Whittaker v. Allstate Prop. & Ins. Co., Case No. 2:15-CV-02584

WOODROW WHITTAKER, et al., Plaintiffs, v. ALLSTATE PROPERTY & INSURANCE COMPANY, Defendant.

Case No. 2:15-CV-02584

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

December 18, 2018

JUDGE ALGENON L. MARBLEY

Magistrate Judge Elizabeth P. Deavers

OPINION & ORDER

This matter is before the Court on the parties' Motions for Summary Judgment. (ECF No. 53, 54). For the reasons that follow, this Court GRANTS Plaintiffs' Motion for Summary Judgment and, accordingly, DENIES Defendant's Motion for Summary Judgment.

I. BACKGROUND

A. Factual Background

Plaintiff Woodrow Whittaker and his wife, Carolyn Whittaker, owned a home at 4128 Trumbull Street, Bellaire, Ohio. (Examination Under Oath (EUO) of Woodrow Whittaker, ECF No. 52, at 4). They purchased this property in 2007. (EUO at 33). Plaintiffs lived in the home for a short period of time before moving to California. (EUO at 17). Plaintiffs' son also lived in the house for a time, before his death in July 2012; no one lived in the house after his death. (EUO at 47, 48).

In 2012 and 2013, there were at least two break-ins at the property. (EUO 66-68). During those break-ins, furniture and appliances were stolen, in addition to the hot water heater, furnace, air conditioning components, and dehumidifier. (EUO 67-71). Subsequently, the utilities - namely, gas and water - were shut off. Plaintiff Woodrow Whittaker's brother was completing some renovations on the property, but the last time Plaintiff went to the property was in February, 2014. (EUO 49, 50-51).

On June 7, 2014, the property at 4128 Trumbull Street was destroyed in a fire. (ECF No. 3 at 1). At the time of the fire, the property was insured by Defendant Allstate Property & Casualty Insurance Company ("Allstate"). Plaintiffs made a claim under their Allstate homeowner's insurance policy. Defendant assigned an adjuster to the case; she retained an independent engineering company to complete an "origin and cause analysis with respect to the fire loss." (Defendant's Motion for Summary Judgment, ECF No. 54, at 3). An inspection was completed on June 11, 2014. The inspection found that the fire was incendiary in nature - gasoline was found in both areas of origin - and deliberately set. (Id. at 4). The fire investigator also found evidence of squatters in the house. (Id). Following these findings, Defendant denied Plaintiffs' insurance claim. A denial letter was sent to Plaintiffs explaining that there was no coverage available.

This suit followed. In their initial complaint, Plaintiffs allege a breach of contract based on the denial of the claim, and allege Defendant denied their claim in bad faith. Plaintiffs request compensatory and punitive damages, attorneys' fees, costs associated with this action, and any other relief to which they are entitled. Magistrate Judge Deavers bifurcated the issues, determining that the coverage question could be dispositive. As a result, the only question facing this court is how to construe the insurance policy.

B. Relevant Policy Language

Plaintiffs' insurance policy at issue has three sections: Coverage A, Coverage B, and Coverage C. Coverage A is the dwelling protection coverage, and it is "all-risk" - that is, all risks are covered as long as they are not specifically excluded by the policy terms. Coverage C isPersonal Property Protection, and the coverage is "named peril," meaning only the specifically named perils are covered. Coverage B, Other Structures Protection, is not at issue.

Coverage A, Dwelling Protection, provides coverage for "sudden and accidental direct physical loss to property described in Coverage A—Dwelling Protection...except as limited or excluded in this policy." (ECF No. 53, Ex. 2, at 7; emphasis in the original). Coverage C, Personal Property Protection, reads in relevant part:

Losses We Cover Under Coverage C

We will cover sudden and accidental direct physical loss to the property described in Coverage C—Personal Property Protection, except as limited or excluded in this policy, caused by:

1. Fire or Lightning

...

8. Vandalism or Malicious Mischief

We do not cover vandalism or malicious mischief if your dwelling has been vacant or unoccupied for more than 30 consecutive days immediately prior to the vandalism or malicious mischief. A dwelling under construction is not considered vacant or unoccupied.

