Kugler v. Philadelphia Fire & Marine Ins. Co.

• Decision Date: 13 May 1952
• Docket Number: Civ. A. No. 899.
• Citation: 105 F. Supp. 158
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: KUGLER v. PHILADELPHIA FIRE & MARINE INS. CO.

105 F. Supp. 158

KUGLER v. PHILADELPHIA FIRE & MARINE INS. CO.

Civ. A. No. 899.

United States District Court E. D. Louisiana, Baton Rouge Division.

May 13, 1952.

Gladney, White & May, Joseph A. Gladney, Baton Rouge, La., for plaintiff.

Robert W. Williams, Jr., Baton Rouge, La., for defendant.

WRIGHT, District Judge.

This action is based on a fire insurance policy covering the premises owned by the plaintiff at 4110 Prescott Road, Baton Rouge, Louisiana. A fire totally destroyed the insured property on January 30, 1951. Relying on the vacancy clause of the policy¹ the defendant denies liability.

On July 20, 1950 the premises in question became vacant when the tenant to whom they had been let moved. On August 3, 1950 a small fire occurred in the interior of the house on the premises and defendant paid the plaintiff $189.20 to cover the damage occasioned by the fire. The house continued to remain vacant, however, and on October 22, 1950 a second fire occurred. The loss by this fire was adjusted on November 9, 1950 and on November 17, 1950 plaintiff was paid the sum of $260 to cover the damages. The house continued to remain unoccupied and on January 30, 1951 it burned down, a total loss.

Defendant has refused to adjust the loss occasioned by the third fire and pay the plaintiff the damage caused thereby because the house at the time of the fire was vacant and had been so beyond a period of sixty consecutive days. Defendant contends further that the premises were unoccupied for a period of over sixty days prior to the fire on October 22, 1950 and that it had indemnified the plaintiff for his loss in that fire on plaintiff's false representation that the premises had been occupied up to within three weeks of that fire.

Plaintiff admits that the premises were unoccupied from July 20, 1950 until the house was totally destroyed on January 30, 1951. He states, however, that under endorsement No. 2-e(c) of the policy² the insurer granted the owner permission to make alterations, additions and repairs to the premises and that while repairs were being made, operation of the vacancy clause was suspended. Secondly, plaintiff contends that the vacancy clause is likewise suspended during the period the premises were uninhabitable by reason of damage from the fires. He maintains further that under the option provisions of the policy³ the company had the right to repair the damage wrought by the fire itself by declaring its intention to do so within thirty days after receipt of the proof of loss and that during said period the vacancy clause was likewise suspended.

The vacancy clause in question providing that the company will not be liable for any loss occurring when the premises are vacant or unoccupied beyond a period of sixty days is a provision required by state law in all fire insurance policies.⁴ Prior to the passage of this statute it had been the practice of fire insurance companies to provide in their policies that the company would not be liable for any loss of or damage to premises which were unoccupied at the time of the fire, it being an accepted fact, as this case certainly tends to prove, that the risk or hazard of fire is increased when a building is unoccupied. In order to protect the insured against arbitrary enforcement of this provision in cases where the premises are necessarily vacant for short periods of time, the Legislature of Louisiana passed the statute requiring that the sixty day vacancy provision be incorporated in all fire policies.

Endorsement No. 2-e(c) of the policy, likewise required by state law, which authorizes the insured to make repairs to the premises is in no way related to this vacancy clause as plaintiff contends. The two provisions are entirely separate and independent. Endorsement No. 2-e(c) gives the insured the right to make repairs on the premises and covers all lumber and building materials on the premises or adjacent thereto to be used in making the repairs. Endorsement No. 2-e(c) does not anticipate that the premises will necessarily be vacant during these repairs. If the repairs to be effected are of such a nature as to require the building to become vacant, that is, the inhabitants moved out together with all their furnishings, then the owner would be required to apply to the company for a waiver of the vacancy clause if he believes the repairs will keep the building unoccupied for a period of over sixty days. If such application for waiver is made, the company can then determine whether or not the risk involved requires an adjustment of the rate. To interpret these provisions as allowing the owner an indefinite time to make repairs, plus sixty days, would not only increase the risk which the defendant has underwritten but would amount to a reformation of the contract where no reformation is required. In this connection it should be observed that the two provisions in question are provisions required in all fire policies by state law. The Legislature of the State of Louisiana chose the language and content of the clauses, and consequently the principle that the policy is to be construed against the company does not apply.

Plaintiff's second contention is that the vacancy clause is suspended while the building is uninhabitable by reason of damage from the previous fire. It is true that in interpreting absolute vacancy clauses, that is, clauses which provide for no grace period before the vacancy clause becomes effective, the majority of the courts have held that in spite of the vacancy clause in the policy, the owner is allowed a reasonable time to make his building habitable before the insurer may avail himself of the vacancy clause to deny liability under the policy. Gash v. Home Insurance Company, 153 Ill.App. 31; Farmers' M. E....