No Liability For Damage Connected To Crumbled Chimney

Homeowners	Breach of Contract
Maintenance

In July 2007, Helena Murphy reported to her homeowners insurer, Patriot Insurance Company (Patriot), that a recent storm had caused damage to the flashing on her roof, allowing water to enter the house. Patriot engaged an adjuster to investigate the claim, and he went to the property four days after the report. Murphy and the adjuster walked around the house, inspecting the damage. The adjuster observed damage to the garage and ceiling of an enclosed porch and dampness in the finished portion of the basement. He went up on the roof but observed “no exterior damage due to wind,” and no damage to the flashing on the roof around the rear chimney, nor did he observe holes in the roof.

The adjuster acknowledged that he did not consider that flashing might have been torn off during the storm, nor did he inspect the front chimney. In his report, the adjuster acknowledged that Murphy showed him certain damage from the storm, including heavy rain that had purportedly “flooded the driveway and infiltrated the foundation causing water damage to [the] contents ... of the basement.”

In August 2007, Patriot paid Murphy a total of $3,553.05 for wind and water damage to her house. The following month, Murphy filed an additional claim with Patriot after a worker discovered damage from rot that resulted from water infiltration near the front chimney. The adjuster returned to inspect the property and, in September 2007, Patriot initially paid Murphy an additional $845 on this claim, after a $500 deductible.

In his report from the return visit, the adjuster concluded that the rot was caused at the same time in July 2007 as the damage for which Patriot had already paid Murphy. In November 2007, Patriot refunded Murphy the $500 deductible from the second payment and paid her an additional $10,000, the policy limit for damage from mold or rot, based in part on the report of an independent building inspector in October 2007.

In that report, the inspector concluded that the cause of the damage was failed flashing near the chimneys that had allowed water to enter and produce structural damage, rot, and mold. The inspector also concluded that the water penetration was a long-term problem that existed before the July 2007 storm.

Patriot paid Murphy an additional $1,889.41 in connection with a subsequent claim in October 2008, and continued to negotiate with her over a repair estimate in excess of $56,000 that she maintained was necessary to remediate the substantial remaining rot and mold in the house. In November 2009, Patriot paid Murphy an additional $15,865.44.

In June 2008, while the parties remained in discussion, Murphy filed a complaint for breach of contract. In August 2009, Patriot moved for partial summary judgment on the scope of coverage for remediation of the mold and rot and replacement of the chimney that Murphy had had removed. The trial court ruled that the policy clearly and unambiguously limited damages relating to fungi or rot to $10,000 and that the provision for coverage for the “collapse” of a building or part of a building did not apply to the chimney. However, the court expressly did not consider whether other policy provisions might apply.

Murphy subsequently filed an amended complaint adding claims against Patriot for negligence and bad faith. Patriot moved for partial summary judgment on the additional claims. In June 2012, the trial court granted Patriot’s motion and Murphy appealed.

On appeal, Murphy contended that Patriot “was estopped from denying coverage for the removal and replacement of the chimney.” She also contended that the trial court erred in dismissing the negligence and bad faith complaints.

The appellate court affirmed the trial court’s dismissal of both complaints. It noted that Murphy had not advanced “any compelling policy or other basis for imposition of an independent, extra-contractual negligence duty in these circumstances.”

Murphy vs. Patriot Ins. Co.-Supreme Court of Vermont-August 14, 2014-2014 WL 3965639