NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 19a0447n.06
Case No. 18-4206
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Aug 22, 2019
WELLS FARGO BANK, N.A., ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellee,
)
) ON APPEAL FROM THE
v.
) UNITED STATES DISTRICT
) COURT FOR THE NORTHERN
ALLSTATE INSURANCE COMPANY,
) DISTRICT OF OHIO
Defendant-Appellant. )
OPINION
BEFORE: SUTTON, McKEAGUE, and KETHLEDGE, Circuit Judges.
McKEAGUE, Circuit Judge. Wells Fargo Bank owned an insurance policy on an
abandoned home that an arsonist set ablaze. Allstate Insurance Company refused to indemnify
Wells Fargo for the loss, relying on a policy exclusion for damage caused by “vandalism or
malicious mischief” after the property has been vacant for more than 30 days. Wells Fargo sued,
arguing that other policy provisions confirm that fire damage is considered distinct from vandalism
or malicious mischief. The district court agreed with Wells Fargo and entered summary judgment
in its favor. We AFFIRM.
I
The facts leading to this insurance-coverage dispute and the policy provisions that govern
the result are straightforward.
Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
Our story begins with Antoniano Delsignore, though his role is limited. In September
2010, Delsignore took out a mortgage from Wells Fargo on his home in Poland, Ohio. Delsignore
purchased a homeowner’s insurance policy from Allstate, with Wells Fargo listed as the insured
mortgagee. Delsignore defaulted in 2013, and Wells Fargo foreclosed.
In February 2014, an unknown arsonist set fire to the property. Wells Fargo filed a claim
with Allstate for the damage caused by the arson. Allstate denied the claim under a provision in
the policy that excludes coverage for damage caused by vandalism or malicious mischief if the
loss occurs after the property has been vacant or unoccupied for more than 30 consecutive days.
The homeowner’s policy provides coverage in three parts: (1) dwelling protection, (2) other
structures protection, and (3) personal property protection. The only one directly at issue here is
dwelling protection, specifically a provision excluding coverage for loss “consisting of or caused
by”:
6. Vandalism or Malicious Mischief if your dwelling is vacant or unoccupied for
more than 30 consecutive days immediately prior to the vandalism or malicious
mischief.
The terms “vandalism” and “malicious mischief” are not defined, but Allstate determined that
arson fell within them and thus denied Wells Fargo’s claim under the exclusion.
Looking elsewhere in the policy, the district court concluded otherwise. Mindful that
isolated terms in a contract should be interpreted with an eye toward a coherent whole, the district
court examined the coverage and exclusions for personal property. Because loss resulting from
“fire” was specifically addressed there, even though a similar “vandalism or malicious mischief”
provision was present, the district court concluded that arson could fit within the fire provision just
as easily as it could within the vandalism or malicious mischief provision. That made it unclear
whether damage resulting from arson (a fire, after all) fell under the “vandalism or malicious
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
mischief” exclusion for dwelling protection. The district court found further support for Wells
Fargo’s position in the policy’s arson-reward provision, which discusses arson in connection with
a fire loss, not a vandalism loss. Accordingly, the district court granted summary judgment to
Wells Fargo.
Allstate appealed, but the appeal was premature, as the district court had yet to address
Wells Fargo’s demand for breach-of-contract damages. Because the district court’s grant of
summary judgment did not constitute a final judgment under 28 U.S.C. § 1291, we dismissed the
appeal for lack of jurisdiction. See Wells Fargo Bank, N.A. v. Allstate Ins. Co., 735 F. App’x 208
(6th Cir. 2018). On remand, the parties jointly stipulated to a damages figure, and the district court
again entered judgment in favor of Wells Fargo.
Allstate again appeals the district court’s grant of summary judgment.
II
A. Standard of Review
First, some preliminaries. We review the district court’s summary judgment order de novo.
Lexicon, Inc. v. Safeco Ins. Co. of Am., 436 F.3d 662, 667 (6th Cir. 2006). Summary judgment is
proper where “there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). In reviewing a motion for summary judgment,
we must view the evidence in the light most favorable to the non-moving party. Escher v. BWXT
Y-12, LLC, 627 F.3d 1020, 1025 (6th Cir. 2010).
Whether summary judgment was appropriate here turns on the application of Ohio contract
law. Affiliated FM Ins. Co. v. Owens-Corning Fiberglas Corp., 16 F.3d 684, 686 (6th Cir. 1994)
(applying state substantive law on exercise of diversity jurisdiction). “An insurance policy is a
contract whose interpretation is a matter of law” for judges, not juries, to decide. Sharonville v.
