Steven W. Vennemann v. Badger Mutual Ins. ( 2003 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 02-3677
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Steven W. Vennemann, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
Badger Mutual Insurance Company, *
*
Appellee. *
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Submitted: June 12, 2003
Filed: July 2, 2003
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Before RILEY, and HEANEY, Circuit Judges, and ERICKSEN,1 District Judge.
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HEANEY, Circuit Judge.
Steven Vennemann was denied coverage under a homeowner’s policy with
Badger Mutual Insurance Company (Badger) after his house was damaged in a fire.
The district court2 granted Badger’s motion for summary judgment, finding that
1
The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota, sitting by designation.
2
The Honorable Ann D. Montgomery, United States District Court for the
District of Minnesota.
Vennemann was properly denied coverage due to a vacancy exclusion clause in the
insurance policy. Vennemann appeals, arguing that his property was not vacant for
sixty consecutive days before the fire. In the alternative, he contends that a
construction exception in the vacancy exclusion clause allows him to recover on his
insurance claim. We affirm.
Vennemann purchased a house in New Scandia, Minnesota on July 11, 2000.
He insured the house through Badger, a Wisconsin company. On September 13,
2000, the house was damaged by a fire. According to his testimony, Vennemann
engaged in sporadic remodeling projects from the date of purchase until the time of
the fire. The remodeling consisted of non-structural improvements such as tiling,
cleaning, and the installation of a new roof and air conditioning unit. Vennemann
never lived in the house; rather, he stayed overnight an average of twice per week
during the remodeling process. He kept neither food, nor personal belongings at the
house, and electricity was the only utility in service. Although Vennemann moved
personal belongings to the house, the record shows that these furnishings were stored
in the garage and moved to another location at some point before the fire. The only
property damaged in the fire consisted of standard appliances, including a
refrigerator, washer, dryer, stove, and dishwasher.
The homeowner’s insurance policy contained a clause that denied coverage for
losses caused by “vandalism and malicious mischief if the dwelling [was] vacant for
more than thirty consecutive days immediately before the loss.”3 An exception in the
policy indicated that a dwelling “being constructed” is not considered vacant. In a
diversity matter such as this, Minnesota law would generally guide our analysis of
substantive issues. Bennett v. Hidden Valley Golf & Ski, Inc., 318 F.3d 868, 874 (8th
Cir. 2003) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). However,
3
While the policy contained a thirty-day vacancy exclusion clause, Minn. Stat.
§ 65A.01, subd. 3, extends the clause to a sixty-day period.
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since there is no Minnesota law regarding the interpretation of “vacancy” in the
context of a homeowner’s insurance policy, we look to the reasoning of other courts
for guidance.
The First and Fourth Circuits reject the definition of “vacant” as “devoid of
contents” in the context of vacancy exclusion clauses; instead, these circuits focus on
the presence or absence of objects or activities customary for the property’s intended
use. See Langill v. Vermont Mut. Ins. Co., 268 F.3d 46, 48 (1st Cir. 2001) (finding
rental property vacant where sparse furnishings and random evening visits by
appellant did not “convey the appearance of residential living”); Catalina Enterprises,
Inc. v. Hartford Fire Ins. Co., 67 F.3d 63, 66 (4th Cir. 1995) (determining that a
warehouse was vacant where the objects left on the premises did not indicate that the
building was occupied). Where the insured property is a dwelling, midday work
activity does not constitute habitation, and accordingly, a house undergoing daily
renovation may still be considered vacant. Langill, 268 F.3d at 48-49. Thus,
Vennemann’s engagement in various remodeling projects, where he did not reside at
the property, does not provide support for his contention that the property was not
vacant.
In American Mutual Fire Insurance Co. v. Durrence, 872 F.2d 378, 379 (11th
Cir. 1989), the appellant’s house was excluded from coverage under the vacancy
clause of a homeowner’s policy because the house “lacked amenities minimally
necessary for human habitation.” Like the present case, the house was empty except
for a few standard appliances, the utilities had been shut off for about sixty days, and
no one resided in the house. Id. In reaching the conclusion that the house was
vacant, the court noted that the property was not being used for its intended purpose
according to the insurance policy. Id. Here, Vennemann concedes that his house was
not being used as a dwelling. While he argues that staying overnight twice per week
constitutes occupation of the property, random nighttime occupation does not
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preclude a finding of vacancy in the interpretation of a homeowner’s insurance
policy. Langill, 268 F.3d at 49.
Furthermore, we agree that predictability is a key factor in the insurance
context. In considering the nature of the hazard to be guarded against in the case of
arson, Langill stated that “the sustained presence of a resident, particularly in the
hours of darkness, appears logically as the critical factor where the premises are a
dwelling.” Id. A predictable pattern of habitation is significant in the insurance
context because “[w]hen a building is not in use, it is more likely that potential fire
hazards will remain undiscovered or unremedied.” Catalina, 67 F.3d at 66. Here,
Vennemann’s random overnight stays and daytime visits do not represent a sustained
presence at the dwelling for the purpose of minimizing the risk of arson.
In light of the reasons for the inclusion of a vacancy clause in a homeowner’s
insurance policy, we hold the district court did not err in finding that Vennemann’s
property was vacant. Sporadic nighttime visits and remodeling projects do not
“convey the appearance of residential living” and thus, do not constitute effective
measures against vandalism. Langill, 268 F.3d at 48. Furthermore, even if Appellant
visited the property at random points during the sixty days before the fire, the house
was vacant in the sense that it was not being used for its intended purpose as a
dwelling. Id.Finally, Vennemann’s remodeling and refurbishing projects do not qualify his
claim for the “being constructed” exception to the vacancy exclusion clause. One
court indicated, and we agree, that the remodeling must consist of “substantial
continuing activities” to fall under this exception. Will Realty Corp. v. Transp. Ins.
Co., 492 N.E.2d 372, 373 (Mass. App. Ct. 1986). By his estimate, Vennemann spent
a total of $5000 on various remodeling activities. The most extensive project was the
installation of a new roof, which cost about $3500. Even if the roof installation is
considered “substantial,” the fact that the project was completed several weeks before
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the fire indicates that it was not a “continuing” activity. Likewise, the smaller
projects were discrete, non-structural changes that do not rise to the level of
traditional construction activities. Vennemann was cleaning and refurbishing a
finished house, and no projects were in progress when the fire occurred.
Accordingly, the “being constructed” clause was not meant to extend coverage to
relatively minor, individual projects such as those engaged in by appellant.
For the reasons discussed above, we hold that Badger’s motion for summary
judgment was properly granted. The judgment is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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