Monday, April 06, 2015

Ong v. Fire Insurance Exchange (Cal. Ct. App. - April 3, 2015)

I find myself in the unusual position of agreeing with both the majority opinion as well as the dissent in this case.  Which is not rationally possible, since they reach opposite results.

Maybe that's just another way of saying that I'm on the fence on this one.  Which is unusual for me.

It's a simple, straightforward fact pattern.  There's a homeowner's insurance policy, and it contains an exclusion for "vandalism or malicious mischief."  Plaintiff owns the house, and after his last tenants move out, it's vacant for a while.  During which time a vagrant slept in the house, built a fire (with firewood) on the kitchen floor to keep warm, and the fire got out of control and burned the house down.

Does what the vagrant did constitute "vandalism or malicious mischief?"

Justice Chaney writes the majority opinion and says "No."  She says that "vandalism" is generally defined as meaning the "wilful or malicious destruction or defacement of private property."  Notice that this definition has the same word as in the "malicious mischief" component of the exclusion:  "malicious."  "Malicious" in turn is generally defined as meaning "having or showing a desire to cause harm to someone".  So if the vagrant had intended to burn the house down, that'd clearly be a "malicious" act and uncovered by the exclusion.

But that's clearly not the case here.  The vagrant was just trying to keep warm.  Indeed, there's some real evidence that once the fire started to get out of control, the vagrant tried to stop it by throwing the firewood out the door.  To no avail.

So Justice Chaney says the was no "malicious" act here.  The guy (or gal) just wanted to keep warm.  The destruction of the house was an accident.  Hence there's coverage.

That's a good argument.  It makes sense to me.

But so does the dissent.  Justice Rothschild says that, yeah, maybe the vagrant didn't desire to burn the house down.  But s/he nonetheless started a fire on the kitchen floor.  That was going to clearly harm (e.g., put burn marks) on the floor.  That, she says, counts as "malicious".  When you know that what you're going to do is to partially burn up a kitchen floor, that's covered by the exclusion.  Hence no coverage.

That's a pretty good argument too.

Yet both can't be right.  Or at least both can't be dispositive.  Either the exclusion applies or it doesn't.  So you've got to choose.

It's a tough call.

My intuition is that the doctrine of double effect might help resolve the resulting conflict.  Since the vagrant didn't really "mean" to burn the kitchen floor, even though that was the natural consequence of his or her act -- s/he simply wanted to keep warm.  But applying that doctrine here is complicated, and I haven't entirely worked out the ramifications.  I nonetheless have a sense that this very longstanding philosophical concept might be well-suited to help sort things out here.

The other thing that might tip the scale is ambiguity.  The definition isn't rock solid here.  Reasonable minds might well (indeed, do) differ.  So maybe we resolve the resulting ambiguity against the entity that drafted the policy; i.e., the insurance company.  Hence coverage.

Maybe.  I'm sure that Justice Rothschild would say that the policy is not ambiguous.  It's clear.  The vagrant clearly "intended" to burn the floor, hence the exclusion applies.  She'd likely say that there's no coverage here just like there'd be no coverage if a cold vagrant deliberately burned the entire house down in order to get even more heat from the thing.

And she'd have a point.

In short:  This one's really hard.  Both sides could easily be right.

Though only one can be.