Opinion
4:00CV3340
March 14, 2003
MEMORANDUM AND ORDER ON PLAINTIFF'S MOTIONS FOR PARTIAL SUMMARY JUDGMENT
On December 22, 2000, the plaintiff, Helen Volquardson, filed a complaint against the defendant, Hartford Insurance Company of the Midwest (hereinafter "Hartford"), alleging a breach of contract. (See Compl., filing 1) Now before me are the plaintiff's motion for partial summary judgment, filing 14, and the plaintiff's amended motion for partial summary judgment, filing 16. For the following reasons, I find that the plaintiff's amended motion must be granted.
I. BACKGROUND
The basic facts underlying the plaintiff's claim against the defendant are undisputed. (See Am. Br. in Supp. of Am. Mot. for Partial Summ. J., filing 17 (hereinafter "Pl.'s Br."), at 1-3; Def.'s Br. in Response to Pl.'s Mot. for Partial Summ. J. (hereinafter "Def.'s Br.") at 2; Opinion of the Supreme Court of Nebraska, filing 12.) See also Volquardson v. Hartford Insurance Co. of the Midwest, 647 N.W.2d 599 (Neb. 2002). On July 30, 2000, the plaintiff and her husband, Mr. William J. Volquardson, owned a residence and outbuildings in Crofton, Cedar County, Nebraska, as joint tenants with rights of survivorship. Prior to and on July 30, 2000, the defendant, which is an insurer licensed and authorized to conduct business in the State of Nebraska, issued a contract of insurance that insured the Volquardsons' residence and outbuildings against peril of fire. This contract of insurance (hereinafter "the homeowner's policy") contains a declarations page stating that the residence was insured up to the amount of $151,000.00, and that the outbuildings were insured up to the amount of $15,100.00. (See Pl.'s Br. at 5; Def.'s Br. at 4.) The homeowner's policy also names both the plaintiff and Mr. Volquardson as insureds.
On July 30, 2000, the Volquardsons also owned a vehicle described as a "1984 Mercury Lynx" as joint tenants with rights of survivorship, and their vehicle was insured by a second contract of insurance issued by the defendant (hereinafter "the auto policy"). The auto policy provided comprehensive coverage for damage to the vehicle and named the plaintiff and Mr. Volquardson as insureds.
On July 27, 2000, Mr. Volquardson was admitted to the Veteran's Administration Hospital in Sioux Falls, South Dakota, due to depression and other mental health issues. Although he expressed suicidal tendencies upon his arrival at the hospital, he was released on July 28, 2000. After Mr. Volquardson's release from the hospital, he returned to his home in Crofton.
On July 30, 2000, the Volquardsons' residence, the outbuildings, and the 1984 Mercury Lynx were totally destroyed by fire. The fire was caused intentionally by Mr. Volquardson to cause damage to the residence, outbuilding, and vehicle as a part of a suicide attempt. The plaintiff did not set fire to the buildings or vehicle, and she had no actual or constructive knowledge that Mr. Volquardson was going to burn them.
Since the fire, the plaintiff has complied with all of the terms and conditions precedent to coverage required under the insurance contracts issued by the defendant. She also complied with the requisite claim procedures. However, the plaintiff's claim has not yet been paid.
On December 22, 2000, the plaintiff filed a complaint alleging that the defendant breached the aforementioned contracts of insurance by failing to pay the plaintiff's claim. (See Compl., filing 1.) On January 25, 2001, the defendant filed its answer to the plaintiff's complaint. (See Answer, filing 5.) In its answer, the defendant alleged that it was not indebted to the plaintiff under the homeowner's policy because the policy contains the following provision:
1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss:
h. Intentional loss, meaning any loss arising out of any act committed;
(1) By or at the direction of an insured; and
(2) With the intent to cause a loss.
(Answer, filing 5, ¶ 11 (emphasis omitted).) The defendant also alleged that it was not indebted to the plaintiff under the auto policy, which contains the following provision:
PART D — COVERAGE FOR DAMAGE TO YOUR AUTO
Insuring Agreement
We will pay for direct and accidental loss to your covered auto or any non-owned auto, including their equipment, minus any applicable deductible shown in the Declarations.
(Answer, filing 5, ¶ 12 (emphasis omitted).)
The plaintiff then filed a motion requesting that certain questions of law be certified to the Nebraska Supreme Court for resolution. (See Mot. for Request for Certification of Law and Request for Oral Argument, filing 6.) See also Neb. Rev. Stat. Ann. § 24-219 (Michie 1995). This motion was granted, and the following questions of Nebraska law were certified:
Is the language of the intentional acts exclusion in SECTION 1 — EXCLUSIONS, Paragraph 1.h.1. and 1.h.2 of Hartford's Homeowner's Policy ambiguous?
