There is a line between tenant abuse and criminal acts of a tenant. Did the owner file a police report? start with that.

A basic thought is that most insurance covers occurrences that are sudden and accidental. My first question would be how tenants accomplished sudden and accidental modification intended for a particular purpose.

This is a State Farm landlord policy to protect the property owner against unspecified perils. Not like a DP with specified peril coverage for what I consider to be a vandalism loss or malisious mischief. Damages to the property are extensive. I have been absent from posting in the this forum for a while, but still follow the threads on a regular basis. I always enjoyed the challenge of Jim Flynt, Jim Lakes, Ray Hall and some of the other old timers that thought they new more than me. I found out that they did in most every instance. This thread should give rise to some interesting dialog regarding the validity of my client's claim. Ray has started the controversy with his comment tht there exista line between tenant abuse and criminal act. Perhaps he will share where I can locate that line for a starter. Chuck opines tht vandalism must be accidental. For Steves purposes of having the policy I have not been favord with a copy of the policy as yet but I think SF does not use the standard ISO forms or language. Now, prior to any of you hotshots getting your boxers in a bunch, consider if your parents had a rental house fully insured with a good paying tenant and six months later the cops busted the door down with a search wwarrant in hand, your good tenants have vamoosed back to Mexico and you found that their $300,000.00 investment was reworked to be a marijuana grow house or methlab, with about $&5,000.00 in damages. Please remember that I include spelling errors and typos for the ones that like to find them
William S Cook
Public Adjuster

I  will chime in again in a few says, but I need some more reading/ If you have the CP 30 you must have the CP10 which has a lot of the basic language and it seems some of the dates of the act are in play was well as when it was brought to the owners attention and how close he checked on the tenant. You all can see the way I am going.

As this is a State Farm policy I expect that you are right in that it is proprietary, as most State Farm policies are. My experience is that State Farm policies tend to be written to exclude risks that State Farm does not want to take. My guess is that if State Farm sees "grow houses" as a threat they will have addressed them in the policy language.

All Risk except as excluded is certainly a different cat from named peril. Generally speaking all that is required of the insured is the notice of loss and it is up to the insurer to react with acceptance or denial. Has State Farm denied the claim?

However, a basic tenet of insurance is that the occurrence be sudden and accidental. Whether the intentional modification of a rental unit into a grow house could be considered sudden and accidental from the insureds point of view is outside my experience and probably depends on Florida case law. Could the modification be considered sudden and accidental because the insured was unaware and found the modification suddenly.

Residential water damage claims, caused by small slow leaks, rot and decay, can be sudden and accidental and covered, in Arkansas.

Since we don't have a copy of the coverage form, we really cannot speak to whether this loss is covered. Were I the PA on this one, William, I would first request in writing a certified copy of the policy. This way you get not just the main form, but all the forms and endorsements. (But you probably already knew that.)

The questions we can answer, or at least make some inroad on, are:
1. Is this vandalism/malicious mischief?
2. Is it sudden and accidental?

In my thinking, it is not malicious mischief because this would, by definition involve malice. Without any additional information, I don't see the malice here. Does vandalism of neccessity involve malice? Is it synonymous with "malicious mischief? That is the question I would be bringing to the claim committee if this is a specified peril policy that includes the peril of vandalism. I will leave it as a question. A trip to Funk and Wagnalls might be in order if vandalism is not defined in the policy.  If it is an "open peril" policy (the new politically correct name for "all risks") I agree with the others.  It all depends on whether an exclusion applies.

Is it sudden and accidental? It obviously involves an intentional act that occurred over a period of time. But the intentional act was not committed by an insured, and the discovery was sudden with regard to the insured. I would tend to believe it is sudden and accidental in that sense and would give the insured the benefit of the doubt for that one question. In fact many forced place policies will cover intentional damage done by someone who has discovered they are being evicted - even though the person committing the act was the technical owner of the property at the time the damage was done -- because the owner is not the insured (the mortgage company).