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
Am. Emp. Ins. Co., 846 N.E.2d 833, 836 (Ohio 2006). While Ohio courts have not confronted the
question whether arson is categorically encompassed by “vandalism or malicious mischief,” Ohio
law’s interpretive principles guide us to the answer in this case. “[W]ords and phrases used in an
insurance policy must be given their natural and commonly accepted meaning,” Gomolka v. State
Auto. Mut. Ins. Co., 436 N.E.2d 1347, 1348 (Ohio 1982), “unless another meaning is clearly
apparent from the contents of the policy,” Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261
(Ohio 2003). Put differently, if words carry some “special meaning manifested in the contractual
context,” that understanding trumps the man-on-the-street’s. Gomolka, 436 N.E.2d at 1351.
Accordingly, the meaning of a disputed contract term “must be derived . . . from the instrument as
a whole, and not from detached or isolated parts thereof.” Id. In the end, if we cannot ascertain
the parties’ intended meaning and the disputed term remains “reasonably susceptible of more than
one interpretation,” the ambiguity “will be construed liberally in favor of the insured.” Laboy v.
Grange Indem. Ins. Co., 41 N.E.3d 1224, 1227 (Ohio 2015).
B. Analysis
We begin with the words themselves, Sunoco, Inc. (R & M) v. Toledo Edison Co., 953
N.E.2d 285, 293 (Ohio 2011), though they leave us at an unhappy impasse. On the one hand, as
Allstate urges, the “usually accepted meanings of the words used” suggest arson should qualify as
vandalism.1 Black’s Law Dictionary (11th ed. 2019) defines arson as the “malicious burning of
someone else’s dwelling house . . . .” The same source defines vandalism as the “[w]illful or
ignorant destruction of public or private property.” Webster’s Third New International Dictionary
(1986), meanwhile, defines arson as “the willful and malicious burning of or attempt to burn any
building, structure, or property of another.” It defines “vandalism” as the “willful or malicious
1
Allstate does not argue that arson constitutes “malicious mischief,” but rather focuses its argument exclusively on
“vandalism.”
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
destruction or defacement of things of beauty or of public or private property.” If vandalism is, at
bottom, the intentional destruction of property, arson seems like one (particularly pernicious) way
to accomplish that objective.
On the other hand, when someone intentionally sets fire to the property of another, would
anyone—especially those steeped in legal parlance, like the lawyers who drafted this insurance
contract—characterize that act as “vandalism”? Probably not. We have a well-established term
of art for that: arson. Contrast arson with other, archetypal acts of vandalism. A rebellious youth
throwing a brick through a window? A small-time gang spray painting a train car? Some bored
teenagers “toilet-papering” their math teacher’s house? “Vandalism” would roll off our tongues.
Yet that word would be far from the first to describe the act of burning down a person’s dwelling.
Indeed, we think one would describe arson as vandalism about as regularly as one would call
murder a battery—which is to say almost never. Though the former act in each instance cannot
be completed without the latter, that does not mean one would interchange the terms in everyday
speech. This points up the difficulty in deciding this case on the words alone.
So we broaden our search for connotative clues. Gomolka, 436 N.E.2d at 1351 (instructing
courts to define contract terms by reading the “instrument as a whole”). Like the district court, we
find two bits of context crucial. The first is that the policy’s personal property coverage section
lists fire loss separately from loss caused by vandalism or malicious mischief. Wells Fargo
contends that if the vandalism term did not subsume fire damage in that section of the policy, it
cannot do so for the dwelling coverage at issue here. The second contextual feature is the policy’s
arson-reward provision, which contains the policy’s lone mention of “arson,” but does so in
connection with fire (not vandalism or malicious mischief) loss. The first piece of context dampens
Allstate’s plain-meaning argument; the second drowns it out altogether. We consider each in turn.
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
Because the meaning of disputed terms must be determined from the contract as a whole,
Gomolka, 436 N.E.2d at 1351, identical terms should ordinarily have the same meaning throughout
the contract. Here, Wells Fargo notes that the “vandalism or malicious mischief” term appears in
both the personal property and dwelling sections of the policy. Yet the personal property section—
a “named-peril” section—separately lists fire loss. Wells Fargo argues, and the district court
agreed, that the separate treatment of fire and vandalism informs the meaning of the vandalism
exclusion for the dwelling protection section of the policy. If “fire” and “vandalism or malicious
mischief” are treated as separate phenomena for the purposes of personal property coverage, the
argument goes, they ought to be treated separately for the purposes of dwelling protection. Or put
more precisely, if “vandalism or malicious mischief” doesn’t encompass all fires in one section of
the policy, it cannot capture all fires in another section of the policy. Were it otherwise, the
policy’s separate listing of fire and vandalism loss would be superfluous. Affiliated FM Ins. Co.,
16 F.3d at 686 (“In construing a contract, a court . . . must give meaning to every paragraph, clause,
phrase and word, omitting nothing as meaningless, or surplusage.”). But that not all fires are
vandalism is an obvious point. The more essential takeaway from the policy’s separate listing of
fire and vandalism is that it presents two potential landing spots for arson, teeing up the question
of which is the more natural fit.
