Chapter 10 - § 10.10 • AN INSURER'S POTENTIAL LIABILITY FOR SPOLIATION OF EVIDENCE

• Jurisdiction: Colorado

§ 10.10 • AN INSURER'S POTENTIAL LIABILITY FOR SPOLIATION OF EVIDENCE

Johnson v. Liberty Mutual Fire Insurance Co., 648 F.3d 1162 (10th Cir. 2011), as described by the Tenth Circuit, "[wa]s about a pair of missing tail lights and the limits of reasonable foreseeability." Id. at 1163. The case arose out of a motor vehicle accident involving Russell Johnson and an employee of Zimmerman Truck Lines. Mr. Johnson, driving a pickup truck, was rear-ended by the employee, and the employee told the reporting police officer(s) that he rear-ended Mr. Johnson because the pickup truck's taillights were not working. The police issued Mr. Johnson a traffic citation based on the employee's account.

Liberty Mutual Fire Insurance Company, Mr. Johnson's insurer, tested the taillights in its lab. A lab report suggested that the taillights were working at the time of the accident, and, likely based upon this suggestion, Liberty Mutual fended off liability claims threatened by the trucking company and the employee's insurance companies. Additionally, Liberty Mutual was successful in having the trucking company's insurance company pay for the damage to Mr. Johnson's truck and trailer. Lastly, the police dismissed Mr. Johnson's citation. After these events, approximately two years after the accident, Liberty Mutual closed its file. Id.

Two years after Liberty Mutual closed its file, Mr. Johnson and his wife sued the trucking company and its employee for personal injuries. Id. at 1163-64. In pursuit of their case, the Johnsons requested the return of the taillights from Liberty Mutual. Until this request, "the Johnsons had never asked Liberty Mutual to return or retain the lights, and never mentioned their potential interest in suing." Id. at 1164. When finally asked for the taillights, Liberty Mutual could not produce them because they had been destroyed or discarded.

Ultimately, the Johnsons settled their claims against the trucking company and its employee. However, the Johnsons argued the settlement amount was significantly lower than it should have been because of the absence of the taillights. As a result of the purported discounted settlement, the Johnsons filed suit against Liberty Mutual. As the Tenth Circuit noted, however, "the Johnsons were apparently unable to find any contractual or statutory cause of action to fasten their claim onto, so they turned to the common law of tort." Id. The Johnsons' argument was predicated on three bases: (1) Liberty Mutual was liable...