1 

# FILED July 18, 1996 Cecil Crowson, Jr. App ellate C ou rt Clerk I N THECOUR

TOFAPPEALSOFTENNES SEE

TED C. SM I TH , ) C / A N O . 03A 01- 9603- C

H - 00076 ) W ASHI NGTON C

OUNTY C

HANC ER Y C OUR T Pl a i ntif f

- A

pp e lle e , )

) ) ) ) ) v. ) HONOR ABLEG. R

I C HAR D J OHNSON, ) C HANC ELLOR ) ) ) ) THESHELBY I NSUR

ANC ECOM PANY ) OFTHESHELBY I NSUR ANC EGR OUP, ) R

EVER SED ) COM PLAI NTDI SM

I S SED D e f e nda nt - A

ppe l l a nt . ) R

EM A N D ED

ALBER TJ . HAR

Bo f HODGES , DOUGHTY & C AR S ON, Kn o xvi l l e , f or A ppe l l a nt M AR K S . DES SAUER

o f HUNTER

, SM I TH & DAVI S , Ki n g s p or t , f or A ppe l l e e

O PI N I O N Sus a no, J .2 Thi s i s a de c l a r a t or y j udgm e nt a c t i on. The c om pl a i nt s eeks a decl a r a t i o nt h a t a l o s s cau s e db yd a m a g e t ot he pl a i nt i f f ’ s bui l di ng i s c ove r e d unde r a c om m e r c i a l pr ope r t y i ns ur a nc e pol i c y i s s ue d by The She l by I ns ur a nc e C om pa ny ( She l by) . Fol l ow i ng a be nc h t r i a l , t he C ha nc e l l or he l d t ha t t he r e w a s c ove r a ge unde r t he pol i c y a nd a w a r de d t he pl a i nt i f f a j udgm e nt f or $12, 352. 92. She l by a ppe a l s , a r gui ng t ha t t he r e i s no c o v e r a g e b ecau s e t he pr e m i s e s w e r e v acant at t he t i m e o f t he l os s . I t a l s o a r gue s t ha t t he l os s i s not c ove r e d be c a us e t he pol i c y e xc l ude s c ove r a ge f or da m a ge s “ [ c ] a us e d by or r e s ul t i ng f r o m the f t.” The p l a i nt i f f , Te dC. Sm i t h( Sm

i t h ) , r a i s e s , a s a n a ddition a l is s u e , th e f a ilur e o f the tr i a l c our t toa w a r dthe s t a t ut or y ba d f a i t h pe na l t y a ut hor i z e d by T. C. A . § 56- 7- 105( a ) . O ur re vi e w

i s de nov o ; how

e ve r , t he r e c or d c om e s t o us a c c om pa ni e d by a pr e s um pt i on of c or r e c t ne s s t ha t w e m us t honor unl e s s t he e vi de nc e pr e ponde r a t e s a ga i ns t t he t r i a l c our t ’ s f i ndi ng s o f f a c t. R ul e 1 3 ( d) , T. R. A

. P .; C i t y of K

i ngs por t v . St e w ar t , 920 S . W

. 2d 658 ( Te nn. A

pp. 1995) . The t r i a l c our t ’ s c onc l us i ons of l a w a r e not e nt i t l e d t o a pr e s um pt i on of c or r ect ne s s . U

ni onC ar bi de C

orp. v . H

uddl e s t on , 854 S . W . 2d 87, 91 ( Te nn. 1993) .3 I

O n or a bout M

a r c h 2, 1993, a n unknow n pe r s on ( or pe r s ons ) s ur r e pt i t i ous l y e nt e r e d a bui l di ng i n w hi c h Sm

i t h w a s w a r e hous i ng pe r s ona l pr ope r t y a nd r i ppe d out e l e c t r i c a l w i r i ng, pl um bi ng pi pe s , a nd c onde ns e r c oi l s i n t he a i r c ondi t i oni ng s ys t e m , i n or de r t o e xt r a c t c oppe r w i r i ng a nd t ubi ng. I n t he pr oc e s s of r e m

ovi ng t he c oppe r , t he i ndi vi dua l ( s ) di d e xt e ns i ve da m a ge t o t he i nt e r i or of t he bui l di ng. Sm i t h r e por t e d t he i nc i de nt tothe p o lic e , w h ointhe i r r e p or t lis t e dthe inc i de nt a s a the f t. The r e a f t e r , S m ithf ile da c l a i m w iththe in s ur a nc e a ge nt t hr ough w

hom t he pol i c y ha d be e n s e c ur e d.

