Ted C. Smith v. The Shelby Insurance Company of The Shelby Insurance Group

I N THE COURT OF APPEALS OF TENNESSEE

TED C. SM TH, I ) C/ A NO. 03A01- 9603- CH- 00076 FILED ) WASHI NGTON COUNTY CHANCERY COURT July 18, 1996 Pl a i nt i f f - Appe l l e e , ) ) Cecil Crowson, Jr. ) Appellate C ourt Clerk ) ) ) v. ) HONORABLE G. RI CHARD J OHNSON, ) CHANCELLOR ) ) ) ) THE SHELBY I NSURANCE COM PANY ) OF THE SHELBY I NSURANCE GROUP, ) REVERSED ) COMPLAI NT DI SM SSED I De f e nda nt - Appe l l a nt . ) REMANDED

ALBERT J . HARB o f HODGES, DOUGHTY & CARSON, Knoxvi l l e , f or Ap p e l l a nt

MARK S. DESSAUER o f HUNTER, SM TH & DAVI S, Ki ngs por t , f or I Ap p e l l e e

O P I N I O N

Sus a no, J .

Thi s i s a de c l a r a t or y j udgme nt a c t i on. The c ompl a i nt s e e ks a de c l a r a t i on t ha t a l os s c a us e d by da ma ge t o t he p l a i n t i f f ’ s bui l di ng i s c ove r e d unde r a c omme r c i a l pr ope r t y i n s u r a n c e pol i c y i s s ue d by The She l by I ns ur a nc e Compa ny ( She l b y ) . Fo l l o wi ng a be nc h t r i a l , t he Cha nc e l l or he l d t ha t t he r e wa s c o v e r a g e unde r t he pol i c y a nd a wa r de d t he pl a i nt i f f a j udgme nt f o r $ 1 2 , 352. 92. She l by a p pe a l s , a r gui ng t ha t t he r e i s no c ov e r a ge be c a us e t he pr e mi s e s we r e va c a nt a t t he t i me of t he l os s . I t a l s o a r gue s t ha t t he l os s i s not c ove r e d be c a us e t he p o l i c y e xc l ude s c ove r a ge f or da ma ge s “ [ c ] a us e d by or r e s ul t i ng f r o m t he f t . ” The p l a i nt i f f , Te d C. Smi t h ( Smi t h) , r a i s e s , a s a n a d d i t i ona l i s s ue , t h e f a i l ur e of t he t r i a l c our t t o a wa r d t he s t a t u t o r y ba d f a i t h pe na l t y a ut hor i z e d by T. C. A. § 56- 7- 105( a ) .

Our r e vi e w i s de nov o; howe ve r , t he r e c or d c ome s t o u s a c c o mp a ni e d by a pr e s umpt i on of c or r e c t ne s s t ha t we mus t honor u n l e s s t he e vi de nc e pr e ponde r a t e s a ga i ns t t he t r i a l c our t ’ s f i nd i ng s o f f a c t . Rul e 1 3( d) , T. R. A. P. ; Ci t y of Ki ngs por t v .

St e wa r t , 920 S. W 2d 658 ( Te nn. App. 1995) . . The t r i a l c our t ’ s

c o n c l u s i ons of l a w a r e not e nt i t l e d t o a pr e s umpt i on of

c or r e c t ne s s . Uni on Car bi de Cor p. v . Huddl e s t on, 854 S. W 2d 87 , .

9 1 ( Te n n. 1993) .

I

On or a bout M r c h 2, 1993, a n unknown pe r s on ( or a

p e r s o n s ) s ur r e pt i t i ous l y e nt e r e d a bui l di ng i n whi c h Smi t h wa s wa r e h o u s i ng pe r s ona l pr ope r t y a nd r i ppe d out e l e c t r i c a l wi r i ng, p l u mb i n g pi pe s , a nd c onde n s e r c oi l s i n t he a i r c ondi t i oni ng s y s t e m, i n or de r t o e xt r a c t c oppe r wi r i ng a nd t ubi ng. I n t he p r o c e s s of r e movi ng t he c o ppe r , t he i ndi vi dua l ( s ) di d e xt e ns i ve d a ma g e t o t he i nt e r i or of t he bui l di ng. Smi t h r e por t e d t he i nc i de n t t o t he p ol i c e , who i n t he i r r e por t l i s t e d t he i nc i de n t a s a t he f t . The r e a f t e r , Smi t h f i l e d a c l a i m wi t h t he i ns ur a nc e a g e n t t hr ough whom t he pol i c y ha d be e n s e c ur e d.

