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Southern Trust Ins. Co. v. Phillips

Court of Appeals of Tennessee, Knoxville

June 10, 2015

SOUTHERN TRUST INSURANCE COMPANY
v.
MATTHEW PHILLIPS

Session April 15, 2015.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and Remanded. Direct Appeal from the Circuit Court for Anderson County. No. B3LA0206. Donald Ray Elledge, Judge.

Terrill Lee Adkins and Amy Victoria Peters, Knoxville, Tennessee, for the appellant, Southern Trust Insurance Company.

James Brandon McWherter, Franklin, Tennessee, and Clinton H. Scott, Jackson, Tennessee, for the appellee, Matthew Phillips.

BRANDON O. GIBSON, J., delivered the opinion of the court, in which D. MICHAEL SWINEY, J., and THOMAS R. FRIERSON, II, J., joined.

OPINION

BRANDON O. GIBSON, JUDGE

This appeal involves the interpretation of an insurance policy in order to determine whether the policy provided coverage for damage caused by arson. The insurer and the insured filed cross-motions for partial summary judgment on this issue. The trial court found the policy ambiguous and construed it in favor of coverage, holding that arson was covered under the policy. Accordingly, the trial court granted the motion for partial summary judgment filed by the insured and denied the motion for partial summary judgment filed by the insurer. The insurer appeals. We affirm.

OPINION

I. Facts & Procedural History

Matthew Phillips is the owner of residential real property located in Lake City, Tennessee. The property was insured under a dwelling policy issued by Southern Trust Insurance Company. On or about February 27, 2013, a fire substantially damaged the residential structure located on the insured premises. Phillips promptly reported the loss to Southern Trust and fulfilled all duties imposed on him under the policy. Nevertheless, Southern Trust denied that the fire was covered under the insurance policy. Southern Trust determined that the fire was intentionally set. Even though Phillips was not suspected of setting the fire, Southern Trust denied coverage pursuant to an exclusion in the policy providing that Southern Trust did not insure loss caused by " vandalism and malicious mischief, theft or attempted theft" if the dwelling was vacant. For purposes of this appeal, the parties do not dispute that the dwelling was vacant and that the fire was caused by arson.

Southern Trust filed a complaint for declaratory judgment in the Circuit Court of Anderson County, seeking a declaration that the policy did not provide coverage for the dwelling because, according to Southern Trust, the home " was damaged by vandalism and malicious mischief." Phillips filed an answer and counterclaim, asserting that Southern Trust was obligated to provide coverage for the loss because, according to Phillips, the home was damaged by fire, not vandalism and malicious mischief. Phillips asserted that Southern Trust's refusal to pay for the loss breached the parties' insurance contract and demonstrated bad faith.

Phillips filed a motion for partial summary judgment on the issue of whether the exclusion for " vandalism and malicious mischief" applied to his claim. He claimed that arson did not fall within the meaning of " vandalism and malicious mischief" as those terms were used in his policy. In the section of the policy entitled " Perils Insured Against," the policy described coverage for the dwelling under " Coverage A," coverage for other structures under " Coverage B," and coverage for personal property under " Coverage C." For Coverage A and Coverage B, the policy provided that it did not cover loss caused by " vandalism and malicious mischief, theft or attempted theft if the dwelling has been vacant for more than 30 consecutive days immediately before the loss." The policy did not define vandalism or malicious mischief. However, the policy listed " vandalism and malicious mischief" separate and apart from " fire" under Coverage C, which addressed coverage for personal property. Coverage C specifically provided coverage for personal property for the perils of:

1. Fire or lightning.
. . . .
8. Vandalism or malicious ...

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