Justices side with insurer in Explorer wreck case

By Steve Korris | Jun 15, 2007

CHARLESTON – Terry Mace and Donald Mace sold a wreck to Liberty Mutual Insurance for scrap and then sued the insurer for scrapping it.

CHARLESTON – Terry Mace and Donald Mace sold a wreck to Liberty Mutual Insurance for scrap and then sued the insurer for scrapping it.

The Maces claimed Liberty Mutual sold parts off a 1994 Ford Explorer to get rid of evidence in a personal injury suit, but the West Virginia Supreme Court of Appeals didn't buy the theory.

The Justices on May 25 unanimously affirmed a decision of Kanawha County Circuit Judge Louis Bloom in favor of Liberty Mutual.

Bloom ruled in 2005 that when Liberty Mutual sold the Explorer to a salvage yard, the insurer had no reason to expect a personal injury suit.

Terry Mace rolled the Explorer in 2002 on an icy interstate highway. Liberty Mutual called it a total loss and paid $7,775.25 for it.

Two months after the crash, Liberty Mutual sold it to a salvage yard.

In 2004 the Maces sued Ford Motor Company and dealer Bert Wolfe Ford, blaming a faulty suspension for injuries Terry Mace suffered.

Two weeks later, they added Liberty Mutual as a defendant, claiming the insurer deliberately got rid of evidence they needed.

They accused Liberty Mutual of "negligent spoliation." The allegation can apply to a third party with a special duty to preserve evidence.

The Maces settled with Ford and Bert Jones for $50,000. They continued pursuing their claim against Liberty Mutual.

The Maces discovered that in 10 years Liberty Mutual had processed about 500 claims nationwide involving Explorer "upsets."

Liberty Mutual had paid about $7 million on those accidents.

According to the Maces, this showed that Liberty Mutual knew about defects in the suspension.

Next the Maces discovered that in 2001, Liberty Mutual filed a subrogation action against Ford in a fatal Explorer rollover case in Florida.

In that case Liberty Mutual alleged product liability theories similar to those the Maces presented.

Though Ford never paid Liberty Mutual in that case, the Maces offered it as further evidence that the insurer knew about the defects.

Liberty Mutual built its defense on depositions of the Maces.

At Terry Mace's deposition, an attorney for the insurer asked if she told Liberty Mutual she would sue Ford. She said no.

She said, "I hadn't researched anything, didn't know anything about the product to even go that route."

At Donald Mace's deposition, an attorney asked if he told Liberty Mutual to retain the Explorer. He said no.

The attorney asked if he told Liberty Mutual he would sue Ford. He said no. The attorney asked if he told Liberty Mutual he was even thinking about suing Ford. He said no.

Both sides moved for summary judgment. Liberty Mutual won.

Bloom ruled that when the alleged spoliation occurred, the Maces had not sued Ford nor formed any intention to sue Ford.

On behalf of the Maces, Miles Morgan of Charleston and Edgar Heiskell III of Charlottesville appealed.

Ancil Ramey and Barbara Keefer, both of Charleston, represented Liberty Mutual.

The Justices heard oral arguments Jan. 10.

In an unsigned opinion they wrote that they saw nothing in the record demonstrating a possible claim against Ford at the time of the crash.

They wrote that the Maces never gave Liberty Mutual a direct and explicit notice regarding the possibility of a product liability suit.

They wrote that a plaintiff claiming negligent spoliation "must show that the third party had actual knowledge, from whatever source, of the plaintiff's pending or potential lawsuit."

They wrote that the evidence might suggest actual knowledge that some policyholders might have product liability claims against Ford.

"However, hindsight is, as they say, 20-20," they wrote. "There is nothing in the record indicating that Liberty Mutual had ever, prior to conducting discovery in this case, as a corporate act examined its records and discovered a pattern of rollover accidents involving Ford Explorers."

They wrote that Liberty Mutual might have examined the circumstances and concluded that the Maces had a potential claim, but they added that the insurer had no legal duty to do so.

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