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Aspen American Insurance Co. v. Interstate Warehousing Inc.

United States District Court, N.D. Indiana, Fort Wayne Division

March 13, 2019

ASPEN AMERICAN INSURANCE CO., as subrogee of Eastern Fish Company, Plaintiff,


          William C. Lee, Judge

         This matter is before the Court on cross-motions for partial summary judgment. Defendant Interstate Warehousing filed its “Motion for Partial Summary Judgment as to the Enforceability of the Limitation of Liability Contract Clause and Plaintiff's Spoliation of Evidence Claims” on August 29, 2018 (ECF 35), to which Plaintiff Aspen American Insurance filed a response on October 29, 2018 (ECF 42) and Interstate filed a reply on December 12, 2018 (ECF 48). Aspen filed its motion for partial summary judgment on October 29, 2018 (ECF 40), to which Interstate filed a response on December 26, 2018 (ECF 51) and Aspen filed a reply on January 9, 2019 (ECF 53). For the reasons explained below, Defendant Interstate's motion is GRANTED in part and DENIED in part, and Plaintiff Aspen's motion is DENIED.[1]

         I. Background

         Interstate Warehousing owns and operates “cold storage warehouses throughout the United States.” Plaintiff's Memorandum in Support of Motion for Partial Summary Judgment (ECF 41), p. 1. Eastern Fish Company sells and distributes frozen seafood and contracted to store some of its products-about $2.5 million worth-in Interstate's cold-storage warehouse in Hudsonville, Michigan. Id., pp. 1-2. The frozen seafood was then distributed to grocery stores for sale to consumers. Id., p. 1. On March 8, 2014, part of the roof of Interstate's Hudsonville warehouse collapsed due to heavy snow, “subjecting the temperature-sensitive products within the Warehouse to temperature damage.” Id., p. 2. After the roof collapse “[t]he Michigan Department of Agriculture seized [Eastern Fish's inventory] from Interstate.” Id. Aspen states that “[weeks later, Interstate hired a contractor to haul the Food Products away and have them disposed [of] so that Interstate could satisfy its own obligations to the government related to the seizure of the Food Products.” Id., p. 3. Aspen “paid Eastern Fish for [its] loss in return for subrogation rights.” Id. Aspen brought this suit to recoup its money, contending that the loss of Eastern Fish's products was Interstate's fault. Aspen contends that Interstate knew or should have known that the warehouse in Hudsonville was structurally unable to handle the weight of excessive snow and therefore Interstate should be made to pay the loss incurred by Eastern Fish as a result of what Aspen alleges was a preventable incident. Interstate, however, insists that “Eastern Fish . . . and Defendant entered into a warehouse contract and rate quotation . . . which contained a standard, industry-wide used, liability and limitation of damages provision . . . which limits the liability for damages claimed in Plaintiff's Complaint to approximately $128, 400, if Defendant is found legally liable.” Defendant's Memorandum in Support of Motion for Partial Summary Judgment (ECF 36), p. 1. Interstate also insists that the roof collapse was the result of an “Act of God, occurring without the fault of Interstate.” Defendant's Response in Opposition (ECF 51), p. 8.

         Interstate argues that the limitation of damages provision included in its contract with Eastern Fish is valid and enforceable, and the company seeks summary judgment on that issue. Id. Interstate also seeks summary judgment on Aspen's “claims of spoliation of evidence and intentional spoliation of evidence [because they] are not recognized independent causes of action under either Indiana or Michigan laws[.]” Id.[2] Aspen argues that Interstate cannot limit its liability because the actions of its employees and agents before and after the roof collapse constituted “breach of bailment, conversion and gross negligence.” Plaintiff's Memorandum in Support (ECF 41), p. 3. Aspen maintains it is entitled to judgment as a matter of law on those three claims and that the Court should award Plaintiff more than $2.6 million for the loss of its food products, nearly $8 million in treble damages, and several hundred thousand more in prejudgment interest, costs and attorneys' fees. Id., pp. 24-25.

         II. Summary judgment standard

          Summary judgment is appropriate when the record shows that there is “no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Disputes concerning material facts are genuine where the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding whether genuine issues of material fact exist, the court construes all facts in a light most favorable to the non-moving party and draws all reasonable inferences in favor of the non-moving party. See Id. at 255. However, neither the “mere existence of some alleged factual dispute between the parties, ” id. at 247, nor the existence of “some metaphysical doubt as to the material facts, ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986), will defeat a motion for summary judgment. Michas v. Health Cost Controls of Ill., Inc., 209 F.3d 687, 692 (7th Cir. 2000).

