Spoliation of Evidence
A car wreck occurred in which someone died. A suit was brought on the decedent’s behalf, against Nissan by Gramacki, the car’s manufacturer, for products liability and against Farmers Insurance, the vehicle’s insurer, for spoliation of evidence due to the car being destroyed sometime after it was brought to the storage yard of LKQ. Farmers filed a third party complaint against LKQ. LKQ filed an insurance claim with Universal Underwriters under their commercial general liability policy, asking Universal to defend against Farmer’s claims. Universal filed an action for declaratory judgment, requesting that the Court declare that it had no duty to defend or indemnify LKQ. The trial court held that there was no duty to indemnify or defend under either the auto inventory or garage policy provisions.
On appeal, the court said that the garage policy provision did not apply and considered the auto inventory provision. LKQ argued that the claim for spoliation of evidence was covered because it sought “damages as a result of *** direct and accidental physical loss or damage *** include[ing] resulting loss of use.” Universal countered that the suit was seeking damages measured by the diminution of value of the products liability claim, which is “intangible” and not covered. The Court held that Universal had a duty to defend because the underlying complaint alleged a “loss” by alleging the destruction and/or discarding of the Nissan automobile and it alleged “loss of use” by alleging that by destroying the vehicle, he lost the ability to use the vehicle in support of his products liability claim. Lastly, the Court held that the damages sought were a result of the loss. The Court reasoned that LKQ points to the destruction of the Nissan and Gramacki’s resulting inability to use the evidence in his lawsuit as the loss, which was sufficient to allege damages, resulting from the loss, because the allegations contained reference physical damage of property supporting the spoliation claim.
Universal Underwriters Ins. Co. v. LKQ Smart Parts, Inc., 2011Il App (1st) 101723, 963 N.E.2d. 930 Ill. App. 1 Dist., 2011
