|
Commercial Property |
|
Theft Exclusion In
Vandalism Coverage Provision |
Leonard Dwayne Heard (Heard)
climbed on the roof of the building owned by Frances Steinberg and Morton Rudolph
(collectively Owners) on March 26, 2007, opened up the air conditioning units
located there, and removed copper pipes and electrical wiring. While still on
the roof, Dallas police officers found and arrested him. The incident report
listed theft as the offense but Heard was indicted for felony criminal
mischief, to which he pleaded guilty and was convicted.
Owners notified Nautilus
Insurance Company (Nautilus), their insurance carrier, of the damage done to
the property. Nautilus denied the claim on April 17, 2007, stating that there
was no coverage for theft. The Nautilus policy defined vandalism as
"willful and malicious damage to, or destruction of, the described
property." However, the vandalism coverage provision contained a theft
exclusion, that stated: "We do not pay for loss or damage caused by or
resulting from theft, except for building damage caused by the breaking in or
exiting of burglars."
Owners sued Nautilus,
seeking to recover the amount they alleged the policy owed, statutory penalties,
attorney's fees, costs, pre-judgment and post-judgment interest. The affidavit
stated that the arresting police officer observed that Heard removed a number
of pipes from the air conditioning units and left them laying on the roof. The
trial court concluded that the Nautilus policy failed to show that the
exclusion barred coverage. This was based on the fact that the pipes were never
removed from the building's roof as well as a finding that the air conditioning
units were not personal property and Nautilus failed to prove Heard took any
personal property from Owners. It also stated that Nautilus did not prove that
there was a theft of the copper pipe removed from the air conditioning units
based on a preponderance of evidence. The court awarded Owners the amount of
actual damages, along with attorney's fees and interest.
On appeal, Nautilus argued
that the trial court erred in construing the policy in a way that led to the
conclusion that the theft exclusion did not apply to bar coverage. It also
argued that the trial court's findings of fact and conclusions of law were in
error with respect to its concluding that the copper pipes were not personal
property because they were originally attached to the building.
On the first issue, the
appellate court determined that, when determining if a theft occurred, within
the meaning of the policy's vandalism coverage, the trial court erred when it
construed the term "theft" to require that property be removed from
the premises when, in fact, and according to Texas law, it was not necessary to
establish that the property was removed or carried away from the premises. To
show theft, it was not necessary to establish that the property was removed or
carried away from the premises.
On the second issue, the
appellate court determined that Heard's removal of the copper pipes from the
air conditioning units was sufficient to show control over the property for the
purpose of theft. Once he separated the copper pipes from the building, they
became property that could be stolen. The fact that they were originally part
of a fixture did not prevent them from being subject to theft for the purpose
of determining whether the theft exclusion applied to bar coverage.
The trial court's judgment
was reversed and the cause remanded for further proceedings.
Court of Appeals of Texas,
Dallas. Nautilus Insurance Company, Appellant, v. Frances Steinberg and Morton
Rudberg, Appellees. No. 05-08-01418-CV. July 2, 2010. Rehearing Overruled Aug.
16, 2010. 316 S.W.3d 752