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NSTAR Electric Co. v. Veolia Energy North America Holdings, Inc.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

January 29, 2019

NSTAR ELECTRIC COMPANY dba Eversource Energy

          File Date: January 30, 2019


          Kenneth W. Salinger, Justice of the Superior Court

          NSTAR Electric Company, now doing business as Eversource Energy, owns and operates an electrical distribution system in Boston, Massachusetts, that includes many underground cables. Veolia Energy North America Holdings, Inc., owns and operates an underground steam distribution system in Boston. In many locations Eversource’s electric cables are located near Veolia’s steam pipes.

          Eversource alleges that its facilities have been damaged by steam or heat leaks from Veolia’s system. Eversource asserts claims for negligence (on the theory that Veolia did not exercise due care in operating and maintaining its system), trespass to chattels (based on allegedly wrongful releases or leaks of steam), and breach of contract (asserting that Veolia breached a December 2013 agreement to cooperate with Eversource in identifying and mitigating steam leaks and to reimburse Eversource for future and certain past costs caused by Veolia steam leaks).

          Veolia has moved for partial summary judgment. It seeks to bar any claim for damages incurred before this action was filed on the ground that Eversource allegedly spoliated evidence. Veolia also contends that it is entitled to summary judgment in its favor on other grounds on the claims for negligence, trespass, and breach of the implied covenant of good faith and fair dealing.

          The Court will allow the summary judgment motion in part and deny it in part. It will deny Veolia’s request to dismiss some of Eversource’s claims as a sanction for alleged spoliation of evidence, but will order that at trial Veolia may present evidence of the alleged spoliation and receive a jury instruction permitting an adverse inference if spoliation is found. As to the statute of limitations issue, the Court finds that Eversource’s tort claims are time-barred only to the extent they seek compensation for damage occurring more than three years before this action was filed, but that the statute does not bar Eversource’s claims based on damage that occurred later on. The Court will also grant summary judgment in Veolia’s favor on the claim for breach of the implied covenant of good faith and fair dealing, which adds nothing to Eversource’s claim for breach of the express terms of the 2013 contract. The Court will deny the request for summary judgment on the trespass to chattels claim and on the portion of the negligence claim based on alleged leaks of heat because Veolia is not entitled to judgment in its favor as a matter of law on those claims.

          1. Alleged Spoliation of Evidence

          Veolia has established that by the end of 2009 Eversource suspected that its facilities were being damaged by steam or heat leaks from Veolia’s system, Eversource nonetheless did not preserve any electric cable that failed before this lawsuit was filed in early 2015, and as a result Veolia cannot inspect those cables in an attempt to ascertain why they failed.

          Veolia argues that this constitutes spoliation of evidence and seeks dismissal of all claims for damages incurred before the filing of this action as a sanction for that alleged spoliation.[1]

          "The doctrine of spoliation ‘is based on the premise that a party who has negligently or intentionally lost or destroyed evidence known to be relevant for an upcoming legal proceeding should be held accountable for any unfair prejudice that results.’" Westover v. Leiserv, Inc., 64 Mass.App.Ct. 109, 112-13 (2005), quoting Keene v. Brigham and Women’s Hosp., Inc., 439 Mass. 223, 234 (2003). "As a general rule, a judge should impose the least severe sanction necessary to remedy the prejudice to the nonspoliating party." Keene, supra, at 235.

          The failure by Eversource after 2009 to preserve cables that it now claims were damaged by heat or steam leaking from Veolia’s system constitutes spoliation of evidence. By the end of 2009 Eversource knew or should have realized that it could be involved in a lawsuit with Veolia regarding electric cable failures and that any failed cables would likely be relevant evidence in such a proceeding. Eversource’s negligent failure to preserve that evidence is spoliation.

          The argument by Eversource that there was no spoliation because it never instructed its workers to collect and preserve all failed electric cables is without merit. Once Eversource realized it had potential claims against Veolia for allegedly damaging electric cables, it had a duty to preserve that evidence. Its failure to do so is negligent spoliation.

          The further argument by Eversource that it no longer had any duty to preserve evidence of failed cables once it entered into its December 2013 agreement with Veolia is also unavailing. In that contract, Veolia agreed to enter into a further mitigation agreement under which Veolia would reimburse Eversource all costs of repairs or restorations, over the prior two years or at any time in the future, that were caused by Veolia steam leaks. Eversource should have realized that it would have to preserve failed cables because they could be important in determining whether particular repair or restoration costs were made necessary by leaks from the Veolia steam distribution system. The contract made it even more important that Eversource preserve this evidence, because the parties may need to examine damaged cables to determine whether Veolia complied with the 2013 agreement or the anticipated future mitigation agreement.

          It is not clear, however, whether or to what extent Veolia has suffered any unfair prejudice as a result of Eversource’s failure to retain damages electric cables. Eversource notes that not all of its claims are for damage to electric cables. For example, Eversource claims that a Veolia steam leak caused a duct bank to collapse under School Street in Boston. In addition, Eversource has presented expert opinions, by a polymer scientist and by an electrical engineer, that when an electric cable short circuits any evidence of what caused that event is often destroyed by the cable failure. Veolia has presented expert testimony to the contrary.

         The Court concludes, in the exercise of its discretion, that the jury should decide at trial what to make of this conflicting evidence as to whether Veolia suffered any material prejudice from Eversource’s failure to preserve failed electric cables. The Court will not dismiss any part of Eversource’s claims as a sanction for losing or destroying evidence. But it will allow both sides to present evidence regarding the alleged spoliation of evidence and regarding whether Veolia suffered any unfair prejudice as a result. The Court will then instruct the jury that, if they find that that there was spoliation of evidence-meaning they find that Eversource negligently or intentionally lost or destroyed evidence that it knew or should have known would be relevant if Eversource were to sue Veolia, and also that Veolia was unfairly prejudiced as a result-then the jury may, but is not required to, infer that the missing cables would have provided evidence unfavorable to Eversource. See Gath v. M/A-Com, Inc., 440 Mass. 482, 491 (2003); Keene, 439 Mass. at 234.

          2. Statute of Limitations

          Veolia argues that the claims by Eversource for negligence and trespass to chattels are barred in whole or in part by the statute of limitations. Eversource filed this action on February 18, 2015. Its tort claims for negligence and trespass are governed by a three-year statute of limitations. See G.L.c. 260, § 2A. As a ...

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