Interlocutory Appeal from the White Superior Court The
Honorable Robert B. Mrzlack, Judge Trial Court Cause No.
ATTORNEYS FOR APPELLANT Brent E. Inabnit Matthew R. Kaczmarek
Nicholas J. Derda Sopko, Nussbaum, Inabnit & Kaczmarek
South Bend, Indiana
ATTORNEY FOR APPELLEES Thomas M. Dogan Dogan and Dogan
This interlocutory appeal arises out of a fire that occurred
at Aqua Environmental Container Corp.'s
("Aqua") warehouse facility in Wolcott, Indiana,
which was owned by Joki Leasing, LLC ("Joki
Leasing"). Aqua and Joki Leasing (together,
"Aqua" or "Plaintiffs") filed a complaint
against Indiana Public Service Company ("NIPSCO"),
alleging that NIPSCO negligently supplied electrical power to
the Wolcott area, including Aqua's warehouse, resulting
in severe power fluctuations that caused a fire in the area
of the ceiling-mounted furnace of Aqua's warehouse.
NIPSCO denied all liability for the fire. During discovery,
it was determined that Aqua preserved some, but not all, of
the ceiling-mounted furnace equipment. NIPSCO filed a Motion
for Default Judgment for Spoliation of Evidence, which the
trial court denied. NIPSCO appeals and raises the following
issue: whether the trial court abused its discretion when it
denied NIPSCO's motion on the basis that Aqua did not
intentionally spoliate evidence.
We affirm and remand with instructions.
and Procedural History
In March 2010, Aqua was in the business of swimming pool
manufacturing, and it leased a warehouse facility ("the
premises") from Joki Leasing. Kirk Sullivan
("Sullivan") is both the president of Aqua and the
managing director of Joki Leasing. On the evening of March 28,
2010, a major fire occurred at the premises, in the ceiling
area where the furnace was located, and the fire destroyed
about 12, 000 square feet of finished warehouse, office, and
factory space. The ceiling furnace assembly is the basis
of NIPSCO's spoliation claim.
At around 8:45 p.m. on the night in question, an Aqua sales
representative, John Kantor ("Kantor"), was working
in the factory showroom area, heard a bang sound, and saw in
the ceiling area a glow that he suspected was fire, so he
contacted Aqua's property manager, Mike Storz
("Storz"), who lived in a residence located next to
the warehouse. Storz called 911, and he and Kantor went back
to the premises. Wolcott Volunteer Fire Department Chief
Kenneth Burns ("Chief Burns") was the first to
respond to the fire, arriving about two minutes after he
received the dispatch call. A number of local fire
departments responded to the fire, and it did not get fully
extinguished until after around 2:00 a.m. Chief Burns called
dispatch and requested they contact the Indiana State Fire
Marshal to send a fire investigator to the scene to
investigate the origin and cause of the fire.
Appellant's App. Vol. 3 at 159.
On his way to the fire, Chief Burns had noticed that the
lights to the lumber yard and about five houses in town were
"flickering." Appellees' App. Vol. 2
at 35. He also noticed that the generator at the fire station
had started up automatically, which generally occurs if the
voltage drops below 200 volts (from the normal 220 volts) and
occurs in order to prevent damage to an electric motor.
Id. at 28, 38-39. Chief Burns talked to Storz at the
scene of the fire, and Storz told Chief Burns that the lights
and television at his residence kept flickering and surging,
going bright and dim, for forty-five minutes prior to the
fire. Tr. Vol. 2 at 209.
In the morning on March 29, 2010, the day after the fire,
Chief of Fire Investigations for the Indiana Department of
Homeland Security Division of Fire and Building Safety,
Robert Dean ("Fire Marshal Dean"), came to the
premises in response to Chief Burns's request for an
investigator. Chief Burns also returned to the premises, and
he told Fire Marshal Dean that he believed the fire started
in the furnace area and may have been caused "by
NIPSCO's being low on power." Appellant's
App. Vol. 3 at 161, 163-64. During his investigation,
Fire Marshal Dean determined the area of a ceiling-mounted
furnace was the area of origin and that the furnace was a
possible cause of the fire. Tr. Vol. 2 at 27- 29.
The furnace, including a firebox, blower box, and the A/C
ductwork (together, "Furnace Assembly") survived
the fire. Fire Marshal Dean took the following picture of the
entire Furnace Assembly on the day
the fire, March 29, 2010:
Vol. 4 at 159; Appellant's Br. at 9.
