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Shepperson v. Metropolitan Property and Casualty Insurance Co.

United States District Court, D. Massachusetts

May 22, 2018

SUSAN SHEPPERSON, Plaintiff,
v.
METROPOLITAN PROPERTY AND CASUALTY INSURANCE CO., Defendant.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK, UNITED STATES DISTRICT JUDGE.

         The question presented is whether Mass. Gen. Laws ch. 175, § 99 assures property damage coverage for an innocent named insured when an unnamed co-insured resident of the premises they share intentionally sets those insured premises afire. Plaintiff Susan Shepperson, the named insured of the insurance policy before me, seeks to establish that she is entitled to coverage irrespective of whether the fire which damaged her residence was caused by her son, who I find to be an unnamed co-insured and also a resident of the premises. Concluding that the policy may not exclude coverage for Ms. Shepperson as an innocent co-insured, I will grant her summary judgment establishing the insurer's liability on her contract claim.

         In reaching my conclusion that the insurer is liable on the contract claim, I have followed a somewhat different path from that pursued by Ms. Shepperson in her motion. I conclude first that by its plain terms, the policy does exclude coverage. I nevertheless also conclude that such an exclusion is barred under Massachusetts law. Once the illegal exclusion is excised from the policy, Ms. Shepperson is entitled to coverage, so long as she was innocent of involvement in the fire which caused the injury for which she seeks damages. I find she is an innocent insured entitled to damages. The amount of damages is not yet ripe for resolution. I will consequently look to the parties to formulate a plan for resolving the issues that remain outstanding following my grant of Ms. Shepperson's motion for partial summary judgment so as to bring this case to final judgment promptly.

         I. BACKGROUND

         A. Factual Background

         Ms. Shepperson is the sole owner of the residential property located at 47 Larchmont Road in Salem, Massachusetts (“the premises”). She maintained a homeowner's insurance policy (“the policy”) with Defendant, Metropolitan Property and Casualty Insurance Co., identified as policy number 1190421841; the policy coverage was effective July 13, 2015 to July 13, 2016. The policy provided coverage for the premises. Ms. Shepperson is the sole named insured on the policy.

         1. The Policy

         The policy included, in relevant part, the following language:

         The terms of this policy impose joint obligations on all persons defined as you. This means that the responsibilities, acts and failures to act of a person defined as you will be binding upon another person defined as you.

         “You” and “your” mean:

1. the person or persons named in the Declarations and if a resident of the same household:
A. the spouse of such person or persons;
B. the relatives of either; or
C. any other person under the age of twenty-one in the care of any of the above . . . .
SECTION I - LOSSES WE COVER
(SPECIAL PERILS) . . .
COVERAGE A - DWELLING AND COVERAGE B - PRIVATE STRUCTURES We will pay for sudden and accidental direct physical loss or damage to the property described in Coverages A and B, except as excluded in SECTION I - LOSSES WE DO NOT COVER. COVERAGE C - PERSONAL PROPERTY We will pay for sudden and accidental direct physical loss or damage to the property described in Coverage C when loss or damage is caused by SECTION I - BROAD NAMED PERILS, except as excluded in SECTION I - LOSSES WE DO NOT COVER.
SECTION I - LOSSES WE DO NOT COVER
(SPECIAL PERILS)

         1. We do not insure under any Section I coverage for any loss which would not have happened in the absence of one or more of the following excluded events. We do not insure for any such loss regardless of:

(a) the cause of the excluded event;
(b) other causes of the loss; or
(c) whether such causes acted at the same time or in any other sequence with the excluded event to produce or contribute to the loss.

         These exclusions apply whether or not the excluded event results in widespread damage or affects a substantial area. The excluded events are listed below.

A. Intentional Loss, meaning any loss arising out of any intentional or criminal act committed:
1. by you or at your direction; and
2. with the intent to cause a loss.
This exclusion applies regardless of whether you are actually charged with or convicted of a crime.
In the event of such loss, no one defined as you or your is entitled to coverage, even people defined as you or your who did not commit or conspire to commit the act causing the loss.

         2. The Incident and Claim History

         On March 4, 2016, a fire caused significant damage to the premises and to the personal property contained within. Ms. Shepperson made a report of the loss to Metropolitan the next day. Metropolitan sent Ms. Shepperson a letter on March 7, 2016, acknowledging the receipt of her claim.

         On March 9 and again on March 28, Metropolitan sent Ms. Shepperson a letter informing her of “a potential coverage problem for [her] recent claim.” Moreover, in accordance with its rights under the policy, Metropolitan requested that Ms. Shepperson cooperate with its investigation into the fire, provide an examination under oath, and produce pertinent documentation and information in support of her claim. Her examination under oath was conducted on April 21, 2016.

         Metropolitan also scheduled the examination under oath of Scott Shepperson, Ms. Shepperson's eldest son, for April 21, 2016. This scheduled examination was the subject of notice provided in letters dated March 24, 2016 and March 31, 2016, sent to Scott at the premises and at 3 Whipple Street in Danvers, Massachusetts.[1] When Scott failed to appear for his scheduled examination under oath, Metropolitan notified Ms. Shepperson's counsel that “Scott Shepperson qualifie[d] as ‘you' under the policy, and as such [wa]s obligated to cooperate with Metropolitan's investigation and provide an examination under oath[, ]” and that until that was done Metropolitan could not “make a final determination on the coverage available to [Ms. Shepperson].”

         3. Ms. Shepperson's Examination Under Oath

         In her examination under oath, Ms. Shepperson testified that she owned the premises and that no one else had an ownership interest in it on the date of the fire. She said that on the day of the fire no one other than she, Scott, and another son Eric Shepperson, were living at the premises. She testified that she was not at home at the time of the fire because she, along with her daughter, Beth DiSessa, and her two granddaughters, traveled to Holyoke, Massachusetts to visit her brother for the night. Ms. Shepperson testified that Scott, who was on a scheduled layoff from work at the time, however, was home when the fire occurred.

         Ms. Shepperson learned about the fire around 11:45 PM that evening during a phone call from her neighbor. When she spoke to Scott that night, he told her that he “accidentally set the house on fire” and that he was “so sorry.” Ms. Shepperson testified that Scott told her he had noticed that the snow blower needed gasoline so he filled the gas can, which was ordinarily kept in the garage, with gasoline and brought it inside the house. She said Scott had described to her that as he was walking through the house, he smelled gas and it appeared that the gas can was leaking. Ms. Shepperson further testified that Scott told her that “[h]e took a cigarette out of the package, put it in his ...


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