Supreme Court takes up definition of arson in Poland foreclosure case

By Marc Kovac

news@vindy.com

COLUMBUS

The state’s high court is considering arguments in an insurance case involving a vacant, foreclosed Poland home that was damaged by arson several years ago.

Allstate Insurance Co. contends the incident was an act of “malicious mischief or vandalism” and, under policy provisions, the resulting damages were excluded from coverage.

Wells Fargo Bank, the mortgage holder, counters that arson amounts to a “fire loss” and should be covered under the homeowner’s insurance policy.

Justices must decide whether arson is malicious mischief or vandalism.

“We’re not really deciding coverage here today,” Justice William O’Neill said during oral arguments Wednesday. “We’re deciding the English language, it appears to me.”

The case focuses on a single-family home on Yellow Creek Drive in Poland. The property was purchased in 2010, with stipulations that required insurance include coverage of fire damages.

In 2013, the homeowner defaulted on his mortgage payments, and Wells Fargo initiated foreclosure proceedings. The property was vacant, from “at least October” of that year, according to documents.

A fire, “deliberately started ... the result of arson,” damaged the property the following February.

Wells Fargo sought coverage for the damages. Allstate denied the claim, saying arson amounted to “vandalism or malicious mischief” on a property that had been “vacant for more than 30 consecutive days.” As such, the policy excluded coverage.

Wells Fargo filed suit in federal court last year. That court sent the case to the Ohio Supreme Court, seeking a state decision on whether arson amounted to “malicious mischief or vandalism.”

“Millions of Ohioans have homeowners insurance policies,” U.S. District Judge Benita Pearson wrote in her order of certification to the Ohio Supreme Court. “Even if less than 1 percent of these homeowners file arson-related insurance claims, the interpretation of this question could potentially affect tens of thousands of properties.

“Rather than speculate as to whether arson is considered vandalism or malicious mischief, the best course is to provide the Supreme Court of Ohio with the opportunity to decide this issue and create precedence in the state of Ohio,” Judge Pearson wrote.

Margo Meola, legal counsel for Allstate, said other states and courts have made decisions in similar cases, but not Ohio.

She said the policy in question did not include definitions for vandalism, arson, malicious mischief or fire.

“It is Allstate’s position, of course ... that when that occurs, there is no definition, you use the common ordinary definition of the language used,” Meola said.

Philip Sineneng, legal counsel for Wells Fargo, said, “The homeowners’ insurance policies of Ohio’s residents are at jeopardy if we were to permit Allstate to throw decades of contract principles out the window in favor of unilaterally reading exclusions into homeowner policies.”