I represented a Memphis homeowner a couple of years ago whose residential rental property was destroyed by fire. The policy provided coverage for fire loss, but contained an exclusion for "vandalism and malicious mischief . . . if the dwelling has been vacant for more than 30 days immediately before the loss." In our case, it was undisputed that the house had been vacant for more than 30 days at the time of the fire, which was intentionally set by an unknown third person. These undisputed facts left one unanswered question - - does arson constitute vandalism or malicious mischief? If so, there would be no coverage for the claim. If not, then the claim should be paid in full.
After summary judgment briefing, Chancellor Armstrong in Shelby County ruled that arson isn't necessarily the same thing as vandalism or malicious mischief. Noting the split of authority across the country, Chancellor Armstrong ultimately ruled that fire is a separate peril from vandalism and malicious mischief, and that arson was not included within the exclusion applying to losses caused by vandalism or malicious mischief. Accordingly, the court granted my client's motion for summary judgment and the case was concluded, marking another victory for insureds in Tennessee.
Download a copy of Chancellor Armstrong's Order by clicking here.
Here's a tidbit that can come in handy in the right case. In Murphy v. Cincinnati Ins. Co., 772 F.2d 273 (6th Cir. 1985), the Sixth Circuit Court of Appeals affirmed a district court's ruling that an insured's willingness to submit to a polygraph test as part of the insurance company's investigation was admissible evidence at trial. In so holding, the court noted that a willingness to submit to a polygraph test does not depend on the scientific acceptability which is necessary to support the admissibility of polygraph test results. In other words, an insured's willingness to submit to a polygraph test may be admissible as probative of the insured's credibility and the insurer's motive for denial, but the polygraph test results most likely will be ruled inadmissible.
This type of evidence can obviously be very persuasive, especially in an arson case. So the next time an insurance company seems to be ramping up their investigation for suspected arson but your client swears up and down he or she had nothing to do with the fire, send a letter to the insurance company notifying it of your client's willingness to submit to a polygraph test. This approach obviously demands a risk v. reward analysis, but it is a great tactic in the right case. Also be aware of a distinguishing case, Wolfel v. Holbrook, 823 F.2d 970 (6th Cir. 1987), which made a point of noting that it was the insurer in Murphy that requested that the insured submit to the polygraph test.