On Apr i l 5, 1993, a r e pr e s e nt a t i ve of She l by s e nt Smi t h a l e t t e r , whi c h s t a t e d, i n pa r t , a s f ol l ows :

I n or de r t ha t t h e Compa ny ma y c ont i nue t o ha ndl e t hi s ma t t e r , we wa nt you t o know t ha t we a r e pr oc e e di ng unde r a Re s e r va t i on of Ri ght s . W a r e r e s e r vi ng our r i ght s unde r e t he pol i c y f or t he f ol l owi ng r e a s ons :

• • * * *

6. Vac anc y I f t he bui l di ng whe r e l os s or da ma ge oc c ur s ha s be e n va c a nt f or mor e t ha n 60 c ons e c ut i ve da ys be f or e t ha t l os s or da ma ge , we wi l l : a. Not pa y f or a ny l os s or da ma ge c a us e d by a ny of t he f ol l owi ng e ve n i f t he y a r e Cove r e d Ca us e s of Los s : ( 1) Va nda l i s m; ( 5) Th e f t ; or ( 6) At t e mpt e d t he f t .

As you c a n s e e f r om t he a bove , i t i s pr oba bl e t ha t a l l or a pa r t of your l os s ma y not be c ove r e d unde r your i ns ur a nc e pol i c y. W e s ha l l c ont a c t yo u f ur t he r a s s oon a s a de c i s i on r e ga r di ng c ove r a ge ha s be e n ma de .

( b o l d p r i nt i n or i gi na l ) . On J une 1, 1993, She l by s e nt Smi t h a l e t t e r de nyi ng c ove r a ge . Tha t c or r e s ponde nc e a l s o r e l i e d upon t h e v a c a nc y pr ovi s i on. No me nt i on wa s ma de of a ny ot he r pol i c y p r o v i s i on i n e i t he r l e t t e r .

On J a nua r y 6, 1994, t he pl a i nt i f f f i l e d t he c ompl a i n t

i n t h e c a s e a t ba r . She l by’ s a ns we r wa s f i l e d on M r c h 7, 199 4 . a

On Augus t 28, 1995, She l by f i l e d a M i on t o Ame nd i t s ot

An s we r t o i nc l ude , a mong ot he r t hi ngs , t he f ol l owi ng de f e ns e :

. . . unde r “ Ca u s e s of Los s - Ba s i c For m, s ubs e c t i on 8" , t he de f e nda nt a ve r s t ha t no c ove r a ge i s pr ovi de d f or va nda l i s m c a us e d by or r e s ul t i ng f r om t he f t e xc e pt f or t he bui l di ng da ma ge c a us e d by t he br e a ki ng i n or e xi t i ng of bur gl a r s .

The Cha nc e l l or c onduc t e d a he a r i ng on Se pt e mbe r 8, 1995. He f ound t he f ol l owi ng ope r a t i ve f a c t s pe r t a i ni ng t o t h e c a us e of t he l os s :

Some one . . . got i nt o t ha t pr ope r t y . . . a nd r i ppe d out t he e l e c t r i c a l c ondui t a nd pa r t s of he a t pu mps a nd a i r c ondi t i oni ng e qui pme nt , a nd ge ne r a l l y, r i ppe d t he i nt e r i or of t he bui l di ng a pa r t , e vi de nt l y t o t a ke t he c oppe r out of t he c ondui t a nd out of t he a i r

c ondi t i one r a nd out of ot he r i nt e r i or pa r t s a nd por t i ons of t he bui l di ng, a nd r e move d t ha t c oppe r a nd t ook i t wi t h t he m l e a vi ng t he bui l di ng i n a da ma ge d c ondi t i on.

He d e t e r mi ne d t ha t t he “ va c a nc y” pr ovi s i on r e f e r r e d t o i n t he c o mp a n y ’ s r e s e r va t i on of r i ght s l e t t e r wa s not a ppl i c a bl e ,

f i n d i n g t ha t t he pr ope r t y wa s i n f a c t oc c upi e d by Smi t h a nd be i n g 1 u t i l i z e d by hi m a s a wa r e hous e . Cur i ous l y, t he Cha nc e l l or di d

n o t a d d r e s s , i n a ny wa y, She l by’ s de f e ns e ba s e d upon t he 2 e x c l u s i ona r y l a ngua ge pe r t a i ni ng t o l os s c a us e d by t he f t .

