Safeco Insurance Company of Indiana v. Blue Sky Innovation Group, Inc
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This case involved Safeco Insurance Company (Safeco) appealing against the trial court's dismissal of its third-party spoliation and negligence claims against the Michaelis Corporation. The dispute originated from a fire in a home insured by Safeco, which resulted in over $500,000 worth of damage. Safeco hired Michaelis to restore the property, and during this process, the kitchen, identified as the origin of the fire, was demolished and the dehydrator believed to have caused the fire was discarded. Safeco subsequently sued Michaelis for negligence and spoliation of evidence, arguing this impeded its ability to bring a successful claim against the dehydrator manufacturer.
The trial court dismissed both claims, sparking Safeco's appeal. The Indiana Supreme Court held that under the given facts, Indiana common law did not recognize the tort of third-party spoliation and therefore upheld the trial court’s ruling. The court established that a special relationship did not exist between Safeco and Michaelis that would impose a duty on Michaelis to preserve the evidence. Furthermore, the court ruled it was not reasonably foreseeable that Safeco would be harmed by the loss of the dehydrator. Public policy considerations also weighed against recognizing third-party spoliation absent a special relationship.
In addition, the court ruled that Safeco's negligence claim was essentially a third-party spoliation claim and failed for the same reasons. The court also dismissed Safeco's argument that Michaelis assumed a duty of care to preserve the evidence, as this was not alleged in the amended complaint and was raised for the first time on appeal.
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