Really the question of covrage is not at issue in this thread. The issue at hand is in regard to the peril of vandalism. almost every policy will conditionally cover vandalism. Some policies have vacancy period restrictions. None of those restricitions apply, the policy is a State Farm FP-8127 and is not a spcified peril so the debate is restricted to what would be considered vandalism. Since the definiition is not in the policy I went to Blacks Law dictionary. I have two editions and they both provide what I would interpret as allowing coverage to apply for the peril of vandalism. I recall reading several court cases of coverage disputes in courts across the nation for methlab damage caused by tenants home cooking in a rental home or apartment. These damages were not sudden and were not accidental,  But without regard for the damage they were aware they were causing when they did the deeds. Because it is intentional in nature with full awarness that modifications to the home to make it a hydroponic plant farm was causing damage to property of others, it is vandalism. Intentional damage to property of others was the controlling issue with the courts. If it is an all peril policy or a specified peril policy it will still be reduced to the definition of vandalism. It did not fit under malicious mischief based on my law dictonary due to an absence of getting back at someone. I think that insurers will soon be forced to place language in the policy to address the methlab/growhouse issues as they can cause significant damage to an insured property. Absent a polution exclusion would the toxic chemicals poured down the toilet into the septic tank out into the drain field be a part of the loss to correct the contaminated soil. Will the insured be entitled to a loss in value of the property due to a stigma attached to a grow house that must be disclosed to any future buyer. Stigma losses are being recognized as valid claims in sme limited juristictions. Again when considering all of the elements involved and that it is an allperil policy...and intentional damage to property of others may be considered vandalim and vandalism is a recognized peril any loss over the deductible should be paid in my opinion, and some couurts as well.
Thanks to all who contributed to the thread.
I will post the outcome when the matter is resolved with State Farm.
William S Cook
Public Adjuster

Generally speaking, "perils of the sea" is an exclusion.

Bill,

I would diverge from your analysis in one respect. Since you state that the policy is not a specified peril policy, it really is a moot point whether this scenario can be defined as "vandalism". In an open perils policy it is covered if it is direct physical damage and not excluded. As an example, I had a claim where a child knocked over a five gallon bottle of red wine, breaking the bottle in the process. The policyholder described the ensuing occurence as "a wave of red wine washed across my carpet". It was a covered cause of loss under the open perils policy -- at least with regard to the building elements affected (carpeting, cleanup, etc.). It was not neccessary to qualify the cause of loss as any particular peril. It simply was direct physical damage (generally incorporates the concepts of sudden and accidental) and not excluded. I got this claim early on in my career and knew much less than I now know. So, I spent an inordinate amount of time trying to figure out what peril it was. In the final analysis, it just didn't matter.

The first question to ask is "Is this property covered under the dec pages?" The second question is "Does this fit the insuring agreement?" This will require determining whether it qualifies as direct physical damage (or similar language depending on the policy). The third question is "Have the policy conditions been met?" The next question will be "Does any exclusion apply?" A final question to be asked if any exclusion applies is "Are there any exceptions to the exclusion or coverage extensions that allow coverage for this despite the exclusion?"

In terms of loss of value -- maybe the value is enhanced. It could be marketed as "Converted Grow House. All Ready outfitted to start your own home based business. Just move in and start planting your own stash of the wacky weed." It might bring a premium price.

MUST see the policy in its entirety, forms and endorsements.

Some of these claims are paid and some are not. The defintions of "vandalism", "malicious mischief" etc. vary according to state case law. I have posted a Washington State case below which has no relevance to Florida cases or the policy you are adjusting except that it might illustrate some of the issues the courts look at. You need to find previous Florida cases with similar sets of facts to even approach what the law is.

This is a great case to read because it deals with proximate cause and all kinds of other issues, but PLEASE don't assume it applies to other states.

Court of Appeals Division III
State of Washington

Opinion Information Sheet

Docket Number: 18306-8-III
Title of Case: Bethany Bowers
v.
Farmers Insurance Exchange, a Foreign Ins. Corp.
File Date: 01/25/2000


SOURCE OF APPEAL
----------------
Appeal from Superior Court of Spokane County
Docket No: 98-2-03129-2
Judgment or order under review
Date filed: 02/26/1999
Judge signing: Hon. Salvatore F. Cozza


JUDGES
------
Authored by Frank L. Kurtz
Concurring: John A. Schultheis
Stephen M. Brown


COUNSEL OF RECORD
-----------------
Counsel for Appellant(s)
Martin Gales
Montgomery Carroll & Gales
2206 N Pines Rd
Spokane, WA 99206-4756

Counsel for Respondent(s)
Mark S. Cole
1001 4th Ave Ste 3810
Seattle, WA 98154-1106

Gregory D. Zamudio
1001 4th Ave Plz #3810
Seattle, WA 98154-1131

State of Washington
Division 111

BETHANY BOWERS, a single woman, ) No. 18306-8-III
)
Appellant, )
)
v. ) ORDER GRANTING MOTION
) FOR RECONSIDERATION
FARMERS INSURANCE EXCHANGE, a ) AND AMENDING OPINION
foreign insurance corporation, )
)
Respondent. )
)

