1

FILED

July 18, 1996

Cecil Crowson, Jr.

Appellate Court Clerk

I N THE COURT OF APPEALS OF TENNESSEE

TED C. SMI TH, ) C/ A NO. 03A01- 9603- CH- 00076

) WASHI NGTON COUNTY CHANCERY COURT

Pl a i ntif f - Appe lle e , )

)

)

)

)

)

v. ) HONORABLE G. RI CHARD J OHNSON,

) CHANCELLOR

)

)

)

)

THE SHELBY I NSURANCE COMPANY )

OF THE SHELBY I NSURANCE GROUP, ) REVERSED

) COMPLAI NT DI SMI SSED 

De f e nda nt - Appe l l a nt . ) REMANDED

ALBERT J . HARB of HODGES, DOUGHTY & CARSON, Knoxvi l l e , f or

Appe l l a nt

MARK S. DESSAUER of HUNTER, SMI TH & DAVI S, Ki ngs por t , f or

Appe l l e e

O P I N I O N

Sus a no, J .
2

Thi s i s a de c l a r a t or y j udgme nt a c t i on. The c ompl a i nt

s eeks a decl a r a t i on t ha t a l os s caus e d by da ma ge t o t he

pl a i nt i f f ’ s bui l di ng i s c ove r e d unde r a c omme 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 Compa ny ( She l by) .

Fol l owi ng a be nc h t r i a l , t he Cha nc e l l or he l d t ha t t he r e wa s

c ove r a ge unde r t he pol i c y a nd a wa r de d t he pl a i nt i f f a j udgme 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 ove r a ge becaus e t he pr e mi s e s we r e vacant at t he t i me of 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 ma ge s “ [ c ] a us e d by or r e s ul t i ng

f r om the f t.” The pl a i nt i f f , Te d C. Smi t h ( Smi t h) , r a i s e s , a s a n

a dditiona l is s ue , the f a ilur e of the tr i a l c our t to a wa r d the

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 ) .

Our re vi e w i s de nov o; howe ve r , t he r e c or d c ome s t o us

a c c ompa ni e d by a pr e s umpt i on of c or r e c t ne s s t ha t we mus 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 ngs of f a c t. Rul e 13( d) , T. R. A. P.; Ci t y of Ki ngs por t v .

St ewar t , 920 S. W. 2d 658 ( Te nn. App. 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 umpt i on of

c or r ect ne s s . Uni on Car bi de Cor p. v . Huddl e s t on, 854 S. W. 2d 87,

91 ( Te nn. 1993) .
3

I

On or a bout Ma r c h 2, 1993, a n unknown 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 whi c h Smi t h wa s

wa 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 wi r i ng,

pl umbi 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 wi r i ng a nd t ubi ng. I n t he

pr oc e s s of r e movi ng t he c oppe r , t he i ndi vi dua l ( s ) di d e xt e ns i ve

da ma ge t o t he i nt e r i or of t he bui l di ng. Smi t h r e por t e d t he

i nc i de nt to the polic e , who in the i r r e por t lis t e d the inc i de nt

a s a the f t. The r e a f t e r , Smith f ile d a c l a i m with the ins ur a nc e

a ge nt t hr ough whom t he pol i c y ha d be e n s e c ur e d. 

On Apr i l 5, 1993, a r e pr e s e nt a t i ve of She l by s e nt Smi t h

a le tte r , whi c h s t a t e d, in pa r t, a s f ollows :

I n or de r t ha t t he Compa ny ma y c ont i nue t o

ha ndl e t hi s ma t t e r , we wa nt you t o know t ha t

we a r e pr oc e e di ng unde r a Re s e r va t i on of

Ri ght s . We 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 owi ng r e a s ons :

* * * *

6. Vac anc y

I f t he bui l di ng whe r e l os s or

da ma ge occur s ha s been vacant f or

mor 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 ma ge , we

will:

a. Not pa y f or a ny l os s or da ma ge

 c a us e d by a ny of t he f ol l owi ng 

 eve n i f t he y ar e Cove r e d 

 Ca us e s of Loss:

( 1) Va nda l i s m;

( 5) The f t; or

( 6) Attempt e d the f t .
4

As 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 ma y not be

c ove r e d unde r your i ns ur a nc e pol i c y. We

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 ma de . 

