen & Semmes (

Available at:

In a recent reported opinion, the Court of Special Appeals addressed the application of the spoliation doctrine in a case in which the destroyed evidence was the subject of the claims at issue.

On May 5, 2013, a fire broke out at the home of an insured of Cumberland Insurance Group (“Cumberland”). Firefighters were able to put out the fire, but the home was damaged severely. During the fire, Delmarva Power (“Delmarva”), the electric company servicing the house, sent a representative to the scene to disconnect the power to the house. Subsequently, a fire marshal investigated the fire and determined that it was caused by the house’s electric meter box, which the marshal removed from the scene. Cumberland also investigated the fire, sending an expert to take pictures of the scene and another to examine the meter box. Cumberland’s experts reached the same conclusion as the fire marshal, and it notified Delmarva that it anticipated asserting a subrogation clause against Delmarva for the damage to the house. Approximately two (2) months after the fire, Cumberland paid its insured for the value of the property lost in the fire. With Cumberland’s knowledge, and with funding obtained from Cumberland, Cumberland’s insured then retained a demolition company to destroy the remains of the house. No representative of Delmarva ever investigated the cause of the fire.

Cumberland eventually filed suit against Delmarva. In response, Delmarva moved for summary judgment, arguing that the spoliation doctrine barred Cumberland’s claim, as Cumberland’s destruction of the house prevented Delmarva from investigating and defending the claim. In response, Cumberland argued that it preserved the meter box, which was the cause of the fire, and thus that it had not destroyed the evidence that Delmarva needed to investigate the claim. After hearing argument, the Circuit Court granted Delmarva’s motion for summary judgment.

On appeal, the Court of Special Appeals affirmed. Judge Nazarian, writing for the Court, began by discussing in detail the spoliation doctrine. Typically, the spoliation doctrine applies where there is: (1) an act of destruction; (2) the destroyed evidence was discoverable; (3) the at-fault party intended to destroy the evidence; and (4) the destruction occurred after the suit had been filed or when filing was imminent. Furthermore, to impose sanctions under the spoliation doctrine, there must be a finding that the destroying party was at fault for the destruction. The Court’s inquiry in this regard, however, is not whether there was bad faith; even the negligent, inadvertent destruction or loss of evidence may be sufficient to satisfy the element of fault. Nevertheless, the degree of fault involved in a particular case may be an important factor in fashioning an appropriate remedy. The Court noted that the most serious sanction – dismissal – is typically only available where it is shown that: (1) the party who destroyed the evidence intended to destroy relevant, discoverable evidence to prevent the opposing party from viewing it; or (2) where the lack of the destroyed evidence is highly prejudicial to the other party. The trial court is vested with wide discretion to determine what the remedy for spoliation should be.

Turning to the facts of this case, the Court concluded that the elements of spoliation had been met. There was unquestionably an act of destruction, the destroyed evidence, i.e., the house, was discoverable, Cumberland intended that the house be destroyed, and the demolition took place after Cumberland perceived that it would seek compensation from Delmarva. To the extent that Cumberland argued that the meter box was the true cause of the fire and that it did not destroy that evidence, the Court was unpersuaded. Although Cumberland alleged that the meter box was the cause of the fire, the destruction of the house precluded Delmarva from investigating possible alternative causes.

Furthermore, the Court concluded that Cumberland was at fault for the destruction of the house. Despite that it notified Delmarva of its potential claim, and that Delmarva never sought to send a representative to investigate the fire, Cumberland never notified Delmarva that it intended to demolish the house. Moreover, despite that Cumberland did not itself conduct the demolition of the house, it was aware that its insured intended to have the house demolished, it financed the demolition, and it was apparently heavily involved in the choice to have the house demolished. The Court, however, expressly left open the question of whether fault would be imputed to a party less directly involved in the destruction of evidence than Cumberland was in this case.

Finally, the Court concluded that dismissal was the appropriate sanction. Ultimately, the most important issue in this case was the cause of the fire. To determine the cause of the fire, Delmarva required access to the house. Without such access, it could not reasonably defend against Cumberland’s claim. Consequently, due to the high degree of prejudice Delmarva suffered, the Court concluded that the Circuit Court did not err in granting Delmarva’s motion for summary judgment.