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Village Heights Condominium Association v. The Cincinnati Insurance Co.

United States District Court, M.D. Pennsylvania

February 10, 2017

VILLAGE HEIGHTS CONDOMINIUM ASSOCIATION, an unincorporated association, Plaintiff,



         Presently before the Court are Cross-Motions for Summary Judgment filed by the Plaintiff, Village Heights Condominium Association (doc. 15), and the Defendant, the Cincinnati Insurance Company (doc. 12). The Motions have been fully briefed (docs. 14, 17, 20, 21 and 23) and are thus ripe for our review. For the reasons that follow, the Court will deny the Defendant's Motion in full and grant the Plaintiffs Motion.


         At all times relevant to the above-captioned action, the Plaintiff Village Heights Condominium Association ("Plaintiff) was the insured entity on a policy (the "Policy") issued by the Defendant, Cincinnati Insurance Company ("Defendant"). (Doc. 16, ¶ 20; doc. 22, ¶ 20). The Village Heights development is a gated community comprised of fifty (50) units, including fifteen (15) stand-alone homes, one (1) duplex, one (1) triplex, and thirty (30) apartment units. (Doc. 1-2, ¶ 7; doc, 14, p. 6).[1] Plaintiff is an association of unit owners that acts through an executive board. (Doc. 14, p. 5). Plaintiff is generally responsible for maintaining all common areas in the development, including all external grounds, roofs, building standard components, walls, ceilings and floors, stopping at the interior surface of the same, at which point the unit begins. (Doc. 1-2, ¶ 8; doc. 16, ¶ 10).

         In or around December 2013, Mr. and Mrs. Herb Graves owned and resided in Unit 205, a stand-alone villa within the Village Heights development ("Unit 205" or "the Unit"). (Doc. 1-2, ¶¶ 11-12). The same month, Mr. and Mrs. Graves elected to move from Unit 205 into an apartment unit and so entered into an agreement to sell Unit 205 to a third party. (Id.). Throughout the winter of2013-14, Mr. and Mrs. Graves maintained the heat in Unit 205, and Mr. Graves inspected the interior of the Unit every Friday to ensure that its systems and maintenance were functioning properly. (Id., ¶ 13). However, the parties agree that the Unit was predominantly empty, "most" of the furniture having been sold at an auction held in late 2013. (Doc. 16, ¶ 38; doc. 22, ¶ 38). Mr. and Mrs. Graves did continue to store several trunks and a few items of furniture in the garage of the Unit. (Doc. 16, ¶ 39; doc. 22, ¶ 39).[2] They also kept some wine in the wine cellar, which Mr. Graves occasionally retrieved as needed. (Doc. 16, ¶¶ 39-40; doc. 22, ¶¶ 39-40).[3] The parties dispute whether the Graves' intermittently kept a car at the Unit. (Doc. 16, ¶ 36; doc. 22, ¶ 36).

         In the summer of 2014, the pending sale of the Unit fell through. (Doc. 1-2, ¶ 14). Mr. and Mrs. Graves continued to seek another buyer through the winter of 2014-15, and the Unit was shown on a regular basis. (Id., ¶ 14-16). Mr. Graves continued to check the Unit every Friday (id., ¶ 15); however the Complaint is silent regarding whether Mr. and Mrs. Graves continued to keep the heat on in the Unit throughout this time. (See generally, id.).[4]

         On or about March 1, 2015, while Mr. and Mrs. Graves were on vacation, [5] a pipe froze in the Unit, causing the pipe to burst and resulting in significant water damage. (Id., ¶ 18). When they returned from vacation, the Graves' observed "ice hanging out" of the Unit. (Doc. 16, ¶ 46; doc, 22, ¶ 46).

         The parties agree that Unit 205 is identified as "Location 11" on the Schedule of Locations attached to the Commercial Property Coverage Part Declarations (the "Declarations") forming a portion of the Policy. (Doc. 16, ¶ 27; doc. 22, ¶ 27). Defendant states that the policy "provides coverage for the 19 separate buildings on Village Heights Drive, each of which are separately listed in the Policy's Declarations." (Doc. 14, pp. 7-8). Plaintiff argues that Defendant's characterization misconstrues the nature of the coverage, and that the buildings are not in fact listed separately in the Declarations but are instead described as a single "Blanket Building." (Doc. 20, p. 5).

         After the water damage occurred, Plaintiff filed a claim with Defendant, believing some of the damage caused to be covered under the Policy referenced above. (Doc 1-2, ¶ 19). Specifically, Plaintiff anticipated that the common elements of the Unit, including the drywall of the ceilings and walls and the internal mechanical, electrical and HVAC components, would be insured under the Policy. (Doc. 16, ¶64).

         On June 1, 2015, Defendant issued a declination of coverage letter to Plaintiff. (Doc. 1-2, ¶ 20). Defendant cited the "Vacancy Provision" of the Policy ("Vacancy Provision") as the reason for refusing to cover the damage caused by the burst pipe. (Id.; doc. 22, ¶ 48). The Vacancy Provision is reproduced as follows:

The following conditions apply in addition to the COMMON POLICY CONDITIONS and the COMMERCIAL PROPERTY CONDITIONS.
6. Vacancy
a. Description of Terms
(1) As used in this Vacancy Condition, the term building and the term vacant will have the meanings set forth in (1)(a) and (0(b) below:
(a) When this Coverage Part is issued to a tenant, and with respect to that tenant's interest in Covered Property, building means the unit or suite rented or leased to the tenant. Such building is vacant when it does not contain enough business personal property to conduct customary operations.
(b) When this Coverage Part is issued to the owner or general lessee of a building, building means the entire building. Such building is vacant unless at least 31% of its total square footage is:
1) Rented to a lessee or sublessee and used by them to conduct their customary operations; or 2) Used by the building owner to conduct customary operations.
b. Vacancy Provisions If the building where "loss" occurs has been vacant for more than 60 consecutive days before that "loss", we will:
(1) Not pay for any "loss" caused by any of the following, even if they are Covered Causes of Loss:
(a) Vandalism;
(b) Sprinkler leakage, unless you have protected the system against freezing;
(c) Building glass breakage;
(d) Water damage;
(e) Theft; ...

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