O n A pr i l 5, 1993, a r e pr e s e nt a t i ve of She l by s e nt Sm i t h a le tte r , w

hi c hs t a t e d , inp a r t, a s f o llo w s :

I n or de r t ha t t he C om pa ny m a y c ont i nue t o ha ndl e t hi s m

a t t e r , w

e w a nt you t o know

t ha t w e a r e pr oc e e di ng unde r a R e s e r va t i on of R i ght s . W

e a r e r e s e r vi ng our r i ght s unde r t he pol i c y f or t he f ol l ow i ng r e a s ons : * * * * 6. V ac anc y I f t he bui l di ng w he r e l os s or d a m a g e o ccur s h a s b eenv acant f or m or e t ha n 60 c ons e c ut i ve da ys be f or e t ha t l os s or da m a ge , w e w ill: a. N ot pa y f or a ny l os s or da m a ge c a us e d by a ny of t he f ol l ow i ng ev e ni f t he yar e C o v e r e d Ca u s e s o f Lo ss: ( 1 ) V a nda l i s m

; ( 5 ) The f t; or ( 6 ) A tte m p t e dthe f t .4 A s you c a n s e e f r om t he a bove , i t i s pr oba bl e t ha t a l l or a pa r t of your l os s m a y not be c ove r e d unde r your i ns ur a nc e pol i c y. W e s ha l l c ont a c t you f ur t he r a s s oon a s a de c i s i on r e ga r di ng c ove r a ge ha s be e n m a de . ( bol d pr i nt i n or i gi na l ) . O n J une 1, 1993, She l by s e nt Sm i t h a l e t t e r de nyi ng c ove r a ge . Tha t c or r e s ponde nc e a l s o r e l i e d upon t he va c a nc y pr ovi s i on. N o m e nt i on w

a s m a de of a ny ot he r pol i c y pr o vi s i onine i t he r le t t e r .

O n J a nua r y 6, 1994, t he pl a i nt i f f f i l e d t he c om pl a i nt i n t he c a s e a t ba r . She l by’ s a ns w e r w a s f i l e d on M

a r c h 7, 1994.

O n A ugus t 28, 1995, She l by f i l e d a M ot i on t o A

m e nd i t s A ns w e r t o i nc l ude , a m ong ot he r t hi ngs , t he f ol l ow i ng de f e ns e :

. . . unde r “ Ca us e s of Los s - Ba s i c For m , s ubs e c t i on 8" , t he de f e nda nt a ve r s t ha t no c ove r a ge i s pr ovi de d f or va nda l i s m c a us e d by or r e s ul t i ng f r om t he f t e xc e pt f or t he bui l di ng da m

a ge c a us e d by t he br e a ki ng i n or e xi t i ng of bur gl a r s . The C ha nc e l l or c onduc t e d a he a r i ng on Se pt e m be r 8, 1995. H

e f ound t he f ol l ow i ng ope r a t i ve f a c t s pe r t a i ni ng t o t he cau s e o f t he l o s s :

Som e one . . . got i nt o t ha t pr ope r t y . . . a nd r i ppe d out t he e l e c t r i c a l c ondui t a nd pa r t s of he a t pum ps a nd a i r c ondi t i oni ng e qui pm e nt , a nd ge ne r a l l y, r i ppe d t he i nt e r i or of t he bui l di ng a pa r t , e vi de nt l y t o t a ke t he c oppe r out of t he c ondui t a nd out of t he a i r1The Chancellor also rejected Shelby’s defense that Smith did not have

an insurable interest in the property. Shelby did not appeal this ruling.

2Our review is not restricted to the trial court’s findings. We must determine if the result reached by the lower court is correct regardless of “the reasoning employed to reach the result.” Kelly v. Kelly , 679 S.W.2d 458, 460 (Tenn. App. 1984). 5

c ondi t i one r a nd out of ot he r i nt e r i or pa r t s a nd por t i ons of t he bui l di ng, a nd r e m ove d t ha t c oppe r a nd t ook i t w i t h t he m

l e a vi ng t he bui l di ng i n a da m a ge d c ondi t i on.

