Motion 7 - product liability defendants 619 motion to dismiss
Galbreath, Inc., One of its attorneys, Terry D. Weissman Timothy P. Mahoney Neal, Gerber & Eisenberg LLP Two North LaSalle Street Chicago, Illinois 60602 (312) 269-8000
Third-Party Plaintiff Galbreath Inc. (“Galbreath”), by its attorneys, respectfully submits this Memorandum Of Law In Opposition To BFI Waste Equipment Systems of North America, Inc.'s (“BFI”) Motion For Summary Judgment, and in Support of Its Cross Motion For Summary Judgment.
Having lost its Motion to Dismiss Galbreath's Third-Amended Third Party Complaint (“Complaint”), BFI now recycles many of the same arguments under the guise of its Motion for Summary Judgment. In so doing, BFI mischaracterizes some and ignores other allegations in Complaint, presents a story for which there is no evidence, overstates Galbreath's reliance on Dann Bailey, and conveniently ignores BFI's admissions in its Answer.
BFI's Motion contains several mischaracterizations of the allegations in Galbreath's Complaint. For example, BFI states that the Estate of Andersen recently settled its claim with “totally defenseless Galbreath” for $384,000. (See BFI's Motion for Summary Judgment “MSJ,” at p. 1) In addition, BFI states that “Galbreath has seized upon the fact that the broken hydraulic hose is no longer available in an attempt to claim in these proceedings that it was unable to defend itself against Anderson's [sic] claims (MSJ at p. 3);” and further states that “irrespective of its allegations that it has no defense against Anderson [sic], Galbreath filed seven affirmative defenses.” (MSJ at p. 3). Galbreath, however, did not allege that it was “totally defenseless,” that it was “unable to defend itself,” or even that it “has no defense” against Andersen.
Rather, Galbreath alleged that its “ability to advance meritorious defenses in the Underlying Litigation has been significantly impaired and Galbreath has lost the opportunity to prosecute meritorious third party complaints for contribution, which makes it less likely that Galbreath ultimately can prevail in this case.” (Complaint, ¶ 51). Galbreath further alleged that “in the event that a judgment is rendered against Galbreath and in favor of plaintiff in the Underlying Litigation or in the event that a settlement is entered into between Galbreath and plaintiff, such judgment or. settlement, if any, will have proximately resulted from BFI's breach of its duty to preserve evidence.” (Complaint, ¶ 52). BFI presented its arguments that such allegations are insufficient in light of the Andersen decision in its Motion to Dismiss the Complaint. This Court disagreed with BFI's reading of Andersen, and denied BFI's Motion.
The testimony in this case supports Galbreath's allegations. Christopher Ferrone, the plaintiff's own expert, acknowledged that possession and inspection of the actual failed hose could defeat his “paperclip” theory:
Q. You mentioned before that you thought that you may have another opportunity to take a look at the hose when everybody has a shot at it I think is what you referred to. Do you remember that?
Q. Is one of the things that you would want to do in examining the hose assembly after it was taken off the truck to look more carefully at the abraded wires to determine how they fractured?
A. I would certainly think that would be interesting to me, yes.
Q. That would, in fact, help you to either confirm or reject the notion that those wires were paper clipped basically until the point of fracture, correct?
A. I think we can find that, yes.
Q. Now, because the hose is no longer available, nobody can confirm or reject that based on the examination of the wires that is?
A. I agree. (Ferrone, pp. 155-56).
Q. Well, you are assuming that Galbreath did this particular installation. You don't know whether that is true or not, right?
A. Let's slow down for a second. I am assuming that Galbreath installed the hose because they built the machine. I am further assuming that any maintenance that occurred was done with the proper replacement parts of quantity, quality, and length. So assuming all of those facts are right, which I don't know if we will ever be able to prove one way or another, but assuming they are correct that it is still a Galbreath installation because it is Galbreath's geometry. (Ferrone, p. 90 emphasis added).
Moreover, Mike Rogers' (Galbreath's expert) affidavit establishes that had the hose been preserved, it would be possible to disprove Ferrone's assumptions. 1 If the hose had been preserved, Rogers would have been able to determine (i) the length of the hose; (ii) the radius of the bend in the hose as it was installed on the truck; (iii) whether the hose was a replacement hose; (iv) whether a hose adjacent to the one that leaked and which had been modified by BFI to include sharp edges on rigid ties had abraded the hose in question; and (v) whether the materials used to construct the faulty hose failed to meet specifications and thus weakened the hose that leaked. (See Affidavit attached as Exhibit A). Thus, the- evidence shows that the only way for Galbreath to definitively disprove Ferrone's assumptions was to show him the actual hose. Therefore, it is beyond dispute that BFI's failure to preserve the hose significantly impaired Galbreath's ability to prove its defenses. BFI has introduced no evidence to the contrary.