         Summary judgment is not a substitute for a trial on the merits nor is it a vehicle for resolving factual disputes. Waldridge v. Am. Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994). Therefore, after drawing all reasonable inferences from the facts in favor of the non-movant, if genuine doubts remain and a reasonable fact-finder could find for the party opposing the motion, summary judgment is inappropriate. See Shields Enterprises, Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992); Wolf v. City of Fitchburg, 870 F.2d 1327, 1330 (7th Cir. 1989). However, if it is clear that a plaintiff will be unable to satisfy the legal requirements necessary to establish his or her case, summary judgment is not only appropriate, but mandated. See Celotex, 477 U.S. at 322; Ziliak v. AstraZeneca LP, 324 F.3d 518, 520 (7th Cir. 2003). “[Speculation and conjecture” also cannot defeat a motion for summary judgment. Cooney v. Casady, 735 F.3d 514, 519 (7th Cir. 2013). In addition, not all factual disputes will preclude the entry of summary judgment, only those that “could affect the outcome of the suit under governing law.” Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir. 2001) (citation omitted).

         As the Seventh Circuit has explained many times and reiterated recently, a district court's task on summary judgment is as follows:

The following common refrains in summary judgment cases are important to recall in a case with so many factual recitations:
On summary judgment a court may not make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts; these are jobs for a factfinder. Rather, the court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial. Summary judgment is not appropriate if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. We must look therefore at the evidence as a jury might, construing the record in the light most favorable to the nonmovant and avoiding the temptation to decide which party's version of the facts is more likely true. As we have said many times, summary judgment cannot be used to resolve swearing contests between litigants.

Johnson v. Advocate Health & Hosps. Corp., 892 F.3d 887, 893 (7th Cir. 2018) (quoting Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003)).

         III. Discussion

         A. Choice of law

          When the parties filed their cross-motions for summary judgment they had not yet agreed whether Michigan or Indiana law applied to this case. The case is before this Court on diversity jurisdiction because Plaintiff Aspen “is a Texas corporation with its principal place of business located in Rocky Hill, Connecticut . . . [and] Defendant, Interstate, is an Indiana corporation with a principal place of business in Fort Wayne, Indiana.” Plaintiff's Memorandum in Support, p. 3. However, the events giving rise to this lawsuit occurred at Interstate's warehouse in Hudsonville, Michigan. In its brief in support of its motion for partial summary judgment, filed on August 29, 2018, Interstate stated that “[i]t has yet to be determined whether Michigan or Indiana law will apply to the facts of this matter[]” but added that “Defendant asserts that Michigan law applies[.]” Defendant's Memorandum in Support, p. 1. At that point, Interstate presented its arguments “under Michigan and Indiana law.” Id., p. 2. Aspen, in its memorandum in support of its own motion for partial summary judgment filed on October 29, 2018, also argued that Michigan law applies. Plaintiff's Memorandum in Support, pp. 12-15. By the time Interstate filed its reply brief in support of its motion on December 12, 2018, the parties apparently had concluded and agreed that Michigan law applies, since Interstate discusses only Michigan law in that brief. Defendant's Reply Brief (ECF 48). The final round of briefs, including Defendant's Response in Opposition (ECF 51) filed on December 26, 2018, and Plaintiff's Reply in Support (ECF 53) filed on January 9, 2019, apply and discuss only Michigan law. The Court agrees and will apply Michigan law for the reason argued by the parties. See Defendant's Memorandum in Support, pp. 1-2 (“Michigan law applies because it is the state with the most intimate contacts to the facts and location of the alleged property damage”); Plaintiff's Memorandum in Support, p. 15 (“The place of all of the wrongs complained of, including the final destruction of the Food Products . . . occurred in Michigan.”). As this Court has noted, it is well established that in a diversity case, “Indiana's choice of law rules determine the applicable state law. . . . The general rule for torts is that the law of the state where the injury occurred controls.” Abrams v. McGuireWoods LLP, 518 B.R. 491, 498-99 (N.D. Ind. 2014) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (forum state's choice of law rules determine the applicable law in diversity cases)). In this case, Michigan law applies to Aspen's tort claims “since the injury has a significant connection to that state.” Agricultural Mgmt. Dev., Inc. v. Nat'l City Bank, 2003 WL 21919184, at *1 (N.D. Ind. June 23, 2003) (citing Land v. Yamaha Motor Corp., 272 F.3d 514, 516 (7th Cir. 2001); also citing Judge v. Pilot Oil Corp., 205 F.3d 335 (7th Cir. 2000) (under Indiana's choice of law rules the law of the state where the injury occurred governs)).