II

I n Tat a v . Ni c ho l s , 848 S. W 2d 649 ( Te nn. 1993) , t he .

Su p r e me Cour t r e i t e r a t e d t he f a mi l i a r ge ne r a l pr i nc i pl e s a p p l i c a bl e t o t he c ons t r uc t i on of i ns ur a nc e pol i c i e s :

The analysis used in construing insurance policies is well settled. "Insurance contracts like other contracts should be construed so as to give effect to the intention and express language of the parties." Blaylock & Brown Construction, Inc. v. AIU Insurance Co., 796 S.W.2d 146, 149 (Tenn. App. 1990). Words in an insurance policy are given their common and ordinary meaning. Where language in an insurance policy is susceptible of more than one reasonable interpretation, however, it is ambiguous. See e.g., Moss v. Golden Rule Life Insurance Co., 724 S.W.2d 367, 368

1 The Chancellor also rejected Shelby’s defense that Smith did not have an insurable interest in the property. Shelby did not appeal this ruling. 2 Our review is not restricted to the trial court’s findings. We must determine if the result reached by the lower court is correct regardless of “the reasoning employed to reach the result.” Kelly v. Kelly, 679 S.W.2d 458, 460 (Tenn. App. 1984).

(Tenn. App. 1986). Where the ambiguous language limits the coverage of an insurance policy, that language must be construed against the insurance company and in favor of the insured. Allstate Insurance Co. v. Watts, 811 S.W.2d 883, 886 (Tenn. 1991).

Id. at 650. We approach our de novo review with these principles in mind.

III

Al t hough not a ddr e s s e d by t he Cha nc e l l or , we be l i e ve Sh e l b y ’ s de f e ns e ba s e d upon t he “ t he f t ” e xc l us i on i s di s pos i t i v e o f t hi s a ppe a l . The r e f or e , we wi l l f i r s t a ddr e s s t ha t i s s ue . We wi l l , a s a p a r t of o ur i nqui r y, e xa mi ne t he pl a i nt i f f ’ s t he or y t h a t Sh e l by s houl d not be pe r mi t t e d t o a s s e r t t hi s e xc l us i on u n d e r t he f a c t s o f t hi s c a s e .

Smi t h a r gue s t ha t be c a us e ne i t he r t he r e s e r va t i on of r i g h t s l e t t e r nor t he c ove r a ge de ni a l l e t t e r me nt i one d t he da ma g e “ [ c ] a u s e d by or r e s ul t i ng f r om t he f t ” e xc l us i ona r y pr ovi s i on, Sh e l b y ha s e i t he r wa i ve d i t s r i ght s unde r t ha t pr ovi s i on or i s

e q u i t a b l y e s t oppe d f r om r e l yi ng upon t hos e r i ght s . W di s a gr e e . e

I t i s c l e a r t ha t She l by ha s not e x pr e s s l y wa i ve d r e l i a n c e on t he “ t he f t ” pr ovi s i on, a s t he r e s e r va t i on of r i ght s l e t t e r c ont a i ns t he f ol l owi ng s t a t e me nt :

No a c t of a ny Compa ny r e pr e s e nt a t i ve , whi le i nve s t i ga t i ng, n e got i a t i ng s e t t l e me nt of t he c l a i m o r d e f e ndi ng a l a ws ui t , s ha l l be c ons t r ue d a s wa i vi ng a ny Compa ny r i ght s . The Compa ny r e s e r ve s t he r i ght unde r t he pol i cy t o de ny c ove r a ge t o your [ s i c ] or a nyone c l a i mi ng c ove r a g e unde r t he pol i c y.

Th e q u e s t i on t he n i s whe t h e r She l by s houl d be e qui t a bl y e s t opp e d f r o m a s s e r t i ng t hi s e xc l us i ona r y pr ovi s i on. As s t a t e d by t he

Co u r t o f Appe a l s i n t he c a s e of Gi t t e r v . Te nne s s e e Far me r s M . ut

I ns . Co . , 450 S. W 2d 780, 783 ( Te nn. App. 1969) , .