( bol d pr i nt i n or i gi na l ) . On J une 1, 1993, She l by s e nt Smi 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. No me nt i on wa s ma de of a ny ot he r pol i c y

pr ovi si on in e i t he r le t t e r . 

On J a nua r y 6, 1994, t he pl a i nt i f f f i l e d t he c ompl a i nt

i n t he c a s e a t ba r . She l by’ s a ns we r wa s f i l e d on Ma r c h 7, 1994.

On Augus t 28, 1995, She l by f i l e d a Mot i on t o Ame nd i t s

Ans we r t o i nc l ude , a mong ot he r t hi ngs , t he f ol l owi 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 ma 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 Cha nc e l l or c onduc t e d a he a r i ng on Se pt e mbe r 8,

1995. He f ound t he f ol l owi ng ope r a t i ve f a c t s pe r t a i ni ng t o t he

caus e of t he l os s :

Some 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 pumps a nd a i r c ondi t i oni ng

e qui pme 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 r
1

The Chancellor also rejected Shelby’s defense that Smith did not have

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

2

Our 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 move d

t ha t c oppe r a nd t ook i t wi t h t he m l e a vi ng t he

bui l di ng i n a da ma ge d c ondi t i on.

He de t e r mi 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 ompa ny’ s r e s e r va t i on of r i ght s l e t t e r wa s not a ppl i c a bl e ,

f i ndi ng t ha t t he pr ope r t y wa s i n f a c t oc c upi e d by Smi t h a nd be i ng

ut i l i z e d by hi m a s a wa r e hous e .

1

 Cur i ous l y, t he Cha nc e l l or di d

not a ddr e s s , i n a ny wa 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 Tat a v . Ni c hol s , 848 S. W. 2d 649 ( Te nn. 1993) , t he

Supr e me Cour t r e i t e r a t e d t he f a mi l i a r ge ne r a l pr i nc i pl 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, 368
6

(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 novo review with these principles

in mind.

III

Al t hough not a ddr e s s e d by t he Cha nc e l l or , we 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

of thi s a ppe a l. The r e f or e , we wi l l f i r s t a ddr e s s tha t i s s ue . We

will, a s a pa r t of our inqui r y, e xa mi ne the pl a i ntif f ’ s the or y

t ha t She l by s houl d not be pe r mi 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 of t hi s cas e .

Smi t h ar gue s t ha t becaus e ne i t he r t he r e s e r va t i on of

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 me nt i one d t he da ma 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 wa 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 . We di s a gr e e .

I t i s c l e a r t ha t She l by ha s not expr e s s l y wa i ve 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 ont a i ns the f ollowi ng s t a t eme nt :
7

No a c t of a ny Compa ny r e pr e s e nt a t i ve , whi l e

i nve s tiga ting, ne gotia ting s e ttleme nt of the

c l a i m or de f e ndi ng a la ws uit, s ha ll be

c ons t r ue d a s wa i vi ng a ny Compa ny r i ght s . The

Compa 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 mi 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 whe 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. As s t a t e d by t he

Cour t of Appe a l s i n t he c a s e of Gi t t e r v. Te nne s s ee Far me r s Mut .

I ns . Co., 450 S. W. 2d 780, 783 ( Te nn. App. 1969) ,

[ t ] he es s e nt i a l el e me nt s of an equi t a bl e

e s t oppe l a s r e l a t e d to the pa r t y c l a i mi ng the

e s t oppe l , a r e , ( 1) l a c k of knowl e dge a nd of

t he me a ns of knowl 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

ba s e d t he r e on of s uc h a cha r act e r as t o

c ha nge hi s pos i t i on pr e j udi c i a l l y. Pr ov i de nt

Was hi ngt on I ns . Co. v . Re e s e ( 1963) , 213

Te nn. 355, 373 S. W. 2d 613.

