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A Racoon Ravage: Insurance Company Allowed to Deny Coverage for Animal Destruction (PA)

September 27, 2019

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<p style="text-align: justify;">The United States District Court for the Western District of Pennsylvania recently granted an insurance company’s dismissal from a lawsuit asserting claims of breach of contract and insurance bad faith. In <em><a href="">Capital Flip,LLC v. American Modern Select Insurance Company</a></em><a href=""></a>, American Modern Select Insurance Company (“American Modern”) denied insurance coverage for substantial property damage caused by racoons.</p>
<p style="text-align: justify;">In April of 2018, Capital Flip, LLC (“Capital Flip”) discovered that racoons had entered its dwelling and caused a substantial amount of damage to the interior. Capital Flip was insured by a Dwelling Policy issued by American Modern. Under the insurance policy, coverage was available for a limited number of “perils insured against” which included losses arising from “vandalism or malicious mischief.” As such, Capital Flip made a claim on the policy stating that the racoon damage was the result of “vandalism or malicious mischief” by the culprit racoons. American Modern denied Capital Flip’s claim stating that since the loss was a result of animals damaging the dwelling, it was not covered under the insurance policy.</p>
<p style="text-align: justify;">In response, Capital Flip filed a lawsuit in state court asserting breach of contract and insurance bad faith claims against American Modern. American Modern removed the action to federal court asserting diversity jurisdiction and later filed a Motion to Dismiss claiming that its denial of coverage was warranted. Specifically, American Modern claimed that racoons cannot commit vandalism or engage in malicious mischief. Capital Flip argued that the policy was ambiguous and never defined the terms “vandalism” and “malicious mischief.” Therefore, Capital Flip believed damages caused by animals may be included.</p>
<p style="text-align: justify;">The Court failed to find Capital Flip’s argument persuasive and determined that it failed to plead a plausible claim for either breach of contract or bad faith as both of those claims required a finding that Capital Flip was entitled to coverage in the first place. Instead, the Court found American Modern’s Dwelling Policy to be clear and unambiguous. With regard to Capital Flip’s undefined term argument, the Court stated that it was “well-established that a term is not ambiguous merely because an insurance policy does not provide a specific definition.” Instead, when a term is undefined, courts will use the common law definition and apply it to the facts of the case.</p>
<p style="text-align: justify;">Here, the Court determined that both the common law definitions and the specific legal usage of the terms “vandalism” and “malicious mischief” do not apply to animal behavior. First, the Court looked to the common law definition of “vandal” which is defined as “a person who deliberately destroys or damages property.” Next, the Court stated that “malicious” is defined as “intending or intended to do harm” and that “mischief” is defined as “playful misbehavior.” All in all, the Court concluded that these definitions apply to the deliberate acts of a person.</p>
<p style="text-align: justify;">Additionally, the Court determined that the concepts of vandalism and common law malicious mischief are intertwined with the offense of Criminal Mischief. As such, like all crimes, this required a human actor as animals are not subject to criminal law. As a result, the Court determined that it was not plausible for Capital Flip to claim coverage under American Modern’s Dwelling Policy. Therefore, the Court granted American Modern’s Motion to Dismiss.</p>
<p style="text-align: justify;">Thanks to Zhanna Dubinsky for her contribution to this post. Please email <a href="">Vito A. Pinto</a> with any questions.</p>

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