When he took the picture, Fire Marshal Dean was standing
inside the building and under the furnace; because it was
unsafe for Storz to accompany Fire Marshal Dean into the
burned building, Storz was not with Fire Marshal Dean when he
took the picture. At some point, while Storz and Fire Marshal
Dean were standing approximately 30 feet outside of the
building, Fire Marshal Dean pointed out the furnace to Storz
- as they looked through a hole that had been made in the
wall of the building during the process of fighting the fire
- and Fire Marshal Dean told Storz, "This is a possible
cause, you may want to save it for your insurance company or
other entities." Id. at 31, 222-26. Fire
Marshal Dean's March 29, 2010 report concluded that the
fire was "accidental[, ]" and "[t]he area of
origin was in the ceiling of the north portion of the south
building. The possibility of an area of internal failure or
resistive heating in a ceiling- mounted furnace could not be
ruled out as the ignition source of this event."
Appellant's App. Vol. 3 at 53.
Sullivan, who was out of state at the time, delegated
responsibility for handling the situation to his uncle, Phil
Sullivan ("Phil"), and Storz. Aqua sought estimates
to remove the burned part of the building, and within about a
week, Phil hired Xtreme Contractors ("Xtreme") for
the project. Tr. Vol. 2 at 243. Phil and Storz
worked with Terry Wilson ("Wilson"), an owner of
Xtreme, on the project. Demolition took approximately two
weeks, and on or about the third day, Xtreme removed the
furnace with a claw or crane and placed it in a cleared-out
location that was at least 100 feet from any other objects.
According to Xtreme, it cut out and lowered the entire
Furnace Assembly, including the firebox, and set it aside.
According to Storz, Xtreme saved only the A/C ductwork
portion, which is what Fire Marshal Dean had pointed out to
him on March 29. Tr. Vol. 3 at 22;
Def't's Ex. 9; Tr. Vol. 8 at 200.
Using a pallet and a forklift device, Storz moved the saved
furnace remains to the nearby Aqua warehouse for storage.
According to Aqua, the saved furnace remains were untouched
for six to eight months, until they were examined by
Aqua's experts in the fall of 2010. Tr. Vol. 3
On April 19, 2010, Sullivan traveled from Florida to Wolcott,
Indiana to view the premises and meet with Chief Burns. Chief
Burns advised Sullivan that NIPSCO's supply of
electricity may have played a part in causing the fire. After
talking to Chief Burns and a local electrician about NIPSCO
having electrical surges on the night in question, Sullivan
phoned NIPSCO's claims division on or around April 22,
2010, spoke to claims adjuster Cindy Jenkins
("Jenkins"), and made a claim.
Jenkins took notes of her conversation with Sullivan, and her
"Adjuster Comments" reflect that Sullivan told her
that: (1) he had been told by the fire chief and an
electrician that NIPSCO had experienced "brownouts"
in Wolcott and surrounding communities on the night in
question; (2) the fire started in or at a "heater";
(3) the building had been torn down and all that remained was
the slab; (4) the "heater" had been saved, and
NIPSCO could view it by calling Phil Sullivan, and Sullivan
gave Phil's number to Jenkins. Appellant's App.
Vol. 3 at 181, 184. Jenkins sent a follow-up email to
Sullivan, stating, "NIPSCO requests that you preserve
and maintain any and all equipment, wiring and other
facilities from the subject building." Id.
Jenkins also stated in her email to Sullivan, "As we
discussed, since the building has been torn down, NIPSCO
would like to view the heater and any other remaining
equipment or wiring from the building. They or someone on
their behalf will be contacting Mr. [Phil] Sullivan to make
these arrangements." Id. at 185. NIPSCO did not
thereafter contact Aqua to arrange to see the saved furnace.
Several months later, in August 2010, Aqua and Joki Leasing
filed a Complaint against NIPSCO and Nisource, Inc., a
holding company in the business of distributing electrical
utility service in White County, Indiana (together,
"Defendants"). Appellant's App. Vol. 2 at
27-36. Plaintiffs asserted claims for negligence, strict
liability, res ipsa loquitur, and breach of implied warranty.
Id. Among other things, Plaintiffs asserted that
Defendants were negligent in the following respects:
a. Defendants improperly installed, serviced, and maintained
the utility service and its various providing implements over
which the Defendants maintained exclusive ownership and
b. Defendants failed to conduct proper inspections of its
electrical service implements, wiring and equipment and
failed to discover the defective condition of their delivery
of electricity to Joki Leasing and Aqua Environmental;
c. Defendants had prior notice of and failed to conduct
proper maintenance and/or to repair their transformers and/or
other equipment so that their electricity product could
safely be ...