THE COURT has considered respondent's motion for reconsideration and
the answer thereto, and is of the opinion the motion should be granted.
Therefore, the motion for reconsideration of this court's decision of
January 25, 2000, is granted.
IT IS FURTHER ORDERED that the last sentence of the opinion 'On
remand, the superior court shall enter a judgment in conformity with this
opinion and make an award of reasonable attorney fees to Ms. Bowers' shall
be amended to read:
On remand, the trial court shall enter an order of partial summary judgment
in favor of Bethany Bowers on the issue of coverage, and shall make an
award of reasonable attorney fees pertaining to the issue of coverage. The
matter is remanded for further proceedings consistent with this opinion.

DATED:
FOR THE COURT:

FRANK L. KURTZ
CHIEF JUDGE

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

BETHANY BOWERS, a single woman, ) No. 18306-8-III
)
Appellant, )
) Division Three
v. ) Panel Five
)
FARMERS INSURANCE EXCHANGE, a )
foreign insurance corporation, ) PUBLISHED OPINION
)
Respondent. )
) FILED

KURTZ, C.J. - Bethany Bowers was denied coverage by Farmers Insurance
Exchange (Farmers) for mold damage to a rental house which occurred when
her tenants, without the knowledge of Ms. Bowers, converted the house into
a marijuana grow operation. The marijuana cultivation caused damage to the
house, including mold growth throughout the house. Upon cross-motions for
summary judgment, the court held in favor of Farmers. Ms. Bowers appeals
contending the court erred in holding that the insurance did not cover the
mold damage caused by the marijuana grow operation, and in not awarding her
reasonable attorney fees.
We conclude the tenants' acts constitute vandalism, for which there is
coverage under Ms. Bowers' landlord's insurance policy. We further
conclude that the tenants' acts are the efficient proximate cause of Ms.
Bowers' loss. The judgment of the superior court is reversed. Ms. Bowers
is awarded her attorney fees.
FACTS

On November 1, 1997, Bethany Bowers rented her single family house to
new tenants. Prior to being rented, the house had been well-maintained,
without problems of mold or excess water vapor condensation. A Landlord's
Protection Package insurance policy was issued by Farmers to Ms. Bowers and
was in effect from November 1, 1997, to June 6, 1998.
The tenants converted a basement portion of the house into a hothouse
for growing marijuana. Halide lights were used, the basement windows were
covered, foil was put on the walls, and the marijuana grow operation was
vented directly into the chimney. The house was otherwise sealed. All
heat in the house was diverted to the basement grow operation room.
The lack of heat throughout the house, together with excessive water
condensation from the halide lights and marijuana grow operation, caused
mold to grow rapidly throughout the house. There were deposits of mold on
floors, carpets, walls, paneling, doors, window coverings, insulation,
rafters, joints and other surface areas in the house.
Initially, Ms. Bowers was unaware of the marijuana grow operation.
However, after almost three months, she became suspicious and contacted the
Spokane police. The marijuana grow operation was discovered and removed by
the Spokane police.
Ms. Bowers thereafter submitted an insurance claim to Farmers for
(1) replacement of warped paneling in the basement, and (2) an additional
$14,802.90 for clean up of mold damage. Farmers paid for the warped wall
paneling, but denied the claim for mold-related damage as not being covered
under the policy. Ms. Bowers filed an action against Farmers for the
repair costs and lost rent. Upon cross-motions for summary judgment, the
trial court held in favor of Farmers. Ms. Bowers appeals.
ANALYSIS
An insurer is liable under a contract for insurance when a covered
peril causes a loss. The court must first determine the scope of the
policy's coverage. Graham v. Public Employees Mut. Ins. Co., 98 Wn.2d 533,
540, 656 P.2d 1077 (1983) (Brachtenbach, J., dissenting). The court
determines coverage by characterizing the perils contributing to the loss,
and determining which perils the policy covers and which it excludes. Kish
v. Insurance Co., 125 Wn.2d 164, 170, 883 P.2d 308 (1994). Interpretation
of insurance policy language is a matter of law that we review de novo.
McDonald v. State Farm Fire & Cas. Co., 119 Wn.2d 724, 730-31, 837 P.2d
1000 (1992).
The Farmers policy's exclusion section states in relevant part:
We do not cover direct or indirect loss from:
. . . .
4. Vandalism or Malicious Mischief, breakage of glass and safety glazing
materials if the dwelling has been vacant for more than 30 consecutive days
just before the loss. A dwelling under construction is not considered
vacant.
. . . .
6. Wear and tear; marring; deterioration; inherent vice; latent defect;
mechanical breakdown; rust; mold; wet or dry rot; contamination; smog;
smoke from farm smudging or industrial operations; settling, cracking,
shrinking, bulging or expansion of pavements, patios, foundation, walls,
floors, roofs or ceiling; birds, vermin, rodents, insects or domestic
animals. If any of these cause water to suddenly and accidentally escape
from a plumbing, heating, air conditioning system or household appliance,
we cover loss caused by water. We also cover the cost of tearing out and
replacing any part of a building necessary to repair the system or
appliance not otherwise excluded under item 5 above. We do not cover loss
to the system or appliance from which the water escaped.