H e de t e r m

i ne d t ha t t he “ va c a nc y” pr ovi s i on r e f e r r e d t o i n t he c om pa ny’ s r e s e r va t i on of r i ght s l e t t e r w a s not a ppl i c a bl e , f i ndi ng t ha t t he pr ope r t y w a s i n f a c t oc c upi e d by Sm i t h a nd be i ng ut i l i z e d by hi m

a s a w

a r e hous e . 1C

ur i ous l y, t he C

ha nc e l l or di d not a ddr e s s , i n a ny w a y, She l by’ s de f e ns e ba s e d upon t he e xc l us i ona r y l a ngua ge pe r t a i ni ng t o l os s c a us e d by t he f t . 2

I I

I n T at av . N

i c ho l s , 848 S . W

. 2d 649 ( Te nn. 1993) , t he Supr e m e C our t r e i t e r a t e dt he f a m i l i a r g e ne r a l pr i nc i p l e s a ppl i c a bl e t o t he c ons t r uc t i on of i ns ur a nc e pol i c i e s :

The analysis used in construing insurance policies is well settled. "Insurance contracts like other contracts should be construed so as to give effect to the intention and express language of the parties." Blaylock & Brown Construction, Inc. v. AIU Insurance Co ., 796 S.W.2d 146, 149 (Tenn. App. 1990). Words in an insurance policy are given their common and ordinary meaning. Where language in an insurance policy is susceptible of more than one reasonable interpretation, however, it is ambiguous. See e.g., Moss v. Golden Rule Life Insurance Co ., 724 S.W.2d 367, 3686 (Tenn. App. 1986). Where the ambiguous language limits the coverage of an insurance policy, that language must be construed against the insurance company and in favor of the insured. Allstate Insurance Co. v. Watts , 811 S.W.2d 883, 886 (Tenn. 1991).

Id . at 650. We approach our de novoreview with these principles in mind.

III

A l t hough not a ddr e s s e d by t he C ha nc e l l or , w

e be l i e ve She l by’ s de f e ns e ba s e d upon t he “ t he f t ” e xc l us i on i s di s pos i t i ve o f thi s a pp e a l. T he r e f or e , w

e w i l l f i r s t a ddr e s s tha t i s s u e . W e w ill, a s a p a r t o f our inqui r y , e x a m i ne the p l a i ntif f ’ s the or y t ha t She l by s houl d not be pe r m i t t e d t o a s s e r t t hi s e xc l us i on unde r t he f act s o f t hi s cas e .

Sm i t har gu e s t h a t b ecau s e ne i t he r t he r e s e r v a t i o no f r i ght s l e t t e r nor t he c ove r a ge de ni a l l e t t e r m e nt i one d t he da m

a ge

“ [ c ] a us e d by or r e s ul t i ng f r om t he f t ” e xc l us i ona r y pr ovi s i on, She l by ha s e i t he r w a i ve d i t s r i ght s unde r t ha t pr ovi s i on or i s e qui t a bl y e s t oppe d f r om r e l yi ng upon t hos e r i ght s . W e di s a gr e e . I t i s c l e a r t ha t She l by ha s not exp r e s s l y w a i v e d r e l i a nc e on t he “ t he f t ” pr ovi s i on, a s t he r e s e r va t i on of r i ght s l e tte r c o nt a i n s the f o llo w i ngs t a t e m

e nt :7 N o a c t of a ny C

om pa ny r e pr e s e nt a t i ve , w hi l e i nv e s tig a ting , n e g o tia tings e ttle m e nt o f the c l a i m or de f e ndi nga la w s uit, s h a ll b e c ons t r ue d a s w

a i vi ng a ny C

om pa ny r i ght s . The C om pa ny r e s e r ve s t he r i ght unde r t he pol i c y t o de ny c ove r a ge t o your [ s i c ] or a nyone c l a i m i ng c ove r a ge unde r t he pol i c y.

