Opinion ID: 2263407
Heading Depth: 2
Heading Rank: 1

Heading: Sears' Claims on Appeal

Text: On appeal from the jury verdict in favor of the plaintiffs, Sears claims that the Superior Court erred in three respects. First, Sears claims that the trial court erroneously gave a missing evidence adverse inference instruction without preliminarily determining that Sears had intentionally or recklessly destroyed the evidence in question. Second, Sears contends that the Superior Court erroneously admitted into evidence the expert opinion of Dr. Cyril Wecht, who testified that Terry Midcap had experienced pain and suffering before he died. Third, Sears argues that the Superior Court erroneously applied the collateral source rule so as to prevent the defendants from proving Maria Midcap's past and future receipt of payments from her deceased husband's Social Security and United States Air Force pension benefits.
We first address Sears' claim that the Superior Court erroneously gave an adverse inference jury instruction against Sears without finding preliminarily that Sears' conduct merited such an instruction. The question of who installed the Midcaps' range was critical and hotly contested at trial. Maria Midcap testified that she recalled that a Sears truck had delivered the range, which two men wearing Sears uniforms had installed. Carla Midcap, one of Maria Midcap's daughters, testified that she remembered seeing a truck in the driveway with the Sears logo on the side panel. Sears' District Installation Manager, Richard Besler, testified that the Midcaps' stove was a built in range, which Sears' employees would not have been permitted to install because the stove operated with liquid propane gas. To deliver and install that range, Mr. Besler said, Sears would have used an outside contractor that (contrary to the Midcaps' testimony) would not have used a truck bearing a Sears logo on the side panel. Sears produced records showing that the Midcaps had purchased the range in 1995 and had paid Sears a fee to deliver it. Sears could not, however, produce any record of the delivery, which would have taken the form of a load sheet. When called as a witness by the plaintiffs in their case at trial, Sears' Mr. Besler testified that Sears had moved its storage facility, and that the load sheet might have been misplaced in that move or may have been destroyed due to a document retention policy. Sears recalled Mr. Besler as a witness during its case-in-chief. At that point, Mr. Besler testified unequivocally (for the first time) that under Sears' document retention policy, the load sheet would have been destroyed one year after the installation. Then, when cross-examined about his inconsistent explanations, Mr. Besler stated that he was not certain that the document retention policy was in fact in place until he conducted further research following his initial direct testimony. [3] Because of the missing load sheet and the inconsistent explanations given for its absence, the plaintiffs requested, and the Superior Court gave, the following missing document adverse inference instruction to the jury: If a party acknowledges that it should have possession, custody, and control of a document or record that would have been produced and retained by it in the ordinary course of business, but fails to produce such document or record at trial without adequate explanation of the reasons for such nonproduction, then the jury is permitted to infer that had the document or record been produced by the party that should have possession, custody, or control of it, its contents would reveal information adverse to the party that failed to produce the document or record. Plaintiffs contend that Defendant Sears has acknowledged that it should have in its possession, custody or control documents pertaining to the transaction and delivery of the range to the Midcap home. If you should find that the Defendant Sears has not adequately explained the absence of such document or record, then you may infer that if it had been duly produced for trial, it would contain information adverse to Defendant Sears in this case. Sears claims that the trial court erred because it was required to  but did not  make a finding, preliminary to and as a foundation for any instruction, that Sears' conduct was wrongful. That error, Sears argues, is reflected in the instruction itself, which did not require the jury to conclude that Sears had acted intentionally or recklessly in failing to retain the document. This Court reviews de novo the Superior Court's decision to issue a contested jury instruction. [4] Two decisions of this Court support Sears' claim that before issuing a missing evidence adverse inference instruction, a trial court must first determine that a party acted willfully or recklessly in failing to preserve evidence. In Equitable Trust Co. v. Gallagher, [5] we stated that [i]t is the duty of a court, in such a case of wilful destruction of evidence, to adopt a view of the facts as unfavorable to the wrongdoer as the known circumstances will reasonably admit. [6] In Gallagher, we reasoned that an adverse inference is consistent with human nature and common sense: if a party intentionally destroys evidence, it is reasonable to infer that the evidence was not favorable to that party. [7] But, and as Sears points out, that reasoning would not apply where the evidence is destroyed accidentally or where records are purged under a routine document destruction policy. Similarly, in Collins v. Throckmorton, [8] this Court upheld the Superior Court's refusal to issue an adverse inference instruction where there was no evidence that the plaintiff had intentionally destroyed the records in dispute. [9] In Collins we recognized the general rule that an adverse inference is appropriate where a litigant intentionally