Court Opinion

ID: 4585005
Source: CourtListenerOpinion
Date Created: 2020-11-09 19:00:30.329779+00
Date Added: 2024-06-11T13:46:50.052385
License: Public Domain

Case: 19-31030     Document: 00515629986          Page: 1    Date Filed: 11/06/2020

              United States Court of Appeals
                   for the Fifth Circuit                             United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                   No. 19-31030                     November 6, 2020
                                                                       Lyle W. Cayce
                                                                            Clerk
   Coastal Bridge Company, L.L.C.,

                                                            Plaintiff—Appellant,

                                       versus

   Heatec, Incorporated,

                                                            Defendant—Appellee.

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                            USDC No. 6:18-CV-422

   Before Graves, Costa, and Engelhardt, Circuit Judges.
   Per Curiam:*
          Coastal Bridge Company, L.L.C. (“Coastal Bridge”) appeals the
   dismissal of its negligence action brought against Heatec, Inc. (“Heatec”).
   Concluding that the district court improperly granted sanctions for spoliation
   of evidence against Coastal Bridge and overlooked genuine issues of material

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
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                                    No. 19-31030

   fact in entering summary judgment for Heatec, we reverse and remand for
   further proceedings.
                                         I.
          A fire involving an industrial Heatec heater occurred at Coastal
   Bridge’s asphalt plant. The morning of the fire, a power surge knocked the
   heater offline. Coastal Bridge reset the breaker and replaced two blown fuses.
   While attempting to restart the heater, Coastal Bridge received a low media
   differential pressure reading on the control panel indicating that thermal oil
   was not flowing properly.
          In response to the alarm, Coastal Bridge’s foreman and heater
   operator, Nathan Brossett (“Brossett”), called Heatec’s customer service
   department for help troubleshooting the problem. The fire started while
   Brossett was on the phone with Larry Weldon (“Weldon”), a Heatec service
   technician. During the course of the telephone conversation, Weldon made
   certain inquiries concerning the nature of the problems that Coastal Bridge
   was having with the heater. Brossett related to Weldon what had occurred
   that morning, including the power surge. Weldon instructed Brossett to
   operate one of the heater’s purge valves, and while Brossett was on the phone
   with Weldon and operating the valve as instructed, a fire started that engulfed
   the heater and surrounding area. Brossett and three co-workers saw the fire
   originate, but were unharmed.
          After the fire, Coastal Bridge conducted a preliminary inspection of
   the area where the fire occurred to obtain background information for
   insurance adjustment purposes. That same day, Coastal Bridge’s risk
   manager and safety director recorded audio statements from the four
   employees present at the scene where the fire occurred.
          Two days after the fire, Coastal Bridge’s expert witness, engineer
   Andrew Lynch (“Lynch”), arrived at the plant to investigate the fire,

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   examine the scene, and interview the employees. The fire shut down the
   entire plant, and in an effort to mitigate damages, Coastal Bridge ordered a
   temporary heater. Lynch recommended that the entire heater skid be
   removed from the plant’s piping system and set aside for a subsequent joint
   inspection with Heatec. The damaged heater was moved until the joint
   inspection with Heatec.
          Heatec had immediate notice of the fire while on the phone with
   Coastal Bridge, and was given formal notice of the fire one month later. After
   receiving the formal notice, Heatec’s counsel called to discuss the fire and
   make arrangements for the joint inspection to occur three weeks later.
   Counsel for Heatec, Heatec’s cause-of-origin expert, and other
   representatives attended the joint inspection at the plant. They tested,
   photographed, and inspected the heater.
          Coastal Bridge filed a negligence case against Heatec seeking recovery
   of damages related to the fire in March 2018, alleging that the Heatec service
   technician’s troubleshooting advice caused the fire. After completion of
   discovery, Heatec filed a Daubert motion to exclude Lynch (Coastal Bridge’s
   expert), a motion for summary judgment, and a motion for sanctions for
   spoliation of evidence.
          The district court held a hearing on the motions and issued an oral
   ruling deciding all three motions from the bench. The court dismissed all of
   Coastal Bridge’s claims with prejudice. In doing so, it granted Heatec’s
   summary-judgment motion and its motion for sanctions for spoliation of
   evidence, and it granted in part Heatec’s motion to exclude Coastal Bridge’s
   expert. 1 The next day, the court entered a two-page final judgment giving
   limited insight into its findings. Coastal Bridge timely filed an appeal, arguing