The que s t i on t he n i s w he t he r She l by s houl d be e qui t a bl y e s t oppe d f r om a s s e r t i ng t hi s e xc l us i ona r y pr ovi s i on. A s s t a t e d by t he C our t of A

ppe a l s i n t he c a s e of G i t t e r v. T

e nne s s ee F

ar m e r s M ut . I ns . C o ., 450 S . W

. 2d 780, 783 ( Te nn. A pp. 1969) , [ t ] he es s e nt i a l el e m e nt s o f anequi t a b l e e s t opp e l a s r e l a t e dtothe p a r t yc l a i m i ngthe e s t oppe l , a r e , ( 1) l a c k of know l e dge a nd of t he m e a ns of know

l e dge of t he t r ut h a s t o t he f a c t s i n que s t i on; ( 2) r e l i a nc e upon t he c onduc t of t he pa r t y e s t oppe d, a nd ( 3) a c t i on b a s e dt he r e ono f s u c ha ch a r act e r as t o c ha nge hi s pos i t i on pr ej udi c i a l l y. P r ov i de nt W as hi ngt onI ns . C

o . v . R

e e s e ( 1963) , 213 Te nn. 355, 373 S . W . 2d 613.

I d. The G

itte r c our t not e d t ha t “ t he c r ux of t he i s s ue on e qui t a bl e e s t oppe l i s w he t he r t he c om

pl a i na nt r e l i e d on t he s e s t a t e m e nt s a nd t hi s c onduc t a nd t he r e by c ha nge d he r pos i t i on pr ej udi c i a l l y . ” I d. Subs e que nt c a s e s de a l i ng w i t h e qui t a bl e e s t opp e l h a v e l i ke w i s e em ph a s i zedt he r e l i a nce andde t r i m e nt a l c ha nge of pos i t i on r e qui r e m e nt s . See R

o b i ns o n v . T

e nne s s e e F ar m e rs M ut . Ins . C

o . , 857 S . W

. 2d 559, 563 ( Te nn. A pp. 1993) ( “ The bur de n of pr oof i s on t he i ns ur e d t o pr ove t ha t a m i s r e pr e s e nt a t i on w a s m a de a nd t ha t t he i ns ur e d r e a s ona bl y r e l i e d upon t he m

i s r e pr e s e nt a t i on. ” ) ; S pe ar s v . C

om m e r c i al I ns . C

o. of8

N e w ar k, N . J., 866 S . W

. 2d 544, 549 ( Te nn. A pp. 1993) ( “ The pa r t y a l l e gi ng w

a i ve r m

us t s how

how he ha s be e n pr ej udi c e d by a ny c ha nge of pos i t i on. ” )

I n t he c a s e a t ba r , Sm i t h ha s not de m

ons t r a t e d t ha t he unde r t ook a pr ej udi c i a l c ha nge i n pos i t i on ba s e d upon She l by’ s l e tte r s . O

ur r e s e a r c hr e v e a l s th a t a c o nt e ntionquite s i m ila r to Sm i t h ’ s h a s b eenm

a de i nat l eas t t w opr i or Te nne s s ee cases , and w a s s um m a r i l yr e j ect e di nb o t hi n s t a nces . The f i r s t cas e e l i c i t e d t he f ol l ow i ng c om

m e nt s f r om

t he Supr e m

e C our t :

The s e c ond c ont e nt i on, t ha t t he r e w a s a w a i ve r of t he pol i c y pr ovi s i ons m e nt i one d, or t ha t t he I ns ur a nc e C om pa ny i s e s t oppe d t o r e l y t he r e on, m

us t be de ni e d. The s e de f e n s e s , w a i v e r andes t opp e l , ar e ba s e d on a l e t t e r w r i t t e n by t he C

om pa ny t o Le w e l l yn w

he r e i n i t poi nt e d out c e r t a i n pol i c y pr ovi s i ons unde r w hi c h i t c ont e nde d i t w a s not l i a bl e unde r i t s pol i c y. H ow e ve r , s i nc e inthi s s a m e le tte r , th e I n s ur a nc e C o m p a nyr e s e r v e dev e r yde f e n s e av a i l a b l e t o i t unde r t he pol i c y, and t he r e i s no s howi ng w hat s oe v e r of any har m or i nj ur y t o t he appe l l ant be c aus e of t he l e t t e r , t he def e ns e s ar e not good.

