What happened to my fire scene?

A call comes in regarding a new large fire loss. Based on the preliminary information from the insured, it sounds like there may be subrogation potential. The adjuster promptly retains a cause and origin investigator to go to the scene. However, the cause and origin investigator shows up only to find that an overzealous restoration or cleaning company has already gutted the scene and ruined any opportunity to determine the cause of the fire.

This is a scenario that many property adjusters may be all too familiar with. I often get calls from clients inquiring whether there is any potential claim against the restoration company under this scenario. Unfortunately, in most instances, there is no recourse against the restoration company. In recent years, a number of jurisdictions have considered the issue of whether there is an independent cause of action against a third party for evidence spoliation. The vast majority of jurisdictions to consider the issue have refused to recognize such a cause of action. Those jurisdictions have taken the position that the only remedy against a spoliating party are the sanctions available against that party in litigation for the underlying claim. This remedy is obviously of no help when the spoliating party is a restoration company who has no potential liability for causing the fire.

Even if the loss occurs in one of the handful of jurisdictions that have recognized an independent cause of action for spoliation, it is still very difficult to maintain such a cause of action. First, you have to establish that the spoliating party was a aware of potential litigation and had a duty to preserve evidence. Most jurisdictions recognizing this cause of action require that the destruction of evidence be intentional and be done for the express purpose of depriving another party of its use and it is not sufficient to show the party negligently disposed of the evidence. In most circumstances, it would be difficult to establish this against a restoration company that cleans up a fire scene.

Even if you can establish that the party has intentionally spoliated evidence, you still need to prove the damage aspect. To prove damages, you need to establish that the spoliation prevented you for proving the underlying claim and that but for the spoliation you would have been able to prevail on the underlying claim. However, if the restoration company cleans up the entire fire scene before you can even investigate, in almost all instances, it would be impossible to prove that but for the clean up, you could have prevailed on a subrogation claim against some other party. As a result, in most cases you will not have any legal recourse against a restoration company who cleans up a fire scene before you can investigate. The situation may be different if there is an express contractual agreement with the restoration company to preserve evidence and they fail to do so.

Given that there is likely no legal recourse against restoration companies for cleaning up a fire scene too soon, carriers need to educate everyone involved in the claims process to try to make sure it does not occur. Carriers should make sure that restoration companies they use frequently are aware that they should not do any cleanup until specifically authorized to do so. More importantly, carriers need to let insureds, agents and public adjusters know as soon as a claim is reported that the scene needs to be preserved for investigation and they are not permitted to let emergency services contactors clean up the scene until the carrier authorizes it.
 

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