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Fisher v. Garrison Property and Casualty Insurance Co.

Supreme Court of Idaho

April 28, 2017

SHAMMIE L. FISHER, Plaintiff-Appellant,
v.
GARRISON PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Respondent.

         2017 Opinion No. 39

         Appeal from the District Court of the Fourth Judicial District of the State of Idaho, in and for Ada County. Hon. Patrick H. Owen, District Judge.

         The judgment of the district court is vacated.

          James G. Reid, Kaufman Reid, PLLC, Boise, argued for appellant.

          Jeffrey A. Thomson, Elam & Burke, P.A., Boise, argued for respondent.

          EISMANN, JUSTICE.

         This is an appeal out of Ada County from a judgment dismissing the Plaintiff's action seeking to recover under an insurance policy for the loss of her house caused when a renter, who had an option to purchase the house, demolished it. The district court held that coverage for such loss was excluded under the policy. We vacate the judgment of the district court and remand this case for further proceedings that are consistent with this opinion.

         I. Factual Background.

         The Plaintiff, Shammie L. Fisher, was the owner of a house located at 2510 N. 34th Street in Boise. It was a single-story building that had been built in 1965 and contained 1152 square feet with an attached one-car garage. She purchased a policy of insurance covering the house from the Defendant, Garrison Property and Casualty Insurance Company. The policy period was from March 8, 2012, to March 8, 2013, and she renewed the policy for the period from March 8, 2013, to March 8, 2014.

         The Plaintiff married and decided to sell her house. She entered into a "Real Estate Purchase and Sale Agreement" ("Purchase Agreement") dated January 23, 2012, with Ron Reynoso. The Purchase Agreement provided that Mr. Reynoso would purchase the property for $153, 000; that the purchase was contingent upon him obtaining financing; that he intended to occupy the property as his primary residence; that the closing would occur no later than March 31, 2013; that Mr. Reynoso would lease the property from March 15, 2012, until March 31, 2013; and that if the he was unable to close before March 31, 2013, the Plaintiff would extend the lease on a month-to-month basis for a period up to September 1, 2013. The Purchase Agreement also included a provision stating: "Buyer intends to make certain improvements to the property upon possession, with the intent to sell the property for a profit which might be prior to the end of the lease period. The buyer is required to give a monthly update for plans/upgrades."

         In conjunction with the Purchase Agreement, the Plaintiff and Mr. Reynoso entered into a "Rental Agreement" also dated January 23, 2012. It stated that the move-in date was March 1, 2012, although an addendum to the Purchase Agreement changed the lease start date to March 15, 2012, with the rent prorated accordingly. The Rental Agreement stated that the Plaintiff was obligated to rent the property for a minimum term ending on March 31, 2013 and that "Tenant shall return said premises to Owner is as good condition as when received, reasonable wear and tear excepted."

         Within two months of renting the property to Mr. Reynoso, the Plaintiff learned that he had demolished the entire house down to the foundation. She contacted him, and he agreed to rebuild a house on the foundation. He commenced doing so, erecting some rough framing of some interior and exterior walls, but in August 2013 he ceased working on the house and left. The Plaintiff then made a claim under her insurance policy, which the Defendant denied.

         On May 27, 2015, the Plaintiff commenced this action seeking to recover for the loss of her house and her personal property. She later filed a motion for partial summary judgment, seeking a ruling that her loss was covered under the policy. In her affidavit in support of that motion, she stated that she had no knowledge that Mr. Reynoso intended to destroy the house; that the improvements that he had discussed with her included new flooring, countertops, light fixtures, paint, and other cosmetic improvements; that she did not authorize him to perform any work to remodel or tear down the house or to perform any structural work; and that he said he would be residing in the house while making improvements.

         The Defendant moved for summary judgment seeking dismissal of this action. It contended that the Plaintiff's loss was excluded by two provisions of the policy: (1) an exclusion for intentional loss and (2) an exclusion for faulty, inadequate or defective work.

         The district court held that the intentional-loss exclusion did not apply, but that the exclusion for faulty, inadequate or defective work did apply. It denied the Plaintiff's motion for partial summary judgment, granted the Defendant's motion for summary judgment, and entered a judgment dismissing this lawsuit with prejudice. The Plaintiff then timely appealed.

         II. Did the District Court Err in Granting the Defendant's Motion for Summary Judgment?

         When reviewing on appeal the granting of a motion for summary judgment, we apply the same standard used by the trial court in ruling on the motion. Infanger v. City of Salmon, 137 Idaho 45, 46-47, 44 P.3d 1100, 1101-02 (2002). We construe all disputed facts, and draw all reasonable inferences from the record, in favor of the non-moving party. Id. at 47, 44 P.3d at 1102. Summary judgment is appropriate only if the evidence in the record and any admissions show that there is no genuine issue of any material fact regarding the issues raised in the pleadings and that the moving party is entitled to judgment as a matter of law. Id.

         Under Coverage A, the insurance policy applied to "the dwelling on the Described Location shown in the Declarations, used principally for dwelling purposes, including structures attached to the dwelling." The described location was 2510 N. 34th Street, Boise, Idaho. Thus, Coverage A applied to the dwelling at 2510 N. 34th Street, Boise, Idaho, which was the Plaintiff's house.

         The perils insured against under Coverage A were "risk of direct loss to property described in Coverage[] A . . . if that loss is a physical loss to property." Thus, the loss must be a direct physical loss to the Plaintiff's house. The policy then stated

however, we do not insure loss:
1. involving collapse, other than as provided in Other Coverages 10:
2. caused by: [a list of causes]
3. excluded under General Exclusions.

         Under Items 1 and 2, any ensuing loss to property described in Coverage[] A . . . not excluded or excepted in this policy is covered.

         There is no contention that the Plaintiff's loss would be excluded pursuant to either Item 1 or Item 2. The contention is that the loss is excluded under Item 3, which is a list of exclusions under the title "General Exclusions." Thus, the policy would cover a direct physical loss to the Plaintiff's house if it was a loss that was not excluded pursuant to the exclusions listed under General Exclusions.

         In the district court, the Defendant contended that there were two exclusions that would apply. The first was the ...


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