          1
              Coastal Bridge does not challenge the Daubert motion on appeal.

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   that the district court erred by ignoring genuine issues of material fact in
   Heatec’s motion for summary judgment and erred in granting Heatec’s
   motion for sanctions for spoliation of evidence.
                                         II.
          In its motion for summary judgment, Heatec argues it is entitled to
   summary judgment for two main reasons: First, that Coastal Bridge was the
   improper party to bring suit, and that the “real party in interest” is the
   insurance company. And second, that Coastal Bridge cannot establish the
   essential elements of its negligence claim. The district court granted
   summary judgment because it found: (1) Coastal Bridge spoliated evidence
   by delaying notification of Heatec of the fire, which deprived Heatec of an
   opportunity to inspect the scene and the heater and, thus, of an opportunity
   to present a defense; (2) Coastal Bridge failed to carry its burden of showing
   causation because it didn’t eliminate other potential causes; and (3) the
   Heatec service tech acted within the scope of his duty — i.e., he had a duty
   of reasonable care and satisfied that duty because causing a fire was not
   reasonably foreseeable to him.
          On appeal, Coastal Bridge argues that the district court ignored
   evidence in the record that directly contradicts its basis for granting the
   motion for summary judgment. Specifically, the district court ignored
   disputed issues of material facts involving: (1) whether the pipes moved
   during the phone call with the technician and where the fire escaped; (2)
   whether Coastal Bridge spoliated evidence; (3) whether Coastal Bridge could
   prove fire causation; and (4) whether Heatec breached its duty of reasonable
   care in troubleshooting the heater.
          In response, Heatec argues the district court’s decision should be
   affirmed. Heatec notes that Coastal Bridge leaves the Daubert decision
   untouched. Heatec acknowledges that the Daubert ruling eliminated Lynch
   as an expert on “servicing of heaters,” but fails to acknowledge that the court

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   upheld him as an expert “regarding fire cause and origin within the heater
   system itself.” This distinction is significant. Further, Heatec argues that
   because the heater’s pumps were replaced prior to the inspection, it was
   prejudiced and “deprived of the opportunity to even examine the very parts
   of the heater Coastal Bridge claims played a role in the fire.”
           We review the motion for summary judgment de novo, and we apply
   the same standard as the district court, viewing the evidence in the light most
   favorable to the nonmovant. First Am. Title Ins. Co. v. Continental Cas. Co.,
   709 F.3d 1170, 1173 (5th Cir. 2013). Summary judgment is appropriate where
   “there is no genuine dispute as to any material fact and the movant is entitled
   to judgment as a matter of law.” FED. R. CIV. P. 56(a). Courts do not disfavor
   summary judgment, but, rather, look upon it as an important process through
   which parties can obtain a “just, speedy and inexpensive determination of
   every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary
   judgment is properly entered when the “depositions, documents, affidavits
   or declarations, stipulations, admissions, interrogatory answers, or other
   materials” show that there is no genuine issue as to any material fact and that
   the movant is entitled to a judgment as a matter of law. FED. R. CIV. P.
   56(c)(1)(A); see also Celotex, 477 U.S. at 322.
                                                 A.
           Heatec argues that Coastal Bridge cannot establish the essential
   elements of its negligence claim. 2 Pursuant to Louisiana Civil Code article

