The California Court of Appeal recently held that an exclusion in an insured’s homeowner’s policy precluding coverage for “vandalism” did not apply to damage caused by a warming fire started by a transient.  Applying the plain meaning of the term “vandalism,” the court reasoned that intent to cause damage – which was required based on the exclusion’s use of the word “malicious” – was not present because the damage was caused unintentionally when the warming fire spread out of control. 

In Ong v. Fire Insurance Exchange, decided April 3, 2015, Fire Insurance Exchange (“FIE”) denied coverage for a first party property claim submitted by Eugene Ong (“Ong”) arising out of a fire that occurred at Ong’s property (the “Property”).  At the time of the fire, the Property had been vacant for approximately ten (10) months and the gas and electric utilities were turned off.  According to FIE’s fire investigator, the fire started as the result of an uncontrolled warming fire lit by an unauthorized inhabitant.  The fire investigator noted there was firewood in the adjacent room and a mattress next to a hole in the floor.  There was also evidence that the occupant attempted to throw burning wood outside when the fire got out of control.  FIE denied coverage relying upon the vacancy exclusion in the homeowner’s policy which provided: “We do not cover direct or indirect loss from: … 4. Vandalism or Malicious Mischief, breakage of glass and safety glazing materials if the dwelling has been vacant for more than 30 consecutive days just before the loss.”  The term “vandalism” was not defined.

In light of FIE’s claim denial, Ong filed suit for breach of contract and bad faith.  FIE filed a motion for summary judgment based upon the vandalism portion of the vacancy exclusion.  In granting summary judgment, the court held that the unauthorized person intended to set a fire which created an obvious hazard to the dwelling. 

The Court of Appeal reversed and held that the ordinary and plain meaning of the term “malicious,” as used in the vacancy exclusion, required intent to injure.  Based upon all available evidence, the fire, although intentionally lit, was not intended to cause harm.  Accordingly, the exclusion did not apply. 

In so holding, the Court of Appeal applied the plain meaning of the term “vandalism,” which requires “a willful or malicious destruction or defacement of public or private property.”  The Court of Appeal also referred to the dictionary definition of “malicious” – i.e., “having or showing a desire to cause harm to someone.”  The Court of Appeal rejected the trial court’s reliance on the legal definition of “malice in law,” which requires only the intent to perform an act.  Instead, the court looked to the definition of “malice in fact,” which requires ill will or intent to injure and therefore, the court reasoned, is more akin to the word “malicious” used in the exclusion.  Thus, applying rules of insurance policy interpretation affording undefined terms their ordinary and popular meaning, the court concluded that the word “vandalism” in the vacancy exclusion required intent to injure, which was absent from the circumstances presented. 

The court also held that if FIE wanted to exclude the risk of fire from premises that were vacant for an extended period of time, it could have included that risk in the exclusion. 

Click here for the opinion.

This opinion is not final.  It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court.  These events would render the opinion unavailable for use as legal authority in California state courts.