Is the intentional acts exclusion in SECTION 1 — EXCLUSIONS, Paragraph 1.h.1. and 1.h.2 of Hartford's Homeowner's Policy contrary to the public policy of Nebraska, as expressed by statute and case law, when applied to preclude coverage against peril of fire to an innocent co-insured?
Does the intentional acts exclusion in SECTION 1 — EXCLUSIONS, Paragraph 1.h.1. and 1.h.2 of Hartford's Homeowner's Policy comply with the provisions of § 44-501(6), R.R.S. 1998, and provide the substantial equivalent of the minimum provisions of the 1943 New York Standard Fire Insurance Policy?
If the answer to Question No. 3 is "no," did the Director of Insurance of the State of Nebraska, pursuant to § 44-501(11), R.R.S. 1998, have the lawful authority in 1994 to approve the variations in Hartford's Homeowners policy notwithstanding its noncompliance with the 1943 New York Standard Fire Insurance Policy?
Is the language "direct and accidental loss" in the insuring agreement in PART D — COVERAGE FOR DAMAGE TO YOUR AUTO, Paragraph A. of Hartford's Auto Policy ambiguous?
Is the language "direct and accidental loss" in the insuring agreement in PART D — COVERAGE FOR DAMAGE TO YOUR AUTO, Paragraph A. of Hartford's Auto Policy contrary to the public policy of Nebraska, as expressed by statute and case law, when applied to preclude comprehensive coverage to an innocent co-insured?
(Certification of Questions, filing 10.) The Supreme Court of Nebraska accepted the certification request and answered the certified questions as follows. (See Opinion of the Supreme Court of Nebraska, filing 12.)See also Volquardson v. Hartford Insurance Co. of the Midwest, 647 N.W.2d 599 (Neb. 2002). In response to question number one, the court stated,
The Hartford's homeowner's policy defines various losses for which no insurance is provided, including intentional losses "arising out of any act committed [b]y or at the direction of an insured." We conclude that this means, simply and unambiguously, that if a loss is caused intentionally by someone who is insured under the policy, it is not covered. Thus, in response to the first certified question, we find no ambiguity in the intentional acts exclusion found at section 1 exclusions, paragraph 1h(1) and (2), of the Hartford's homeowner's policy.
(Opinion of the Supreme Court of Nebraska, filing 12, at 4 (emphasis omitted)); Volquardson v. Hartford Insurance Co. of the Midwest, 647 N.W.2d 599, 606 (Neb. 2002) (emphasis omitted). In response to question number two, the court concluded "that there is no public policy specifically articulated by Nebraska statutes or case law which would preclude application of the intentional acts exclusion at issue here to negate coverage against peril of fire to an innocent coinsured under the uncontested facts presented in this case." (Filing 12 at 6);Volquardson, 647 N.W.2d at 607. In response to the third question, the court stated, "we determine that the intentional acts exclusion in section 1, exclusions, paragraph 1h(1) and (2), of the Hartford's homeowner's policy does not comply with the provisions of § 44-501(6) because it does not provide the substantial equivalent of the minimum protections of the 1943 NYSFIP [(New York Standard Fire Insurance Policy)]." (Filing 12 at 8); Volquardson, 647 N.W.2d at 610. The court also answered the fourth question in the negative, stating, "we conclude that the Director of Insurance did not have lawful authority in 1994 to approve the variations in the Hartford's homeowner's policy because such variations were not the substantial equivalent of the minimum provisions of the 1943 NYSFIP." (Filing 12 at 10); Volquardson, 647 N.W.2d at 612. In response to question number five, the court stated, "The language `direct and accidental loss' in the insuring agreement in part D, paragraph A, of the Hartford's automobile policy is not ambiguous." (Filing 12 at 12); Volquardson, 647 N.W.2d at 615. Finally, in response to question six, the court concluded that "[t]he language `direct and accidental loss' in the insuring agreement in part D, paragraph A, of the Hartford's automobile policy is not contrary to the public policy of Nebraska, as expressed by statute and case law, when applied to preclude comprehensive coverage to an innocent coinsured." (Filing 12 at 12);Volquardson, 647 N.W.2d at 615.
