                             STATE OF WEST VIRGINIA
                           SUPREME COURT OF APPEALS

Mohammed Ashraf, M.D.,
Plaintiff Below, Petitioner                                                         FILED
                                                                                  May 20, 2019
vs) No. 18-0382 (Marion County 14-C-253)                                        EDYTHE NASH GAISER, CLERK
                                                                                SUPREME COURT OF APPEALS
                                                                                    OF WEST VIRGINIA
State Auto Property and
Casualty Insurance Company,
Defendant Below, Respondent


                               MEMORANDUM DECISION

        Petitioner Mohammed Ashraf, M.D., by counsel David A. Jividen, Chad C. Groome, and
John R. Angotti, appeals the April 24, 2018, amended order of the Circuit Court of Marion County
granting the motion for summary judgment filed by Respondent State Auto Property and Casualty
Company (“State Auto”) and denying petitioner’s motion for partial summary judgment on
petitioner’s claim that State Auto waived the application of the vacancy provision set forth in an
insurance policy that petitioner purchased to cover certain real property. State Auto, by counsel
Trevor K. Taylor, filed a response in support of the circuit court’s order.

       This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these reasons,
a memorandum decision affirming the circuit court’s order is appropriate under Rule 21 of the
Rules of Appellate Procedure.

         Petitioner is a medical doctor who also invests in real estate. He and his wife purchased a
certain building in Fairmont, West Virginia, in 1997 at a tax sale. The building had previously
been converted from a private home to an assisted living facility and petitioner and his wife
continued to operate it as such until 2006, when they closed the business. Thereafter, petitioner’s
efforts to rent out the building did not materialize and the building became vacant.

        In 2009, the building was broken into and vandalized. At the time, the building was covered
by an insurance policy by State Auto.1 The State Auto policy provided, in part, as follows:

   A. Coverage


       1
        The policy was issued through Wells Fargo Insurance Services of West Virginia, a
defendant below, but which is not a party to the instant appeal.


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      We will pay for direct physical loss of or damage to Covered Property at the
      premises described in the Declarations caused by or resulting from any Covered
      Loss.
      ....
  E. Loss Conditions
      The following conditions apply in addition to the Common Policy Conditions and
      the Commercial Property Conditions.
      ....
   1. Vacancy

       ....
       b. Vacancy Provisions
       If the building where loss or damage occurs has been vacant for more than 60
       consecutive days before that loss or damage occurs
           (1) We will not pay for any loss or damage caused by any of the following even if they
               are Covered Causes of Loss:
               (a) Vandalism;
               (b) Sprinkler leakage, unless you have protected the system against freezing;
               (c) Building glass breakage;
               (d) Water damage;
               (e) Theft; or
               (f) Attempted theft.
           (2) With Respect to Covered Causes of Loss other than those listed in b.(1)(a) through
               b.(1)(f) above, we will reduce the amount we should otherwise pay for the loss or
               damage by 15%.

        Petitioner reported the incident to State Auto, which investigated and learned that the
building was vacant and had been vacant since 2006. State Auto denied coverage, advising
petitioner in a June 26, 2009, letter that the claim was for a clear uncovered loss under subpart
(1)(a) of the vacancy provision in the policy: vandalism. Following the 2009 loss, State Auto
continued to reissue, and petitioner continued to repurchase, the policy for the vacant property.
Over the years, the insurance premium and the amount of coverage on the vacant structure both
increased.

       By 2012, the insurance policy on the still-vacant building consisted of a property value of
$410,555.00, with a $500.00 deductible and a 4% inflation guard provision. Thus, the policy
provided a total policy coverage limit of $420,228.35.2

        On October 29, 2012, the building was damaged by fire and was a total loss. Petitioner
timely reported the fire loss and, upon investigation, State Auto determined that the fire was caused
by an incendiary act. By letter dated November 15, 2012, State Auto advised petitioner that it was
proceeding under a reservation of rights regarding the fire loss claim because, inter alia, the subject
property was alleged to be vacant and, therefore, subject to cancellation or a 15% reduction of the


       2
         The policy also provided for demolition and/or debris removal and also for pollutant
removal. See infra.
                                                  2
policy limit. State Auto canceled the subject policy on November 21, 2012. On December 18,
2012, the subject property sustained a second fire.