[ t ] he e s s e nt i a l e l e me nt s of a n e qui t a bl e e s t oppe l a s r e l a t e d t o t he pa r t y c l a i mi ng t he e s t oppe l , a r e , ( 1) l a c k of knowl e dge a nd of t he me a ns of knowl e dge of t he t r ut h a s t o t he f a c t s i n que s t i o n; ( 2) r e l i a nc e upon t he c onduc t of t he p a r t y e s t oppe d, a nd ( 3) a c t i on ba s e d t he r e on o f s uc h a c ha r a c t e r a s t o c ha nge hi s pos i t i on pr e j udi c i a l l y. Pr ov i de nt W hi ngt on I ns . Co. v . Re e s e ( 1963) , 213 as Te nn. 355, 373 S. W 2d 613. .

I d. The Gi t t e r c our t not e d t ha t “ t he c r ux of t he i s s ue on e q u i t a b l e e s t oppe l i s whe t he r t he c ompl a i na nt r e l i e d on t he s e s t a t e me nt s a nd t hi s c onduc t a nd t he r e by c ha nge d he r pos i t i on p r e j ud i c i a l l y. ” I d. Subs e que nt c a s e s de a l i ng wi t h e qui t a bl e e s t o p p e l h a ve l i ke wi s e e mpha s i z e d t he r e l i a nc e a nd de t r i me nt a l c h a n g e of pos i t i on r e qui r e me nt s . Se e Robi ns on v . Te nne s s e e

Fa r me r s M . I ns . Co. , 857 S. W 2d 559, 563 ( Te nn. App. 1993) ( “ Th e ut .

b u r d e n of pr oof i s on t he i ns ur e d t o pr ove t ha t a mi s r e p r e s e nt a t i on wa s ma de a nd t ha t t he i ns ur e d r e a s ona bl y r e l i e d u p o n t h e mi s r e pr e s e nt a t i on. ” ) ; Spe ar s v . Comme r c i al I ns . Co. of

Ne wa r k , N. J . , 866 S. W 2d 544, 549 ( Te nn. App. 1993) ( “ The pa r t y .

a l l e g i n g wa i ve r mus t s how how he ha s be e n pr e j udi c e d by a ny c h a n g e of pos i t i on. ” )

I n t he c a s e a t ba r , Smi t h ha s not de mons t r a t e d t ha t h e u n d e r t o ok a pr e j udi c i a l c h a nge i n pos i t i on ba s e d upon She l by’ s l et t er s . Our r e s e a r c h r e v e a l s t ha t a c ont e nt i on qui t e s i mi l a r t o Smi t h ’ s ha s b e e n ma de i n a t l e a s t t wo pr i or Te nne s s e e c a s e s , a nd wa s s u mma r i l y r e j e c t e d i n bot h i ns t a nc e s . The f i r s t c a s e e l i c i t e d t he f ol l owi ng c omme nt s f r om t he Supr e me Cour t :

The s e c ond c ont e nt i on, t ha t t he r e wa s a wa i ve r of t he pol i c y pr ovi s i ons me nt i one d, or t ha t t he I ns ur a nc e Compa ny i s e s t oppe d t o r e l y t he r e on, mus t be de ni e d.

The s e de f e ns e s , wa i ve r a nd e s t oppe l , a r e ba s e d on a l e t t e r wr i t t e n by t he Compa ny t o Le we l l yn whe r e i n i t poi nt e d out c e r t a i n pol i c y pr ovi s i ons unde r whi c h i t c ont e nde d i t wa s not l i a bl e unde r i t s pol i c y. Howe ve r , s i nc e i n t hi s s a me l e t t e r , t h e I ns ur a nc e Compa ny r e s e r ve d e ve r y de f e ns e a va i l a bl e t o i t unde r t he pol i c y, and t he r e i s no s howi ng what s oe v e r of an y har m or i nj ur y t o t he appe l l ant be c aus e of t he l e t t e r , t he de f e ns e s ar e not good.

Le we l l y n v . St at e Far m M . Aut o. I ns . Co. , 438 S. W 2d 741, 7 4 2 - ut .

4 3 ( Te n n. 1969) ( e mpha s i s a dde d; f oot not e omi t t e d) .

