Opinion
No. CV 09 4009267
February 18, 2011
MEMORANDUM OF DECISION RE MOTIONS FOR SUMMARY JUDGMENT #112 AND #114
In its complaint filed on February 10, 2009, the plaintiff, New London County Ins. Co., seeks a declaratory judgment that the plaintiff is not liable for a loss suffered at the property of the defendants, Karleen Zachem and Phyllis Knutson, on September 11, 2008. The plaintiff alleges that the loss falls within an exclusion provision in the parties' insurance contract. This provision excludes from coverage a loss caused by "vandalism and malicious mischief, theft or attempted theft," when the premises has been vacant for more than thirty consecutive days at the time of the loss. The plaintiff alleges that it is not responsible for the defendants' loss because this exclusion applies. On April 21, 2009, the defendants answered the complaint by denying that the premises were vacant and alleging the same in a special defense.
The defendants raised two other special defenses in their answer which are not at issue in either of the present motions for summary judgment.
On April 6, 2010, the plaintiff filed a motion for summary judgment and a memorandum in support thereof. The plaintiff attached the following evidence to its motion:(1) portions of a deposition transcript of Larry Lentine, an employee or agent of the plaintiff; (2) a copy of the insurance contract between the parties; (3) a report prepared by Fire Marshall Thomas Casey; (4) portions of a deposition transcript of Thomas Casey; (5) photographs of the defendants' premises; (6) portions of a deposition of Karleen Zachem; (7) portions of a deposition of Peter Knutson; (8) portions of a deposition of Phyllis Knutson; and (9) the defendants' answers to the plaintiff's second requests to admit.
On July 12, 2010, the defendants filed a cross motion for summary judgment and a memorandum that both supports their cross motion and opposes the plaintiffs' motion. In support thereof, the defendants attached the following: (1) portions of a deposition of Peter Knutson; (2) portions of a deposition of Phyllis Knutson; (3) portions of a deposition of Larry Lentine; (4) a letter to the defendants in which the plaintiff denies coverage; and (5) a letter between opposing counsel.
On September 29, 2010, the plaintiff filed an objection to the defendants' cross-motion for summary judgment and a memorandum in support thereof. In support of this memorandum, the plaintiff attached the following: (1) portions of a deposition of Thomas Casey; and (2) portions of a deposition of Karleen Zachem.
DISCUSSION
"Summary judgment is a method of resolving litigation when pleadings, affidavits, and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried." (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989). "In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact . . . To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
"In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "[T]he `genuine issue' aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of a case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
The plaintiff moves for summary judgment on the ground that the defendants' property had been vacant for at least thirty consecutive days and that, because the loss was caused by "vandalism, malicious mischief, theft or attempted theft," the defendants' loss is excluded from coverage. The plaintiff argues that there is no dispute that the premises were vacant because the defendants acknowledge that no one had lived on the property since July 2007. The plaintiff notes that its insurance policy does not define the word "vacant," but instead argues that the court should construe "vacant" to mean "`being without content or occupant' and `not lived in.'" (Plaintiff's Memorandum of Law in Support, p. 12.) In support of its position, the plaintiff cites cases from various federal circuit courts, but no Connecticut precedent.
In opposition to the plaintiff's motion for summary judgment and in support of their cross-motion for summary judgment, the defendants argue that the property was not vacant for thirty or more consecutive days and that, consequently, the plaintiff is liable to the defendants for their loss. They note that the insurance contract does not define "vacant," a term they argue is ambiguous and susceptible to multiple meanings. They further contend that the court must construe any ambiguity in their favor. They argue that although no one lived at the property since July 2007, Peter Knutson made daily trips to the property, stored equipment there and performed various repair and maintenance work. They contend that they were refurbishing the home so that it could be sold.
The defendants also argue that the explosion was an "ensuing loss" covered under their insurance contract with the plaintiff. The defendants argue that the vacancy exclusion only applies to "direct" losses. They contend that the explosion which ensued after the burglary of the copper pipes "could not have been expected and as such is an ensuing loss covered by the policy." Thus, they argue that the vacancy exclusion does not apply here, because the nature of their loss was "ensuing" and not "direct." Specifically, the defendants contend that the only direct loss resulting from the burglary of the copper pipes "was the loss and destruction of the copper pipes and their supporting structures. The explosion that ensued could not have been expected" and is therefore an ensuing loss, covered under the insurance policy. (Defendants' Memorandum in Opposition, p. 17.)
