Fort Lane Village, L.L.C. v. Travelers Indemnity Co. of America, 805 F. Supp. 2d 1236

Fort Lane sought to add the 208 East Gentile Street property to its policy; the building was occupied at request but vacant for the policy period beginning May 2008.
Fort Lane renewed the policy through February 1, 2010, but never disclosed the vacancy to Travelers or had Travelers independently confirm occupancy.
On October 20, 2009, a fire destroyed the vacant building; Fort Lane had paid all premiums; Travelers denied coverage based on a vacancy-vandalism exclusion.
Travelers’ investigator concluded the fire was human-caused and vandalism occurred; the report attributed the origin to persons unknown and noted ongoing vandalism problems.
Fort Lane asserted claims for breach of contract, bad faith, negligence, and unjust enrichment; Travelers moved for summary judgment on all four claims; Fort Lane cross-moved on the interpretation issue.
The court held that Fort Lane’s interpretation of the policy is correct as a matter of law for coverage, but Travelers is entitled to summary judgment on negligence, bad-faith, and unjust enrichment claims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Vandalism ambiguity	Vandalism term is ambiguous when read with the policy as a whole.	Vandalism unambiguously includes arson.	Vandalism is ambiguous; construed in Fort Lane's favor.
Arson within vandalism exclusion	Arson may not fall within vandalism under the policy language.	Arson falls within vandalism and is excluded when vacancy exceeds 60 days.	Policy ambiguous on arson; interpreted in insured's favor; coverage remains.
Negligence claim viability	Travelers’ investigation and denial may support negligence.	No duty to prove beyond denying a covered claim; claim merits dismissal.	Negligence claim dismissed as a matter of law.
Bad-faith denial	Denial was unreasonable and in bad faith.	Denial was reasonable and fairly debatable.	Bad faith claim dismissed; denial deemed fairly debatable.
Unjust enrichment	Unjust enrichment feasible where no coverage exists.	Contract governs; unjust enrichment unavailable where there is an enforceable contract.	Unjust enrichment claim dismissed.

Bear River Mut. Ins. Co. v. Williams, 153 P.3d 798 (Utah Ct. App. 2006) (vandalism can be interpreted to include arson in vacancy exclusions)
Rancho San Marcos Props., LLC v. American States Ins. Co., 97 P.3d 775 (Wash. App. 2004) (arson/vandalism terms may create ambiguity when listed separately)
S.W. Energy Corp. v. Continental Ins. Co., 974 P.2d 1239 (Utah 1999) (ambiguity resolved in favor of insured)
First Am. Title Ins. Co. v. J.B. Ranch, 966 P.2d 834 (Utah 1998) (interpret policy language by its plain meaning when unambiguous)
LDS Hosp. v. Capitol Life Ins. Co., 765 P.2d 857 (Utah 1988) (burden on insured to show policy exclusions apply)
Young v. Fire Ins. Exch., 182 P.3d 911 (Utah Ct. App. 2008) (fairly debatable standard for bad-faith analysis)
United Capital Corp. v. Travelers Indemnity Co. of Illinois, 237 F.Supp.2d 270 (E.D.N.Y. 2002) (vacancy/vandalism language interpreted against insurer in some jurisdictions)