         B. Cross-motions for partial summary judgment-factual assertions and arguments

          To reiterate, Interstate moves for summary judgment on the issue of the enforceability of the limitation of damages provision in its contract with Eastern Fish and also seeks “judgment in its favor . . . as a matter of law[]” as to Aspen's “claims of spoliation of evidence and intentional spoliation of evidence [because they] are not recognized independent causes of action under either Indiana or Michigan laws[.]” Defendant's Memorandum in Support, p. 2. Interstate insists there are no material disputes about the contractual language or that spoliation allegations cannot be brought as independent causes of action and so Interstate is entitled to judgment as a matter of law on both issues. Aspen, in its motion, moves for judgment (including an award of damages as noted above) on its Michigan state law claims for “breach of bailment, conversion and gross negligence.” Plaintiff's Memorandum in Support, p. 3.

         While Interstate's arguments are primarily legal ones, Aspen's are much more fact-dependent. Interstate wrote in its motion for oral argument that “the claims and facts at issue in the parties' respective motions for partial summary judgment largely coincide[.]” It might be more accurate to say that the issues are intertwined or interdependent, in that Interstate argues that the limitation of liability provision trumps Aspen's damages claim and the Act of God defense trumps Aspen's claims for breach of bailment, conversion and gross negligence (because an event that occurs due to an Act of God ipso facto does not involve negligence-or any fault at all-on the part of an alleged tortfeasor), while Aspen argues that the evidence establishes as a matter of law that Interstate was grossly negligent, which trumps Interstate's Act of God defense and its limitation of liability argument.

         Aspen's Complaint alleges 10 claims or “counts” against Interstate, including 1) breach of contract, 2) negligent bailment, 3) negligence, 4) gross negligence, 5) spoliation of evidence, 6) intentional spoliation of evidence, 7) fraudulent concealment, 8) conversion, 9) consumer fraud, and 10) breach of bailment. Amended Complaint (ECF 3), pp. 3-14. All of those claims are based on Aspen's allegations that Interstate was negligent-grossly negligent, in fact-in not preventing the roof collapse at its warehouse. The factual foundation for all of Aspen's claims is summarized in the following excerpts the Complaint:

[D]efendant breached its duties and obligations under the agreement of the parties, and breached its obligations as bailee of the food products, in one or more of the following ways:
(a) Failing to deliver the food products to Eastern in good order and condition;
(b) Failing to take reasonable measures to prevent a roof collapse on the premises;
© Failure to take reasonable measures to safeguard the food products while in its care, custody and control; and
(d) Otherwise failed to perform pursuant to the agreement of the parties.

Id., p. 14 (“Count X (Bailment)”). In Count IV, in which it alleges gross negligence, Aspen asserts that Interstate “willfully, wantonly and recklessly breached its duty to properly store, care for and protect Eastern's food products from damage by exhibiting utter indifference to or conscious disregard for the welfare of the Eastern's [sic] food products in defendant's care, custody and control.” Id., p. 6. All of Aspen's claims, then, are based on the premise that Interstate failed to prevent the roof collapse and destroyed evidence after the incident.

         Aspen's argument centers on the actions of the warehouse general manager Nate Tippmann, who “was responsible for maintenance at the Warehouse[]” and Leroy Lozada, whom “Tippmann hired . . . to work as the maintenance technician and supervisor in 2012.” Plaintiff's Memorandum in Support, pp. 4-5.[3] Aspen asserts that neither Tippmann nor Lozada had any “background in structural engineering or snow loads on steel roofs of commercial properties.” Id., p. 5. Either “Tippmann, Mr. Lozada or temporary maintenance employees would inspect the roof of the Warehouse on a monthly basis.” Id. Interstate had “no written procedures regarding snow removal from the roof of the Warehouse[]” and “had no plans or policies with respect to snow events or snow removal.” Id. And Aspen asserts that “Tippmann never asked a structural engineer whether it would be appropriate to remove snow from the roof of the Warehouse under certain circumstances[]” and “never received any instruction or training with respect to removal of snow accumulation on the roof of the Warehouse.” Id. On February 20, 2014, “Tippmann notified Andrew Bobay, Corporate Engineer in charge of all Interstate warehouses, Matthew Helbling, Senior Vice President of Operations for Interstate, and Jeff Carteaux, Nate Tippmann's direct supervisor[]” about an excessive amount of snow on the Warehouse roof. Id., pp. 5-6. In an email to Bobay, Tippmann wrote as follows:

We are at 26 inches of compressed snow with the bottom 6 inches being ice and slush (drifts along the walls are about 4 feet deep). How does this compare to our roof design spec? Are we still okay?

Id. The day after Tippmann's email to Bobay, “Interstate's management, including the president of the company, participated in a conference call” to discuss the issue. Id. From that point, “Tippmann and . . . Lozada continued to look for signs of structural strain in the coming weeks[]” and “provided each other with verbal reports of the snow accumulation and condition of the Warehouse roof.” Id., p. 9. Aspen also asserts that “between February and March of 2014, Interstate never hired a snow removal company to inspect the snow load on the Warehouse roof to determine if snow and ice could be removed[]” and “never hired any contractor whatever to examine the structure related to the snow and ice accumulation.” Id. The partial roof collapse occurred on March 8.

         Aspen's claims for conversion and spoliation of evidence are based on Interstate's post-collapse actions. Interstate informed Eastern Fish of the roof collapse and “[i]n a letter dated March 13, 2014, Eastern Fish provided Interstate with notice of its claim for damage to the Food Products with an estimated value of $2, 411, 273.00. Jeff Hastings, the treasurer of Interstate, responded with a letter the next day in which he declared that “[a]s this was an Act of God, we have no responsibility for your loss.” Id., p. 11.

         The Michigan Department of Agriculture inspected the warehouse on the day of the collapse and issued a Notice of Seizure, directing that food products stored in the warehouse be destroyed due to “[possible adulteration of foods exposed to anhydrous ammonia leaking from damaged refrigeration equipment which was caused by a roof collapse.” MDA Notice of Seizure (ECF 41-21). A few days later, on March 11, the Ottawa County (Michigan) Department of Public Health sent a letter to Interstate's director of operations stating that the food products in the area of the roof collapse, including Eastern Fish's products, were “deemed unsafe for human consumption.” Ottawa Cty. Dept. of Health letter (ECF 41-22). The Department mandated that Interstate “[r]emove, and properly dispose of, all food under the [Michigan Dept. of Agriculture] seizure order at the site.” Id. Accordingly, Interstate “sent the Food Products to Waste Management for destruction so Interstate could satisfy its obligations to the Michigan Department of Agriculture and the Department of Public Health for Ottawa County, Michigan.” Plaintiff's Memorandum in Support, p. 11.

         Aspen states that “Eastern Fish could not access the Food Products from the date of the Roof Collapse to the date of disposal by Interstate[]” and that “Eastern Fish did not authorize Interstate to dispose of the Food Products.” Id. Meanwhile, Aspen insists, Interstate committed acts of spoliation. Aspen asserts as follows:

Aspen engaged a structural engineer, James Goes, to investigate the Roof Collapse. Mr. Goes visited the Warehouse on March 20, 2014, but Interstate did not allow Mr. Goes to move anything that could allow an examination of the point of failure of the roof. On March 20, 2014, Aspen and Eastern Fish (via counsel) advised Interstate that Interstate must preserve evidence related to the Roof Collapse and allow Aspen and Eastern Fish to investigate the loss or Interstate would face consequences for spoliation of evidence. Mr. Goes then coordinated with Nate Tippmann to investigate the Roof Collapse and arrived at the Warehouse on March 25, 2014, but Mr. Goes could not access the facility. Mr. Goes visited the Warehouse again on April 7, 2014. Interstate had removed the end wall, all product and racking.

Id., pp. 11-12. Goes apparently scheduled another visit to the warehouse for April 24, 2014, but according to Aspen much of the collapsed part of the warehouse had been removed:

When we arrived approximately forty feet of the middle of the building was gone including the columns, joist girders, joists, roof deck, roofing material, mechanical systems, and any other materials that were on the roof. More importantly, the damaged parts of the collapsed roof were also gone. ...

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