        Ultimately, on January 28, 2014, State Auto determined that a fire loss qualified as a
covered cause of loss and paid petitioner for a total loss of the building. However, because the
building was “vacant” at the time of the fire, pursuant to the policy’s vacancy provision, State Auto
reduced the amount it would “otherwise pay” by 15%. State Auto further explained that the 4%
inflation guard was triggered and was added to the amount of the policy payment due to petitioner.
Petitioner received a check in the amount of $322,194.10 for the covered loss, which included a
$25,000.00 reduction for money State Auto advanced to petitioner in “good faith” while it
investigated the claim; petitioner received a second check for $22,141.69 for personal property
loss, which amount also reflected the 15% vacancy provision reduction and 4% inflation guard;
and a third check was issued for $10,000.00 for debris removal coverage. Though petitioner
asserted that he incurred $4,925.00 in costs for the removal and testing of asbestos, no coverage
was extended for pollutant removal under the policy.

        On August 28, 2014, petitioner filed a declaratory judgment action as to the stated value
policy, arguing that the policy’s 15% coverage reduction provision violates West Virginia Code §
37-17-9 (Count I), and, as to coverage for pollutant removal, arguing that he is entitled to coverage
for asbestos removal (Count II). Petitioner also filed claims for violations of the Unfair Trade
Practices Act, West Virginia Code § 33-11-4(9), and first-party bad faith (Count III), the tort of
outrage (Count IV), and negligence on the part of Wells Fargo Insurance Services of West Virginia
(“Wells Fargo”) (Count V).

        Defendant Wells Fargo filed an answer. State Auto also filed an answer and a motion to
bifurcate and stay petitioner’s bad faith and other claims pending a ruling on the declaratory
judgment issues (Counts I and II). Petitioner filed a response to the motion, objecting to the same.
Following a December 2, 2014, hearing, the circuit court granted the motion to bifurcate and stay
discovery related to the bad faith claims for ninety days and ordered that discovery could proceed
on the coverage issues.

       Petitioner and State Auto thereafter filed cross-motions for summary judgment on Counts
I and II. Following a hearing on December 22, 2015, questions were certified to this Court.
Relevant to this appeal, we held that a vacancy provision that provides that the insurer may

       reduce by 15% the stated amount of coverage payable for a total loss of the building
       destroyed by fire is enforceable, where the building has been vacant for more than
       60 consecutive days prior to the loss. The provision does not conflict with this
       State’s valued policy statute, W.Va. Code, 33-17-9 [2005], or this State’s Standard
       Fire Policy adopted pursuant to W.Va. Code, 33-17-2[1957].

Syl. Pt. 1, in part, Ashraf v. State Auto Prop. & Cas. Ins. Co., 239 W. Va. 119, 799 S.E.2d 550




                                                 3
(2017).3

       Following remand to the circuit court, State Auto filed a motion for entry of an order
granting its previously filed motion for summary judgment. Petitioner filed a response in
opposition on the ground that State Auto had waived the application of the vacancy provision
following the 2009 vandalism claim. State Auto submitted a reply.

        By amended order entered on April 24, 2018, the circuit court granted State Auto’s motion
for summary judgment and denied petitioner’s partial motion for summary judgment on Count I
(relating to the vacancy provision) and Count II (relating to pollutant removal) of petitioner’s
complaint. Petitioner now appeals the court’s summary judgment ruling as to Count I only.

       This Court reviews the circuit court’s summary judgment order de novo. See Syl. Pt. 1,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). Further, in syllabus point two of Painter,
this Court held that

       “‘[a] motion for summary judgment should be granted only when it is clear that
       there is no genuine issue of fact to be tried and inquiry concerning the facts is not
       desirable to clarify the application of the law.’ Syllabus Point 3, Aetna Casualty &
       Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770
       (1963).” Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W.Va. 706, 421
       S.E.2d 247 (1992).

       Finally,

       [s]ummary judgment is appropriate where the record taken as a whole could not
       lead a rational trier of fact to find for the nonmoving party, such as where the
       nonmoving party has failed to make a sufficient showing on an essential element
       of the case that it has the burden to prove.

Painter, 192 W. Va. at 190, 451 S.E.2d at 756, syl. pt. 4. This Court will consider petitioner’s
appeal under this standard.