In addition, BFI completely ignores the allegations in Galbreath's complaint concerning its inability, due to the loss of the hose, to prove potential third party complaints for contribution. In paragraphs forty-five and forty-six of the Complaint, Galbreath pled that due to BFI's loss of the hose, Galbreath lost its actions for contribution against potential third party defendants Dana Corporation and Tork Products, Inc., because no expert could opine with a reasonable degree of certainty that the hose was flawed without having the opportunity to test and inspect the hose. (Complaint, ¶¶ 45, 46).
Once again, the evidence in this matter supports Galbreath's allegations. Mr. Ferrone testified that due to the loss of the hose, he cannot form an opinion, one way or the other, regarding a manufacturing or design defect in the hose itself:
Q. Would you agree with me as well that based upon the limited nature of the inspection you were able to do of the actual hose that day you were out there that you would never be able to testify that the hose itself had some manufacturing or design defect because of what you were able to do that day?
A. I agree. (Ferrone, p. 117).
Mike Rogers' affidavit also demonstrates that if he had the actual hose, he would be able to determine if it was manufactured with defective materials. (See Exhibit A at ¶ 5(v)).
BFI also tells a story regarding the transfer of the Waukegan facility from BFI to Onyx, but offers no evidence to support the story. BFI claims that it sold its Waukegan facility to Onyx in a turnkey transaction, in which the only thing that changed was the ownership of the facility, but presents no affidavits to substantiate this story. (MSJ at pp. 2-3). More importantly, BFI claims that “no one knows whatever happened to the broken hydraulic hose after it was replaced as part of the repairs made to the subject truck in order to put it back into service.” (MSJ at 3). Again, BFI cites no evidence to support its story that no one knows what happened to the hose after it was replaced. In fact, this story flies in the face of BFI's admission in its Answer.
As shown below, BFI admitted that it kept the hose at issue after its self-imposed March 1, 2000 deadline for putting its equipment back into service, and continued to keep the hose until the sale of the Waukegan facility to Onyx on or about April 1, 2000. Certainly, no one seems to know what happened to the hose after the sale, which is precisely the point of Galbreath's spoliation claim. But in the interim period, the period between March 1, 2000 and April 1 2000, BFI admits that it kept the broken hose. Why would BFI keep a broken hose other than in an attempt - in recognition of its duty - to preserve the hose as evidence?
BFI's decision to keep the hose made perfect sense. After all, Christopher Ferrone, the expert hired at BFI's behest by its insurer, AIG, testified that he did not have the appropriate tools with him to conduct a proper inspection and that he always expected to be able to come back for a second look at the evidence:
Q. In terms of being able to measure the bend radius, is that something that you could have done that day?
A. I usually just have my camera kit, a tape measure, and a caliber none of which are really conducive to do that. So, no, I would have to say I probably was not equipped to do that ... when you leave for this type of thing [initial inspection] not knowing what you are going to be faced with, I would have to bring a tractor trailer full of tools to have the exact one that I need when I get there. So, of course, that's the reason. (Ferrone, pp. 107-08).
Q. Did you do any further examination of the hose to see if there was any problem with that particular hose?
Q. Except you photographed it as it sat on the truck and what we have seen in the tape, right?
A. Right. I was always under the presumption that I was going to get the second bite at the apple when everybody came back. (Ferrone, p.79).
BFI also overstates Galbreath's reliance upon Dann Bailey. Galbreath has consistently maintained that Dann Bailey's “undated letter” is not central to its case, and hereby withdraws that letter as support of its claim. 2 With regard to his February 21, 2000 inspection, Bailey testified that he could not conduct a complete inspection; that the truck he was inspecting was parked next to a wall and was difficult to get to; that due to the truck's position he could feel the hose better than he could see it; that the truck was segregated off by itself; that he did not ask BFI to move the truck because it was locked-out by OSHA; that he could not cycle the hoist; and that he conducted the best inspection he could under these circumstances. (Bailey, pp. 25-6, 46). 3 Bailey further testified that a broken hydraulic hose cannot be repaired. (Bailey, pp. 29-30). Thus, although Bailey played a significant role in this matter, he is not the “key witness.”
The evidence in this matter, as opposed to BFI's unsupported stories, shows that BFI as
sumed a duty to preserve the hose, breached that duty, and-that its breach was the proximate cause of harm to Galbreath.