Le w e l l y nv . St at e F

ar m M ut. A ut o. I ns . C

o . , 438 S . W

. 2d 741, 742- 43 ( Te nn. 1969) ( e m pha s i s a dde d; f oot not e om i t t e d) . I n S pe ar s v . C

om m e r c i al I ns . C

o. of N

e w ar k, N . J. , s upr a , th e f o llo w i ngw a s s a i d :9 Pl a i ntif f a l s oc o nt e n d s th a t C o m m e r c i a l w a i v e di t s de f e n s e t ot he ef f ect t h a t pl a i nt i f f ha d not s uf f e r e d a n i nj ur y c a us e d b ya c c i de nt. Pl a i ntif f b a s e s thi s c o nt e ntion o na le tte r s e nt top l a i ntif f b yC o m m e r c i a l pr i or tothi s s uit. Inthi s le tte r , C o m m e r c i a l a dvi s e dp l a i ntif f th a t it w oul d not be pa yi ng l i f e t i m e be ne f i t s unde r t he a c c i de nt pr ovi s i on of t he pol i c y be c a us e “ hi s ba c k i nj ur y oc c ur r e d i n 1943 pr i or t o t he e f f e c t i ve da t e of [ t he ] pol i c y a nd not w hi l e t he p o lic yis inf or c e . ” I t is p l a i ntif f ’ s a s s e r tionth a t thi s is inc o n s i s t e nt w iththe pos i t i on t a ke n by C om m e r c i a l i n t hi s litig a tion - - t h a t the inj ur i e s c o m p l a i ne do f i n pl a i nt i f f ’ s c om pl a i nt w

e r e not c a us e d by acci de nt a l m

ean s . The pa r t y a l l e gi ng w a i ve r m

us t s how

how he ha s be e n pr ej udi c e d by a ny c ha nge of pos i t i on. P

r ude nt i a l I ns ur anc e C o . o f A m e r i c a v . F

a l l s , 169 Te nn. 324, 87 S . W . 2d 567, 569 ( 1935) . W hi l e w e ha ve s e r i ous doubt s a s t o w

he t he r t he r e ha s be e n a ny c ha nge of pos i t i on by C om m e r c i a l , t he r e ha s be e n no s how

i ng by pl a i nt i f f how he ha s be e n pr e j u di cedb yC

o m m e r c i a l ’ s al l e g e d“cha ng e o f p o s ition . ” Thi s a r gum e nt is like w

i s e w ithout m e r it.

S pe ar s , 866 S . W

. 2d a t 549.

A s pr e vi ous l y i ndi c a t e d, Sm i t h ha s not s how

n de t r i m e nt a l r e l i a nc e upon She l by’ s a s s e r t i ons i n i t s r e s e r va t i on o f r i ght s a ndde ni a l le tte r s . H e r e f e r s tothe f a c t th a t he r e pa i r e d t he bui l di ng a t hi s ow n e xpe ns e ; but w

e do not s e e how it c a nb e c l a i m

e dth a t thi s a c tivityw a s pr ej u di c i a l tohi m or e ve n t a ke n i n r e l i a nc e on She l by’ s s t a t e m e nt s i n t he t w

o l e t t e r s . The r e f or e , w

e r e j ect Sm

i t h ’ s cl a i m

s o f w a i v e r andes t opp e l .10 W e now t ur n our a t t e nt i on t o t he “ t he f t ” e xc l us i ona r y l a ngua ge of t he pol i c y upon w hi c h She l by r e l i e s . Tha t e xc l us i on i s f ound i n a s e c t i on of t he pol i c y e nt i t l e d

“ CO V ER ED C A U SESO FLO S S . ” The r e l e va nt por t i ons of t ha t s e c t i on of t he pol i c y a r e a s f ol l ow s : A. CO

VE RE D CAUSE

SO FL O SS

. . . . C

ove r e d Ca us e s of Los s m e a n t he f ol l ow

i ng: * * * 8. V andal i s m

, m eani n g w illf ul a n dm

a lic i ou s da m a ge t o, or de s t r uc t i on of , t he de s c r i be d pr ope r t y. W e w i l l not pa y f or l os s or da m a ge : * * * b. Ca us e d by or r e s ul t i ng f r om t he f t , ex cept f or bui l di ng d a m a g e cau s e d by t he br e a ki ng i nor e xiting of bur gl a r s . ( bol d pr i nt i n or i gi na l ) . The pl a i nt i f f doe s not c l a i m t ha t a ny of t he c l a i m

e d l os s r e s ul t e d f r om “ da m a ge c a us e d by t he br e a ki ng i n or e xi t i ng of bur gl a r s . ” The r e f or e , t he i s s ue i s s qua r e l y pr e s e nt e d: I s t he pl a i nt i f f ’ s l os s one r e s ul t i ng f r om va nda l i s m

