The opinion of the court was delivered by: Thomas A. Varlan United States District Judge
This civil action is before the Court on defendant State Farm Fire and Casualty Company's ("State Farm") Motion for Judgment on the Pleadings [Doc. 22]. Plaintiffs have responded in opposition to defendant's motion [Doc. 25] and defendant State Farm has filed a reply [Doc. 28]. Thus, the motion is now ripe for determination.
The Court has carefully considered the pending motion, pleadings, and the arguments made during the motion hearing on October 29, 2007 in light of the applicable law. For the reasons set forth herein, defendant's motion will be granted in part and denied in part.
On September 6, 2002, the 1994 Oldsmobile 88 Royale LS owned by plaintiffs Ronald and Linda Poynter burst into flames while Mr. Poynter was sitting in the car in his driveway. [Doc. 1-2 at ¶ 6.] The fire resulted in injury to Mr. Poynter, total loss of the car, and damage to plaintiffs' home. [Id.] Plaintiffs' car was designed, manufactured, assembled, and placed in the stream of commerce by defendant General Motors Corporation ("GM"). At the time of the accident, plaintiffs had homeowners and auto insurance with defendant State Farm. [Id. at ¶ 12.]
Shortly after the fire, State Farm sent representatives to plaintiffs' home to investigate the incident. [Id. at ¶ 13.] The investigators removed and took with them parts of the burned car, specifically the instrument cluster and shorted wiring from the dashboard of the car. [Id.] Plaintiffs state that State Farm's investigators concluded that the fire was caused by a defective condition of these parts. [Id.] Plaintiffs allege that the investigators told plaintiffs they would "preserve this evidence for the benefit of [plaintiffs'] claim against GM," the manufacturer of the car against whom plaintiffs anticipated filing a products liability lawsuit. [Id.] However, in June or July of 2003, after inquiring about the parts, plaintiffs were notified that the investigators had been ordered by State Farm to dispose of the components.*fn1 [Id. at ¶ 14.] Plaintiffs state this action was done without their knowledge or consent. [Id.]
Plaintiffs filed suit against GM and State Farm in the Circuit Court for Knox County, Tennessee in May 2006. Plaintiffs argue that GM should be held strictly liable for the personal injuries and property damage resulting from the fire and liable for negligence and breach of implied warranties of merchantability and fitness. [Id. at ¶¶ 8-11.] As to State Farm, plaintiffs allege that its disposal of the components of plaintiffs' car constitutes spoliation of evidence, negligence, breach of contract, and conversion and that State Farm should be held liable for "the amount by which [plaintiffs'] action against the defendant GM has been reduced in value as a result of State Farm's negligence." [Id. at ¶¶ 15, 17-18.]
Defendant State Farm removed the lawsuit to this Court on June 16, 2006 pursuant to 28 U.S.C. § 1332. On July 7, 2006, Defendant State Farm filed a motion to dismiss [Doc. 9] on the grounds that each of plaintiffs' claims against State Farm are grounded in the tort of spoliation of evidence, a tort that is not recognized in Tennessee. The Court granted State Farm's motion to dismiss as to plaintiffs' spoliation of evidence and negligence claims and denied the motion as to plaintiffs' breach of contract and conversion claims in a Memorandum Opinion and Order [Docs. 18 & 19] dated February 21, 2007.
Defendant State Farm now moves for judgment on the pleadings as a matter of law as to plaintiffs' breach of contract and conversion claims. Specifically, State Farm contends that these remaining claims should be dismissed or at least limited to recovery of only the actual value of the components removed from plaintiffs' vehicle by State Farm's investigators. [Doc. 22 at 1.] Plaintiffs oppose State Farm's motion, contending among other things that a damages recovery is not speculative as State Farm asserts. [Doc. 25 at 7.]
In determining whether to grant a motion for judgment on the pleadings, "all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." United States v. Moriarty, 8 F.3d 329, 332 (6th Cir. 1993); see also Fed. R. Civ. P. 12(c). The Court need not accept, however, the legal conclusions or unwarranted factual inferences of the non-moving party's pleadings. See Gahafer v. Ford Motor Co., 328 F.3d 859, 861 (6th Cir. 2003).
Where a federal court exercises diversity jurisdiction, it is axiomatic that it must apply the substantive law of the forum state. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Therefore, this Court must apply the ...