The plaintiff responds to the defendants' second argument by arguing that the explosion alleged by the defendants "was intentional and . . . was not only a reasonably foreseeable consequence, but an outcome that the vandals desired." Accordingly, the plaintiff argues that the explosion was not an ensuing loss but a direct loss, and therefore is not covered under the insurance contract.
The court must first address the issue of whether the vacancy exclusion applies. "Under well established principles of contract construction, we must construe the terms of an insurance policy in favor of insurance coverage because it is the insurance company that has drafted the terms of the policy . . . A necessary predicate to this rule of construction, however, is a determination that the terms of the insurance policy are indeed ambiguous . . . The fact that the parties advocate different meanings of the exclusion clause does not necessitate a conclusion that the language is ambiguous." (Citations omitted; internal quotation marks omitted.) Kelly v. Figueiredo, 223 Conn. 31, 36-37, 610 A.2d 1296 (1992). "A contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself." (Internal quotation marks omitted.) Reid v. Landsberger, 123 Conn.App. 260, 271, 1 A.3d 1149, cert. denied, 298 Conn. 933 (2010).
"The [i]nterpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy . . . The determinative question is the intent of the parties, that is, what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . It is axiomatic that a contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . The policy words must be accorded their natural and ordinary meaning . . ." (Internal quotation marks omitted.) Board of Education v. St. Paul Fire Marine Ins. Co., 261 Conn. 37, 42-43, 801 A.2d 752 (2002). "In Connecticut, the insurer must prove `with a high degree of certainty' that the exclusion clause is applicable." Nationwide Mutual Fire Ins. Co. v. Pasiak, Superior Court, judicial district of Stamford-Norwalk, Docket No. 084015401 (March 31, 2010, Brazzel-Massaro, J.), quoting Kelly v. Figueiredo, supra, 223 Conn. 37.
Both parties' recitations of the facts demonstrate that most of the operative facts are not in dispute. (See Plaintiff's Memorandum in Support, pp. 5-7; Defendants' Memorandum in Opposition, pp. 2-5.) The insurance contract excludes from coverage any loss by vandalism, malicious mischief, theft or attempted theft if the premises is "vacant" for more than thirty consecutive days. A property loss occurred at the defendants' property while the insurance contract was in effect. Moreover, the property loss occurred as a result of an intentional breaking of a propane copper pipe by an intruder, ultimately leading to a gas explosion. No one was living in the premises at the time of the property loss, nor was the property set up for human habitation. Last, Peter Knutson performed remodeling and maintenance work on the property at least several times and the defendants kept some items on the premises.
The parties' insurance contract provides, in relevant part: "We insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to property; however, we do not insure loss . . . 2. caused by . . . f. vandalism and malicious mischief, theft or attempted theft if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant . . ." Resolution of the present motions for summary judgment turns, in part, on the interpretation the term "vacant" as it is used in this exclusion provision.
The plaintiff cites four out-of-state cases to support its interpretation of the term "vacant" in the insurance policy. First, the plaintiff cites Vennemann v. Badger Mutual Ins. Co., 334 F.3d 772, 773 (8th Cir. 2003). In that opinion, the court described the insurance policy as using only the word "vacant," a term undefined in the insurance policy. Id. The court did not use the term "unoccupied" in describing the exclusion provision in the insurance policy. The court found for the insurance company because the court determined that the property was vacant on the ground that the insured did not reside in the premises. Id.
Second, the plaintiff cites Langill v. Vermont Mutual Ins. Co., 268 F.3d 46, 47-48 (1st Cir. 2001). There, the insurance policy read, in pertinent part, "we will not be liable for loss caused by fire or lightning occurring while a described building is vacant, whether intended for occupancy by owner or tenant . . ." Id., 47. The court in Langill did not, however, discuss whether the insurance contract contained an ambiguity because the contract followed statutorily prescribed language. Id. The court reasoned: "We . . . are bound by the Massachusetts rule that because the language of the standard policy is prescribed by statute . . . the rule of construction resolving ambiguities in a policy against the insurer is inapplicable." (Internal quotation marks omitted.) Id. The court relied on this fact to distinguish older cases that may have reached a different conclusion. Id., 50. Specifically, the court distinguished its case from those that accorded "wide elasticity to the word `occupancy,' after finding the word ambiguous and construing the term in favor of the insured . . . Suffice it to say that [these cases] would [not] be considered relevant in interpreting the mandatory vacancy provision under Massachusetts law." (Citations omitted.) Id.
