Wells Fargo Bank, N.A. v. Allstate Ins. Co.

• Decision Date: 21 November 2017
• Docket Number: Case No. 4:15CV0239
• Citation: 290 F.Supp.3d 715
• Parties: WELLS FARGO BANK, N.A., Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Ohio

290 F.Supp.3d 715

WELLS FARGO BANK, N.A., Plaintiff,

v.ALLSTATE INSURANCE COMPANY, Defendant.

Case No. 4:15CV0239

United States District Court, N.D. Ohio, Eastern Division.

Signed November 21, 2017

Anthony C. White, Philip B. Sineneng, Thompson Hine, Columbus, OH, for Plaintiff.

Margo Stoffel Meola, Bonezzi, Switzer, Polito & Hupp, Canfield, OH, for Defendant.

MEMORANDUM OF OPINION AND ORDER

[Resolving ECF Nos. 36, 38, and 43 ]

PEARSON, District Judge.

Plaintiff Wells Fargo Bank, N.A., ("Wells Fargo") brought the present action against Allstate Insurance Company ("Allstate") on February 5, 2015 asserting claims for breach of contract, declaratory judgment, specific performance, and unjust enrichment. The parties submitted cross-motions for summary judgment on the issue of whether arson is an excluded loss under a homeowner's policy which prohibits coverage for "vandalism and malicious mischief" when a home has been vacant for 30 or more consecutive days. The Court has been advised, having reviewed the record, the parties' briefs, and the applicable law. For the reasons set forth below, Wells Fargo's motion is granted and Defendant's motion is denied.

I. Stipulated Facts

The stipulated facts¹ are as follows:

1. The terms of Allstate Property and Casualty Insurance Company Homeowners Policy No. 9 80 584930 09/20 (the "Policy"), executed with Antoniano Delsignore for a single-family home located at 7376 Yellow Creek Drive in Poland, Ohio (the "Property"), govern the dispute between the parties in the above-captioned action.

2. At all relevant times, Wells Fargo was the insured mortgagee under the Policy.

3. Mr. Delsignore defaulted on his mortgage payments in 2013, and by the end of the year, the Property was vacant.

4. On February 6, 2014, a fire caused by an unknown arsonist (the "Arson") damaged the Property.

5. The Policy was in effect at the time of the Arson.

6. Wells Fargo filed an insurance claim under the Policy for the damage caused by the Arson.

7. Allstate denied Wells Fargo's claim based upon the exclusion in the Policy which precludes coverage for losses caused by vandalism and/or malicious mischief when the Property has been vacant or unoccupied for 30 or more consecutive days prior to the loss.

8. Wells Fargo and Allstate disagree over the applicability of the exclusion described in Paragraph 7 (above) to the Arson.

II. Procedural History

Wells Fargo filed the within lawsuit against Allstate in February 2015. There is no Ohio legal precedent deciding whether "malicious mischief" or "vandalism" exclusions in homeowners' insurance policies include losses that occur as a result of arson. The Court certified the question to the Supreme Court of Ohio, and the high court accepted the certification on September 30, 2015. On May 18, 2016, the Supreme Court of Ohio issued an order that the certification was improvidently allowed and declined to answer the question presented.² Wells Fargo Bank, N.A. v. Allstate Ins. Co. , 146 Ohio St.3d 232, 54 N.E.3d 1227 (2016) (ECF No. 30 ). Thereafter, both parties submitted cross-motions for summary judgment regarding the issue of whether arson falls within an exclusion for "vandalism or malicious mischief" under the Policy.

III. Standard of Review

Summary judgment is appropriately granted when the pleadings, the discovery and disclosure materials on file, and any affidavits show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Johnson v. Karnes , 398 F.3d 868, 873 (6th Cir. 2005). The moving party is not required to file affidavits or other similar materials negating a claim on which its opponent bears the burden of proof, so long as the movant relies upon the absence of the essential element in the pleadings, depositions, answers to interrogatories, and admissions on file. Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party must "show that the non-moving party has failed to establish an essential element of his case upon which he would bear the ultimate burden of proof at trial." Guarino v. Brookfield Twp. Trustees. , 980 F.2d 399, 403 (6th Cir. 1992).

