Pappas Enterprises, Inc. v. Commerce and Industry Ins. Co.
| Decision Date | 14 February 1996 |
| Citation | 661 N.E.2d 81,422 Mass. 80 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | PAPPAS ENTERPRISES, INC., & others 1 v. COMMERCE AND INDUSTRY INSURANCE COMPANY. |
CERTIFICATION of questions of law to the Supreme Judicial Court by the United States District Court for the District of Massachusetts.
Robert J. Murphy, Jr., Boston, for plaintiffs.
Michael A. Pezza, Jr., Boston, (Christian W. Habersaat with him), for defendant.
Before LIACOS, C.J., and WILKINS, O'CONNOR, GREANEY and FRIED, JJ.
The plaintiffs, whom we shall refer to collectively as the insured, are beneficiaries of an insurance policy issued by the defendant insurer that provided coverage against fire loss to numerous properties in the Boston area. The policy, which became effective on September 1, 1990, was a renewal of property damage policies that had been issued on September 1, 1988, and September 1, 1989. On October 27, 1990, fifty-seven days after the effective date of the policy then in effect, one of the covered properties was damaged by fire. That property had been vacant since May, 1989, a period of well over a year.
When the insurer declined liability for the fire loss, the insured commenced an action in the United States District Court for the District of Massachusetts. In defense of the claim, the insurer relied in part on policy language, prescribed by G.L. c. 175, § 99 [Twelfth] (1994 ed.), that excluded liability for a loss occurring while the described premises "are vacant or unoccupied beyond a period of sixty consecutive days." The facts presented the question whether the period of sixty consecutive days of vacancy included only days during the policy period in which the loss occurred or could also include consecutive days of vacancy during the prior policy period.
A District Court judge determined that (1) the policy provision was inherently ambiguous; (2) there was no controlling Massachusetts authority; (3) cases elsewhere relied on factors not applicable in the circumstances of this case; and (4) the ambiguity is "contained in every fire insurance policy written in Massachusetts." She invoked S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981), and certified the following two questions to this court:
We conclude that consecutive days of vacancy occurring prior to the policy period may be counted toward the sixty days of vacancy, referred to in the vacancy exclusion provision, only if the current policy is a renewal of substantially the same coverage of the damaged property provided in the previous policy period.
1. Today, and since its insertion in the General Laws (by St.1951, c. 478), § 99 [Twelfth] of G.L. c. 175 has required that a policy state that, unless it otherwise provides, the insurer of premises of the kind involved in this case "shall not be liable for loss occurring ... (b) while the described premises, whether intended for occupancy by owner or tenant, are vacant or unoccupied beyond a period of sixty consecutive days." Prior to the 1951 amendment, the relevant statute had required that the standard Massachusetts policy provide that the policy was void "if the premises hereby insured shall become vacant by the removal of the owner or occupant, and so remain vacant for more than thirty days." In Wainer v. Milford Mut. Fire Ins. Co., 153 Mass. 335, 339, 26 N.E. 877 (1891), the court construed that former language to mean a vacancy of thirty days commencing while the policy was in force. The words "shall become vacant" pointed to a prospective event, a future vacancy. Id. The language of the current § 99 concerning premises that "are vacant" for more than sixty days is not as clearly prospective in its focus. The 1951 change in the relevant language tends to suggest that the Legislature may have no longer intended that the focus should be only on a prospective vacancy.
The Legislature may not, however, have had its eye on the Wainer case when it placed the relevant language in § 99. That language came from the New York standard fire insurance policy, which was adopted in most States by statute and was adopted in Massachusetts in part. See Annot. of the 1943 Standard Fire Insurance Policy 3 (ed. ABA Tort and Insurance Practice Section, 2d ed. 1994); Vance on Insurance 807-808 (3d ed. 1951). The old standard form policy used nationally (but not here) and replaced generally in this country by the New York standard fire insurance policy, provided that, if premises "be or become vacant or unoccupied and so remain for ten days," the policy was void. See Old Colony Ins. Co. v. Garvey, 253 F.2d 299, 301 (4th Cir.1958); Thomas v. Industrial Fire & Casualty Co., 255 So.2d 486, 488 (La.App.1971). The abandonment of the old form ("be or become vacant") in favor of the less certain "are vacant" provision was a move away from voiding a policy or coverage based on a vacancy existing at the policy's inception.
We decline to interpret language used in a national standard policy to have a special Massachusetts meaning simply because of an implication that could be derived from an uncertain legislative history. The language "are vacant" (which replaced "be or become vacant") has been consistently regarded as referring only to a vacancy occurring after the commencement of coverage. See Home Mut. Fire Ins. Co. v. Pierce, 240 Ark. 865, 402 S.W.2d 672, 674-675 (1966); Kolivera v. Hartford Fire Ins. Co., 8 Ill.App.3d 356, 360-361, 290 N.E.2d 356 (1972); Thomas v. Industrial Fire & Casualty Co., 255 So.2d 486, 488 (La.App.1971); Hurst v. Donegal & Conoy Mut. Fire Ins. Co., 224 S.C. 188, 78 S.E.2d 189, 191 (1953); Old Colony Ins. Co. v. Garvey, 253 F.2d 299, 302 (4th Cir.1958) (North Carolina law); United States Fidelity & Guar. Co. v. Board of Educ. of Fairfield, 339 F.Supp. 315, 318 (N.D.Ala.1972) (Alabama law).
Some opinions holding that the entire vacancy must occur during the policy period resolve the policy ambiguity by reliance on the principle that ambiguities should be construed against the insurer. See Home Mut. Ins. Co. v. Pierce, supra 402 S.W.2d at 675; Old Colony Ins. Co. v....
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