In the last two cases that the plaintiff cites, the insurance contract specifically defined "vacant." The insurance contracts involved in both cases defined the term in the same way. "`Vacant' or `vacancy' means containing no contents pertaining to operations or activities customary to occupancy of the building, but a building in process of construction shall not be deemed vacant." Catalina Enterprises, Inc. Pension Trust v. Hartford Fire Ins. Co., 67 F.3d 63, 65 (4th Cir. 1995), cert. denied, 517 U.S. 1105, 116 S.Ct. 1321, 134 L.Ed.2d 473 (1996); Myers v. Merrimack Mutual Fire Ins. Co., 788 F.2d 468, 470 (7th Cir. 1986).
"Vacant" and "unoccupied" may well have two different meanings. Black's Law Dictionary defines "vacant" as follows: "1. Empty; unoccupied a vacant office. Courts have sometimes distinguished vacant from unoccupied, holding that vacant means completely empty while unoccupied means not routinely characterized by the presence of human beings. 2. Absolutely free, unclaimed, and unoccupied vacant land. 3. (Of an estate) abandoned; having no heir or claimant. — The term implies either abandonment or nonoccupancy for any purpose." Black's Law Dictionary (9th Ed. 2009). Although research reveals no Connecticut case drawing a distinction between "vacant" and "unoccupied," the two terms have been used in the same sentence in myriad cases. See, e.g., Slavitt v. Ives, 163 Conn. 198, 204, 303 A.2d 13 (1972); Thorne v. Zoning Board of Appeals, 156 Conn. 619, 620, 238 A.2d 400 (1968); Mead v. Fitzpatrick, 74 Conn. 521, 522, 51 A. 515 (1902). Moreover, General Statutes § 38a-307 uses both "vacant" and "unoccupied" in the same sentence. The use of different terms in the same statute or agreement strongly implies that the legislature or parties intended the terms to have different meanings. See, e.g., Aspetuck Valley Country Club v. Weston, 292 Conn. 817, 830, 975 A.2d 1241 (2009) (different terms in same statute); RM Realty Holdings Corp. v. Moore, 64 A.D. 3d 434, 442, 884 N.Y.S.2d 344 (2009) (different terms in same agreement).
Both parties fail to cite any Connecticut case law discussing the meaning of "vacant" in an insurance contract, and research does not reveal any. The Connecticut Supreme Court has, however, recognized that a "substantial value" test should be applied to determine whether a property is "vacant" for purposes of a commercial lease. In Bishop's Corner Associates Ltd. Partnership v. Service Merchandise Co., Inc., 247 Conn. 192, 195, 718 A.2d 966 (1998), the Supreme Court adopted the reasoning set forth in the Superior Court's decision: "[T]he appropriate test to apply is whether items of `substantial value,' functionally, were left on the premises at the time this action was brought. Common sense would dictate that the leaving of a few items will not defeat a finding of vacating." Bishop's Corner Associates Ltd. Partnership v. Service Merchandise Co., Inc., 45 Conn.Sup. 443, 453, 720 A.2d 531 [ 21 Conn. L. Rptr. 208] (1997).
As noted above, the provision at issue in the present case excludes from coverage losses caused by "vandalism and malicious mischief, theft or attempted theft if the dwelling has been vacant for more than 30 consecutive days immediately before the loss." Significantly, the insurance contract uses the term "unoccupied" elsewhere in the policy. Paragraph 2(a) of "Coverage A — Dwelling and Coverage B — Other Structures" excludes various losses from coverage, but notes specifically that, "[t]his exclusion applies only while the dwelling is vacant, unoccupied . . ." "Coverage C — Personal Property" lists various covered losses, but paragraph fourteen of this section provides an exclusion: "[t]his peril does not include loss . . . while the dwelling is unoccupied . . ." Neither "vacant" nor "unoccupied" are defined in the policy.