, a c ove r e d e ve nt , or da m a ge “ [ c ] a us e d by or r e s ul t i ng f r om t he f t , ” a n e xc l ude d l os s ?11 W e be l i e ve t he pa r t i e s , by t he l a ngua ge of t he pol i c y, i nt e nde d t o e xc l ude f r om c ove r a ge t he t ype of l os s c l a i m e d by t he p l a i ntif f inthi s c a s e . It is s i g ni f i c a nt th a t the e x c l u s i o n a r y l a ngua ge pe r t a i ni ng t o da m a ge “ [ c ] a us e d by or r e s ul t i ng f r om t he f t ” f o llo w

s im m e di a t e l ya f t e r la n gu a g e p e r t a i ni ngtothe c ove r e d l os s of va nda l i s m . W e be l i e ve t he pa r t i e s pur pos e l y i nt e nde d t o r e f l e c t t he i r unde r s t a ndi ng t ha t da m a ge f r om

t he f t w oul d not be i nc l ude d w i t hi n t he ge ne r a l c onc e pt of va nda l i s m . O ur hol di ng i s bol s t e r e d by t he de f i ni t i on of va nda l i s m f ound i n t he pol i c y- - ” w i l l f ul a nd m

a l i c i ous da m

a ge t o, or de s t r uc t i on of , t he de s c r i be d pr ope r t y. ” Thi s de f i ni t i on r e f e r s t o t he t ype of da m a ge c a us e d by va nda l s a s t ha t c onc e pt i s or di na r i l y unde r s t ood, i . e . , da m a gi ng s om

e t hi ng s i m

pl y f or t he s a ke of da m

a gi ng i t . The c onc e pt of t he f t i s e nt i r e l y di f f e r e nt . A t hi e f e nt e r s a bui l di ng i n or de r t o s t e a l s om e t hi ng; c e r t a i nl y a t hi e f ’ s pr i m

a r y f oc us i s not t he m a l i c i ous de f a c i ng, de s t r oyi ng, or da m a gi ng of pr ope r t y. I f t he m ot i va t i on a nd e nd r e s ul t i s t ha t of t he f t a nd t he c l a i m e d l os s i s “ [ c ] a us e d by or r e s ul t [ s ] from

[t h a t ] t he f t , ” t he r e i s n oc o v e r a g e . I nt hi s cas e , ev e r ykn o w l e dg eab l e w

i t ne s s t e s t i f i e d t ha t t he a ppa r e nt m ot i va t i on f or t he e nt r y i nt o Sm i t h’ s bui l di ng w a s t he s t e a l i ng of c oppe r w i r i ng a nd t ubi ng. Si gni f i c a nt l y, Sm ithhi m

s e l f s ote s tif i e dins e v e r a l in s t a nc e s , in c l u di ngthe f ol l ow i ng:12 Q : N ow , t hi s phot ogr a ph a nd your t e s t i m ony r e ga r di ng Fr a nk Ba r r y H e a t i ng &

A i r , i t i s m

y unde r s t a ndi ng t ha t ba s i c a l l y, t ha t w hoe ve r di d t hi s t o your bui l di ng, w a s i nt e r e s t e d i n t he c oppe r ? A: Ye s . Q : The y w

a nt e d a nd di d t a ke a l l t he c oppe r t ha t t he y c oul d t a ke out of t hi s bui l di ng? A: Ye s . * * * * Q : A nd i t i s your be l i e f a s you s i t he r e t oda y, t ha t t he m a i n t hi ng t ha t t he s e pe opl e w e r e i nt e r e s t e d i n w a s t he c oppe r a nd t he va l ue t o s e l l t ha t c oppe r ? A : W e ll, th a t ’ s m

yop i ni o n , ‘c a u s e like I s a y , th e r e ’ s ot he r bui l di ngs a l l ove r t ow n t he y w

a s doi ng i t a t t he s a m e t i m e .