           2
             Heatec also asserted in its summary judgment motion that because Coastal Bridge
   has been compensated by its insurance company, its negligence claim should be dismissed
   as an improper party to the suit. This issue was not addressed by the district court, nor has
   it been raised on appeal. Coastal Bridge presented evidence that it had not been fully
   compensated in the form of a sworn statement in proof of loss. An insurer who pays a part
   of the loss is only partially subrogated to the rights of the insured. See United States v. Aetna
   Casualty & Surety Co., 338 U.S. 366, 381 (1949). When an insurer has paid part of the loss
   and is only partly subrogated to the rights of the insured, the respective rights of the parties

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   2315, “[e]very act whatever of man that causes damage to another obliges
   him by whose fault it happened to repair it.” To prove negligence under
   Louisiana law, a plaintiff must show: (1) the defendant had a duty to conform
   his conduct to a specific standard; (2) the defendant’s conduct failed to
   conform to the appropriate standard; (3) the defendant’s substandard
   conduct was a cause in fact of the plaintiff’s injuries; (4) the defendant’s
   substandard conduct was a legal cause of the plaintiff’s injuries; and (5)
   actual damages. Lemann v. Essen Lange Daiquiris, Inc., 2005–1095 (La.
   3/10/06); 923 So.2d 627.
           Literally interpreted, a tortfeasor may be held liable under Article 2315
   for any damage remotely caused by his or her fault. Severn Place Assocs. v. Am.
   Bldg. Servs., Inc., 05-859 (La. App. 5 Cir. 4/11/06); 930 So.2d 125, 127.
   However, “[a]s a matter of policy, the courts, under the scope of duty
   element of the duty-risk analysis, have established limitations on the extent
   of damages for which a tortfeasor is liable.” Id. (citations omitted).
           Under Louisiana law, determining the scope of a duty is “ultimately a
   question of policy as to whether the particular risk falls within the scope of
   the duty.” Roberts v. Benoit, 605 So.2d 1032, 1044 (La. 1991). There “must
   be an ‘ease of association’ between the rule of conduct, the risk of injury, and
   the loss sought to be recovered.” Severn, 930 So.2d at 127 (citation omitted).
   That inquiry typically requires consideration of the facts of each case;

   parallel those when there has been a partial assignment. Greenhill Petroleum Corp. v. Mike
   Hicks Tools & Serv., Inc., No. CIV. A. 92-3938, 1994 WL 495797, at *2 (E.D. La. Sept. 6,
   1994). Either the insured or the insurer may sue. Id. An insurance company, as a partial
   subrogee, need not be joined in an action by the insured, even if the alleged tortfeasor
   requests joinder. Dudley v. Smith, 504 F.2d 979, 983 (5th Cir. 1974). Moreover, Coastal
   Bridge expressly consented to and authorized XL Specialty to sue in its name pursuant to
   a Subrogation Receipt. As a result, though not argued on appeal, we find this argument is
   without merit.

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   therefore, “[a]lthough duty is a question of law, Louisiana courts do not grant
   summary judgment on the issue of duty where factual disputes exist or where
   credibility determinations are required.” Bass v. Superior Energy Servs., Inc.,
   No. 13-5175, 2015 WL 460378, at *10 (E.D. La. Feb. 3, 2015) (citing Parish v.
   L.M. Daigle Oil Co., Inc., 98-1716 (La. App. 3 Cir. 6/23/99); 742 So.2d 18,
   10–11 (Summary judgment is proper only where no duty exists as a matter of
   law and no factual or credibility disputes exist); Coates v. Nettles, 563 So. 2d
   1257, 1259 (La. App. 1st Cir. 1990) (Where there is no factual dispute which
   exists and no credibility determination required, the question of the existence
   of a duty is a legal question within the province of the trial judge).
          It is not the court’s function on a motion for summary judgment to
   resolve any genuine issue of material fact or make determinations as to the
   credibility of witnesses, but instead the court must consider the facts
   presented and resolve all doubts in the light most favorable to the non-moving
   party. See Williams v. Shell Oil Company, 677 F.2d 506, 509 (5th Cir. 1982).
   The court has no duty to try or decide factual issues; its only duty is to
   determine whether or not there is an issue of fact to be tried. Chappell v.
   Goltsman, 186 F.2d 215 (5th Cir. 1950). In passing on such a motion, the court
   should not assess the probative value of any of the evidence. Gross v. Southern
   Railroad Co., 414 F.2d 292, (5th Cir. 1968). If there is a genuine issue of
   material fact which would cause a dispute to reasonably be resolved in favor
   of the party resisting the summary judgment, the summary judgment cannot
   stand. National Hygienics, Inc. v. Southern Farm Bureau Life Insurance
   Company, 707 F.2d 183, 186 (5th Cir. 1983). Because this case presents
   multiple genuine issues of material fact, summary judgment was
   improvidently granted.
                                          B.
          Coastal Bridge’s claim for negligence against Heatec stems from the
   phone call between Brossett and Weldon, when Coastal Bridge called