I n Spe ar s v . Comme r c i al I ns . Co. of Ne war k, N. J. , s u p r a , t h e f ol l owi ng wa s s a i d:

Pl a i nt i f f a l s o c ont e nds t ha t Comme r c i a l wa i ve d i t s d e f e ns e t o t he e f f e c t t ha t pl a i nt i f f ha d no t s uf f e r e d a n i nj ur y c a us e d by a c c i de nt . Pl a i nt i f f ba s e s t hi s c ont e nt i on on a l e t t e r s e nt t o pl a i nt i f f by Comme r c i a l pr i or t o t hi s s u i t . I n t hi s l e t t e r , Comme r c i a l a dvi s e d pl a i nt i f f t ha t i t woul d not be pa yi ng l i f e t i me be ne f i t s unde r t he a c c i de nt pr ovi s i on of t he pol i c y be c a us e “ hi s ba c k i nj ur y oc c ur r e d i n 1943 pr i or t o t he e f f e c t i ve da t e of [ t he ] pol i c y a nd not whi l e t he p ol i c y i s i n f or c e . ” I t i s pl a i nt i f f ’ s a s s e r t i on t ha t t hi s i s i nc ons i s t e nt wi t h t he pos i t i on t a ke n by Comme r c i a l i n t hi s l i t i ga t i on- - t ha t t he i nj ur i e s c ompl a i ne d of i n pl a i nt i f f ’ s c ompl a i nt we r e not c a us e d by a c c i de nt a l me a ns .

The pa r t y a l l e gi ng wa i ve r mus t s how how he ha s be e n pr e j udi c e d by a ny c ha nge of pos i t i on. Pr ude nt i al I ns ur anc e Co. of Ame r i c a v . Fal l s , 169 Te nn. 324, 87 S. W 2d . 567, 569 ( 1935) . W l e we ha ve s e r i ous hi doubt s a s t o whe t he r t he r e ha s be e n a ny c ha nge of pos i t i on by Comme r c i a l , t he r e ha s be e n no s howi ng by pl a i nt i f f how he ha s be e n pr e j udi c e d b y Comme r c i a l ’ s a l l e ge d “ c ha nge of pos i t i on. ” Thi s a r gume nt i s l i ke wi s e wi t hout me r i t .

Sp e a r s , 866 S. W 2d a t 549. .

As pr e vi ous l y i ndi c a t e d, Smi t h ha s not s hown d e t r i me nt a l r e l i a nc e upon She l by’ s a s s e r t i ons i n i t s r e s e r va t i o n o f r i gh t s a nd d e ni a l l e t t e r s . He r e f e r s t o t he f a c t t ha t he r e p a i r e d t he bui l di ng a t h i s own e xpe ns e ; but we do not s e e ho w i t c a n be c l a i me d t ha t t hi s a c t i vi t y wa s pr e j udi c i a l t o hi m or e v e n t a ke n i n r e l i a nc e on She l by’ s s t a t e me nt s i n t he t wo l e t t e r s . Th e r e f o r e , we r e j e c t Smi t h’ s c l a i ms of wa i ve r a nd e s t oppe l .

W now t ur n our a t t e nt i on t o t he “ t he f t ” e

e x c l u s i ona r y l a ngua ge of t he pol i c y upon whi c h She l by r e l i e s . Th a t e x c l us i on i s f ound i n a s e c t i on of t he pol i c y e nt i t l e d “ COVERED CAUSES OF LOSS. ” The r e l e va nt por t i ons of t ha t s e c t i o n o f t h e pol i c y a r e a s f ol l ows :

A. COVERED CAUSES OF LOSS . . . . Cove r e d Ca us e s of Los s me a n t he f ol l owi ng:

• • * *

8. Vandal i s m me a ni ng , wi l l f ul a nd ma l i c i ous da ma ge t o, or de s t r uc t i on of , t he de s c r i be d pr ope r t y.

W wi l l not pa y f or l os s e or da ma ge :

• • * *

b. Ca us e d by or r e s ul t i ng f r om t he f t , e xc e pt f or bui l di ng da ma ge c a us e d by t he br e a ki ng i n or e xi t i ng of bur gl a r s .

( b o l d p r i nt i n or i gi na l ) . The pl a i nt i f f doe s not c l a i m t ha t a n y o f t h e c l a i me d l os s r e s ul t e d f r om “ da ma ge c a us e d by t he br e a ki n g i n o r e xi t i ng of bur gl a r s . ” The r e f or e , t he i s s ue i s s qua r e l y p r e s e n t e d: I s t he pl a i nt i f f ’ s l os s one r e s ul t i ng f r om va nda l i s m, a c o v e r e d e ve nt , or da ma ge “ [ c ] a us e d by or r e s ul t i ng f r om t he f t , ” a n e x c l ude d l os s ?

