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Appellate court upholds ruling against Ace unit in school fire

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Appellate court upholds ruling against Ace unit in school fire

An appellate court has affirmed a lower court ruling against an Ace Group unit in a lawsuit it filed charging Electrolux Home Products Inc. with liability in connection with a school fire, in a case in which exculpatory evidence was allegedly destroyed.

According to Tuesday's ruling by the 3rd U.S. Court of Appeals in Philadelphia in Indemnity Insurance Co. of North America v. Electrolux Home Products Inc., Ace unit Indemnity Insurance Co. of North America, which is based in Philadelphia, had insured the Kennett Square, Pa.-based Unionville-Chadds Ford School District.

After a July 2009 fire at the Unionville-Chadds Ford High School, the school district submitted a claim to Indemnity for about $770,000, according to court papers. Indemnity paid the claim and filed suit against Augusta, Ga.-based Electrolux to recover the money paid to the school district, charging strict liability and breach of warranty. Indemnity charged the fire was caused by a malfunction within the internal wiring of an Electrolux-manufactured Frigidaire refrigerator.

Before trial, Electrolux filed a motion for summary judgment charging Indemnity with spoilage of evidence for failing to preserve a metal can and its contents, which was next to the refrigerator at the fire scene. The company claimed the fire was caused by a spontaneous combustion in the metal can.

The court denied the motion for summary judgment, but granted the company's request that the jury be instructed “they could draw an adverse inference” based on Indemnity's failure to preserve the evidence.

The district court “found that because Indemnity's experts had the authority to remove the items from the scene when they conducted an investigation … Indemnity bears responsibility for not preserving the metal can and its contents — evidence that the experts should have known would be discoverable and would likely be destroyed if not preserved at that time,” according to the ruling.

The court also agreed to preclude evidence regarding the refrigerator's manufacture in China, stating its relevance “in this case is tenuous at best,” said the appellate court.

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After a jury returned a unanimous verdict in Electrolux's favor, Indemnity appealed both of these rulings, among others.

“The district court did not abuse its discretion in determining that spoliation occurred or in deciding that the jury could draw an adverse inference as a result of the spoliation,” said a three judge panel, stating that, because the can was not preserved, “Electrolux was thus unable to expound upon its theory of the case.”

In affirming the lower court's judgment in Electrolux's favor, the appellate court said it was within the district court's discretion “to hold that the probative value of the place of manufacture in China was substantially outweighed by a danger of unfair prejudice.”

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