I d. The Gitte 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 whe t he r t he c ompl a i na nt r e l i e d on t he s e

s t a t e me 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 e j udi c i a l l y. ” I d. Subs e que nt c a s e s de a l i ng wi t h e qui t a bl e

e s t oppe l ha ve l i ke wi s e empha s i zed t he r e l i a nce and de t r i me nt a l

c ha nge of pos i t i on r e qui r e me nt s . See Robi ns on v . Te nne s s e e

Far me rs Mut . Ins . Co. , 857 S. W. 2d 559, 563 ( Te nn. App. 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

mi s r e pr e s e nt a t i on wa s ma 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 mi s r e pr e s e nt a t i on. ” ) ; Spe ar s v . Comme r c i al I ns . Co. of
8

Newar k, N. J., 866 S. W. 2d 544, 549 ( Te nn. App. 1993) ( “ The pa r t y

a l l e gi ng wa i ve r mus t s how how he ha s be e n pr e j 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 , Smi t h ha s not de mons t r a t e d t ha t he

unde r t ook a pr e j 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 . Our r e s e a r c h r e ve a l s tha t a c ont e ntion quite s i mila r to

Smi t h’ s ha s been ma de i n at l eas t t wo pr i or Te nne s s ee cases , and

wa s s umma r i l y r e j ect e d i n bot h i ns t a nces . The f i r s t cas e

e l i c i t e d t he f ol l owi ng c omme nt s f r om t he Supr e me Cour t :

The s e c ond c ont e nt i on, t ha t t he r e wa s a

wa i ve r of t he pol i c y pr ovi s i ons me nt i one d, or

t ha t t he I ns ur a nc e Compa ny i s e s t oppe d t o

r e l y t he r e on, mus t be de ni e d.

The s e de f e ns e s , wa i ve r and es t oppe l , ar e

ba s e d on a l e t t e r wr i t t e n by t he Compa ny t o

Le we l l yn whe 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 whi c h i t c ont e nde d i t

wa s not l i a bl e unde r i t s pol i c y. Howe ve r ,

s i nc e in thi s s a me le tte r , the I ns ur a nc e

Compa ny r e s e r ve d eve r y de f e ns e ava i l a bl e t o

i t unde r t he pol i c y, and t he r e i s no s howi ng

what 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 de f e ns e s

ar e not good.

Lewe l l y n v . St at e Far m Mut. Aut o. I ns . Co. , 438 S. W. 2d 741, 742-

43 ( Te nn. 1969) ( e mpha s i s a dde d; f oot not e omi t t e d) .

I n Spe ar s v . Comme r c i al I ns . Co. of Newar k, N. J. ,

s upr a, the f ollowi ng wa s s a i d:
9

Pl a i ntif f a l s o c ont e nds tha t Comme r c i a l

wa i ve d i t s de f e ns e t o t he ef f ect t ha 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

by a c c i de nt. Pl a i ntif f ba s e s thi s c ont e ntion

on a le tte r s e nt to pl a i ntif f by Comme r c i a l

pr i or to thi s s uit. In thi s le tte r ,

Comme r c i a l a dvi s e d pl a i ntif f tha t it woul d

not be pa yi ng l i f e t i me 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 whi l e

t he polic y is in f or c e . ” I t is pl a i ntif f ’ s

a s s e r tion tha t thi s is inc ons i s t e nt with the

pos i t i on t a ke n by Comme r c i a l i n t hi s

litiga tion- - t ha t the inj ur i e s c ompl a i ne d of

i n pl a i nt i f f ’ s c ompl a i nt we r e not c a us e d by

acci de nt a l means . 