        At issue here is whether State Auto waived the application of the policy’s provision that
reduced coverage on the building by fifteen percent because the building was vacant at the time of
the fire. “‘To effect a waiver, there must be evidence which demonstrates that a party has
intentionally relinquished a known right.’” Syl. Pt. 1, in part, Potesta v. U.S. Fid. & Guar. Co.,
202 W. Va. 308, 504 S.E.2d 135 (1998) (quoting Syl. Pt. 2, in part, Ara v. Erie Ins. Co., 182 W.
Va. 266, 387 S.E.2d 320 (1989)). Furthermore,


       3
         The second certified question involved whether the policy covered asbestos removal
under the pollutant removal provision. This Court held that “[a] Pollutant Cleanup and Removal
provision in a fire insurance policy, which covers the expense of extracting pollutants from ‘land
or water’ at the insured premises, does not apply to asbestos testing and removal, where the
asbestos removed is located within the fire-damaged structure.” Ashraf, 239 W. Va. at 120, 799
S.E.2d at 551, syl. pt. 2. The pollutant removal provision is not at issue in this appeal.
                                                4
               [t]here is no requirement that an insured have detrimentally relied upon an
       insurer’s previously stated reason(s) for denying coverage in order to assert waiver
       to prevent the insurer, in subsequent litigation, from asserting other, previously
       unarticulated reasons for denying coverage. Rather, the insured must show, by clear
       and convincing evidence where waiver is implied, that the insurer intentionally and
       knowingly waived the previously unarticulated reason(s) for denying coverage.

Potesta, 202 W. Va. at 310, 504 S.E.2d at 137, syl. pt. 3. (Emphasis in original).

        Petitioner argues that State Auto impliedly waived the vacancy provision by continuing to
renew the insurance policy after it became aware, at the time of the 2009 vandalism claim, that the
building was vacant. In support of this argument, petitioner argues that syllabus point two of
McKinney v. Providence Washington Insurance Co., 144 W. Va. 559, 109 S.E.2d 480 (1959),
applies:

       When a duly authorized agent of the insurer knows at the time the policy is issued
       that the building is vacant, and it was later destroyed by fire while vacant but had
       been occupied between the time of the issuance of the policy and the time of the
       loss, the provision of the policy that the insurer shall not be liable if the building is
       vacant or unoccupied for a definite number of days is waived by the insurer.

See also Kimball Ice Co. v. Springfield Fire & Marine Ins. Co., 100 W. Va. 728, 732, 132 S.E.
714, 715 (1926) (“Issuance and delivery of the policy, with knowledge by the company, or its
agent, of existing facts as to vacancy or nonoccupancy, or that the building will be unoccupied for
more than the limited or prescribed period, operates as a waiver or estoppel, preventing the
company from claiming a forfeiture by reason of such facts.”) Petitioner argues that, under
McKinney and Kimball Ice, State Auto’s reissuance of insurance coverage “with knowledge of a
vacancy waives the application of [the] vacancy clause in the insurance contract.” He contends
further that waiver does not apply only in cases where the insurer knew about a vacancy at the
time it first issued the policy. Relying on cases from other jurisdictions, petitioner argues that,
where an insurer is or becomes aware of a property’s vacant status, the doctrine of waiver applies
to initial issuances and reissuances of insurance equally. See Am. Fire & Cas. Co. v. Eastham, 185
F.2d 729 (5th Cir. 1950); Marketfare Canal, LLC v. United Fire & Cas. Co., 594 F.Supp.2d 724
(E.D. La. 2009); Travelers Fire Ins. Co. v. Bank of New Albany, 146 So.2d 351 (Miss. 1962).
Finally, petitioner argues that the circuit court erred in concluding that waiver does not apply
because petitioner is sophisticated in insurance matters and/or should have cured the vacancy.

        We find no error. This Court has long held that “‘[w]here the provisions of an insurance
policy contract are clear and unambiguous . . . full effect will be given to the plain meaning
intended.’ Syl., [in part,] Keffer v. Prudential Ins. Co., 153 W.Va. 813, 172 S.E.2d 714 (1970).”
Syl. Pt. 5, in part, American Nat’l Prop. & Cas. Co. v. Clendenen, 238 W. Va. 249, 793 S.E.2d
899 (2016). In 2009, petitioner reported a loss to State Auto because the subject building had been
vandalized. Upon learning that the building had been vacant for more than sixty consecutive days,
State Auto invoked the clear and unambiguous language of the policy’s vacancy provision, which




                                                  5
enumerated six reasons for denial of coverage, including vandalism.4 State Auto expressly advised
petitioner of the same, in writing, and denied coverage. When petitioner’s still-vacant building
sustained a fire loss (a covered loss under the policy) in 2012, State Auto again invoked the clear
and unambiguous language of the vacancy provision by “reduc[ing] the amount [it] should
otherwise pay for the loss or damage by 15%.”

