Eighth Circuit Reverses Judgment on Farm Bureau Vandalism Policy
The Eighth Circuit reversed summary judgment on a unique insurance coverage question in Farm Bureau Mut. Ins. Co. v. Wilcox, No. 06-3982 (8/28/07).
Wilcox owned a rental property insured by Farm Bureau for fire and other perils. The tenants moved out in June 2004. In November 2004, Wilcox discovered a running faucet which caused extensive damage, and he submitted a claim. Farm Bureau filed this action seeking a declaration that coverage did not apply.
In Minnesota, fire insurance policies must provide a statutory minimum coverage. The insurer is not liable if the premises were vacant for 60 days or more. See Minn. Stat. § 65A.01, subd. 3. Insurers are able to provide more coverage if they want. Id. The Farm Bureau policy at issue had two provisions affecting vacancy. One provided that coverage was excluded for vandalism or malicious mischief if the premises were vacant for 30 days or more ("Vandalism Provision"). The other provided that, unless limited elsewhere in the policy, no coverage would apply to premises that were vacant for 180 days or more ("Vacancy Provision").
Wilcox only raised the Vandalism Provision to the district court; he did not find the Vacancy Provision. The district court held that the 60-day vacancy provision of the Minnesota statute applied and granted summary judgment to Farm Bureau. In an uncharacteristic move, Wilcox prevailed by raising a new argument on appeal.
The Eighth Circuit expressed its concern with: "The district court's application of the sixty-day exclusion results in an insurer using the Standard Fire Policy as a sword, and an insured losing coverage to a hidden statutory exclusion." Then the court turned to another statute which provides that no policy covering fire can issue in Minnesota unless it either expressly informs the insured of the 60-day vacancy exclusion or provides more generous coverage. See Minn. Stat. § 70A.06, subd. 2.
Farm Bureau's Vacancy Provision, which states no coverage applies if the premises are vacant for 180 days or more, provides more generous coverage. However, Wilcox did not discover this provision until after the appeal was filed. The Eighth Circuit decided to consider this issue because the provision was already in the record on appeal, and injustice would result if Farm Bureau prevailed by failing to advise the district court of this provision.
The Eighth Circuit determined that, as an initial matter, the Vacancy Provision (180 days) applies instead of the statute (60 days). Summary judgment is reversed, but, if the damage was caused by vandalism, the 30-day period of the Vandalism Provision applies. There is conflicting evidence on the cause of the damage, which must be taken up by the district court on remand.