suppresses or destroys pertinent evidence, but held that absent evidence of intentional conduct, no such inference was warranted. [10] Here, neither the judge's findings, nor the instruction given, applied or even alluded to the intentional or reckless standard. The trial judge made no finding that Sears had acted intentionally or recklessly, nor did the issued instruction require the jury to so find. All that the jury was instructed was that it could draw an adverse inference if Sears had not adequately explained the absence of the record. The standard that the trial court adopted would penalize businesses and individuals simply because they failed to retain documents they were under no legal obligation to preserve. In this case, for example, the explosion occurred four years after Sears sold the range in question. To fault Sears for failing to retain the record of that sale would create an inefficient incentive scheme, whereby all records that might ever become evidence in a legal dispute would have to be perpetually retained, in order to avoid an adverse inference instruction. In our view, the better balance is to continue to embrace an adverse inference standard that requires a showing that a party acted with a mental state indicative of spoliation. By this means, the bad faith destruction of probative evidence will be discouraged without penalizing innocent persons who simply seek to get rid of old files in the ordinary course of business that they have no duty to retain. We note in this connection that the federal courts have also adopted a standard that requires a preliminary determination of wrongful conduct. In Morris v. Union Pac. R.R., [11] the Eighth Circuit found an adverse inference instruction improper where the trial judge determined that the defendant had not intentionally destroyed evidence. [12] The Morris Court held that `there must be a finding of intentional destruction indicating a desire to suppress the truth,' before an adverse inference instruction is justified. [13] Similarly, in Gumbs v. Int'l Harvester, Inc., [14] the Third Circuit held that to merit an adverse inference instruction, the party seeking the instruction must show that there has been an actual suppression or withholding of evidence, and that no adverse inference arises where the evidence is lost or accidentally destroyed or where the failure to produce it is otherwise properly explained. [15] The plaintiffs contend that Delaware law does not require intentional destruction of evidence, and that an adverse inference instruction is permitted even where a litigant suppresses or destroys evidence negligently. The plaintiffs' legal support for that position consists of two Superior Court decisions that permitted adverse inference instructions in cases involving negligent destruction of evidence. Those cases cite no precedent of this Court for their holdings, however. [16] The plaintiffs also rely upon decisions that involved missing evidence instructions in criminal cases. [17] Those decisions are inapposite because a criminal missing evidence instruction is not equivalent to an adverse inference instruction in a civil case. In the criminal context, the court considers, as part of a six-factor balancing test, the degree of negligent or intentional conduct of the State in failing to preserve the evidence. [18] The criminal standard also requires the court to consider other factors, including the importance of the missing evidence, the availability of secondary evidence, and the sufficiency of other evidence presented at trial. [19] In a criminal case, the governmental agency that is accusing the defendant of a crime has a special duty to preserve evidence, because it, by virtue of its investigation of the crime, knows that there will likely be a later proceeding in which the evidence may be relevant to the defendant's efforts to avoid conviction. [20] And, importantly, a missing evidence instruction in a criminal trial rests upon constitutional considerations of due process. As this Court has recognized, even where a defendant is unable to prove that the State acted in bad faith, there may be circumstances where lost evidence is, nonetheless, so critical to the defense as to render a criminal trial fundamentally unfair. [21] Because those constitutional considerations are not present in a civil case, the plaintiffs' reliance on criminal case precedent is not persuasive on the issue before us. The decisions of this Court and of the federal courts require a preliminary finding of intentional or reckless destruction of evidence as a predicate to an adverse inference instruction. The plaintiffs cannot point to any such finding being made in this case. In supplemental briefing, the plaintiffs argue that the trial judge must implicitly have determined that Sears' conduct was intentional or reckless, because the judge understood the law and by issuing the instruction, must be deemed to have concluded that the evidence supported a finding that Sears' conduct was intentional. The flaw is in that argument's premise: it is not clear that the trial judge understood the law. The judge's instructions to the jury reflect a different understanding  that an adverse inference instruction is justified, irrespective of fault, whenever the absence of evidence is not adequately explained. In an earlier case, Burris v. Kay Bee Toy Stores, that same judge held that Delaware law does not require that the spoliation of evidence be intentional for an adverse inference to be drawn. [22] In a close case such as this, where the record does not reflect an explicit finding of intentional or reckless destruction at a time when Sears was under no duty to preserve the record, and where it is unclear that the trial judge understood such a finding to be required, this Court will not assume that a