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   Heatec’s customer service department for help troubleshooting a
   problematic heater after the power went out and the two fuses in the control
   panel blew. During the course of that telephone conversation, Weldon made
   certain inquiries concerning the nature of the problems that Coastal Bridge
   was having with the heater. Coastal Bridge alleges that the fire occurred
   because the issue was misdiagnosed by Weldon, after he negligently failed to
   inquire further about electrical issues after the power outage. Heatec asserts
   that Coastal Bridge cannot show that Weldon breached any duty, nor can it
   show that the alleged breach caused the fire.
          Under a Louisiana law negligence cause of action, the breach and
   causation elements require factual determinations. Cornelius v. Wal-Mart
   Stores, Inc., 2000-121 (La. App. 3 Cir. 10/25/00), 772 So.2d 816, 819
   (Whether negligence defendant has breached a duty is a question of fact);
   Montgomery v. State Farm Fire & Cas. Co., 2012-320 (La. App. 3 Cir.
   11/14/12), 103 So.3d 1222, 1227 (Causation is a question of fact).
          The first element has been satisfied. It is undisputed that Heatec’s
   service technician owed Coastal Bridge a duty to exercise reasonable care in
   instructing Brossett over the phone. Coastal Bridge argues Weldon owed a
   heightened duty of care because of the risk of serious injury to Coastal Bridge
   employees and property from improper instructions concerning the
   industrial heater. Although expert testimony may be helpful in determining
   whether special circumstances justify imposing a heightened duty of care on
   Weldon, the court ultimately bears responsibility for deciding whether such
   a duty exists. We do not find a heightened duty of care owed here.
          Next, we examine whether Weldon’s conduct failed to conform to the
   appropriate standard imposed, breaching his duty of reasonable care owed to
   Coastal Bridge. What constitutes reasonable care depends on the degree of
   the likelihood and seriousness of injury compared to the cost of prevention.

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   Brooks v. Henson Fashion Floors, Inc., 26,378 (La. App. 2 Cir. 12/7/94), 647
   So.2d 440, 443. Heatec asserts that Weldon exercised reasonable care in his
   instructions to Brossett. 3 Coastal Bridge argues that Heatec breached its duty
   of care by not properly assessing the status of the heater’s electrical safety
   systems and burner prior to giving instructions to change the heater’s valve
   configuration, despite being told that there was a power surge at the plant
   earlier that morning.
           On March 28, 2017, nearly two years after the fire, Brossett and
   Weldon testified to the circumstances leading up to the fire. When Brossett
   called Weldon, he relayed what had happened that morning involving the
   power surge, that the heater showed no differential pressure, and that the
   heater was, at that point, in purge mode. According to Weldon, the phone
   call lasted five to ten minutes. After the alarm message indicated low media
   differential pressure, the testimony materially differs as to what instructions
   were given by Weldon to Brossett.
           Brossett testified that he was told to “open the valve…and flood the
   pump with oil.” Weldon testified he asked Brossett the standard questions
   and gave him instructions to “throttle down” on the return valve going back
   to the expansion tank. Heatec’s corporate representative also testified,
   stating that “[Heatec’s] had issues with power surges…and they’ll mess up
   the electrical.” Heatec was aware that power surges at asphalt plants could
   damage a heater’s electrical components, including pressure switches.

