SIU Today Spring 2018 - 35

Insured Took No Steps to Preserve
the Evidence Existing on His Phone
The court next sought to determine if there had been intentional
suppression or withholding of evidence by Mr. Brown. In that
regard, the court noted that he had submitted a signed affidavit
swearing that he "lost" the phone in October 2016 and "did not
intentionally dispose of it."
The Court finds, however, that Mr. Brown's undetailed account of
losing his phone is not credible and that, rather than innocently
losing his phone, Mr. Brown made a deliberate choice to withhold
it from production. In making that finding, we note that Mr.
Brown and his attorney did not notify Lloyds of the loss of
relevant evidence that he had a known duty to preserve until
hours before the requested time of production, even though its
loss had supposedly been known for at least four months.

Mr. Brown has offered zero explanation as to how he came to
lose his phone. He has also offered no indication that he took
even rudimentary steps to preserve the evidence that existed on
his phone, as was his obligation, or to take any measures to find
the phone after it was somehow lost.
Therefore, the Court found that Lloyds was prejudiced by Mr.
Brown's spoliation of evidence because they have not and will
not have any opportunity to determine whether information on
his cell phone would have aided in their defense of his claim or
in their own insurance fraud counterclaim. The court further
found that Lloyds has satisfied its burden of showing that Mr.
Brown has purposely suppressed or withheld relevant evidence.
The court next considered what sanction, if any, was appropriate.
Lloyds argued that the appropriate sanctions must be a dismissal
of the case. However, the court declined to impose the drastic
sanction of dismissal and decided that an adverse jury instruction
would be sufficient to cure the prejudice to Lloyds.
Accordingly, the court instructed the members of the jury that
they could infer that if Lloyds had been permitted to inspect Mr.
Brown's cell phone, any evidence would have been unfavorable
to Mr. Brown. The court further ordered for Plaintiff to pay fees
associated with the discovery and motion practice concerning
the "lost" cell phone.

Conclusion
It is very important to note at this point that the requirement to
preserve evidence is a "two way street." Thus, insurers also have a
burden to maintain evidence that could be material and relevant,
particularly, evidence that might serve to free a policyholder from
the inference of fraud.
That said, it would be worthwhile for insurers and their attorneys,
at the outset of a fraud investigation, to routinely demand for
insureds to preserve evidence such as surveillance videos,
computers, cell phones, security systems etc. An early demand,
as in this case, may later pay benefits.
Rick Hammond is a Partner in the Chicago office of the law firm of HeplerBroom,
LLC and he serves as national counsel on matters relating to property insurance
coverage, fire and explosion cases and bad faith. He also serves as an expert witness
on insurance law and bad faith, and as an adjunct Professor on Insurance Law
at the Loyola University Law School in Chicago. He is also a member of Loyola
University's Board of Trustees. Mr. Hammond formerly served as Assistant
Deputy Director at the Illinois Department of Insurance's Chicago office,
and he is Past-President of the Illinois Association of Defense Trial Counsel,
a member of the Federation of Defense and Corporate Counsel, and a former
Illinois State Representative of DRI. Mr. Hammond was one of two attorneys
in the country previously selected by the Lexis Nexis Insurance Law Center to
receive its "Insurance Lawyer of the Year Award," and he was recently inducted
into the American College of Coverage and Extra-Contractual Counsel, an
organization that is composed of preeminent coverage and extra-contractual
counsel in the United States and Canada. Questions or comments can be directed
to Mr. Hammond at the law firm of HeplerBroom, LLC, 30 North LaSalle,
Suite 2900, Chicago, Illinois 60602, (312) 205-7743, or at the e-mail address of
rhammond@heplerbroom.com.

SIU TODAY | SPRING 2018 | 35
SIU Today Spring 2018

Table of Contents for the Digital Edition of SIU Today Spring 2018
