Frazier v. State Farm Fire and Cas. Co.

• Decision Date: 19 March 1997
• Docket Number: Civil Action No. 96-0457-R.
• Citation: 957 F.Supp. 816
• Court: U.S. District Court — Western District of Virginia
• Parties: Carol FRAZIER, Individually, and as Executor of the Estate of Sallie M. Stables, and Sherry Lowe, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

957 F.Supp. 816

Carol FRAZIER, Individually, and as Executor of the Estate of Sallie M. Stables, and Sherry Lowe, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

Civil Action No. 96-0457-R.

United States District Court, W.D. Virginia, Roanoke Division.

March 19, 1997.

Randall Bertron Campbell, Roanoke, VA, for plaintiffs.

Phillip V. Anderson, Roanoke, VA, for defendant.

ORDER

CONRAD, United States Magistrate Judge.

In accordance with the written Memorandum Opinion entered this day, it is hereby

ADJUDGED AND ORDERED

that the defendant's motion for summary judgment, brought pursuant to Rule 56 of the Federal Rules of Civil Procedure, shall be and hereby is GRANTED and that this action is stricken from the active docket of this court.

The Clerk is directed to send a certified copy of this order to counsel for both parties.

MEMORANDUM OPINION

Plaintiffs Carol Frazier and Sherry Lowe originally filed this civil action as a Motion for Judgment in the Circuit Court for Giles County, Virginia.¹ On May 13, 1996, the defendant, State Farm Fire and Casualty Company ("State Farm"), removed the action to this court pursuant to 27 U.S.C. § 1441 et seq. Plaintiffs allege in their complaint that State Farm breached the terms of a homeowner's insurance policy issued to Mrs. Stables when it refused to pay a claim filed by the plaintiffs on behalf of Stables' estate after the subject residence was damaged by a fire. Plaintiffs seek monetary damages, costs and attorney's fees in the amount of $50,000. The case is before the undersigned United States Magistrate Judge pursuant to the consent of the parties entered under the authority of 28 U.S.C. § 636(c)(2).

State Farm has filed a motion for summary judgment. State Farm argues that the facts of the case support a finding, as a matter of law, that it may rely on the vacancy exclusion clause in plaintiffs' insurance policy to deny the plaintiffs' coverage. By contrast, plaintiffs contend that State Farm should be estopped from relying on the vacancy exclusion clause to deny plaintiffs coverage under the policy because State Farm's agent knew or should have known, based on an October 10, 1995 conversation with plaintiff Frazier, that the subject residence was vacant. State Farm maintains that the doctrine of estoppel, as established under Virginia law, has no application to the facts of the present case because its agent did not have actual knowledge that the subject residence was vacant. A hearing on defendant's motion was conducted on February 5, 1997. State Farm's motion for summary judgment is now ripe for disposition.

I.

The facts of this case are not disputed. Prior to her death, Mrs. Stables purchased a homeowner's policy from State Farm insuring her residence. Mrs. Stables died testate on July 19, 1995 and bequeathed the insured residence, along with all of its contents and personalty, to plaintiffs Frazier and Lowe. Following Stables' death, the plaintiffs contracted with Dan Hines of the Colonial Auction Company ("Colonial") to remove and auction the contents of the residence. Hines completed the removal of the contents of the residence on or before September 18, 1995, with the exception of a rug, a gas stove, some mattresses and the window curtains. Plaintiffs also contracted with Hines to sell the residence and real estate at auction. While Hines originally scheduled the auction of house's contents for October 6, 1995, the sale was postponed for several weeks until the end of October or the beginning of November.

On October 10, 1995, plaintiff Frazier met with Ben Wheeler, agent for State Farm, at his office in Narrows, Virginia. Frazier claims that she met with Wheeler in order to ascertain when the insurance coverage on her mother's house would expire, whether any premium payments were due, and whether she needed to change the policy from her mother's name to her own. Frazier added that, during their meeting, she informed Wheeler that she was in the process of arranging to sell the residence at auction. Frazier also told Wheeler that the residence was no longer being occupied though she and her family stopped by the house almost daily.