W be l i e ve t he pa r t i e s , by t he l a ngua ge of t he pol i c y , e

i n t e n d e d t o e xc l ude f r om c ove r a ge t he t ype of l os s c l a i me d by t h e p l a i nt i f f i n t hi s c a s e . I t i s s i gni f i c a nt t ha t t he e xc l us i ona r y l a n g u a g e pe r t a i ni ng t o da ma ge “ [ c ] a us e d by or r e s ul t i ng f r om t he f t ” f ol l ows i mme di a t e l y a f t e r l a ngua ge pe r t a i ni ng t o t he

c o v e r e d l os s of va nda l i s m. W be l i e ve t he pa r t i e s pur pos e l y e

i n t e n d e d t o r e f l e c t t he i r unde r s t a ndi ng t ha t da ma ge f r om t he f t wo u l d n ot be i nc l ude d wi t h i n t he ge ne r a l c onc e pt of va nda l i s m.

Our hol di ng i s bol s t e r e d by t he de f i ni t i on of va nda l i s m f o u n d i n t he pol i c y- - ” wi l l f ul a nd ma l i c i ous da ma ge t o, or d e s t r u c t i on of , t he de s c r i be d pr ope r t y. ” Thi s de f i ni t i on r e f e r s t o t h e t ype of da ma ge c a us e d by va nda l s a s t ha t c onc e pt i s o r d i n a r i l y unde r s t ood, i . e . , da ma gi ng s ome t hi ng s i mpl y f or t he s a k e o f da ma gi ng i t . The c onc e pt of t he f t i s e nt i r e l y di f f e r e n t . A t h i e f e nt e r s a bui l di ng i n or de r t o s t e a l s ome t hi ng; c e r t a i nl y a t h i e f ’ s pr i ma r y f oc us i s not t he ma l i c i ous de f a c i ng, d e s t r o y i ng, or da ma gi ng of pr ope r t y. I f t he mot i va t i on a nd e nd r e s u l t i s t ha t of t he f t a nd t he c l a i me d l os s i s “ [ c ] a us e d by o r r e s u l t [ s ] f r om [ t ha t ] t he f t , ” t he r e i s no c ove r a ge .

I n t hi s c a s e , e ve r y knowl e dge a bl e wi t ne s s t e s t i f i e d t h a t t h e a ppa r e nt mot i va t i on f or t he e nt r y i nt o Smi t h’ s bui l di n g wa s t h e s t e a l i ng of c oppe r wi r i ng a nd t ubi ng. Si gni f i c a nt l y, Smi t h h i ms e l f s o t e s t i f i e d i n s e ve r a l i ns t a nc e s , i n c l udi ng t he f o l l o wi ng:

Q: Now, t hi s phot ogr a ph a nd your t e s t i mony r e ga r di ng Fr a nk Ba r r y He a t i ng & Ai r , i t i s my unde r s t a ndi ng t h a t ba s i c a l l y, t ha t whoe ve r di d t hi s t o your bui l di ng, wa s i nt er es t ed i n t he c oppe r ?

A: Ye s .

Q: The y wa nt e d a nd di d t a ke a l l t he c oppe r t ha t t he y c oul d t a ke out of t hi s bui l di ng?

A: Ye s .

• • * * *

Q: And i t i s your be l i e f a s you s i t he r e t oda y, t ha t t he ma i n t hi ng t ha t t he s e pe opl e we r e i nt e r e s t e d i n wa s t he c oppe r a nd t he va l ue t o s e l l t ha t c oppe r ?

A: W l l , t h a t ’ s my opi ni on, ‘ c a us e l i ke I s a y, t h e r e ’ s e ot he r bui l di ngs a l l ove r t own t he y wa s doi ng i t a t t h e s a me t i me .

Ro b e r t E. Kr z e mi ns ki , a l i c e ns e d e l e c t r i c a l c ont r a c t or who di d e l e c t r i c a l r e pa i r s t o t he bui l di ng, t e s t i f i e d a s f ol l ows :

Q: And wha t di d you di s c ove r whe n you ma de your i ni t i a l i ns pe c t i on?