R ob e r t E. K

r zem i n s ki , a l i cen s e del ect r i cal cont r act or w h odi d e l e c t r i c a l r e p a i r s tothe buildi ng , te s tif i e da s f o llo w s : Q : A nd w ha t di d you di s c ove r w he n you m

a de y our initia l in s p e c tion ? A : The bui l di ng w

a s va c a nt a nd s om e one ha d gone i n t he r e a nd I be l i e ve t he pr i m a r y r e a s on f or be i ng t he r e w a s t o ge t s c r a p c opp e r . The yw

e r e af t e r w

i r e , t he yw

e r e a f t e r p l um

b i n g , t he yw

e r e af t e r r e f r i g e r a t i o n t ubi ng, a l l ki nds of c oppe r t he y w e r e pr i m a r ilya f t e r . * * * * Q : A l l r i ght . D

o you r e m

e m be r w e t a l ke d a bout , a nd I t hi nk you ki nd of de s c r i be d i t f a i r l y c l e a r l y f or us , a bout how

t he y t ook a l l t hi s w i r i ng out ? A : U h- huh. Q : A nd t he y t ook a l l t he c oppe r out of t he a i r c ondi t i oni ng uni t ?13 A: Ye a h . Q : The yw

e r e af t e r t he copp e r w e r e n ’ t t he y ? A : I t hi nk a t t ha t t i m e c oppe r w

a s pr e t t y e xpe ns i ve . W e l l , c oppe r ha s be e n hi gh f or t he l a s t f i ve ye a r s . But pr i or toth a t it w a s pr e ttyc he a p . Sm i t h di d not of f e r a ny pr oof s ugge s t i ng t ha t a ny pa r t of t he da m

a ge t o hi s bui l di ng w a s c a us e d by t he m a l i c i ous a c t of a not he r , i . e . , da m a ge s i m

pl y f or i t s ow

n s a ke . W

e f i nd a nd hol d t ha t t he c a us e of Sm i t h’ s l os s w

a s da m a ge due t o t he f t of t he c oppe r w

i r i ng a nd t ubi ng, a nd not due t o c ove r e d va nda l i s m . The da m a ge t o t he bui l di ng oc c ur r e d be c a us e t he t hi e f or t hi e ve s w a nt e d t o ge t t o t he c oppe r . The G e or gi a c a s e of P

ac i f i c I nde m ni t y C o . v . N

. A ., I nc ., 172 S . E. 2d 192 ( G a . A pp. 1969) r e a c he s t he s a m

e c onc l us i on ba s e d upon a na l ogous f a c t s . I t i s anel e m

e nt a r yconcept o f i n s ur a nce l a w t h a t p a r t i e s ar e f r ee t oal l o cat e r i s k s o f l o s s as t he ys ee f i t . I f t he pol i c y of i ns ur a nc e r e f l e c t i ng t he a l l oc a t i on of t hos e r i s ks i s c l e a r a nd una m bi guous , a s i n t hi s c a s e , w e a ppl y i t a s w r i t t e n . The p a r t i e s he r e cho s e t oex c l u de f r o m co v e r a g e t he r i s k of da m

a ge t o t he pr e m

i s e s c a us e d by or r e s ul t i ng f r om t he f t . U nf or t una t e l y f or Sm i t h, t hi s i s e xa c t l y t he ki nd of da m a ge t ha t oc c ur r e d i n t hi s c a s e . The C ha nc e l l or ’ s j udgm e nt i s c ont r a r y t o t he f act s i nt hi s cas e .

Si nc e w

e f i nd t ha t She l by’ s de f e ns e ba s e d on i t s t he or y t ha t t he pl a i nt i f f ’ s l os s w a s c a us e d by or r e s ul t e d f r om t he f t i s14

s us t a i ne d by t he pr oof , w e do not f i nd i t ne c e s s a r y t o a ddr e s s i t s al t e r n a t i v e de f e n s e t he or yt h a t t he pr e m i s e s w e r e v acant at t he t i m

e of t he l os s . O bvi ous l y, i t i s not ne c e s s a r y t o a ddr e s s t he pl a i nt i f f ’ s i s s ue pe r t a i ni ng t o t he a l l e ge d ba d f a i t h of She l by.

For t he a f or e m e nt i one d r e a s ons , t he j udgm e nt of t he C ha nc e l l or i s r e ve r s e d a nd t he c om pl a i nt di s m

i s s e d a t Sm

i t h’ s c os t s . C

os t s on a ppe a l a r e t a xe d a nd a s s e s s e d t o Sm i t h.

______________________________ C h a r l e s D

. Su s a n o , J r ., J . CONC UR:

___________________________ H ous t on M

. G odda r d, P. J .

___________________________ D on T. M

c M ur r a y, J .