           3
             Heatec asserts that Coastal Bridge personnel did not fault Heatec for the fire, and
   in support of this assertion, Heatec cites various deposition excerpts, only one of which can
   substantiate this claim. Brossett stated he didn’t “know what happened,” after being asked
   if he could pinpoint anything that Heatec did to cause the fire. Daniel Leger testified that
   he didn’t know of anyone blaming Heatec for the fire. Jeremy Lacombe stated “I do not
   know” when asked if he knew any facts or information that would suggest that Heatec was
   responsible for the fire.

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   Further, Weldon testified that had he diagnosed the problem as electrical,
   “he would have asked a bunch of questions.” But according to Coastal
   Bridge, Weldon disregarded any potential electrical issues with the heater
   that may have resulted from the earlier power surge, and instead focused
   exclusively on the low media differential pressure reading.
           The evidence here includes conflicting testimony, resolution of which
   requires the evaluation of credibility. In evaluating credibility when
   confronted with conflicting testimony, the trier of fact is free to accept or
   reject, in whole or in part, the testimony of any witness. We find this
   conflicting testimony adequate to raise issues of fact regarding whether
   Weldon had breached the duty of reasonable care and the possible negligence
   in his instructions during the call.
           Turning to the issue of causation, in the context of fire cases, origin
   and cause may be proven by direct and circumstantial evidence. Westridge v.
   Poydras Properties, 598 So.2d 586, 590 (La. App. 4th Cir. 1992). Plaintiffs need
   not negate all other possible causes. Id. Proof that excludes other reasonable
   hypothesis of cause with a fair amount of certainty so that it is more probable
   than not that the fire was caused in a particular manner or scenario is enough
   to establish liability. Id.
           In its motion, Heatec argues that Coastal Bridge cannot show how
   Weldon’s instructions caused the fire and the only explanation for the fire
   comes from Coastal Bridge’s expert, Lynch. Heatec cites the deposition of
   Todd Schexnayder – Coastal Bridge’s Health, Safety, and Environmental
   Director – to support the assertion that Lynch was unable to determine the
   fire’s cause. This assertion is not supported by the cited deposition excerpts,
   nor is it supported by the record. Lynch did make a finding as to the fire’s
   origins. In his report, Lynch prepared an analysis for the origins of the fire
   and determined the electrical system was not functioning properly and that

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   the fire originated near the coil inlet valve No. 4 on the Heatec heater.
   Further, the district court held in its Daubert ruling that Lynch was “qualified
   to offer opinions regarding fire cause and origin within the heater system
   itself.”
          The next issue still in dispute is the relevance of the heating pumps.
   According to Heatec, “[the pumps] are critical because prior incidents
   involving heaters have indicated that poor pump maintenance can be a cause
   of a heater fire.” Coastal Bridge argues that because Heatec had not asked to
   see the pumps at the joint inspection, no search was conducted to locate
   them. Coastal Bridge further asserts that Heatec has not articulated any
   reason for the pumps’ relevance, nor did Heatec demonstrate a nexus
   between the electric pump and the fire’s origins (on opposite ends of the
   piece of equipment). This topic was revisited during oral argument, and
   Heatec’s counsel conceded that while Heatec representatives reviewed the
   evidence available at the joint inspection, they did not specifically ask to
   inspect the pumps, and it is unclear whether or not the pumps were present
   at the joint inspection.
          A factual dispute also remains to the disassembly or disposal of
   equipment. During oral argument, Heatec argued that the heater had been
   taken apart before the inspection and parts had been discarded. Coastal
   Bridge’s response, citing the testimony of its expert witness, was that Lynch
   opened an end cap to photograph the interior of the heater, reinstalled the
   end cap, and performed a visual inspection of the burner.
          Next, the parties disagree as to the origin of the fire or whether the
   inlet pipe moved. Heatec argues that Coastal Bridge could not demonstrate
   its version of the events. Four eyewitness reports from Coastal Bridge
   employees state that the fire started at coil inlet valve No. 4 and chamber inlet
   piping, and Lynch corroborated the eyewitness accounts with burn patterns