That brings us to the second, and we think decisive, bit of context: the policy’s arson-
reward provision. It contains the policy’s sole reference to arson, and it provides that Allstate will
pay “for information leading to an arson conviction in connection with a fire loss to property
covered under Section I of this policy.” If Allstate were correct that arson should be read as a
subset of “vandalism or malicious mischief”—and not “fire” loss—it is odd that the only mention
of arson in the policy is in connection with a fire loss, and not a vandalism loss. Sunoco, 953
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
N.E.2d at 293 (“Under the doctrine of noscitur a sociis, the meaning of an unclear word may be
derived from the meaning of accompanying words.”). If the policy meant what Allstate says it
does—that arson is vandalism—we might expect the arson-reward provision to read “in
connection with a vandalism or malicious mischief loss to property” or avoid categorizing the loss
at all. But it does not; instead, the words around the policy’s lone reference to arson indicate that
arson is at least sometimes, if not always, considered a fire loss. Accord Johnson v. State Farm
Fire & Cas. Co., No. 278267, 2008 WL 4724322, at *4 (Mich. Ct. App. Oct. 28, 2008).
Allstate’s response fails to rekindle its argument. It asserts that the arson-reward provision
“has no bearing on whether arson is to be considered vandalism” since it is “not found in either”
the personal property or dwelling sections of the policy. True enough, but the provision by its
terms applies to all property covered under the policy. And in any event, there is no rule that we
cannot look to policy terms in one section of an insurance policy to inform the meaning of a term
in another section of the policy; just the opposite is true. Gomolka, 436 N.E.2d at 1351 (courts
must interpret contract terms in light of “the instrument as a whole”). Allstate also argues that the
arson-reward provision is irrelevant “due to the fact that there is no coverage for such losses
pursuant to the vandalism and malicious mischief exclusion.” But this merely assumes the
conclusion. Again, the interpretive question we are trying to answer is whether arson is a
vandalism or fire loss under the policy; the fact that the policy’s only mention of arson comes in
the context of a “fire loss” suggests the latter. Finally, Allstate contends that the arson-reward
provision is “not definitional.” We agree, to an extent. This provision is not a categorical
indication that the policy considers arson to be a fire, rather than vandalism, loss. But it is at least
a clue suggesting that interpretation and thus contributes to the policy’s ambiguity on this question.
And ambiguity, remember, is all Wells Fargo must show to prevail in this case.
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
One last point. Allstate spends a good deal of its brief discussing the vacancy condition in
the vandalism or malicious mischief provision—the 30-day rule that demarcates when vandalism
loss ceases to be covered. Allstate may be right that the impetus for the vacancy condition is
“common sense.” We do not doubt that abandoned buildings are far more susceptible to vandalism
than occupied ones. Nor do we question the wisdom of insurers disclaiming responsibility for
vandalism to such buildings. We even grant Allstate’s argument that if there is any damage to an
abandoned building an insurer would be worried about, arson’s destructive potential puts it at the
top of the list. But Allstate misses the point. Its argument explains the rationale behind the vacancy
condition, but it does not help us determine whether arson is considered a fire loss or a vandalism
loss under the policy. And at any rate, the fact that arson carries the most destructive potential of
any purported act of vandalism only makes it more confounding that the policy does not more
explicitly account for it. After all, Allstate has proven it knows how to do so. McPherson v.
Allstate Indem. Co., No. 3:11CV638-WHA, 2012 WL 1448049, at *3 (M.D. Ala. Apr. 26, 2012)
(involving policy excluding coverage for “vandalism, or loss caused by fire resulting from
vandalism”); Bethel v. Allstate Indem. Co., No. 11-13664, 2012 WL 1060112, at *2 (E.D. Mich.
Mar. 29, 2012) (same).
Without such clear language, and in light of other indications in the policy that arson could
be considered a fire (not vandalism) loss, we cannot say that the policy unambiguously permits
Allstate to deny coverage for arson under the vandalism exclusion. We are made more certain of
this conclusion given Ohio’s rule of thumb that “an exclusion in an insurance policy [should] be
interpreted as applying only to that which is clearly intended to be excluded.” Sharonville, 846
N.E.2d at 836 (citation and quotations omitted). Instead, the furthest we can go—and what we
hold today—is that the policy is ambiguous with respect to whether this particular arson is a
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Case No. 18-4206, Wells Fargo Bank, N.A. v. Allstate Ins. Co.
covered or excluded loss. This is cold comfort to Allstate, as we must resolve the ambiguity in
favor of the insured, Wells Fargo. See Laboy, 41 N.E.3d at 1227 (noting that words “reasonably
susceptible of more than one interpretation will be construed liberally in favor of the insured”).
III
The district court’s grant of summary judgment to Wells Fargo is affirmed.
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