Since the insurance contract uses "vacant" and "unoccupied" in different places, the plaintiff could not have intended the two terms to have the same meaning. RM Realty Holdings Corp. v. Moore, supra, 64 A.D.3d 442. The court must view the contract in its entirety. Board of Education v. St. Paul Fire Marine Ins. Co., supra, 261 Conn. 42. The situation in Vennemann does not compare to the present case since there, "unoccupied" was not used in the insurance contract. Further, unlike in Catalina Enterprises and Myers, the insurance contract does not provide a definition of "vacant" and, therefore, is subject to interpretation by the court. Unlike in Langill, the present exclusion provision is not prescribed by statute. Thus, the court cannot rely on a legislature's definition of "vacant" or "vacancy" to conclude that the term is unambiguous.
Because this case involves an insurance contract and not a lease, the "substantial value" test set forth in Bishop's Corner is informative, but not controlling. Different considerations are at play with respect to whether a premises has been vacated in a commercial lease compared to in a residential insurance contract. The former situation involves a contract to secure the use of a premises to house a business. The latter involves a contract to protect a property against various hazards. What items the defendants kept on the premises could be a factor to weigh in determining whether the property was vacant, but does not control the present controversy.
"Vacant" is susceptible to more than one meaning in the present insurance contract and is therefore ambiguous. At least two reasonable interpretations of the vacancy exclusion exist. Under the defendants' interpretation, the property may not have been vacant since it is undisputed that the defendants kept some items in the house and that Peter Knutson visited the house to perform maintenance and repair work on several occasions. (Plaintiff's Memorandum in Support, p. 7.) Under the plaintiff's interpretation, the property was vacant because the undisputed evidence shows that no one resided in the home since July 2007.
Since "vacant" is ambiguous in the present insurance contract, the court must interpret the vacancy exclusion in favor of the defendants. Kelly v. Figueiredo, supra, 223 Conn. 36-37. Thus, the vacancy exclusion does not necessarily apply. On a motion for summary judgment, the moving party bears the burden of demonstrating the nonexistence of genuine issues of material fact. Ramirez v. Health Net of the Northeast, Inc., supra, 285 Conn. 11. The plaintiff has not met its burden. Accordingly, the plaintiff's motion for summary judgment is hereby denied.
Under the insurance contract, the fact that the undisputed evidence shows that no one resided in the home since July 2007, is insufficient to establish that the premises were "vacant" as that term is used in the policy. This does not, however, ensure a finding that the defendants' premises were not vacant. The property could still be considered "vacant" under the vacancy exclusion depending upon what presence the defendants and Peter Knutson maintained at the property in the thirty days immediately preceding September 11, 2008. The extent of their presence during these thirty days is a material fact in determining whether the vacancy exclusion applies.
While most of the operative facts are not in dispute, the extent of the defendants' presence during these thirty days has not been established. It is undisputed that Peter Knutson performed remodeling and maintenance work on the property at least several times, but it is unclear whether this work was performed in the critical thirty-day period. Peter Knutson stored equipment and materials on the defendants' property, but it is unclear whether this equipment was on the premises during the thirty days leading up to the date of loss.
The defendants have not submitted evidence sufficient to satisfy their burden on this motion for summary judgment. A genuine issue of material fact exists: whether, during the thirty days prior to September 11, 2008, the defendants and Peter Knutson maintained a presence on the defendants' property sufficient to render the exclusionary provision inapplicable. Accordingly, the defendants' motion for summary judgment with respect to their claim that their property was not vacant is not granted on this ground.
Nevertheless, the defendants also argue that even if the vacancy exclusion were to apply to their "direct" losses, their loss resulting from the explosion was "ensuing" and is covered under an exception to the vacancy exclusion. Specifically, the defendants argue that their loss was caused by an explosion caused by an ignition which could not have been expected, and therefore their loss should be considered "ensuing." The plaintiff argues that since the loss was caused by vandals who intentionally removed the copper pipes, the explosion was reasonably foreseeable and qualifies as a "direct" loss.
As noted above, the parties' insurance contract provides, in relevant part: "We insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to property; however, we do not insure loss . . . 2. caused by . . . f. vandalism and malicious mischief, theft or attempted theft if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant . . ." The parties `insurance contract further provides, "[u]nder items 1 and 2, any ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered." (Emphasis added.) The parties refer to this last sentence as the "ensuing loss provision." The insurance contract defines neither "direct loss" nor "ensuing loss."