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   in that area. Heatec asserts that “there’s no evidence that the inlet pipe
   moved at all” and that the heater's inlet pipe is bolted in place from the inside
   of the farm tank. But Coastal Bridge cites to the directly contrary eyewitness
   testimony of Brossett, who Coastal Bridge asserts saw the inlet pipe moving
   in and out of the burner chamber at the time that he was following the
   instructions of Heatec to operate the No. 2 purge valve.
           Lastly, during oral argument, Heatec stated that it had no
   communication about the fire with representatives from Coastal Bridge until
   it received the formal notice, apart from a request for a replacement heater.
   Coastal Bridge disagreed, and challenged this assertion during its oral
   argument rebuttal with information that more communication had occurred.
   Specifically, Coastal Bridge’s insurance adjuster was in communication with
   the insurance adjuster for Heatec to discuss a joint inspection and circulate
   protocol for such an inspection. Further, Weldon testified that he called
   Brossett back after the fire, had Brossett text him a photo of the fire, and that
   Heatec would have a salesman sent out to the plant.
           Clearly, genuine issues of material fact exist as to: (1) the significance
   of the heating pumps; (2) what equipment was disassembled and disposed of;
   (3) the origin of the subject fire and whether the inlet pipe moved; and (4)
   the extent of communication 4 that occurred between the parties before the
   formal notice of the fire. These factual issues cannot be resolved without
   weighing the evidence and making credibility determinations, which are
   matters for the factfinder. The error here is structural, in that the jury, not
   the court, should have determined the issue of liability, contingent as it is
   upon resolution of the conflicting testimony and credibility determinations.

           4
              The issue of communication after the fire is relevant to the court’s consideration
   of spoliation, a plank upon which the district court rested its grant of summary judgment.

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   In view of these unresolved issues of material fact, the trial court erred in
   granting summary judgment in favor of Heatec.
                                         III.
          The next issue before the court is spoliation of evidence. The district
   court found spoliation as a factor in granting the motion for summary
   judgment, and granted the defense motion for sanctions based on spoliation.
   We review the spoliation as the basis for granting the motion for summary
   judgment de novo, but a trial court’s decision on a motion for sanctions for
   spoliation is reviewed for abuse of discretion. See Guzman v. Jones, 804 F.3d
   707 (5th Cir. 2015). This court permits an adverse inference against the
   spoliator or sanctions against the spoliator only upon a showing of “bad
   faith” or “bad conduct.” Condrey v. SunTrust Bank of Georgia, 431 F.3d 191,
   203 (5th Cir. 2005).
                                          A.
          Although Heatec separately filed a motion for sanctions for spoliation
   of evidence, the district court addressed the issue of spoliation within the
   context of its reasons for granting summary judgment. Coastal Bridge argues
   that the law and evidence do not support an award of sanctions because the
   district court erred in finding bad faith on the part of Coastal Bridge, and that
   Heatec did not establish that the allegedly spoliated evidence is relevant to
   its defenses nor that it has been prejudiced. Coastal Bridge disputes that the
   missing pumps were material, citing that Heatec allegedly didn’t complain
   about the absence when it performed its inspection. Coastal Bridge argues
   Heatec failed to follow the suggested due diligence of its own expert “to
   investigate the cause and origin of the fire and did not request the opportunity
   to conduct additional testing.”
          Further, Coastal Bridge argues that “Heatec fails to cite any legal
   authority to support its argument that Coastal Bridge was obligated to leave