(Emphasis added.)
Ms. Bowers contends the purpose of the Farmers' policy was to insure
her as landlord from accidental loss to the insured rental property. She
emphasizes that there is no dispute that the loss was 'accidental' insofar
as she was concerned. She argues there should be coverage for this loss
under the coverage for vandalism or malicious mischief because the tenants
willfully, wantonly and recklessly damaged her property.
In response, Farmers argues the cause of Ms. Bowers' loss is mold, not
vandalism or malicious mischief. In plain language, the policy excludes
loss due to mold. Farmers maintains there is no ambiguity or provision in
conflict with the exclusion. Farmers asks this court to enforce the
exclusion.
The Farmers' policy specifically covers loss caused by vandalism or
malicious mischief, but does not define those terms. 'Courts interpret
insurance contracts as an average insurance purchaser would understand them
and give undefined terms in these contracts their 'plain, ordinary, and
popular' meaning.' Kish, 125 Wn.2d at 170 (quoting Boeing Co. v. Aetna
Cas. & Sur. Co., 113 Wn.2d 869, 877, 784 P.2d 507, 87 A.L.R.4th 405
(1990)); accord State Farm Gen. Ins. Co. v. Emerson, 102 Wn.2d 477, 480,
687 P.2d 1139 (1984).
'Vandalism' is defined as 'willful or malicious destruction or
defacement of things of beauty or of public or private property.'
Webster's third New International Dictionary 2532 (1993). 'Malicious
mischief' is defined as 'willful, wanton, or reckless damage or destruction
of another's property.' Webster's, supra,
at 1367. A person who acts willfully acts knowingly. RCW 9A.08.010(4).
The
criminal statutes require that 'malicious mischief' be done 'knowingly and
maliciously.' RCW 9A.48.070, .080, .090.
Farmers argues that the tenants' conduct was not vandalism or
malicious mischief because the conduct was not malicious. Farmers
emphasizes that the tenants' conduct was not motivated by any ill will or
malice towards the owner. In this context, malice does not require ill
will, hatred, or vindictiveness of purpose. Malice may be inferred from
the act of destruction. It is sufficient if the actor is guilty of wanton
or intentional disregard of the rights of others. 13A George J. Couch,
Couch on Insurance 2d sec. 48:210 (Mark S. Rhodes, rev. ed. (1982));
Michael A. Sabatino, Annotation, What Constitutes 'Vandalism' or 'Malicious
Mischief' Within Meaning of Insurance Policy Specifically Extending
Coverage to Losses from Such Causes, 56 A.L.R.5th 407 (1998). As stated in
Frontier Lanes v. Canadian Indem. Co., 26 Wn. App. 342, 613 P.2d 166
(1980), '{p}roperty has been damaged 'willfully and maliciously' if the
damage results from an intentional act from which damage was reasonably
expected to result.' Id. at 347.
This is illustrated in Livaditis v. American Cas. Co., 117 Ga. App.
297, 160 S.E.2d 449 (1968), in which a tenant operated a moonshine still in
a rental house. The moonshine operation was vented so that the smoke,
fumes and vapor were pulled by a fan to the interior of the house. As a
result of smoke and condensation, the paint in the rooms peeled, plaster
was loosened, and rugs, drapes, and walls were stained, soiled and covered
with mold. The issue before the court was whether the tenant's acts were
vandalism, for which there was coverage. In concluding that the tenant's
acts were vandalism, the court rejected the insurance company's contention
that the owner was required to show that the tenant acted with specific
intent to injure the property and was motivated by actual malice. Id. at
299-300.
In this case, the tenants diverted all of the heat from the furnace to
the basement in order to create a marijuana grow room. They irrigated the
marijuana plants under grow lights. This created a sauna-like environment
in the basement. Additionally, they sealed the house and thereby trapped
the water vapor generated by their activities in the basement. These
activities caused certain damage to Ms. Bowers' house. The tenants acted
in conscious or intentional disregard for her property rights. Malice may
be inferred from their acts. We conclude that the tenants' acts are
vandalism.
Ms. Bowers argues that the 'efficient proximate cause' of her loss was
not the mold, but the vandalism of her tenants. The question is whether
