Bowers v. Farmers Ins. Exchange

• Decision Date: 25 January 2000
• Docket Number: No. 18306-8-III.,18306-8-III.
• Citation: 991 P.2d 734,99 Wash.App. 41
• Court: Washington Court of Appeals
• Parties: Bethany BOWERS, a single woman, Appellant, v. FARMERS INSURANCE EXCHANGE, a foreign insurance corporation, Respondent.

991 P.2d 734

99 Wash.App. 41

Bethany BOWERS, a single woman, Appellant, v. FARMERS INSURANCE EXCHANGE, a foreign insurance corporation, Respondent.

No. 18306-8-III.

Court of Appeals of Washington, Division 3, Panel Five.

January 25, 2000.

As Amended on Reconsideration March 7, 2000.

Martin Gales, Montgomery, Carroll & Gales, Spokane, for Appellant.

Mark S. Cole, Gregory D. Zamudio, Seattle, for Respondent.

KURTZ, C.J.

Bethany Bowers was denied coverage by Farmers Insurance Exchange (Farmers) for mold damage to a rental house which occurred when her tenants, without the knowledge of Ms. Bowers, converted the house into a marijuana grow operation. The marijuana cultivation caused damage to the house, including mold growth throughout the house. Upon cross-motions for summary judgment, the court held in favor of Farmers. Ms. Bowers appeals contending the court erred in holding that the insurance did not cover the mold damage caused by the marijuana grow operation, and in not awarding her reasonable attorney fees.

We conclude the tenants' acts constitute vandalism, for which there is coverage under Ms. Bowers' landlord's insurance policy. We further conclude that the tenants' acts are the efficient proximate cause of Ms. Bowers' loss. The judgment of the superior court is reversed. Ms. Bowers is awarded her attorney fees.

FACTS

On November 1, 1997, Bethany Bowers rented her single family house to new tenants. Prior to being rented, the house had been well-maintained, without problems of mold or excess water vapor condensation. A Landlord's Protection Package insurance policy was issued by Farmers to Ms. Bowers and was in effect from November 1, 1997, to June 6, 1998.

The tenants converted a basement portion of the house into a hothouse for growing marijuana. Halide lights were used, the basement windows were covered, foil was put on the walls, and the marijuana grow operation was vented directly into the chimney. The house was otherwise sealed. All heat in the house was diverted to the basement grow operation room.

The lack of heat throughout the house, together with excessive water condensation from the halide lights and marijuana grow operation, caused mold to grow rapidly throughout the house. There were deposits of mold on floors, carpets, walls, paneling, doors, window coverings, insulation, rafters, joints and other surface areas in the house.

Initially, Ms. Bowers was unaware of the marijuana grow operation. However, after almost three months, she became suspicious and contacted the Spokane police. The marijuana grow operation was discovered and removed by the Spokane police.

Ms. Bowers thereafter submitted an insurance claim to Farmers for (1) replacement of warped paneling in the basement, and (2) an additional $14,802.90 for clean up of mold damage. Farmers paid for the warped wall paneling, but denied the claim for mold-related damage as not being covered under the policy. Ms. Bowers filed an action against Farmers for the repair costs and lost rent. Upon cross-motions for summary judgment, the trial court held in favor of Farmers. Ms. Bowers appeals.

ANALYSIS

An insurer is liable under a contract for insurance when a covered peril causes a loss. The court must first determine the scope of the policy's coverage. Graham v. Public Employees Mut. Ins. Co., 98 Wash.2d 533, 540, 656 P.2d 1077 (1983) (Brachtenbach, J., dissenting). The court determines coverage by characterizing the perils contributing to the loss, and determining which perils the policy covers and which it excludes. Kish v. Insurance Co., 125 Wash.2d 164, 170, 883 P.2d 308 (1994). Interpretation of insurance policy language is a matter of law that we review de novo. McDonald v. State Farm Fire & Cas. Co., 119 Wash.2d 724, 730-31, 837 P.2d 1000 (1992).

The Farmers policy's exclusion section states in relevant part:

We do not cover direct or indirect loss from:

....

4. Vandalism or Malicious Mischief, breakage of glass and safety glazing materials if the dwelling has been vacant for more than 30 consecutive days just before the loss. A dwelling under construction is not considered vacant.

. . . .

6. Wear and tear; marring; deterioration; inherent vice; latent defect; mechanical breakdown; rust; mold; wet or dry rot; contamination; smog; smoke from farm smudging or industrial operations; settling, cracking, shrinking, bulging or expansion of pavements, patios, foundation, walls, floors, roofs or ceiling; birds, vermin, rodents, insects or domestic animals. If any of these cause water to suddenly and accidentally escape from a plumbing, heating, air conditioning system or household appliance, we cover loss caused by water. We also cover the cost of tearing out and replacing any part of a building necessary to repair the system or appliance not otherwise excluded under item 5 above. We do not cover loss to the system or appliance from which the water escaped.

(Emphasis added.)

Ms. Bowers contends the purpose of the Farmers' policy was to insure her as landlord from accidental loss to the insured rental property. She emphasizes that there is no dispute that the loss was "accidental" insofar as she was concerned. She argues there should be coverage for this loss under the coverage for vandalism or malicious mischief because the tenants willfully, wantonly and recklessly damaged her property.

In response, Farmers argues the cause of Ms. Bowers' loss is mold, not vandalism or malicious mischief. In plain language, the policy excludes loss due to mold. Farmers maintains there is no ambiguity or provision in conflict with the exclusion. Farmers asks this court to enforce the exclusion.

The Farmers' policy specifically covers loss caused by vandalism or malicious mischief, but does not define those terms. "Courts interpret insurance contracts as an average insurance purchaser would understand them and give undefined terms in these contracts their `plain, ordinary, and popular' meaning." Kish, 125 Wash.2d at 170, 883 P.2d 308 (quoting Boeing Co. v. Aetna Cas. & Sur. Co., 113 Wash.2d 869, 877, 784 P.2d 507, 87 A.L.R.4th 405 (1990)); accord State Farm Gen. Ins. Co. v. Emerson, 102 Wash.2d 477, 480, 687 P.2d 1139 (1984).

"Vandalism" is defined as "willful or malicious destruction or defacement of things of beauty or of public or private property." Webster's third New International Dictionary 2532 (1993). "Malicious mischief" is defined as "willful, wanton, or reckless damage or destruction of another's property." Webster's, supra, at 1367. A person who acts willfully acts knowingly. RCW 9A.08.010(4). The criminal statutes require that "malicious mischief" be done "knowingly and maliciously." RCW 9A.48.070, .080, .090.

Farmers argues that the tenants' conduct was not vandalism or malicious mischief because the conduct was not malicious. Farmers emphasizes that the tenants' conduct was not motivated by any ill will or malice towards the owner. In this context, malice does not require ill will, hatred, or vindictiveness of purpose. Malice may be inferred from the act of destruction. It is sufficient if the actor is guilty of wanton or intentional disregard of the rights of others. 13A George J. Couch, Couch on Insurance 2d § 48:210 (Mark S. Rhodes, rev. ed. (1982)); Michael A. Sabatino, Annotation, What Constitutes "Vandalism" or "Malicious Mischief" Within Meaning of Insurance Policy Specifically Extending Coverage to Losses from Such Causes, 56 A.L.R.5th 407 (1998). As stated in Frontier Lanes v. Canadian Indem. Co., 26 Wash.App. 342, 613...