In re Johnson
| Decision Date | 24 April 1992 |
| Docket Number | Adv. No. 89-0461.,Bankruptcy No. 89-00908(RG) |
| Citation | 141 BR 838 |
| Parties | In re Theresa JOHNSON, Debtor. Theresa JOHNSON, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
David Paul Daniels, Camden, N.J., for debtor.
White and Williams by Christopher P. Leise, Westmont, N.J., for Allstate Ins. Co.
This matter comes before the Court by way of an adversary complaint filed by the debtor, Theresa Johnson, against Allstate Insurance Company. This case involves an insurance claim on property damaged by fire on November 24, 1988. The insured, Theresa Johnson ("Ms. Johnson" or "debtor") is the owner of the home located at 109 Brookfield Avenue, Wenonah, New Jersey, where the fire occurred. After reviewing the record, the arguments of counsel, and the pertinent authorities, the Court makes the following findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.
Ms. Johnson testified that she purchased the home in Wenonah, about seven years before the fire, approximately in 1980 or 1981. (Transcript dated July 18, 1991 at pages 23 and 29) (hereinafter "T1 at ___"). At that time, she also purchased Allstate deluxe homeowners insurance policy AU9601 (hereinafter "the policy" or "Allstate Policy"), which included losses from fire in its coverage. (T1 at 5) (policy # XXXXXXXXX). Ms. Johnson paid her mortgage to New York Guardian Mortgage Corporation of Hempstead, New York and they in turn, made the payment for the insurance policy. (T1 at 71). Although Ms. Johnson had fallen behind in her mortgage payments, the policy did renew on July 8, 1988, with the policy term of one year. (T1 at 5). Thus, the policy remained in effect at the time of the fire on November 24, 1988.
On July 7, 1987, New York Guardian Mortgage filed a foreclosure action against Theresa Johnson in Gloucester County, New Jersey. (T1 at 5). A foreclosure judgment was entered against Ms. Johnson on February 29, 1988 and the mortgage company scheduled a sheriff sale for June 24, 1988. (T1 at 6). On June 17, 1988, however, Ms. Johnson filed a petition under Chapter 13 of the Bankruptcy Reform Act of 1978 as amended by the Bankruptcy Act Amendments of 1982, the Bankruptcy Amendments and Federal Judgeship Act of 1984, and the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986 (hereinafter, "Bankruptcy Code"), in the Bankruptcy Court for the District of New Jersey. (T1 at 6). This Court dismissed that bankruptcy matter on October 8, 1988. (T1 at 6).
About two weeks before the fire, in early November, 1988, Ms. Johnson's electricity was shut off and she and her three children went to stay with a girlfriend, Elaine Bundy. (T1 at 16). Ms. Johnson remained living with Ms. Bundy after the fire on November 24, 1988 until September of 1989. (T1 at 43, 48, 128). She then moved to 163 Carver Drive, Wenonah, New Jersey, where she presently lives and rents her father's home. (T1 at 47, 51). Ms. Johnson contacted Allstate Insurance Company (hereinafter "Allstate") after the fire. (T1 at 45). On January 23, 1989, she submitted a proof of loss, represented by a public insurance adjuster, Guardian Adjustment Service, for $68,721.48 for real property loss and damage and a second proof of loss on February 7, 1989 for $31,219.95 for personal property loss. (See Proofs of Loss dated January 23, 1989 and February 7, 1989). Allstate conducted an investigation of the fire that included a deposition of Ms. Johnson taken on February 9, 1989. (See T1 at 46 and Examination Under Oath of Theresa Johnson dated February 9, 1989 entered as Exhibit D-1). Two weeks after the fire, Ms. Johnson testified that she received $2,000.00 from Allstate, which funds she testified were used to purchase clothing for herself and her children. (T1 at 44-45, 78). Allstate denied the plaintiff's claim on June 13, 1989. (See Letter dated June 3, 1989 attached as Exhibit "E" to unsigned copy of Certification of Paul Batteux, dated September 11, 1989).
On February 8, 1989, Theresa Johnson filed the present petition under Chapter 13 of the Bankruptcy Code in this Court. She is currently making payments under a Chapter 13 plan. (T1 at 56). On May 10, 1989, Ms. Johnson filed a complaint against Allstate. (Adversary No. 89-0461). In the complaint, Ms. Johnson alleged that the insurance policy was adequate to cover the claims, that Allstate had not made any payments on these claims and therefore, requested that Allstate be required to pay the claims of $68,721.48 and $31,219.95, plus interest and attorney's fees and costs of the suit. (Complaint dated May 9, 1989).