In response to Frazier's queries, Frazier claims that Wheeler advised her to keep the insurance policy in her mother's name. In addition, Wheeler informed Frazier that she could purchase a six month extension of the existing policy in order to maintain coverage until she was able to sell the house. Finally, Frazier alleges that Wheeler assured her, with regard to the insurance coverage on the house, that "everything would be okay." Frazier at 42.

On October 18, 1995, the insured residence was damaged by a fire. The parties do not dispute the finding by the Virginia State Police, and other investigators, that vandals set the fire intentionally. The fire severely damaged the residence. Following the fire, on November 16, 1995, plaintiffs submitted a claim for the loss under their mother's insurance policy in the amount of $20,200. State Farm denied plaintiffs' claim in a letter dated February 27, 1996, stating that the insurance policy for the residence excluded coverage for damage caused by "vandalism and malicious mischief" where the residence had been "vacant for more than thirty consecutive days" immediately prior to the loss.

II.

Though the parties do dispute in their pleadings whether the residence was properly considered vacant for the requisite period of time prior to the fire, the parties did not argue this issue at hearing. Nevertheless, the court will address, briefly, the question of whether the insured residence was properly considered to be vacant.

State Farm asserts in its pleading that it considered the house vacant as of August 22, 1995, the date that the plaintiffs signed the contract to have Colonial remove all of the contents from the house and sell them at auction. The court has some doubt as to whether the residence could properly be considered vacant as of this date since Colonial did not immediately remove any items from the house. However, Daniel Hines, agent for Colonial, asserts in his affidavit that he had removed all of the contents of the residence by September 18, 1995, with the exception of a rug, some mattresses, the window curtains and a gas range. State Farm alleges, at the very least, that the residence was properly considered vacant as of the 18th. Consistent with the authorities cited by the defendant, the court finds that the residence was properly considered vacant as of this date.² Accordingly, the court finds and concludes that the residence was vacant for thirty-one consecutive days as of October 18, 1995, the date of the fire, one day more than that required to trigger the policy's vacancy exclusion clause.

In addition to showing that the insured premises were vacant, State Farm must also establish that the loss was caused by vandalism in order for the vacancy exclusion clause to apply. The court notes that the parties do not dispute the finding that the fire was intentionally set and that such a cause would qualify as vandalism under the policy in question. Accordingly, the court finds the defendant has demonstrated the facts necessary to support application of the exclusion.

Thus, the only remaining issue before the court is whether the defendant can be estopped from exercising the policy exclusion based on the fact that Wheeler, the defendant's agent, was informed by Frazier, prior to the fire, that the residence was vacant and that it would remain vacant until it was sold at auction. The defendant alleges that the policy exclusion is fully applicable and, therefore, the loss caused by the fire is not covered by the policy. By contrast, plaintiffs contend that the question of Wheeler's knowledge with regard to the vacant status of the residence is a material and disputed issue of fact which cannot be resolved by the court pursuant to a motion for summary judgment.

Upon motion for summary judgment, the court must view the facts, and the inferences to be drawn from those facts, in the light most favorable to the party opposing the motion. Ross v. Communications Satellite Corp., 759 F.2d 355 (4th Cir.1985). Summary judgment is proper where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). However, "[t]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

When a motion for summary judgment is made and properly supported by affidavits, depositions, or answers to interrogatories, the adverse party may not rest on the mere allegations or denials of the adverse party's pleadings. Instead, the adverse party must respond by affidavits or otherwise and present specific facts showing that there is a genuine issue of disputed fact for trial. Fed. R.Civ.P. 56(e). If the adverse party fails to show a genuine issue of fact, summary judgment, if appropriate, may be entered against the adverse party.

Because the insurance policy in question was signed and executed in Virginia, this court's interpretation of the policy is governed by Virginia substantive law. See National Indep. Coal Operators Ass'n, Inc. v. Old Republic Ins. Co., 544 F.Supp. 520, 525 (W.D.Va.1982) (citing Woodson v. Celina Mutual Ins. Co., 211 Va. 423, 177 S.E.2d 610, 613 (1970)).

Both parties cite the decision in Ruffin v. United States Insurance Company, 208 Va. 463, 158 S.E.2d 672 (1968) as stating the general rule in Virginia which is relevant to the present case. In Ruffin, the Supreme Court of Virginia addressed a claim that the defendant insurance company should be estopped from denying coverage based on an occupancy clause in the policy because the defendant's agent...