After the Supreme Court of Nebraska resolved the foregoing questions, the plaintiff filed a motion for partial summary judgment seeking a determination that she is due to receive coverage under the homeowner's policy. (See Mot. for Partial Summ. J. and Request for Oral Argument, filing 14; see also Br. in Supp. of Mot. for Partial Summ. J. at 5 ("The plaintiff herein is entitled to the policy proceeds and is seeking in this Motion only such policy proceeds with respect to the real property involved.").) In response to the plaintiff's motion, the defendant concedes that it must extend coverage to the plaintiff for the loss of real property caused by Mr. Volquardson's actions. (See Def.'s Br. at 3.) However, the defendant argues that a genuine issue remains as to the amount of damages that the plaintiff may recover under the homeowner's policy. (See id. at 3-5.) The plaintiff then filed an amended motion for partial summary judgment, adding a prayer for damages in the amount of $166,100.00. (See Am. Mot. for Partial Summ. J. and Request for Oral Argument, filing 16.) The plaintiff also filed an amended brief in support of her amended motion, wherein she expands upon her argument that she is entitled to $166,100.00 in damages pursuant to the terms of the homeowner's policy. (See Pl.'s Br. at 5-7.) My analysis of the plaintiff's motions is presented below.
The plaintiff's original motion did not include a prayer that judgment be entered in her favor in this amount. (See Mot. for Partial Summ. J. and Request for Oral Argument, filing 14.)
Although the plaintiff's original motion did not include a prayer that judgment be entered in her favor in the amount of 166,100.00 (see supra note 1), she did argue in her brief in support of her original motion that she was entitled to damages in that amount. (See Br. in Supp. of Mot. for Partial Summ. J. at 5.)
II. STANDARD OF REVIEW
A motion for summary judgment shall be granted by the court when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists when the evidence favoring the party opposing the motion is sufficient to allow a jury to return a verdict for that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the nonmoving party. See Adickes v. S. H. Kress Co., 398 U.S. 144, 157 (1970). If the moving party meets its initial burden of establishing the nonexistence of a genuine issue, the burden shifts to the nonmoving party to produce evidence of the existence of a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The nonmoving party "must present affirmative evidence in order to defeat a properly supported motion for summary judgment," Anderson, 477 U.S. at 257, and "may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial," id. at 256 (citing Federal Rule of Civil Procedure 56(e)).
III. ANALYSIS
The plaintiff argues that she is entitled to partial summary judgment in the amount of $166,100.00 pursuant to a Nebraska statute which states,
Whenever any policy of insurance is written to insure any real property in this state against loss by fire, tornado, windstorm, lightning, or explosion and the property insured is wholly destroyed without criminal fault on the part of the insured or his or her assignee, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the property insured and the true amount of loss and measure of damages.
Neb. Rev. Stat. § 44-501.02 (Reissue 1998). Since there is no evidence that the plaintiff bore any criminal fault, and since it is undisputed that the residence and outbuildings were totally destroyed, the plaintiff argues that pursuant to section 44-501.02, she is entitled to recover the full amounts set forth on the homeowner's policy's declarations page with respect to the residence and outbuildings. She also refers me to Dinneen v. American Insurance Company of City of Newark, N.J., 152 N.W. 307, 308 (Neb. 1915) and Lancashire Insurance Company v. Bush, 82 N.W. 313, 313-14 (Neb. 1900), which hold that when real property is totally destroyed by fire, provisions of insurance policies that attempt to limit losses to amounts less than those written in the policies are invalid.
In response to the plaintiff's argument, the defendant concedes that pursuant to section 44-501.02, "the amount of the insurance written in [Plaintiff's] policy shall be taken conclusively to be the true value of the property insured and the true amount of loss and measure of damages." (Def.'s Br. at 3-4 (quoting Neb. Rev. Stat. § 44-501.02 (Reissue 1998).) The defendant also admits that "[t]he declarations page of Plaintiff's policy provides that Plaintiff's residence was insured in the amount of $151,000.00, and the outbuildings were insured for $15,100.00. (Id. at 4.) Nevertheless, the defendant argues that the plaintiff is only entitled to recover one-half of the $166,100.00 claim, or $83,050. In support of its argument, the defendant refers me to Allstate Insurance Co. v. LaRandeau, 622 N.W.2d 646 (Neb. 2002). Many of the relevant facts in LaRandeau are strikingly similar to the facts of this case:
On September 15, 1994, [the defendant, John LaRandeau,] intentionally set fire to a residence he owned in joint tenancy with his wife. The fire completely destroyed the structure of the home as well as its contents. Both LaRandeau and his wife were insured under a homeowner's insurance policy issued by Allstate. The relevant portion of the policy excluded coverage for the destruction of the dwelling or any personal property when caused by or consisting of "[i]ntentional or criminal acts of or at the direction of any insured person, if the loss that occurs: a) may be reasonably expected to result from such acts; or b) is the intended result of such acts." The policy also provided in part: "When we pay for any loss, an insured person's right to recover from anyone else becomes ours up to the amount we have paid."