On June 19, 1989, Allstate filed an answer to the plaintiff's complaint and raised several affirmative defenses. Allstate demanded a dismissal of the plaintiff's complaint together with the judgment that the policy was void and Allstate was not obligated to pay. (Answer, Affirmative Defenses and Jury Demand of Allstate Insurance Company dated June 15, 1989) (hereinafter "Answer, dated June 15, 1989").
On April 12, 1990, the debtor filed a first amended complaint, which included a request for out of pocket living expenses in the sum of $875.00 per month since November 24, 1988. (Plaintiff's First Amended Complaint dated April 11, 1990).1 Allstate answered the amended complaint with a request that this Court enter a judgment that Allstate is not obligated to make any payment whatsoever to the debtor resulting from the fire of November 24, 1988. (Answer, Affirmative Defenses And Jury Demand Of Allstate To First Amended Complaint, dated May 16, 1990).
This Court heard testimony on July 18, and October 21, 1991. At trial, the parties put on record a number of stipulations, which include the following: the fire occurred on November 24, 1988 and it originated inside the garage area of the house (T1 at 6); the fire was incendiary (T1 at 6); the Township of Deptford received the first report of the fire at 7:13 p.m. on November 24, 1988 (T1 at 5); there was in existence on November 24, 1988, a policy of insurance issued by Allstate Insurance Company to Theresa Johnson and her husband Michael Johnson (T1 at 5); the policy was an Allstate deluxe homeowner's policy form AU9601 (T1 at 5); named on the declaration sheet of the policy as first mortgagee is New York Guardian Mortgage Corporation (T1 at 5); the policy did renew on July 8, 1988, with a policy term of one year (T1 at 5); coverage under the policy for the dwelling loss was $89,000 and coverage under the policy for contents damage was $62,300 (T1 at 7-8); the reasonable cost of repairing the damage to the dwelling caused by the fire at or about a reasonable time after the fire was $68,721.48 (T1 at 7). The parties, however, did not agree that this was the proper measure of recovery under the facts of the case. (T1 at 7).
At trial, Ms. Johnson testified that for about the last four or five years prior to the fire the deed to the house was in her name only, although it originally listed both her name and her husband's name. (T1 at 23). Ms. Johnson testified that she purchased the house in 1980 or 1981. (T1 at 23, 29). She testified that the year before the fire she had occasionally taken in boarders to help her with the mortgage payment. (T1 at 25). But, at the time of the fire there were no boarders. (T1 at 26). Ms. Johnson testified that at the time of the fire the mortgage company, New York Guardian, was paying the cost of the insurance coverage renewal that took place in July of 1988. (T1 at 72).
Ms. Johnson testified that two weeks before the fire, she left her house because the electricity had been disconnected. (T1 at 14, 16). At that time Ms. Johnson testified that she and her three children were staying overnight at 945 Boundary road, Wenonah, New Jersey, with her girlfriend Elaine Bundy, within "five minutes walking" distance of 109 Brookfield Avenue. (T1 at 14-15, 19, 28). She testified that prior to the fire, she had made arrangements to have the electricity reconnected on Friday, November 25, 1988, the day after Thanksgiving Day, the day of the fire. (T1 at 17). She stated at trial that she visited her property about every other day to ensure that everything was in order and to pick up clothes for herself and her children. (T1 at 18, 20). She learned the day of the fire that the water and gas had also been shut off. (T1 at 21-22).
At a deposition, Ms. Johnson stated that on the day of the fire, Thanksgiving Day, November 24, 1988, she had visited her home. (D-1, Examination under Oath dated February 9, 1989 at page 31) (hereinafter "D1 at ____"). Ms. Johnson stated that she shut the front door and that it locked automatically. (D1 at 32). At trial, Mr. John Quinn, a fire investigator with Dove Associates, testified that his investigation of the subject fire on December 1, 1988 established that the fire originated inside the garage and that it was incendiary, that it was set. (T1 at 137). Quinn also testified that the front door lock latch did not go into the keeper, but if it was pulled closed, it would remain shut if a wind did not blow it open. (T1 at 142). He testified that Ms. Johnson told him that she would pull the door shut and leave it in that position. (T1 at 142). He further testified that Ms. Johnson told him that the day before the fire she had visited the house twice, at 5:00 p.m. and 9:30 p.m., that the front door would not lock, but it was still closed and everything was okay. (T1 at 143). Mr. Quinn testified that on December, 1988 he asked Ms. Johnson whether before the fire she had experienced any problem with vandalism or unlawful entry into the subject premises. (T1 at 139). Quinn further testified that Ms. Johnson stated that she had gone on a trip the previous April or May 1988 and that when she returned neighbors had complained to her that children went into the garage and brought out some records...
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