finding was implicitly made. Finally, the issuance of the instruction was not harmless error. As the Eighth Circuit recognized in Morris, an adverse inference instruction creates a substantial danger of unfair prejudice, by labeling one party as a bad actor that intentionally kept evidence from the jury. [23] That instruction was likely to prejudice this close case against Sears. The plaintiffs' closing arguments to the jury, which relied on the missing evidence instruction, underscore that danger of unfair prejudice. Counsel for Allstate told the jury that [y]ou have to question the validity of the documentation produced by Sears and that there are some missing holes in the documentation produced by Sears. Allstate's counsel continued: you are going to be the conscience of the community here ... are you going to tell Sears that it is not okay to produce documents? The Midcaps' counsel went further and argued: Why is Sears now coming around and looking for documents? Why did they purge documents? They knew there was an explosion, they knew there was a potential for loss here, and they are purging documents. [The trial judge] has instructed you about the adverse inference on the missing document. Simply put, if they can't produce a document that they should be able to produce, then you can infer that what is in that document is adverse to them. Among the documents that they can't produce are the delivery papers for the stove, and the receipt signed by Maria. The plaintiffs submit to you the adverse inference that you are permitted to draw is if [ sic ] those papers would show that Sears installed this range. Although recognizing that counsel are permitted a certain flexibility in presenting zealous jury argument, this Court has placed limits on such advocacy. [24] The above-quoted closing arguments exceeded those limits and should not be repeated in the next trial. [25] On remand, even without objection, the trial judge should act sua sponte to control the conduct of the court's officers, if necessary to prevent this type of transgression. [26] Regrettably, the record below contains an even more disturbing illustration of inappropriate advocacy which, although not the subject of any argument on appeal, cannot be ignored. In closing argument, the plaintiffs' counsel stated: You represent the community and its attitude toward safety and what defendant Sears and Southern States and their representatives ought to do with respect to safety. Not only for these plaintiffs, but for the entire community. It is up to you to say whether the conduct of Sears and Southern States under the circumstances here meets with the community's approval. If you stamp their conduct with your approval, it will continue. It will be the standard with which others will be guided. If, on the other hand, you find in favor of the plaintiffs, you will reject this kind of conduct by your verdict. You set the standard in this community. You can set a new and better safety standard. There is no reason for Delaware to be a second class citizen in this regard. Delaware is entitled to the same standard of safety as New York City, Philadelphia, or Pittsburgh. The size of the community makes no difference, nor does the fact that Kent County is largely rural. Delaware shouldn't have to settle for second rate standards. Don't settle for second rate safety. Put Delaware and Kent County standards up there where they belong with the first class citizens. This was an appeal to prejudice that strongly implied factual evidence that Sears and Southern States somehow discriminated against residents of suburban/rural counties like Kent County, Delaware by according them less favorable treatment than residents of more urban areas. The trial court rejected a post-trial motion by Sears to overturn the verdict on the basis of this argument. Without reaching the question of whether this improper argument would have required setting aside the verdict, we disagree with the trial judge's conclusion that Sears was at fault by not interrupting plaintiffs' closing argument to object. It is precisely when such egregious arguments are made that the trial judge should act sua sponte and implement a strong remedial measure. The risk of prejudice resulting from the adverse inference instruction was especially critical here, because this case was close: two of the plaintiffs testified that they recalled seeing Sears deliver and install the range. Sears countered with testimony that under its policy in effect at the time the range was delivered, no Sears employee or contractor would have been allowed to install the range. With the evidence in such equipoise, the adverse inference instruction was all the more likely to tip the balance in favor of the plaintiffs. Given the state of the evidence, and the recognized potential for prejudice that an adverse inference instruction creates, the plaintiffs cannot fairly claim that the erroneous adverse inference instruction was harmless. [27] An adverse inference instruction is appropriate where a litigant intentionally or recklessly destroys evidence, when it knows that the item in question is relevant to a legal dispute or it was otherwise under a legal duty to preserve the item. Before giving such an instruction, a trial judge must, therefore, make a preliminary finding that the evidence shows such intentional or reckless conduct. Absent such a finding, an adverse inference instruction is not justified. Because the trial judge made no specific finding in this case, and because the adverse inference instruction was critical to the plaintiffs' proof of liability, we conclude that the issuance of the instruction was reversible error and that this case must be remanded for a new trial. We next address Sears' other claims of error because of their anticipated importance at the new trial.