The pa r t y a l l e gi ng wa i ve r mus t s how how he

ha s be e n pr e j udi c e d by a ny c ha nge of

pos i t i on. Pr ude nt i al I ns ur anc e Co. of

Ame r i c a v . Fal l s , 169 Te nn. 324, 87 S. W. 2d

567, 569 ( 1935) . Whi l e we ha ve s e r i ous

doubt s a s t o whe t he r t he r e ha s be e n a ny

c ha nge of pos i t i on by Comme r c i a l , t he r e ha s

be e n no s howi ng by pl a i nt i f f how he ha s be e n

pr e j udi ced by Comme r c i a l ’ s al l e ge d “cha nge of

pos ition. ” Thi s a r gume nt is like wi s e without

me r it.

Spe ar s , 866 S. W. 2d a t 549.

As pr e vi ous l y i ndi c a t e d, Smi t h ha s not s hown

de t r i me 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

of r i ght s a nd de ni a l le tte r s . He r e f e r s to the f a c t tha t he

r e pa i r e d t he bui l di ng a t hi s own e xpe ns e ; but we do not s e e how

it c a n be c l a i me d tha t thi s a c tivity wa s pr e j udi c i a l to hi 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 me nt s i n t he t wo l e t t e r s .

The r e f or e , we r e j ect Smi t h’ s cl a i ms of wa i ve r and es t oppe l .
10

We 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 whi 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

“COVERED CAUSES OF LOSS. ” 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 ows :

A. COVERED CAUSES OF LOSS

. . . . Cove r e d Ca us e s of Los s me a n

t he f ol l owi ng:

* * *

8. Vandal i s m, meani ng

willf ul a nd ma lic i ous

da ma 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.

We wi l l not pa y f or l os s

or da ma ge :

* * *

b. Ca us e d by or

r e s ul t i ng f r om

t he f t , except

f or bui l di ng

da ma ge caus e d

by t he br e a ki ng

i n or 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 me d l os s r e s ul t e d f r om “ da ma 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 ma 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

We 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 me d by t he

pl a i ntif f in thi s c a s e . It is s i gni f i c a nt tha t the e xc l us i ona r y

l a ngua ge pe r t a i ni ng t o da ma ge “ [ c ] a us e d by or r e s ul t i ng f r om

t he f t ” f ollows imme di a t e l y a f t e r la ngua ge pe r t a i ni ng to the

c ove r e d l os s of va nda l i s m. We 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 ma ge f r om t he f t

woul d not be i nc l ude d wi t hi n t he ge ne r a l c onc e pt of va nda l i s m.

Our 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- - ” wi l l f ul a nd ma l i c i ous da ma 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 ma 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 ma gi ng s ome t hi ng s i mpl y f or t he

s a ke of da ma 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 ome t hi ng; c e r t a i nl y

a t hi e f ’ s pr i ma r y f oc us i s not t he ma l i c i ous de f a c i ng,

de s t r oyi ng, or da ma gi ng of pr ope r t y. I f t he mot 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 me d l os s i s “ [ c ] a us e d by or

r e s ul t [ s ] from [t ha t ] t he f t , ” t he r e i s no c ove r a ge .

I n t hi s cas e , eve r y knowl e dgeabl e wi t ne s s t e s t i f i e d

t ha t t he a ppa r e nt mot i va t i on f or t he e nt r y i nt o Smi t h’ s bui l di ng

wa s t he s t e a l i ng of c oppe r wi r i ng a nd t ubi ng. Si gni f i c a nt l y,

Smith hi ms e l f s o te s tif i e d in s e ve r a l ins t a nc e s , inc l udi ng the

f ol l owi ng:
12

Q: Now, t hi s phot ogr a ph a nd your t e s t i mony

r e ga r di ng Fr a nk Ba r r y He a t i ng & Ai r , i t i s my

unde r s t a ndi ng t ha t ba s i c a l l y, t ha t whoe ve r

di d t hi s t o your bui l di ng, wa s i nt e r e s t e d i n

t he c oppe r ?

