Catalina Enterprises, Inc. Pension Trust v. Hartford Fire Ins. Co.

• Decision Date: 17 October 1995
• Docket Number: No. 95-1015,95-1015
• Citation: 67 F.3d 63
• Parties: CATALINA ENTERPRISES, INCORPORATED PENSION TRUST, Plaintiff-Appellant, v. HARTFORD FIRE INSURANCE COMPANY, Defendant-Appellee, and Jennings Insurance Associates, Incorporated, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 63

67 F.3d 63

CATALINA ENTERPRISES, INCORPORATED PENSION TRUST, Plaintiff-Appellant, v. HARTFORD FIRE INSURANCE COMPANY, Defendant-Appellee and Jennings Insurance Associates, Incorporated, Defendant.

No. 95-1015.

United States Court of Appeals, Fourth Circuit.

Argued May 3, 1995.

Decided Oct. 17, 1995.

ARGUED: Max Higgins Lauten, Kramon & Graham, P.A., Baltimore, MD, for Appellant. Craig David Roswell, Niles, Barton & Wilmer, Baltimore, MD, for Appellee. ON BRIEF: Thomas H. Bornhorst, Baltimore, MD, for Appellant. V. Timothy Bambrick, Niles, Barton & Wilmer, Baltimore, MD, for Appellee.

Before ERVIN, Chief Judge, and MURNAGHAN and NIEMEYER, Circuit Judges.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Chief Judge ERVIN and Judge MURNAGHAN joined.

OPINION

NIEMEYER, Circuit Judge:

Late on May 9 or early on May 10, 1992, a fire began in a warehouse on Quad Avenue in Baltimore, Maryland, owned by Catalina Enterprises, Inc. Pension Trust. The fire caused approximately $541,000 in damage. When Catalina presented its proof of loss to its insurer, Hartford Insurance Company, Hartford Insurance denied coverage because, at the time of the fire, the warehouse had been "vacant" for almost five months, and the applicable insurance policy excluded coverage for vacant buildings. Catalina filed a breach of contract suit against Hartford Insurance, and the district court granted Hartford Insurance's motion for summary judgment. On appeal, Catalina contends that the district court misconstrued the vacancy exclusion. We disagree and therefore affirm.

I

At the time of the fire, Catalina's warehouse was not occupied by any tenant, the last tenant having left in December 1991, about five months earlier. That tenant had stored unprocessed pepper in the warehouse for the McCormick spice company. After the last tenant left, the heat for the warehouse and all but two circuit breakers were turned off. The two circuit breakers left on were for lights in the office area and for the alarm system. Later, but before the fire, Catalina also deactivated the alarm system.

When the fire began, the only contents in the Quad Avenue warehouse were one piece of scaffolding and one hand truck. The hand truck was a hydraulic, hand-operated pallet truck that had been left on the premises by the previous tenant. The scaffolding, which belonged to Catalina, was a rolling scaffolding, approximately 6 to 8 feet wide with a height of 18 to 20 feet. The warehouse also included a small office area, which at the time of the fire contained only a small work table. The work table apparently belonged to Catalina since the last tenant had removed all of its furniture from the office area when it left. The office contained no business records or business supplies.

The Hartford Insurance policy in effect when the warehouse caught fire contained an exclusion for losses occurring while the building was vacant if the building had been continuously vacant during the previous 60 days. The exclusion reads:

Vacancy or Unoccupancy. This Company shall not be liable for loss occurring while a described building, whether intended for occupancy by owner or tenant, is vacant beyond a period of 60 consecutive days. "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.

Relying on this exclusion, Hartford Insurance denied liability for the fire loss.

When Catalina filed suit for breach of the insurance contract, Hartford Insurance filed a motion for summary judgment. Granting the motion, the district court concluded that "[b]y any reasonable interpretation of the policy language, the warehouse had been 'vacant' for 60 days prior to the fire." In reaching its conclusion that Catalina's building had been "vacant" within the meaning of the policy, the district court referred to undisputed record evidence that (1) no tenant had occupied the building from December 17, 1991, until the fire; (2) the only non-fixtures that remained in the warehouse part of the building after the last tenant left were a piece of scaffolding owned by Catalina and a hand truck abandoned by the previous tenant; (3) with the exception of one small work table owned by Catalina, the office area of the building contained no furniture and no business records or supplies; (4) the building's alarm system was deactivated and its heat and electricity (except for the lights in the office area) turned off; and (5) the building was not in the process of construction and only two minor repairs had been completed on it while it was vacant.

On appeal, Catalina does not contest any of the facts relied on by the district court. Rather, it argues that summary judgment for Hartford Insurance was improper as a matter of law.

II

The sole issue presented for our consideration is whether the clause in Hartford Insurance's fire insurance policy excluding coverage for buildings that are vacant for more than 60 days, where "vacant" means "containing no contents pertaining to operations or activities customary to occupancy of the building," denies Catalina coverage. The parties agree that because this is a diversity case, Maryland law governs the policy's construction.

Under Maryland law, insurance policies are interpreted in the same manner as contracts generally; there is no rule in Maryland that insurance policies are to be construed most strongly against the insurer. See Collier v. MD-Individual Practice Ass'n, 327 Md. 1, 5, 607 A.2d 537 (1992). The "primary purpose" in construing insurance contracts, like all contracts, is to ascertain and give effect to the intentions of the parties at the time of contracting. See Schuler v. Erie Ins. Exch., 81 Md.App. 499, 505, 568 A.2d 873, cert. denied, 319 Md. 304, 572 A.2d 183 (1990); Aragona v. St. Paul Fire and Marine Ins. Co., 281 Md. 371, 375, 378 A.2d 1346 (1977). To ascertain the parties' intent, the court must "construe the instrument as a whole." Collier, 327 Md. at 5, 607 A.2d 537. In addition to the contractual language, the court may look to the character of the contract, its object and purposes, and the factual circumstances of the parties at the time of execution. Id. Clear and unambiguous language, however, must be enforced as written and may not yield to what the parties later say they meant. Board of Trustees of State Colleges v. Sherman, 280 Md. 373, 380, 373 A.2d 626 (1977) ("where a contract is plain and unambiguous, there is no room for construction"). Unless there is an indication that the parties intended to use words in a special, technical sense, the words in a policy should be accorded their "usual, ordinary, and accepted meaning." Bausch & Lomb, Inc. v. Utica Mutual Ins. Co., 330 Md. 758, 778, 625 A.2d 1021 (1993). "A word's ordinary signification is tested by what meaning a reasonably prudent layperson would attach to the term." Id.

Catalina's argument focuses on the words "no contents" in the policy's definition of "vacant." Catalina urges a strict, literal reading of the words "no contents" so that the presence in the warehouse of a single object or item, no matter how small or insignificant, would render a building not vacant. While the object or item must "pertain[ ] to operations or activities customary to occupancy," Catalina contends that this language only means that the object or item must be one that is customarily found on the property when it is occupied. Applying this interpretation to the instant case, the presence of any one of the three items found on Catalina's property at the time of the fire--the scaffold, the hand truck, or the table--would be enough to avoid the vacancy exclusion because each of these items is customarily found on the premises when it is occupied.

Catalina concedes that its...