A BFI Assumed A Duty To Preserve The Hose
Contrary to BFI's assertions, the key evidence in this matter is not Dann Bailey. Dann Bailey's relevance was vastly reduced when BFI finally admitted that it kept the broken hose after its self-imposed March 1, 2000 deadline for putting its equipment back into service. As this Court is well aware, the underlying accident occurred on February 14, 2000. On February 17, 2000, BFI wrote a letter to Galbreath requesting that Galbreath send a service representative to BFI's Waukegan facility to inspect the subject hoist by March 1, 2000, at which time BFI planned to put the unit back into service. 4 In fact, it was upon this correspondence that the Second District relied in holding that BFI did not undertake a duty to preserve the truck (as opposed to the broken hose): “[s]ince BFI had informed Galbreath that the truck was to be put back into service approximately two weeks after the accident, Galbreath cannot plead that BFI voluntarily undertook to preserve the evidence specifically with regard to the truck.” Andersen v. Mack Trucks, Inc., 341 Ill.App.3d 212, 217, 739 N.E.2d 962, 969 (2nd Dist. 2003). Dann Bailey conducted his inspection on February 21, 2000. BFI sold its Waukegan facility to Onyx on or about April 1, 2000. Thus, the only relevant period of time as to whether or not BFI undertook a duty to preserve the broken hose is February 14, 2000 to April 1, 2000.
In paragraph 24 of its Third Amended Third-Party Complaint, Galbreath alleged:
On April 1, 2000, BFI sold the truck, hoist and hoses at issue to Onyx Waste Services, Inc. (“Onyx”) even though up until that time BFI had been segregating and preserving the truck hoist and hose evidence. BFI did not notify Galbreath that it had disposed of the evidence at the time of the sale. BFI thereby breached its duty to preserve the truck, hoist and hoses as evidence.
BFI answered this allegation, admitting that it kept the hose after the March 1, 2000 deadline:
BFI admits only that on or about April 1, 2000, it sold its entire Waukegan District facility, including the truck, hoist and hoses to Onyx Waste Services Inc. BFI denies the remaining allegations. (See BFI's Answer at ¶ 24).
Logically, BFI could not have sold the hose to Onyx on or about April 1, 2000 if it hadn't kept the hose until April 1, 2000. 5
Having let slip the truth that it kept the hose until it transferred the hose, along with its entire Waukegan facility, to Onyx on or about April 1, 2000, BFI would now like its Answer to be read as referring to some hose other than the hose “at issue.” BFI previously argued that its Answer was “non-specific” and did not refer to the hoses “at issue,” that the hose at issue was replaced, and its fate is unknown. 6 However, the allegation in paragraph 24 of the Complaint is specific to the hose “at issue.” It is axiomatic that “[o]nce a statement of fact has been admitted in the pleadings, it constitutes a judicial admission, it is binding on the party making it, and it makes it unnecessary for the opposing party to introduce evidence in support thereof because it has the effect of withdrawing the fact from issue.” State Security Ins. Co. v. Linton, 67 III. App. 3d 480, 484, 384 N.E.2d 718, 721 (1st Dist. 1979). Therefore, regardless of the fact that BFI may now claim, for the sake of convenience to support its current argument, that its Answer meant something other than what its Answer said, BFI's Answer is a binding judicial admission that it kept the hose “at issue” until it sold the Waukegan facility to Onyx on or about April 1, 2000.
Moreover, BFI obviously knew the failed hose played a large role in Andersen's accident. In its February 17, 2000 letter to Galbreath, in addition to informing Galbreath that it wanted to put its equipment back into service by March 1, 2000, BFI identified the hose as the cause of Andersen's fatality. The subject line of that letter reads: “Hydraulic Hose Routing (Roll-Off).” The body of the letter includes:
The purpose of this letter is to inform you of a serious accident that fatally injured one of our employees while he was operating a Roll-Off vehicle on 1/14/2000.
The employee was delivering a 20-yd. Roll-Off box when a hydraulic line broke. The employee was attempting to shut off the reservoir [sic] tank valve when the hoist came down on him. (See Exhibit 1 to the Complaint).
Thus, since BFI knew the failed hose played a major contributing role in Andersen's accident, the only remaining question is why BFI kept the broken, irreparable hose even after Bailey's inspection and comments, and even after BFI's self-imposed deadline of March 1, 2000.
