Opinion ID: 3150196
Heading Depth: 4
Heading Rank: 1

Heading: Vandalism;

Text: (b) Sprinkler leakage, unless you have protected the system against freezing; (c) Building glass breakage; (d) Water damage; (e) Theft; or (f) Attempted theft. (2) With respect to Covered Causes of Loss other than those listed in Paragraphs (1)(a) through (1)(f) above, we will reduce the amount we would otherwise pay for the loss or damage by 15%. In February 2011, when Commerce Bank was added to the policy, the building was vacant and had been so since November 2010; i.e., for more than 60 days. Commerce Bank was aware that the building was vacant.1 West Bend, however, was not so aware. The building remained vacant and, on September 15, 2011, it was vandalized. Commerce Bank made a claim for the damage, which West Bend denied based on the vacancy clause. Commerce Bank sued for breach of the insurance contract. 1 Indeed, in the summer of 2010, Commerce Bank submitted a claim for damage due to vandalism to the building’s previous insurer, The Hartford. That claim was denied under a nearly identical vacancy provision. 4 On cross-motions for summary judgment, the district court granted West Bend’s motion, denied Commerce Bank’s motion, and dismissed the action. The court determined that West Bend never assumed the risk of vandalism to a vacant building, that vacancy was not a violation of the terms of the policy, and that the vacancy was not caused by a breach or violation by the property owner. The court acknowledged the mortgage clause, but held that West Bend “is only liable to the mortgagee for covered losses,” and that “[i]n this case, there was never any coverage offered for a vacant building, so [Commerce Bank] cannot recover.” The court of appeals reversed. Commerce Bank v. W. Bend Mut. Ins. Co., 853 N.W.2d 836 (Minn. App. 2014). The court held that Commerce Bank could recover because “under a standard mortgage clause, ‘the insurance with respect to the mortgagee shall not be invalidated by the mortgagor’s acts or neglect.’ ” Id. at 841 (quoting Am. Nat’l Bank & Trust Co. v. Young, 329 N.W.2d 805, 810 n.1 (Minn. 1983)). Thus, “[w]hile the owner had no coverage under the policy for its violations, under Commerce’s separate and independent policy with West Bend, the vacancy provision applies only when Commerce is guilty of breaching it.” Id. at 842. In this case, the court said, “it was the owner’s failure to occupy the property or secure a tenant that comprised the acts or negligence causing the property to remain vacant for more than 60 days.” Id. We granted West Bend’s petition for review. 5