In December 1994, LaRandeau's wife submitted estimates of the scope and amount of damage. Allstate paid her $181,937.44, which was one-half of the total property damage. Allstate made no payments to LaRandeau. LaRandeau was charged with and convicted of arson and ordered to pay restitution to Allstate in the amount of $55,000.
Allstate then sued LaRandeau, seeking recovery for the payments made to his wife and other expenses incurred in investigating the claim. Allstate alleged that it was the "Subrogee/Assignee of Patricia LaRandeau." Allstate alleged that LaRandeau intentionally set fire to the residence, that his act was the sole proximate cause of the damage sustained by Allstate, and that "[a]s a result of the above-described waste, the market value of the premises has been diminished by $363,874.88, and Plaintiff's interest in the property has been damaged in the amount of $181,937.44, representing half that market value."LaRandeau, 622 N.W.2d at 648. Summary judgment was entered in favor of Allstate, and LaRandeau appealed. See id. at 649. The Supreme Court of Nebraska first noted that its previous decisions holding that "no right of subrogation can arise in favor of an insurer against its own insured" did not involve cases "where the loss was due to arson committed by one of the named insureds." Id. at 649. It then held that "Allstate may pursue its claim against LaRandeau, whose intentional act caused a loss not covered under the policy, to the detriment of an innocent coinsured,"id. at 651, and affirmed the district court's entry of judgment in the amount of $123,663.32 against LaRandeau, id. at 649, 651.
The defendant argues that it has a subrogation claim against William Volquardson, just as Allstate had a subrogation claim against John LaRandeau. At some point in the future, this may prove to be true — although I note that the defendant has not referred me to any portion of the homeowner's policy or any provision of law that might serve as the source of the defendant's right of subrogation. See, e.g.,Allstate Insurance Co. v. LaRandeau, 622 N.W.2d 646, 651 (Neb. 2002) (discussing whether right of subrogation existed under the Unfair Discrimination Against Subjects of Abuse in Insurance Act, Neb. Rev. Stat. § 44-7401 et seq. (Reissue 1998) or under the insurance policy itself). However, even if I assume that the defendant has potential subrogation rights, its argument that the amount of coverage owed to the plaintiff must therefore be reduced at this time is wide of the mark. Put simply, it seems to me that the defendant does not yet have a subrogated claim against William Volquardson because it has not yet paid the plaintiff's claim. See, e.g., LaRandeau, 622 N.W.2d at 649-50 (noting that the right to subrogation is based on, inter alia, the premise that "[a] wrongdoer should reimburse an insurer for payments that the insurer has made to its insured. . . ." (emphasis added)). See also Roger M. Baron, Subrogation: A Pandora's Box Awaiting Closure, 41 S.D. L. Rev. 237, 238 (1996) ("Subrogation allows an insurer who has indemnified an insured to stand in the shoes of the insured on the insured's claim for compensation against a third party, usually a tortfeasor."). Unlike the present case, wherein the person whose intentional act caused the loss (i.e., William Volquardson) is not a party, LaRandeau involved a suit by an insurer who, after paying the innocent coinsured, asserted subrogated claims against the intentional wrongdoer. See LaRandeau, 622 N.W.2d at 651. Thus, it seems to me that the defendant's subrogation argument is, at best, premature. In any event, I am not convinced that the amount owed to the plaintiff under the homeowner's policy must be reduced, as a matter of law, because of the possibility that the defendant will garner subrogation rights after making its payment to her. IT IS ORDERED that:
I note that in Allstate Insurance Co. v. LaRandeau, 622 N.W.2d 646, 649 (Neb. 2002), Allstate originally only paid for one-half of the total property damage claimed by LaRandeau's wife. However, it appears that the amount of this payment was not in dispute and that the implications of section 44-501.02 were not argued by the parties. It seems to me, therefore, that LaRandeau does not stand for the proposition that innocent coinsureds are only entitled to claim coverage for one-half of the property damage caused by the intentional acts of another insured. Moreover, in the instant case the defendant has not based its argument upon this proposition. Instead, it has agreed that the measure of damages has been set at $166,100.00 pursuant to section 44-501.02 and the policy declarations, but has argued that this amount must nevertheless be halved in view of the defendant's subrogation rights. (See Df.'s Br. at 3-5.) As I noted above, this argument must be rejected.
The plaintiff's amended motion for partial summary judgment, filing 16, is granted;
The plaintiff's motion for partial summary judgment, filing 14, is denied as moot; and
The plaintiff's requests for oral argument, filings 14 and 16, are denied.