the tenants' acts, the covered peril, or the mold, the excluded peril, are
the proximate cause of Ms. Bowers' loss.
In Graham, the court addresses the issue of whether an all-risk
insurance policy covers a loss caused by two or more perils when one of the
perils is excluded and the other peril is covered. Graham held that where
an insured peril 'sets other causes in motion which, in an unbroken
sequence and connection between the act and final loss, produce the result
for which recovery is sought' that peril is the 'proximate cause' of the
loss. Graham, 98 Wn.2d at 538. The proximate cause is 'the efficient or
predominant cause,' not necessarily the last act in a chain of events
leading to the damage. Id. When the insured can identify an insured peril
as the proximate cause, there is coverage 'even if subsequent events in the
causal chain are specifically excluded from coverage.' Findlay v. United
Pac. Ins. Co., 78 Wn. App. 17, 20, 895 P.2d 32 (1995), aff'd, 129 Wn.2d
368, 917 P.2d 116 (1996).
In Sunbreaker Condominium Assoc. v. Travelers Ins. Co., 79 Wn. App.
368, 901 P.2d 1079 (1995), the court applied the efficient proximate cause
rule to find that where wind-driven rain was a distinct, covered peril
under the policy, the policy's fungus damage exclusion did not necessarily
bar recovery for fungus damage. Even though expert testimony identified
rain as the cause of fungus, a jury could find that wind-driven rain was
the efficient proximate cause of the loss. Similarly, Ms. Bowers
recognizes that mold growth was the immediate cause of her loss but argues
that her tenants' vandalism was the efficient proximate cause of the loss.
If the efficient proximate cause rule applies, the question of which
peril constitutes the proximate cause is usually referred to the factfinder
unless the facts are undisputed and there can be no reasonable difference
of opinion regarding their meaning. In the latter case, the issue of
proximate cause may be a question of law for the court. Kish, 125 Wn.2d at
170. Here, there can be no reasonable difference of opinion regarding the
cause of Ms. Bowers' loss. It was the tenants' acts, which 'in an unbroken
sequence . . . {produced} the result for which recovery is sought{.}'
Graham, 98 Wn.2d at 538. We conclude that the tenants' acts are the
efficient proximate cause of the owner's loss.
The judgment of the superior court is reversed. Ms. Bowers is awarded
her reasonable attorney fees in superior court and on appeal. Olympic S.S.
Co. v. Centennial Ins. Co., 117 Wn.2d 37, 51-54, 811 P.2d 673 (1991). On
remand, the trial court shall enter an order of partial summary judgment in
favor of Bethany Bowers on the issue of coverage, and shall make an award
of reasonable attorney fees pertaining to the issue of coverage. The
matter is remanded for further proceedings consistent with this opinion.

Kurtz, C.J.

WE CONCUR:

Schultheis, J.

Brown, J.

Thanks for the nice read Leland. Sometimes we will have a risk of loss claim that could be better described by one of the named peril's. The risk of loss presentation was made because the instant proximate cause was excluded under the basic exclusions,(faulty workmanship) but under the risk of loss "it was never intended nor expected from the standpoint of the insured". It was paid by the presentation argument sent to the carrier. Phone calls from peers welcome.

There is another case in Colorado - Asbaugh v. State Farm. A methamphetamine cleanup was denied as excluded "contamination" but paid on appeal under VM&M. I can't find the case except for the plaintiff's lawyer's website mentioning it. I found some articles that this type of claim is getting more common. When I worked in restoration my boss mentioned that he worked a claim where at least a foot of dirt and sprinkler system had been brought inside a home for some illicit indoor farming, this would have been more than 10 years ago. The meth contamination is very toxic, some police officers have claimed that they got cancer after raiding large numbers of meth labs. That's why meth cleanup is specialized and expensive. Anybody here adjust any of these claims? What Xactimate line items did you use? Did you feel like you had more energy than usual when you scoped the loss? Did you feel especially alert? Did you find yourself measuring the same room 34 times in a row? Just askin'.