Bailey testified that at the February 21, 2000 inspection, the truck was segregated from BFI's other equipment. However, he could not conduct a complete inspection because the truck on which the hoist with the broken hose was affixed was parked next to a wall and was difficult to get near. Moreover, due to the truck's position he could not really see the hose. He did not ask BFI to move the truck because it was locked-out by OSHA. Moreover, he could not cycle the hoist. He simply conducted the best inspection he could under these circumstances. BFI has presented no evidence that it did not segregate the equipment. Therefore, the evidence establishes that BFI knew the failure of the hose played a key role in its employee's death, segregated the equipment involved in the accident, wanted to return its equipment to service by March 1, 2000, yet kept the broken hose, even after hearing Bailey's comments, until it sold its facility to Onyx on or about April 1, 2000. The Second District's decision is this case shows that under such circumstances, BFI assumed a duty to preserve the hose.
On the appeal in this case, the Second District indicated that something other than a mere request was necessary to impose a duty to preserve evidence. Andersen, 341 III. App. 3d at 217, 793 N.E.2d at 968. The Court then favorably cited two cases as indicative of the sort of circumstances that give rise to such a duty - Miller v. Gupta, 174 III. 2d 120, 672 N.E.2d 1229 (1996) and Jackson v. Michael Reese Hospital & Medical Center, 294 III. App. 3d 1, 689 N.E.2d 205 (1st Dist. 1997). Andersen, 341 III. App. 3d at 215-17, 793 N.E.2d at 967-68. As discussed below, Miller suggests, and Jackson makes clear, that where, as here, the evidence is segregated by the defendant who knows of potential litigation to which the evidence is important, the defendant will be deemed to have assumed a duty to preserve the evidence.
As the Second District noted in Miller, “the Illinois Supreme Court offered some insight into circumstances that give rise to a duty to preserve evidence.” Andersen, 341 III. App. 3d at 215-216, 793 N.E.2d at 967. In Miller, the Supreme Court gave the plaintiff leave to amend the spoliation of evidence count in her complaint where “the record suggested that the evidence sought had been destroyed after the plaintiff's attorney had requested it from the defendant, and that while it was segregated, as a result of the request, it was inadvertently destroyed.” Andersen, 341 III. App. 3d at 216, 793 N.E.2d at 967. In Jackson, the First District recognized that the defendant's actual segregation of the evidence due to potential litigation gives rise to a duty to take reasonable precautions to preserve it:
[T]here is evidence that the defendant hospital had notice of litigation and took affirmative conduct by segregating the X rays into a special litigation file but failed to safely segregate at a time when the defendant hospital knew the X rays would be needed for litigation. These facts may support a voluntary assumption of a duty to retain the X rays. Under these facts, it could be argued that a reasonable person in defendant's position should have foreseen that the X rays would be evidence material to future litigation. However these facts [were] not pled in the complaint ....
In the instant case, the segregation of the X rays into a special litigation file is analogous [to the facts in Boyd]. Under facts contained in the record but not pled, it could be alleged that the defendant, knowing the X rays were material to future litigation, chose to treat the X rays in a specific manner because of the pending litigation. By such conduct defendant may have voluntarily assumed a duty to preserve the X rays and breached its duty by losing them, not unlike the employees who lost the heater in the Boyd case.
Jackson , 294 III. App. 3d at 11-12, 689 N.E.2d at 212 (emphasis added). Thus, in Jackson, the plaintiff could have satisfied both prongs of the Boyd test by specifically alleging facts to show that the hospital (1) knew that the evidence was material to potential future litigation - the “foreseeability prong;” and (2) chose to segregate the evidence because of the potential litigation - the “relationship prong.” By citing favorably to both Miller and Jackson the Second District indicated that circumstances in which a defendant segregates evidence and knows that the evidence may be important to potential litigation, are sufficient to give rise to a duty to preserve evidence.
This is analogous to what took place in the present case. BFI's February 17, 2000 letter clearly shows that BFI knew the hose played a key role in Andersen's accident. BFI segregated the equipment, including the hose. BFI indicated it wanted to put its equipment back in service by March 1, 2000, but kept the broken hose even after Bailey's inspection and comments, and even after its deadline. Thus, the only reasonable inference is that BFI knew the hose was material evidence to future litigation and chose to treat the hose in a specific manner, i.e., keeping a broken, irreparable hose. Under these circumstances, the only logical conclusion to draw is that BFI voluntarily undertook a duty to preserve the broken hose.
B. BFI Breached Its Duty To Preserve The Hose
BFI's only argument in support of its claim that there is no evidence of BFI's breach of its duty to preserve evidence is that no one from Galbreath followed-up with BFI to ensure that BFI knew that Galbreath desired that the hose be preserved. Once again, BFI ignores the facts. As shown above, BFI admitted that it kept the hose up until the time it sold its Waukegan facility to Onyx on or about April 1, 2000, long after Bailey's comments after his inspection. Thus, BFI's own actions demonstrate that regardless of what Bailey said or did not say, BFI knew it needed to keep the hose, attempted to do so, yet failed.