         We find the instant case to be distinguishable from McKinney and Kimball Ice. In
McKinney, the insurer invoked the applicable policy’s vacancy provision, of which the insured
was previously unaware. In this case, petitioner does not dispute that he was advised of the vacancy
provision when his 2009 vandalism claim was denied. We recognize that the written notice
denying the vandalism claim did not specifically quote from that portion of the vacancy provision
providing for a reduction in coverage for covered causes of loss because that provision was
inapplicable to the claim. However, the notice expressly referenced “Section E. Loss Conditions[,]
which starts on page 9 of 14[,]” and included the coverage reduction provision now at issue. “A
party to a contract has a duty to read the instrument.” Syl. Pt. 5, Soliva v. Shand, Morahan & Co.,
Inc., 176 W. Va. 430, 345 S.E.2d 33 (1986), overruled on other grounds by National
Mutual Insurance Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987),
overruled on other grounds by Parsons v. Hallliburton Energy Services, Inc., 237 W. Va. 138, 785
S.E.2d 844 (2017). Petitioner had a duty to read the coverage reduction provision, as directed by
State Auto. See also American States Ins. Co. v. Surbaugh, 231 W. Va. 288, 299, 745 S.E.2d 179,
190 (2013) (“Had Mr. Grimmett read the policy, as he was told to do in a letter and on the policy
itself, he would have learned of the exclusions and could have contacted American States with any
questions he had regarding said exclusions. In other words, American States fulfilled its obligation
to bring the exclusion to the attention of Mr. Grimmett, but Mr. Grimmett failed to carry out his
duty to read the policy.”). Petitioner’s claim that the 2009 notice was inadequate to advise him of
the coverage reduction provision and amounts to a waiver of the application of the provision in
this case is thus unavailing.

        McKinney and Kimball Ice are further distinguishable because, in those cases, the insurers
were aware that the properties were or would become vacant when the respective policies were
written and invoked provisions that excluded coverage entirely based upon the vacant status. In
the present case, State Auto became aware that the subject building was vacant in 2009. Petitioner,
who was made aware of the vacancy provision at that time, continued to maintain reduced coverage
on the building for covered losses (with the exception of the six enumerated causes of loss set forth
in the State Auto policy). Such coverage clearly benefitted petitioner and, given the evidence below
that petitioner had attempted to rent or sell the property during the period of vacancy, also served
the practical purpose of allowing the building to move fluidly between “occupied” and “vacant”
status without requiring petitioner to take affirmative steps to modify the terms of the policy
accordingly. To the extent the circuit court observed that petitioner was “a sophisticated business
man” who owned other investment properties and who recognized the benefits of maintaining


       4
         As previously noted, the vacancy provision in petitioner’s policy states that if the building
is vacant, “[w]e will not pay for any loss or damage caused by any of the following even if they
are Covered Causes of Loss: (a) Vandalism; (b) Sprinkler leakage, unless you have protected the
system against freezing; (c) Building glass breakage; (d) Water damage; (e) Theft; or (f) Attempted
theft.”
                                                  6
coverage on the vacant structure, such observation was but one factor that the court considered in
determining that State Auto did not waive the application of the coverage reduction provision.

         Based upon the foregoing, we find that the circuit court did not err in concluding that
petitioner failed to present clear and convincing evidence that State Auto intentionally relinquished
its right to invoke the vacancy provision that reduced coverage for petitioner’s fire loss by fifteen
percent. Accordingly, the court correctly determined that the doctrine of waiver did not apply in
this case.

       For the foregoing reasons, we affirm.

                                                                                          Affirmed.

ISSUED: May 20, 2019

CONCURRED IN BY:

Chief Justice Elizabeth D. Walker
Justice Margaret L. Workman
Justice Tim Armstead
Justice Evan H. Jenkins
Justice John A. Hutchison




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