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Allstate Ins. Co. v. Dooley

Supreme Court of Alaska

November 12, 2010

ALLSTATE INSURANCE COMPANY and Wayne Watson, Petitioners,
v.
Ron DOOLEY, Respondent.

Page 198

Peter J. Maassen, Ingaldson, Maassen & Fitzgerald, P.C., Anchorage, for Petitioners.

Dané e L. Pontious and Ray R. Brown, Dillon & Findley, P.C., Anchorage, and Christian N. Bataille, Walther & Flanigan, Anchorage, for Respondent.

Before: CARPENETI, Chief Justice, EASTAUGH, FABE, WINFREE, and CHRISTEN, Justices.

OPINION

CHRISTEN, Justice.

I. INTRODUCTION

Allstate Insurance Company (Allstate) and Wayne Watson, an Allstate attorney, seek review of an order denying their motion for partial summary judgment. Allstate and Watson argue that an action in tort for spoliation of evidence may only be maintained where evidence is permanently lost or destroyed, not when evidence is only concealed from the complaining party. We hold that the tort of fraudulent concealment of evidence, not spoliation, is the appropriate cause of action when evidence is intentionally concealed until after entry of judgment and expiration of the period allowed by Alaska Civil Rule 60(b) for seeking relief from a final judgment.

II. FACTS AND PROCEEDINGS

On October 28, 2000, Ron Dooley was injured when he slipped and fell while working on an addition to William Paul's home in North Pole. Dooley was on the second floor, carrying a piece of lumber, when he slipped on ice or snow that had accumulated at the top of the stairway. Dooley could not recall what caused him to fall, but he fell down the stairs and landed on the concrete floor of the lower level. The stairs had no railings at the time.[1]

Paul was insured by Allstate Insurance Company. On November 10, 2000, Allstate sent independent insurance adjustor Larry Staiger to the accident scene. Staiger took photographs of the addition and stairwell and spoke with Paul about the condition of the area at the time of the accident. Staiger later made large copies of the photographs, mounted them on letter-sized sheets of paper, and made separate notes describing each photograph. Staiger also applied " stick-on" arrows to the photographs. The annotations to the photographs contained information about the condition of the accident site gleaned from Staiger's conversation with Paul. Most significantly, the notes suggest that Paul admitted that the area of floor where Dooley slipped was covered by ice at the time of the accident.[2]

Dooley sued Paul, alleging Paul's negligence caused the accident and seeking damages for his injuries. Allstate attorney Wayne Watson defended Paul in the suit. Watson produced Staiger's photographs to Dooley during the discovery phase of the case but he did not produce the annotations to the photographs or the stick-on arrows, under the mistaken belief that they were privileged. During his deposition, Paul made statements that appear to be inconsistent with Staiger's notes. Later, Watson realized that the photograph annotations and arrows were not privileged and produced them. He also agreed that Dooley's attorneys could re-depose Paul, at Allstate's expense.

Dooley sought permission to submit additional instructions on spoliation and " breach of duty of disclosure" shortly before trial. The superior court gave Dooley a choice

Page 199

between moving for a continuance or receiving an immediate ruling on the request for a spoliation instruction. Dooley chose a continuance. The court ultimately sanctioned Watson, ordering him to pay Dooley $12,200 for the discovery violation, and the parties proceeded with trial preparation.[3]

The case proceeded to trial after the photograph annotations and stick-on arrows were produced and Paul was re-deposed. Paul's negligence had been established in a pre-trial ruling, but the jury allocated 60% of the total fault to Paul and 40% to Dooley. The jury found that Dooley's total damages were $350,000; its decision to allocate 40% of the fault to Dooley reduced the principal amount of the judgment entered in his favor by $140,000.

Dooley then brought this suit against Watson and Allstate. He claimed that their delayed production of material evidence caused him to incur unnecessary litigation expenses by prolonging the litigation and reducing the value of his claim. Dooley's initial complaint did not identify a specific cause of action, but it alleged that Watson's concealment of the photograph annotations " was intentional, in reckless disregard of the plaintiff's rights, fraudulent and a breach of AS 21.36.125(a)(6) & (8)." [4]

During the discovery phase of this case, Dooley learned that Allstate claims adjuster Don Cook made an entry in his " claim diary" on January 16, 2001, after he interviewed Paul about the slip and fall accident (the " Cook note" ). Watson had produced a redacted version of the claim diary before the trial in Dooley v. Paul, but the pages documenting Cook's January 16, 2001 interview with Paul had been removed from the claim diary entirely and had not been produced. Dooley amended his complaint against Watson and Allstate when he learned about the existence of the Cook note. The amended complaint makes three arguments for recovery of damages based on newly-discovered evidence: (1) spoliation of evidence; (2) abuse of process; and (3) fraud and misrepresentation.

Allstate and Watson sought partial summary judgment on Dooley's spoliation claim. Their motion argued that the tort of spoliation of evidence is permitted in Alaska only where evidence is permanently destroyed, or intentionally concealed until it is naturally destroyed, before it can be seen or used by the complaining party. Allstate and Watson argued that Dooley cannot maintain a spoliation claim regarding the Cook note because: (1) the note was not destroyed or irretrievably lost, and (2) deprivation of access to the note did not prejudice Dooley's personal injury suit. The superior court denied the summary judgment motion. The court's order reasoned:

It makes no sense to limit spoliation to the permanent destruction of evidence, thus allowing the temporary concealment of evidence to be outside the parameters of the tort. The essence of the spoliation claim is that the items or information is destroyed as potential evidence, regardless of whether it is destroyed for all purposes or simply concealed long enough to make the evidence unavailable when it matters, whether prior to trial or at trial. The tort reflects the obligation of a party not to interfere with the truth finding function of litigation. If evidence is concealed, but not destroyed, until after trial, the fact finder is no less deprived of the evidence than if the evidence had been destroyed completely.

Allstate petitioned for review of the superior court's decision. We granted the petition for review under Alaska

Page 200

Appellate Rule 402(b)(2).[5]

III. STANDARD OF REVIEW


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