Research does not reveal any Connecticut law providing a definition of "ensuing loss." The defendants cite a California case in support of their position. Acme Galvanizing Co., Inc. v. Fireman's Fund Ins. Co., 221 Cal.App.3d 170, 270 Cal.Rptr. 405 (1990), cert. denied, Supreme Court of California, Docket No. S016534 (October 11, 1990). This case involved an argument by an insured that its loss was covered under an exception to an "exclusionary clause which provides coverage for a loss precipitated by an excluded peril where a loss by a peril not otherwise excluded ensues and then the Company shall be liable for only such ensuing loss." (Internal quotation marks omitted.) Id., 179. The court held that this ensuing loss provision would "apply to the situation where there is a `peril,' i.e., a hazard or occurrence which causes a loss or injury, separate and independent but resulting from the original excluded peril, and this new peril is not an excluded one, from which loss ensues." Id., 179-80. The court found that the insured's loss was not covered under the insurance policy, but described a situation where the loss would be considered "ensuing." The court wrote, "there was no peril separate from and in addition to the initial excluded peril of the welding failure and kettle rupture. The spillage of molten zinc was part of the loss directly caused by such peril, not a new hazard or phenomenon. If the molten zinc had ignited a fire or caused an explosion which destroyed the plant, then the fire or explosion would have been a new covered peril with the ensuing loss covered." Id., 180.
In support of its position that the defendants' loss was "direct" in nature, the plaintiff cites Sansone v. Nationwide Mutual Fire Ins. Co., 47 Conn.Sup. 35, 38-40, 770 A.2d 500 (1999), aff'd, 62 Conn.App. 526, 771 A.2d 243 (2001). Sansone involved a claim that the insured's "house suffered a `collapse' due to the loss of structural integrity resulting from the deterioration in the header beam that supports the roof mechanism. The plaintiffs argue that this collapse should be covered as an ensuing loss." Id., 39. The court disagreed because the policy did not include a provision for collapse and "the loss was the proximate result of termite damage and is therefore excluded." Id., 41.
To be entitled to summary judgment, the defendants must demonstrate the nonexistence of any genuine issues of material fact. Ramirez v. Health Net of the Northeast Inc., supra, 285 Conn. 11. As evidence that their loss was "ensuing," the defendants highlight the fire inspector's report, which they argue "indicates that the explosion was caused when leaking gas was `ignited by a spark possibly from the oil burner as it fired to heat the water in the boiler.'" (Defendants' Memorandum in Opposition, p. 18.) The defendants therefore argue that this ignition was not caused by the vandalism or burglary that occurred at their property on the date of loss, but was caused by an "aggravating event." The defendants also submit a letter sent by the plaintiff to the defendants denying coverage of their claim. There, the plaintiff wrote, "In removing the copper pipes, the perpetrators removed a gas pipe allowing propane gas to enter the building. Recognizing the obvious risk the perpetrators left the building. Thereafter, the propane gas was ignited by a spark or flame from a building appliance." (Exhibit 6, Attached to Defendants' Memorandum in Opposition, p. 1.)
The parties appear to agree that vandals removed a gas pipe that allowed propane gas to emanate into the premises and that it was the ignition of this propane that led to the explosion that caused the defendants' loss. A genuine issue of material fact exists, however, with respect to what caused the propane to ignite. This cause is a material fact necessary to determine whether the defendants' loss was ensuing or direct in nature.
Applying the reasoning of Acme Galvanizing Co., Inc. v. Fireman's Fund Ins. Co., supra, 221 Cal.App. 3d 170, if the vacancy exclusion applies and if the defendants are able to show that the explosion resulted from a peril separate from and in addition to the initial excluded peril of the removal of the copper and gas pipes, then the explosion would be a new covered peril with the ensuing loss covered. If, however, the explosion was part of the loss directly caused by the removal of the pipes, it would not be a new hazard and would be excluded from coverage if the vacancy exclusion applies. Such a situation would be like that in Sansone v. Nationwide Mutual Fire Ins. Co., supra, 47 Conn.Sup. 35.
Put simply, the evidence submitted by the defendants does not establish the absence of a genuine issue of material fact with respect to what caused the explosion. The evidence submitted consists of mere speculation by the fire inspector and the plaintiff as to possible causes of the explosion. Under any definition of "ensuing loss," the defendants have not submitted evidence that eliminates all issues of material fact with respect to the nature of their loss. Accordingly, the defendants' motion for summary judgment with respect to their "ensuing loss" argument is not granted on this ground.
CONCLUSION
For the foregoing reasons, both parties' motions for summary judgment are denied.