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   the fire scene untouched and incur business interruption losses instead of
   mitigating its damages pending the joint inspection of the damaged Heater.”
   Heatec’s argument is contrary to the duty imposed upon a damaged property
   owner to mitigate its damages or otherwise risk recovery from its
   underwriters or against a liable party. Affirmation of the district court’s final
   judgment, Coastal Bridge argues, would have far-reaching consequences
   relative to how a damaged property owner responds to causalities and how
   initial recovery and mitigation efforts are treated by the district courts.
          In response, Heatec argues the district court did not abuse its
   discretion by granting sanctions for spoliation of evidence against Coastal
   Bridge because the surrounding circumstances manifest bad faith, and
   Heatec has been prejudiced by the destruction of evidence. It asserts that the
   delay in getting the formal notice of the fire and being able to inspect the
   scene prejudiced its defenses.
                                          B.
          The spoliation of evidence doctrine governs the intentional
   destruction of evidence. Menges v. Cliffs Drilling Co., No. CIV. A. 99-2159,
   2000 WL 765082, at *1 (E.D. La. June 12, 2000) (citing Vodusek v. Bayliner
   Marine Corp., 71 F.3d 148, 156 (4th Cir. 1995); Schmid v. Milwaukee Elec. Tool
   Corp., 13 F.3d 76, 78 (3d Cir. 1994)). If a party intentionally destroys evidence,
   the trial court may exercise its discretion to impose sanctions on the
   responsible party. Id. (emphasis added). The seriousness of the sanctions that
   a court may impose depends on the consideration of:
          (1) the degree of fault of the party who altered or destroyed the
          evidence; (2) the degree of prejudice suffered by the opposing
          party; and (3) whether there is a lesser sanction that will avoid
          substantial unfairness to the opposing party and, where the
          offending party is seriously at fault, will serve to deter such

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          conduct by others in the future. Id. (quoting Schmid, 13 F.3d 76,
          78 (3d Cir. 1994)).

          Here, finding spoliation of evidence, the district court noted that the
   defendant was not formally notified of the fire or given an opportunity to
   inspect the heater until a month after the fire. Coastal Bridge argues Heatec
   was made immediately aware of the fire, as its technician was on the phone
   with the Coastal Bridge employee when the fire occurred at the plant. This
   was further supported by Weldon’s testimony that he called Brossett back
   after the fire, had Brossett text him a photo of the fire, and indicated that
   Heatec would have a salesman sent out to the plant.
          Allegations of spoliation, including the destruction of evidence in
   pending or reasonably foreseeable litigation, are addressed in federal courts
   through the inherent power to regulate the litigation process, if the conduct
   occurs before a case is filed or if, for another reason, there is no statute or rule
   that adequately addresses the conduct. See Chambers v. NASCO, Inc., 501
   U.S. 32, 43–46 (1991). When evaluating allegations regarding spoliation of
   evidence, federal courts sitting in diversity are to apply federal evidentiary
   rules rather than state spoliation laws. Condrey, 431 F.3d at 203. A plaintiff
   alleging spoliation must establish that the defendant intentionally destroyed
   the evidence for the purpose of depriving opposing parties of its use. Catoire
   v. Caprock Telecommunications Corp., No. 01–3577, 2002 WL 31729484, at *1
   (E.D. La. Dec. 2, 2002) (emphasis added). It is insufficient to show that a
   party acted negligently, rather than intentionally, in spoliating the evidence.
   Id; see also Garnett v. Pugh, No. CIV. A. 14-479, 2015 WL 1245672, at *4 (E.D.
   La. Mar. 18, 2015).
          A spoliation claim has three elements: (1) the spoliating party must
   have controlled the evidence and been under an obligation to preserve it at
   the time of destruction; (2) the evidence must have been intentionally

