Where a transient started a fire on the floor of a house in an apparent effort to keep warm but then lost control of the fire, the fire was not an act of “vandalism” for purposes of a “vacancy” exclusion. ( Ong v. Fire Insurance Exchange (2015) 235 Cal.App.4th 901)
Facts
Hung Van Ong (Ong) owned a rental dwelling property. The tenants moved out, and the gas and electric utilities were turned off. About twenty months later, a fire destroyed the property.
Ong submitted a claim to his insurer, Fire Insurance Exchange (FIE). As part of its investigation, FIE retained an investigator to determine the origin and cause of the fire. In a written report, FIE’s investigator concluded the fire originated on the floor of the kitchen, and likely was a “warming” fire that became uncontrolled and spread. Similarly, FIE’s claim adjuster’s log notes indicated that it was likely a transient had started a “warming fire [that] got out of hand.”
The policy provided “all risk” (sometimes called “open peril”) coverage for the dwelling. However, the policy excluded coverage for damage to the dwelling caused by “Vandalism or Malicious Mischief … if the dwelling has been vacant for more than 30 consecutive days just before the loss.” The policy did not define “Vandalism” or “Malicious Mischief.”
FIE denied coverage for Ong’s claim. In its denial letter, FIE stated as follows: “Our investigation indicates that this loss was the result of vandalism. A trespasser entered the vacant dwelling and intentionally set a fire.…”
Ong sued FIE for breach of contract and bad faith, and FIE moved for summary adjudication on the grounds that the vacancy exclusion barred coverage. The trial court granted FIE’s motion, stating that “[t]he unauthorized person or persons who intentionally set the fire … certainly created an obvious hazard to the dwelling without justification, excuse or mitigating circumstances.” The trial court also agreed with FIE’s assertion that the “malice in law” concept (sometimes used in criminal arson cases) established the requisite intent to damage the property. Ong appealed.
Holding
The Court of Appeal reversed. Although someone intentionally set the fire, there was a triable issue of fact as to whether the fire was a “warming” fire that became uncontrolled, or whether the fire was intended to be an act of destruction. Based on dictionary definitions, the ordinary and popular meaning of “vandalism” is the willful destruction of property or the destruction of property with a desire to cause harm. This commonly-understood meaning of “vandalism” is very different from the “malice in law” concept that arises when intentional conduct gives rise to unintended damage. (For example, under the “malice in law” concept, a person who throws a firecracker onto a dry hillside and starts a brushfire can be guilty of the crime of arson, even though the person did not intend to start a fire.) Because there was a triable issue of fact as to whether the fire was intended to be an act of destruction, the appellate court remanded the case to the trial court for further proceedings.
Comment
The vacancy exclusion in FIE’s policy was limited to “vandalism” and “malicious mischief.” This required FIE to prove that the person(s) who started the fire intended to damage the building. The appellate court noted that FIE could have drafted the vacancy exclusion to extend to fire, which would have eliminated the need to prove intent to damage the property. In this regard, Insurance Code section 2071 (California’s standard form fire insurance policy) allows insurers to exclude coverage for fire after a building has been “vacant or unoccupied” for more than 60 consecutive days.
This was not a unanimous opinion. One of the justices on the appellate panel dissented, arguing that because the fire started on the kitchen floor, there was sufficient evidence that the transient intended to deface the property, even if the fire ultimately grew to unintended proportion.