A: The bui l di ng wa s va c a nt a nd s ome one ha d gone i n t he r e a nd I be l i e ve t he pr i ma r y r e a s on f or be i ng t he r e wa s t o ge t s c r a p c oppe r . The y we r e a f t e r wi r e , t he y we r e a f t e r p l umbi ng, t he y we r e a f t e r r e f r i ge r a t i on t ubi ng, a l l ki nds of c oppe r t he y we r e pr i ma r i l y a f t e r .

• • * * *

Q: Al l r i ght . Do you r e me mbe r we t a l ke d a bout , a nd I t hi nk you ki nd of de s c r i be d i t f a i r l y c l e a r l y f or us , a bout how t he y t ook a l l t hi s wi r i ng out ?

A: Uh- huh.

Q: And t he y t ook a l l t he c oppe r out of t he a i r c ondi t i oni ng uni t ?

A: Ye a h.

Q: The y we r e a f t e r t he c oppe r we r e n’ t t he y?

A: I t hi nk a t t ha t t i me c oppe r wa s pr e t t y e xpe ns i ve . W l l , c oppe r ha s be e n hi gh f or t he l a s t f i ve ye a r s . e But pr i or t o t ha t i t wa s pr e t t y c he a p.

Smi t h di d not of f e r a ny pr oof s ugge s t i ng t ha t a ny pa r t o f t h e da ma ge t o hi s bui l di ng wa s c a us e d by t he ma l i c i ous a c t o f

a n o t h e r , i . e . , da ma ge s i mpl y f or i t s own s a ke . W f i nd a nd ho l d e

t h a t t h e c a us e of Smi t h’ s l os s wa s da ma ge due t o t he f t of t he c o p p e r wi r i ng a nd t ubi ng, a nd not due t o c ove r e d va nda l i s m. Th e d a ma g e t o t he bui l di ng oc c ur r e d be c a us e t he t hi e f or t hi e ve s wa n t e d t o ge t t o t he c oppe r . The Ge or gi a c a s e of Pac i f i c I nd e mni t y Co. v . N. A. , I nc . , 172 S. E. 2d 192 ( Ga . App. 1969) r e a c h e s t he s a me c onc l us i o n ba s e d upon a na l ogous f a c t s .

I t i s a n e l e me nt a r y c onc e pt of i ns ur a nc e l a w t ha t p a r t i e s a r e f r e e t o a l l oc a t e r i s ks of l os s a s t he y s e e f i t . If t h e p o l i c y of i ns ur a nc e r e f l e c t i ng t he a l l oc a t i on of t hos e r i s k s i s c l e a r a nd una mbi guous , a s i n t hi s c a s e , we a ppl y i t a s wr i t t e n. The pa r t i e s h e r e c hos e t o e xc l ude f r om c ove r a ge t he r i s k o f da ma ge t o t he pr e mi s e s c a us e d by or r e s ul t i ng f r om t he f t . Un f o r t u na t e l y f or Smi t h, t hi s i s e xa c t l y t he ki nd of da ma ge t h a t o c c u r r e d i n t hi s c a s e . The Cha nc e l l or ’ s j udgme nt i s c ont r a r y t o t h e f a c t s i n t hi s c a s e .

Si nc e we f i nd t ha t She l by’ s de f e ns e ba s e d on i t s t he o r y t h a t t h e pl a i nt i f f ’ s l os s wa s c a us e d by or r e s ul t e d f r om t he f t i s *14 s u s t a i n e d by t he pr oof , we do not f i nd i t ne c e s s a r y t o a ddr e s s i t s a l t e r na t i ve de f e ns e t he or y t ha t t he pr e mi s e s we r e va c a nt a t t h e t i me of t he l os s . Obvi ous l y, i t i s not ne c e s s a r y t o a ddr e s s t h e p l a i nt i f f ’ s i s s ue pe r t a i ni ng t o t he a l l e ge d ba d f a i t h of Sh e l b y .

For t he a f or e me n t i one d r e a s ons , t he j udgme nt of t he Ch a n c e l l or i s r e ve r s e d a nd t he c ompl a i nt di s mi s s e d a t Smi t h’ s c os t s . Cos t s on a ppe a l a r e t a xe d a nd a s s e s s e d t o Smi t h.

______________________________ Cha r l e s D. Sus a no, J r . , J .

CONCUR:

_ _ _ _ _ _ _ ____________________ Ho u s t o n M Godda r d, P. J . .

_ _ _ _ _ _ _ ____________________ Do n T. M M r a y, J . c ur