(emphasis pattern in the original)

The term "dwelling" is defined (ECF No. 53, Ex. 2, at 3) but the terms "vandalism" and "malicious mischief" are not.

In a section titled "Additional Protection," the policy also offers an arson reward, which reads:

10. Arson reward.

We will pay up to $5,000 for information leading to an arson conviction in connection with a fire loss to property covered under Section I of this policy. The $5,000 limit applies regardless of the number of persons providing information. (ECF No. 53, Ex. 2, at 12).

C. Question Presented

The issue before this Court is whether the insurance policy covers a fire loss, even when that fire has been deemed by experts to have been arson. Plaintiffs argue that because "fire" and "vandalism or malicious mischief" are enumerated separately, each term must be given independent meaning. (ECF No. 53 at 10). If a loss due to fire as a result of arson was nevertheless categorized under "vandalism or malicious mischief," Plaintiffs argue, this would effectively erase "fire" from the policy. In addition, the only mention of "arson" in the policy is in connection with the "arson reward." (ECF No. 56 at 7). Plaintiffs contend that: first, "arson" is not an enumerated type of damage under the "vandalism or malicious mischief" paragraph—indeed, vandalism is not defined anywhere in the policy; and second, Plaintiffs argue, if arson is a type of "fire loss" for the purposes of the arson reward, it must also be a fire loss for the purposes of coverage. To read the policy to deny them coverage, Plaintiffs argue, would run counter to Ohio law and Sixth Circuit precedent.

Defendants counter that the law requires that each word in the contract be given its plain, unambiguous, everyday meaning. (ECF No. 54 at 8). By this reading, "vandalism or malicious mischief" would naturally include "arson," which Black's Law Dictionary defines as "malicious burning of someone else's dwelling house." (Id. at 10). Defendants also argue that listing "fire" and "vandalism or malicious mischief" separately does not create ambiguity in the case of arson, since arson "involves both fire and an act of vandalism or malicious mischief." (Id. at 11). Because the court cannot insert ambiguity into a document where the plain meaning is evident on its face, the policy must be read to exclude coverage in cases of arson loss. (ECF No. 54, at 9-10).

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(a) provides, in relevant part, that summary judgment is appropriate "if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." A fact is deemed material only if it "might affect the outcome of the lawsuit under the governing substantive law." Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The nonmoving party must then present "significant probative evidence" to show that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 340 (6th Cir. 1993). The mere possibility of a factual dispute is insufficient to defeat a motion for summary judgment. See Mitchell v. Toledo Hospital, 964 F.2d 577, 582 (6th Cir. 1992). Summary judgment is inappropriate, however, "if the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.

The necessary inquiry for this Court is "whether 'the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251-52). The mere existence of a scintilla of evidence in support of the opposing party's position will be insufficient to survive the motion; there must be evidence on which the jury could reasonably find for the opposing party. See Anderson, 477 U.S. at 251; Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir. 1995). In evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the nonmoving party. S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013). Therefore, for purposes of Plaintiffs' Motion, the Court will view the facts in the light most favorable toDefendants, and in evaluating Defendant's Summary Judgment Motion, the Court will consider the facts in the light most favorable to Plaintiffs.

III. ANALYSIS

Plaintiffs argue that "arson" is a type of "fire" damage, and so is covered by the policy. In the alternative, Plaintiffs argue that the policy is ambiguous, and Ohio law requires the policy to be read in favor of insurance, because the insurer is understood to be the sophisticated party and the party with the power to write the policy. Defendants argue that arson is a type of "vandalism or malicious mischief" when each word is given its plain meaning, and insist that the court cannot read into the policy any ambiguity that does not exist on the face of the document.

A. The Case Sub Judice

The question of whether, in an insurance policy such as the one at issue here, a loss due to arson is properly classified as a loss due to "fire" or a loss due to "vandalism or malicious mischief" is a question of first impression for the Sixth Circuit Court of Appeals. The Northern District of Ohio, construing another Allstate insurance policy, apparently identical in these paragraphs, found that "arson" was a covered loss under "fire," and was not...