As noted above, BFI's action of keeping the hose even after Bailey's comments made perfect sense. Christopher Ferrone, the expert hired at BFI's behest by its insurer, AIG, testified. that even he expected to be able to come back and inspect the evidence again. Thus, BFI's action in keeping the hose clearly shows that BFI knew that the hose needed further inspection.
C. BFI's Breach Of Its Duty To Preserve TheHose Proximately Caused Damage To Galbreath
BFI also argues that Galbreath cannot prove that BFI's breach of its duty to preserve the evidence prevented Galbreath from putting on a defense against Andersen or proximately caused injury or damage to Galbreath. BFI misstates Galbreath's burden of proof. In denying BFI's Motion to Dismiss, this Court has already ruled that Galbreath does not have to prove that it was “prevented from putting on a defense against Andersen.” Galbreath simply has to prove its allegations, for if this Court did not believe that Galbreath's allegations stated a cause of action, it would have granted BFI's Motion to Dismiss.
As noted above, in paragraph fifty-one of the Complaint, Galbreath alleges that:
Galbreath's ability to advance meritorious defenses in the Underlying Litigation has been significantly impaired and Galbreath has lost the opportunity to prosecute meritorious third party complaints for contribution, which makes it less likely that Galbreath ultimately can prevail in this case.
Paragraph fifty-two of the Complaint alleges:
[I]n the event that a judgment is rendered against Galbreath and if favor of plaintiff in the Underlying Litigation or in the event that a settlement is entered into between Galbreath and plaintiff, such judgment or settlement, if any, will have proximately resulted from BFI's breach of its duty to preserve evidence.
As shown above, the evidence in this matter proves these allegations. Christopher Ferrone testified that an inspection of the actual failed hose could defeat his “paperclip” theory. Ferrone also admitted that if his assumptions were incorrect, Galbreath may not be responsible for Andersen's accident; however, due to the loss of the hose, Ferrone does not know if anyone will ever be able to prove his assumptions one way or the other. Mike Rogers' affidavit shows that an examination of the actual hose would have provided information regarding the length of the hose, the radius of the bend in the hose, whether the hose was original equipment, and whether the hose itself was faulty. Thus, examination of the hose may have defeated Ferrone's “paperclip theory.” BFI has offered no evidence to the contrary. Therefore, it is beyond dispute that the loss of the hose significantly impaired Galbreath's defenses.
In addition, in paragraphs forty-five and forty-six of the Complaint, Galbreath pled that due to BFI's loss of the hose, Galbreath lost its actions for contribution against potential third party defendants Dana Corporation and Tork Products, Inc., respectively the manufacturer and distributor of hoses installed on Galbreath's hoists, because no expert could opine with a reasonable degree of certainty that the hose was flawed without having the opportunity to test and inspect the hose.
Once again, the evidence supports Galbreath's allegations. As shown above, Christopher Ferrone testified that without the hose, no expert could opine that the hose was flawed. Ferrone's testimony clearly proves Galbreath's allegations that it lost its potential third party complaints for contribution because no expert could opine that the hose was flawed without examining the actual hose. Mr. Ferrone's testimony is buttressed by Mr. Rogers' affidavit. BFI has offered no evidence to the contrary.
BFI has filed two Affirmative Defenses. The first is that Galbreath was guilty of contributory negligence. According to BFI, Galbreath failed to take action to ensure that the evidence was preserved because Galbreath failed to tell BFI that Galbreath wanted the hose to be preserved. Even assuming that this statement is correct, BFI has not cited a single case, and Galbreath has found none, that imposes a duty on one party to inform a second party of the second party's continuing duty to preserve evidence. BFI undertook its duty to preserve the hose and then failed to follow through. BFI can cite to no case law holding that Galbreath was required to keep reminding BFI of its duty to preserve the evidence.
BFI's Second Affirmative Defense is that Galbreath should be estopped from asserting that BFI spoliated the evidence because, according to BFI, the only evidence available establishes that Galbreath told BFI it had no further use for the evidence and Galbreath did not follow-up with BFI to secure the evidence in a timely manner. Once again, BFI ignores the fact that it kept the hose until, at least, April 1, 2000, despite anything Dann Bailey or Galbreath did or failed to do. Thus, BFI realized on its own, without any input from Galbreath, that it should preserve the hose, undertook that obligation, yet failed to do so competently.
For the reasons stated above, Galbreath, Inc. respectfully requests this Honorable Court to deny BFI's Motion for Summary Judgment, and grant Galbreath's Cross Motion for Summary Judgment.