In re Feiereisen
| Decision Date | 30 December 1985 |
| Docket Number | Bankruptcy No. 681-05498,Adv. No. 684-6034. |
| Citation | 56 BR 167 |
| Parties | In re Henry Lee FEIEREISEN, aka Hank Feiereisen, Debtor. UNIGARD MUTUAL INSURANCE COMPANY, Plaintiff, v. Thomas J. O'DWYER, Trustee, Defendant. |
| Court | U.S. Bankruptcy Court — District of Oregon |
James T. Walter, Bullivant, Houser, Bailey, Pendergrass, Hoffman, O'Connell & Goyak, Portland, Or., for plaintiff.
Donald H. Landes, North Bend, Or., for defendant.
This matter comes before the court on the parties' cross motions for summary judgment in an adversary proceeding commenced by the insurer of certain real property of the estate to determine its liability under a fire insurance policy. After reviewing the stipulations and memoranda filed and having heard the argument of counsel herein, this court finds in favor of defendant, thus, affirming plaintiff's liability under the terms of the policy.
Plaintiff commenced this adversary proceeding to determine its obligation, if any, to the defendant-trustee, under the terms of a fire insurance policy it has issued, insuring real property and improvements that are property of the estate. Plaintiff contends that intentional wrongdoing, committed by the debtor, is attributable to the defendant for the purpose of any claim made by the defendant on the insurance policy and operates to bar any recovery by defendant thereon. Defendant-trustee, has filed an answer and counterclaim seeking to collect the proceeds of the insurance policy for the benefit of the estate, the imposition of a constructive trust upon the insurance policy in favor of the defendant, reformation of the insurance policy to show the defendant as named insured and for defendant's attorney's fees incurred in this adversary proceeding. The issue raised by plaintiff, in its complaint, is submitted to the court upon stipulated facts. The parties have reserved the issue of the amount to be awarded to the defendant on his counterclaim, (if he prevails) and the issue of whether or not the insurance policy, issued by the plaintiff, provides coverage for the property of Hank's Print Shop, Inc., a related bankruptcy case, Case No. XXX-XXXXX.
The following facts are established by the stipulation of the parties. The debtor and Hank's Print Shop, Inc. filed voluntary petitions for relief under Chapter 7 of 11 U.S.C. (the Bankruptcy Code) on May 1, 1981. The cases were converted to cases under Chapter 11 of the Bankruptcy Code on June 1, 1981 and then back to cases under Chapter 7 on May 25, 1982. The defendant is the duly appointed, qualified and acting trustee herein. At the time of the original filing and the dates of conversion, the debtor owned, in his individual name, certain real property, commonly referred to as 505-525 N. Ellensburg, Gold Beach, Oregon, together with improvements situated thereon and personal property contained therein. The improvements and personal property were destroyed by fire on December 12, 1982. The debtor was subsequently convicted of the crime of arson in the Circuit Court for the State of Oregon for Curry County for having intentionally caused this fire. At the time of such fire, the debtor was the named insured, under plaintiff's contract of insurance number MP518689, insuring the named insured's interest in the subject real property and improvements against loss by fire. Plaintiff first had actual knowledge of the bankruptcy proceedings involving the debtor on February 17, 1982, when plaintiff received a report, concerning debtor's bankruptcy, from an unrelated third party. The debtor has made intentional and material misrepresentations in the presentation of his claim under the insurance policy. Defendant has made a claim for loss under the policy for the benefit of the estate. Non-exempt assets of the estate were used to pay the premiums due on the insurance policy from the date of reconversion to Chapter 7 to the date of loss by payment to a premium financing company unrelated to plaintiff. Plaintiff has denied the claims of both the debtor and trustee-defendant. More than six (6) months have elapsed since plaintiff was made aware of such claims. Although not specifically contained in the stipulation of fact, the parties have represented to the court that the debtor has some claim to a portion of the insurance proceeds, if payable, by virtue of certain exemption rights which he has claimed in and to the subject real property and improvements. It has also been represented to the court that the defendant-trustee disputes such claim.
As stated above, plaintiff contends that it has no liability to the defendant under the terms of its insurance policy. It cites general provisions of law and public policy that prohibit recovery, under a policy, by a wrongdoer. Plaintiff maintains that debtor's intentional wrongdoing is attributable to the defendant-trustee, affording plaintiff a complete defense to payment under the policy. This contention is based upon the position taken by plaintiff that the insurance policy is a personal contract between the parties and cannot be assigned without the consent of the insurer. Although plaintiff concedes that the defendant acquired an interest in the policy pursuant to 11 U.S.C. § 541, plaintiff argues that the trustee does not become the named insured under the policy, the debtor remains as the named insured. The trustee stands in the shoes of the debtor in asserting a claim under the policy and any defenses that would be available to plaintiff on a claim made by the named insured are available to plaintiff on a claim made by the trustee. Plaintiff relies heavily upon Dery v. Citizens Insurance Company of America, (In re Light), 23 B.R. 482 (Bankr.E.D.Mich. 1982). In addition, plaintiff relies upon the provisions of its policy and ORS 743.609 prohibiting the assignment of a fire insurance...
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