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   destroyed; and (3) the moving party must show that the spoliating party acted
   in bad faith. Port of S. La. v. Tri-Parish Indus., 927 F. Supp. 2d 332, 346 (E.D.
   La. 2013); see also Herster v. Bd. of Supervisors of Louisiana State Univ., 887
   F.3d 177, 190 (5th Cir. 2018).
            A party seeking the sanction of an adverse-inference instruction based
   on spoliation of evidence must establish that: (1) the party with control over
   the evidence had an obligation to preserve it at the time it was destroyed; (2)
   the evidence was destroyed with a culpable state of mind; and (3) the
   destroyed evidence was ‘relevant’ to the party’s claim or defense such that a
   reasonable trier of fact could find that it would support that claim or defense.
   Rimkus Consulting Group, Inc. v. Cammarata, 688 F. Supp. 2d 598 (5th Cir.
   2010).
            During the hearing, the court noted that the defendant was not given
   an opportunity to inspect the fire scene immediately, and discussed the
   heater being moved. The heater remained outdoors after it was moved. The
   court stated it believed “the circumstances in this case indicated bad faith . .
   . there was a greater obligation of Coastal Bridge . . . when they are going to
   assert a claim for damages.” During oral argument, Heatec emphasized that
   Coastal Bridge chose “the course of destruction and disposal.” We disagree.
            The first factor is whether Coastal Bridge had an obligation to
   preserve the damaged equipment in anticipation of litigation. Identifying the
   trigger for when a party should have reasonably anticipated litigation is
   challenging, as it varies based on the facts and circumstances. In re Enron
   Corp. Sec., Derivative & Erisa Litig., 762 F. Supp. 2d 942 (S.D. Tex. 2010).
   Because Coastal Bridge reasonably should have anticipated litigation over the
   fire damage, it had a duty to preserve the equipment. Accordingly, the
   spoliation inquiry proceeds to the remaining two factors.

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          The second factor is whether Coastal Bridge acted with a culpable
   state of mind. The potential levels of culpability range from no culpability to
   bad faith, with intervening levels including negligence, gross negligence, and
   willfulness. Negligence is not enough to support the imposition of sanctions
   for spoliation, “for it does not sustain an inference of consciousness of a weak
   case.” Vick v. Texas Employment Comm’n, 514 F.2d 734, 737 (5th Cir. 1975);
   Turner v. Pub. Serv. Co. of Colo., 563 F.3d 1136, 1149 (10th Cir. 2009) (“Mere
   negligence in losing or destroying records is not enough because it does not
   support an inference of consciousness of a weak case.”); Greyhound Lines,
   Inc. v. Wade, 485 F.3d 1032, 1035 (8th Cir. 2007) (Granting a spoliation-of-
   evidence sanction requires a finding of intentional destruction indicating a
   desire to suppress the truth). Accordingly, a party seeking sanctions is not
   entitled to an adverse inference instruction unless that party can show that
   its adversary intentionally and in bad faith disposed of the evidence.
          The highest level of culpability, bad faith, is inapplicable here. Bad
   faith requires destruction for the purpose of depriving the adversary of the
   evidence. See Condrey, 431 F.3d at 203. The record indicates no such
   culpability, and the district court gives no explanation to substantiate this
   determination against Coastal Bridge. Adherence to normal operating
   procedures may counter a contention of bad faith. Here, an outdoor piece of
   industrial equipment was stored outdoors. The record does not support the
   finding that Coastal Bridge acted with a culpable state of mind.
          The third and final factor in the spoliation analysis is the relevance of
   the spoliated evidence. It is undeniable that the damaged heater is relevant
   evidence for the claims in this case, but a question remains as to the relevance
   of the heater’s missing pumps. A party suffers prejudice where it cannot
   present “evidence essential to its underlying claim.” Victor Stanley, Inc. v.
   Creative Pipe, Inc., 269 F.R.D. 497, 532 (D. Md. 2010) (internal citation
   omitted). Heatec did not specifically request to examine the pumps at the

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   joint inspection. As such, the pumps are of questionable relevance for the
   purposes of its underlying claim that poor pump maintenance can be a cause
   of a heater fire.
          Dismissal of this case and sanctions overcorrect for the damage caused
   by the spoliation of evidence in this matter. Dismissal is justified “only in
   circumstances of bad faith or other like action.” Silvestri v. Gen. Motors Corp.,
   271 F.3d 583, 593 (4th Cir. 2001). The record does not support a finding of
   bad faith. For these reasons, we find that the trial court abused its discretion
   by granting sanctions for spoliation.
                                   IV. Conclusion
          For the foregoing reasons, the judgment is REVERSED and
   REMANDED for further proceedings.

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