A: Ye s .

Q: The y wa 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: And 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 ma i n t hi ng t ha t t he s e pe opl e we r e i nt e r e s t e d i n wa 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: We ll, tha t ’ s my opi ni on, ‘c a us e like I s a y, the r e ’ s

ot he r bui l di ngs a l l ove r t own t he y wa s doi ng i t a t t he

s a me t i me .

Robe r t E. Kr zemi ns ki , a l i cens e d el ect r i cal cont r act or who di d

e l e c t r i c a l r e pa i r s to the buildi ng, te s tif i e d a s f ollows :

Q: And wha t di d you di s c ove r whe n you ma de

your initia l ins pe c tion?

A: The bui l di ng wa s va c a nt a nd s ome one ha d

gone i n t he r e a nd I be l i e ve t he pr i ma r y

r e a s on f or be i ng t he r e wa s t o ge t s c r a p

c oppe r . The y we r e af t e r wi r e , t he y we r e

a f t e r pl umbi ng, t he y we r e af t e r r e f r i ge r a t i on

t ubi ng, a l l ki nds of c oppe r t he y we r e

pr i ma r ily a f t e r .

* * * *

Q: Al l r i ght . Do you r e me mbe r we 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 wi r i ng out ?

A: Uh- huh.

Q: And 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 y we r e af t e r t he coppe r we r e n’ t t he y?

A: I t hi nk a t t ha t t i me c oppe r wa s pr e t t y e xpe ns i ve . 

We 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 to tha t it wa s pr e tty c he a p.

Smi 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 ma ge t o hi s bui l di ng wa s c a us e d by t he ma l i c i ous a c t of

a not he r , i . e . , da ma ge s i mpl y f or i t s own s a ke . We f i nd a nd hol d

t ha t t he c a us e of Smi t h’ s l os s wa s da ma ge due t o t he f t of t he

c oppe r wi 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 ma 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

wa nt e d t o ge t t o t he c oppe r . The Ge or gi a c a s e of Pac i f i c

I nde mni t y Co. v . N. A., I nc ., 172 S. E. 2d 192 ( Ga . App. 1969)

r e a c he s t he s a me c onc l us i on ba s e d upon a na l ogous f a c t s . 

I t i s an el e me nt a r y concept of i ns ur a nce l a w t ha t

pa r t i e s ar e f r ee t o al l ocat e r i s ks of l os s as t he y s 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 mbi guous , a s i n t hi s c a s e , we a ppl y i t a s

wr i t t e n. The pa r t i e s he r e chos e t o exc l ude f r om cove r a ge t he

r i s k of da ma ge t o t he pr e mi s e s c a us e d by or r e s ul t i ng f r om t he f t .

Unf or t una t e l y f or Smi t h, t hi s i s e xa c t l y t he ki nd of da ma ge t ha t

oc c ur r e d i n t hi s c a s e . The Cha nc e l l or ’ s j udgme nt i s c ont r a r y t o

t he f act s i n t hi s cas e . 

Si nc e we 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 wa s c a us e d by or r e s ul t e d f r om t he f t i s
14

s us t a i ne d by t he pr oof , we 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 na t i ve de f e ns e t he or y t ha t t he pr e mi s e s we r e vacant at

t he t i me of t he l os s . Obvi 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 me nt i one d r e a s ons , t he j udgme nt of t he

Cha nc e l l or i s r e ve r s e d a nd t he c ompl a i nt di s mi s s e d a t Smi t h’ s

c os t s . Cos 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 Smi t h.

______________________________

Cha r l e s D. Sus a no, J r ., J .

CONCUR:

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Hous t on M. Godda r d, P. J .

___________________________

Don T. Mc Mur r a y, J .