Sears' second claim of error challenges the Superior Court's admission into evidence of the expert opinion of Dr. Cyril Wecht, who testified that the decedent, Terry Midcap, had experienced at least 15 seconds of conscious pain and suffering before he died of the injuries he sustained in the gas explosion. Additionally Sears argues that, even if Dr. Wecht's testimony was properly admitted, the jury's award of $500,000 to Mr. Midcap's Estate was excessive. Because this case will be remanded for a new trial, it is unnecessary for us to decide those claims. On retrial, however, the admission of Dr. Wecht's opinion testimony into evidence at the first trial will not constitute the law of the case, and the trial court will be free to consider anew a Daubert [28] motion to preclude that testimony if such a motion is made. Any Daubert hearing in a re-trial should involve a comprehensive exploration of whether the proffered testimony regarding Terry Midcap's consciousness is scientifically reliable and satisfies the Delaware legal standard for pain and suffering. [29]
Sears' final claim of error is that the Superior Court misapplied the collateral source rule by excluding from the jury's consideration, evidence of the payments that Maria Midcap received (and would continue to receive) from her late husband's Social Security and Air Force pension benefits. This Court reviews questions of law, including the application of the collateral source rule, de novo. [30] We conclude that the trial court erred by excluding that evidence. In order to provide guidance to the trial court on remand, we explain why. The plaintiffs' expert, Dr. William R. Latham III, testified that Maria Midcap's damages included the loss of her husband's military pension and his Social Security benefits. The trial court ruled that the collateral source rule applied to those payments, and as a consequence, precluded Sears from showing that those payments, although claimed as actual losses, were not losses since Maria Midcap had in fact received and would continue to receive substantial portions of her husband's benefits from those two sources. Under the collateral source rule, a tortfeasor is not entitled to mitigate damages in the amount of payments or compensation that the injured party receives from a collateral source. [31] The policy underlying that rule is that a tortfeasor has no interest in monies that the injured party receives from an unrelated source, and therefore has no right to benefit from those payments. [32] Generally, courts exclude Social Security and Air Force Pension benefits under the collateral source rule. [33] This case, however, presents a different factual scenario than in cases, such as Davis and Nanticoke, that apply the collateral source rule, because in those cases the plaintiff did not make a claim for lost Social Security or Air Force pension benefits. Rather, those cases involved the traditional application of the collateral source rule. That is not this case. The facts in this case are more analogous to those in Rotolo Chevrolet v. Superior Court, a California case where the plaintiff made a claim for lost pension benefits due to his early retirement. [34] The defendant sought to introduce evidence that the plaintiff had continued to receive his pension benefits. [35] The plaintiff objected under the collateral source rule. [36] Relying primarily on equity and common sense, [37] the court held that [e]ven if [the plaintiff] may recover for the reduction in his pension benefits, he cannot use the collateral source rule to prevent [the defendant] from introducing evidence that he is, in fact, receiving a pension. [38] Similarly, the plaintiffs here cannot use the collateral source rule to prevent the defendant from introducing evidence that the plaintiff was in fact still receiving, at least in part, the decedent's Air Force pension payments or Social Security benefits. That is, the collateral source doctrine should not bar evidence being offered to show that a payment that is represented to the jury as a benefit that the plaintiffs lost as a result of the decedent's injury or death, was in fact not lost, either in whole or in part, and is actually being received. [39] Thus, if at re-trial, the plaintiffs are permitted to blackboard Mr. Midcap's Social Security and Air Force pension payments as lost benefits, the defendants must be permitted to show that those payments actually were or will be received.