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Phillips v. Owners Insurance Co.

Court of Appeals of Georgia, Fifth Division

June 29, 2017

KENNETH PHILLIPS et al.
v.
OWNERS INSURANCE COMPANY.

          MCFADDEN, P. J., BRANCH and BETHEL, JJ.

          BETHEL, JUDGE.

         Kenneth Phillips ("Phillips") and Cathy Phillips brought suit against Owners Insurance Company ("Owners") alleging third-party spoliation of evidence, breach of contract, promissory estoppel, and negligence. This appeal follows the trial court's order granting Owners' motion for summary judgment with respect to Phillips' claim for third-party spoliation of evidence. Although Phillips asks us to recognize an independent tort of negligent third-party spoliation of evidence under Georgia law, we decline to do so and therefore affirm the trial court's grant of summary judgment.

         Because this case arises from a decision on Owners' summary judgment motion, we view the facts in a light most favorable to Phillips as the non-moving party. Lau's Corp., Inc. v. Haskins, 261 Ga. 491, 491 (405 S.E.2d 474) (1991). So viewed, on May 11, 2013, Phillips was involved in an auto accident in which his vehicle flipped following a tire blowout.[1] He sustained severe injuries and required extensive medical treatment. Phillips held an auto insurance policy with Owners at the time, and Owners became aware of the accident and Phillips' injuries a few days later. Because of the severity of the property damage, the vehicle was deemed to be a total loss.

         Phillips' vehicle was stored at a garage in Swainsboro, Georgia. In a May 17, 2013, letter from Phillips' attorney, Owners was notified that Phillips was investigating the cause of the accident and that the vehicle needed to be held for that purpose. An adjuster from Owners later contacted Phillips' attorney and asked if the vehicle could be moved to a different garage in Savannah in order to reduce storage costs. During a May 31, 2013, phone conversation, a paralegal for Phillips' attorney again spoke with Owners' adjuster to discuss storage of the vehicle and preservation of the tires for inspection as part of a potential products liability suit. During this conversation, they agreed that Owners would store the vehicle at the Savannah lot and would notify Phillips' attorney before moving it. Later that day, Phillips' attorney faxed a letter to the adjuster confirming the parties' understanding from the telephone call regarding the vehicle's storage location and Owners' agreement to notify Phillips' attorney before making any "change in the agreed upon storage location of Mr. Phillips' vehicle." Owners' adjuster received this fax and placed it in Phillips' claim file. The vehicle was moved to the Savannah facility, and the adjuster placed a "seller hold" on the vehicle.

         Meanwhile, on or around May 20, 2013, in exchange for Phillips' agreement to execute a power of attorney and transfer the vehicle's title to Owners, Owners offered to settle Phillips' property damage claim arising from the accident. The parties agreed to this settlement on or about June 12, 2013, and the paperwork settling the property damage claim was prepared the next day. Phillips signed title to the vehicle over to Owners a week later.

         The vehicle remained at the Savannah facility under Owners' seller hold for nearly a year and a half. In mid-October 2014, the owner of the storage lot indicated to the Owners' adjuster that Owners would begin incurring additional storage charges. After receiving that notification, Owners released the seller hold, and the vehicle (including the tires) was sold a few days later. Owners did not notify Phillips or his attorney that the vehicle had been sold.

         In December 2014, Phillips' attorney communicated a demand for damages to the tire manufacturer. In response to a request from the tire manufacturer, Phillips' attorney contacted Owners' adjuster in February 2015 to procure the damaged tire from Phillips' vehicle. This was apparently the first communication between Phillips (through his attorney) and Owners regarding the vehicle since the title to the vehicle was transferred to Owners, and it was the first time Phillips' attorney became aware that the vehicle had been sold.

         Phillips later brought suit against the tire manufacturer, and the parties reached a settlement on the claim for a portion of Phillips' medical expenses from the accident. Claiming that the sale of the car foreclosed Phillips' opportunity to recover his full damages from the tire manufacturer, Phillips brought suit against Owners alleging third-party spoliation of evidence, breach of contract, promissory estoppel, and negligence. Owners moved for summary judgment on each claim. The trial court granted that motion with respect to the claim of third-party spoliation of evidence, but denied it with respect to Phillips' remaining claims. This appeal followed.[2]

         In his brief, Phillips correctly points out that only the non-binding decision in Owens v. Amer. Refuse Sys., Inc., 244 Ga.App. 780, 781 (2) (536 S.E.2d 782) (2000) (physical precedent only) explicitly declines to recognize an independent cause of action for third-party spoliation of evidence. Pointing to a statement in this Court's decision in Sharpnack v. Hoffinger Industries, Inc., 231 Ga.App. 829, 830 (499 S.E.2d 363) (1998) and noting further developments in the law since Owens was decided, he suggests that the facts of this case call for a "fresh look at this issue."[3]

         While a number of states have recognized causes of action for third-party spoliation of evidence (including many in the years since Owens was decided), [4]neither a statute nor any ruling of the Georgia Supreme Court has established third-party negligent spoliation of evidence as an independent tort in this state.[5] Likewise, dicta in Gardner v. Blackston, 185 Ga.App. 754, 755 (1) (365 S.E.2d 545) (1988) (physical precedent only) suggests that spoliation of evidence is not recognized as an independent cause of action in Georgia, even as a remedy between parties to underlying litigation.

         In addition to his spoliation claim, Phillips also brought claims against Owners for breach of contract, promissory estoppel, and negligence, all based generally on the same underlying conduct. Despite the fact that Owners' motion for summary judgment was denied on Phillips' other claims, Phillips argues that he will be left without an adequate remedy for the injuries he suffered in the accident if a cause of action for third-party spoliation against Owners is not available to him. The facts of this case do not support that argument because Phillips has other potential avenues of recovering from Owners under existing law.

         As we discussed in Owens, even without a cause of action for third-party spoliation of evidence,

[a] vigilant litigant already has traditional means of securing evidence available. Those means include, for example, a court order directing preservation, along with remedies for a violation of that order, or ...

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