Once the movant makes a properly supported motion, the burden shifts to the non-moving party to demonstrate the existence of genuine dispute. An opposing party may not simply rely on its pleadings. Rather, it must "produce evidence that results in a conflict of material fact to be resolved by a jury." Cox v. Ky. Dep't. of Transp. , 53 F.3d 146, 150 (6th Cir. 1995). The non-moving party must, to defeat the motion, "show that there is doubt as to the material facts and that the record, taken as a whole, does not lead to a judgment for the movant." Guarino , 980 F.2d at 403. In reviewing a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party when deciding whether a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Adickes v. S.H. Kress & Co. , 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

The United States Supreme Court, in deciding Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), stated that in order for a motion for summary judgment to be granted, there must be no genuine issue of material fact. Id. at 248, 106 S.Ct. 2505. The existence of some mere factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). A fact is "material" only if its resolution will affect the outcome of the lawsuit. In determining whether a factual issue is "genuine," the court must decide whether the evidence is such that reasonable jurors could find that the non-moving party is entitled to a verdict. Id. Summary judgment "will not lie...if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To withstand summary judgment, the non-movant must show sufficient evidence to create a genuine issue of material fact. Klepper v. First Am. Bank , 916 F.2d 337, 342 (6th Cir. 1990). The existence of a mere scintilla of evidence in support of the non-moving party's position ordinarily will not be sufficient to defeat a motion for summary judgment. Id. This standard of review does not differ when reviewing cross-motions for summary judgment versus a motion filed by only one party. U.S. SEC v. Sierra Brokerage Servs., Inc. , 712 F.3d 321, 327 (6th Cir. 2013). In Ohio, interpretation of insurance contracts is a matter of law for the courts. Medpace, Inc. v. Darwin Select Ins. Co. , 13 F.Supp.3d 839, 843–44 (S.D. Ohio 2014).

IV. Relevant Policy Language

The Policy at issue provides coverage for three types of property damage. Coverage A is for dwelling protection, Coverage B is for other structures protection, and Coverage C is for personal property protection. ECF No. 35–1 PageID # : 213. Wells Fargo filed its claim for the Arson under Coverage A. The relevant portions of the Policy are as follows:

Definitions Used in This Policy

* * *

4. Dwelling —means the single family building structure identified as the insured property on the Policy Declarations, where you reside and which is principally used as a private residence.

ECF No. 35–1 PageID # : 214–15 (emphasis in original).

Section I—Your Property

Coverage A

Dwelling Protection

Property We Cover Under Coverage A:

1. Your dwelling including attached structure. Structures connected to your dwelling by only a fence, utility line, or similar connection are not considered attached structures.

ECF No. 35–1 PageID # : 218 (emphasis in original).

Losses We Cover Under Coverage C:

We will cover sudden and accidental direct physical loss to the property described in Coverage C—Personal Property Protection , except as limited or excluded in this policy, caused by:

1. Fire or Lightning.

* * *

8. Vandalism and Malicious Mischief.

We do not cover vandalism or malicious mischief if your dwelling has been vacant or unoccupied for more than 30 consecutive days immediately prior to the vandalism or malicious mischief. A dwelling under construction is not considered vacant or unoccupied.

ECF No. 35–1 PageID # : 220–21 (emphasis in original).

Additional Protection

* * *

10. Arson Reward

We will pay up to $5,000 for information leading to an arson conviction in connection with a fire loss to property covered under Section I of this policy. The $5,000 limit applies regardless of the number of persons providing information.

ECF No. 35–1 PageID # : 222–24 (emphasis in original).

Losses We Do Not Cover Under Coverage A, Coverage B and Coverage C

A. We do not cover loss to the property described in Coverage A—Dwelling Protection or Coverage B—Other Structures Protection consisting of or caused by the following:

* * *

6. Vandalism or Malicious Mischief if your dwelling is vacant or unoccupied for more than 30 consecutive days immediately prior to the vandalism or malicious mischief. A dwelling under construction is not considered vacant or unoccupied.

ECF No. 35–1 PageID # : 225–26 (emphasis in original).

V. Analysis

The issue of whether arson falls within an exclusion for vandalism or malicious mischief is one of first impression in Ohio. Other jurisdictions have, however, decided this issue. For instance, several courts have found that an exclusion for vandalism and/or malicious mischief does not encompass arson, particularly where the policy distinguishes between arson and vandalism and/or malicious mischief. See , e.g., R & J Dev. Co. LLC. v. Travelers Prop. Cas. Co. of Am. , No.11–47–ART, 2012 WL 1598088, at *1 (E.D. Ky. May 7, 2012) ("Although the term ‘vandalism’ is undefined, the language and structure of the policy make clear that ‘vandalism’ does not include damage due to intentionally set fires."); Bates v. Hartford Ins. Co. of the Midwest , ...