                    I N THE COURT OF APPEALS OF TENNESSEE




TED C. SM TH,
         I                                 )   C/ A NO. 03A01- 9603- CH- 00076
                                                                              FILED
                                           )   WASHI NGTON COUNTY CHANCERY COURT
                                                                           July 18, 1996
          Pl a i nt i f f - Appe l l e e , )
                                           )                              Cecil Crowson, Jr.
                                           )                                  Appellate C ourt Clerk
                                           )
                                           )
                                           )
v.                                         )   HONORABLE G. RI CHARD J OHNSON,
                                           )   CHANCELLOR
                                           )
                                           )
                                           )
                                           )
THE SHELBY I NSURANCE COM        PANY )
OF THE SHELBY I NSURANCE GROUP, )              REVERSED
                                           )   COMPLAI NT DI SM SSED
                                                               I
          De f e nda nt - Appe l l a nt . )    REMANDED




ALBERT J . HARB o f HODGES, DOUGHTY & CARSON, Knoxvi l l e , f or
Ap p e l l a nt

MARK S. DESSAUER o f HUNTER, SM TH & DAVI S, Ki ngs por t , f or
                               I
Ap p e l l e e




                                     O P I N I O N


                                                              Sus a no, J .


                                               1
                  Thi s i s a de c l a r a t or y j udgme nt a c t i on.     The c ompl a i nt

s e e ks a de c l a r a t i on t ha t a l os s c a us e d by da ma ge t o t he

p l a i n t i f f ’ s bui l di ng i s c ove r e d unde r a c omme r c i a l pr ope r t y

i n s u r a n c e pol i c y i s s ue d by The She l by I ns ur a nc e Compa ny ( She l b y ) .

Fo l l o wi ng a be nc h t r i a l , t he Cha nc e l l or he l d t ha t t he r e wa s

c o v e r a g e unde r t he pol i c y a nd a wa r de d t he pl a i nt i f f a j udgme nt

f o r $ 1 2 , 352. 92.        She l by a p pe a l s , a r gui ng t ha t t he r e i s no

c ov e r a ge be c a us e t he pr e mi s e s we r e va c a nt a t t he t i me of t he

l os s .    I t a l s o a r gue s t ha t t he l os s i s not c ove r e d be c a us e t he

p o l i c y e xc l ude s c ove r a ge f or da ma ge s “ [ c ] a us e d by or r e s ul t i ng

f r o m t he f t . ”    The p l a i nt i f f , Te d C. Smi t h ( Smi t h) , r a i s e s , a s a n

a d d i t i ona l i s s ue , t h e f a i l ur e of t he t r i a l c our t t o a wa r d t he

s t a t u t o r y ba d f a i t h pe na l t y a ut hor i z e d by T. C. A. § 56- 7- 105( a ) .



                  Our r e vi e w i s de nov o; howe ve r , t he r e c or d c ome s t o u s

a c c o mp a ni e d by a pr e s umpt i on of c or r e c t ne s s t ha t we mus t honor

u n l e s s t he e vi de nc e pr e ponde r a t e s a ga i ns t t he t r i a l c our t ’ s

f i nd i ng s o f f a c t .     Rul e 1 3( d) , T. R. A. P. ; Ci t y of Ki ngs por t v .

St e wa r t , 920 S. W 2d 658 ( Te nn. App. 1995) .
                      .                                             The t r i a l c our t ’ s

c o n c l u s i ons of l a w a r e not e nt i t l e d t o a pr e s umpt i on of

c or r e c t ne s s .   Uni on Car bi de Cor p. v . Huddl e s t on, 854 S. W 2d 87 ,
                                                                            .

9 1 ( Te n n. 1993) .




                                                   2
                                                 I



               On or a bout M r c h 2, 1993, a n unknown pe r s on ( or
                             a

p e r s o n s ) s ur r e pt i t i ous l y e nt e r e d a bui l di ng i n whi c h Smi t h wa s

wa r e h o u s i ng pe r s ona l pr ope r t y a nd r i ppe d out e l e c t r i c a l wi r i ng,

p l u mb i n g pi pe s , a nd c onde n s e r c oi l s i n t he a i r c ondi t i oni ng

s y s t e m, i n or de r t o e xt r a c t c oppe r wi r i ng a nd t ubi ng.         I n t he

p r o c e s s of r e movi ng t he c o ppe r , t he i ndi vi dua l ( s ) di d e xt e ns i ve

d a ma g e t o t he i nt e r i or of t he bui l di ng.        Smi t h r e por t e d t he

i nc i de n t t o t he p ol i c e , who i n t he i r r e por t l i s t e d t he i nc i de n t

a s a t he f t .    The r e a f t e r , Smi t h f i l e d a c l a i m wi t h t he i ns ur a nc e

a g e n t t hr ough whom t he pol i c y ha d be e n s e c ur e d.



               On Apr i l 5, 1993, a r e pr e s e nt a t i ve of She l by s e nt Smi t h

a l e t t e r , whi c h s t a t e d, i n pa r t , a s f ol l ows :



               I n or de r t ha t t h e Compa ny ma y c ont i nue t o
               ha ndl e t hi s ma t t e r , we wa nt you t o know t ha t
               we a r e pr oc e e di ng unde r a Re s e r va t i on of
               Ri ght s .   W a r e r e s e r vi ng our r i ght s unde r
                             e
               t he pol i c y f or t he f ol l owi ng r e a s ons :

                       *              *              *               *

               6.      Vac anc y
                       I f t he bui l di ng whe r e l os s or
                       da ma ge oc c ur s ha s be e n va c a nt f or
                       mor e t ha n 60 c ons e c ut i ve da ys
                       be f or e t ha t l os s or da ma ge , we
                       wi l l :
                       a.       Not pa y f or a ny l os s or da ma ge
                                c a us e d by a ny of t he f ol l owi ng
                                e ve n i f t he y a r e Cove r e d
                                Ca us e s of Los s :
                                ( 1) Va nda l i s m;
                                ( 5) Th e f t ; or
                                ( 6) At t e mpt e d t he f t .

                                                 3
                As you c a n s e e f r om t he a bove , i t i s pr oba bl e
                t ha t a l l or a pa r t of your l os s ma y not be
                c ove r e d unde r your i ns ur a nc e pol i c y.      W e
                s ha l l c ont a c t yo u f ur t he r a s s oon a s a
                de c i s i on r e ga r di ng c ove r a ge ha s be e n ma de .



( b o l d p r i nt i n or i gi na l ) .         On J une 1, 1993, She l by s e nt Smi t h a

l e t t e r de nyi ng c ove r a ge .        Tha t c or r e s ponde nc e a l s o r e l i e d upon

t h e v a c a nc y pr ovi s i on.       No me nt i on wa s ma de of a ny ot he r pol i c y

p r o v i s i on i n e i t he r l e t t e r .



                 On J a nua r y 6, 1994, t he pl a i nt i f f f i l e d t he c ompl a i n t

i n t h e c a s e a t ba r .       She l by’ s a ns we r wa s f i l e d on M r c h 7, 199 4 .
                                                                            a



                 On Augus t 28, 1995, She l by f i l e d a M i on t o Ame nd i t s
                                                            ot

An s we r t o i nc l ude , a mong ot he r t hi ngs , t he f ol l owi ng de f e ns e :



                 . . . unde r “ Ca u s e s of Los s - Ba s i c For m,
                 s ubs e c t i on 8" , t he de f e nda nt a ve r s t ha t no
                 c ove r a ge i s pr ovi de d f or va nda l i s m c a us e d by
                 or r e s ul t i ng f r om t he f t e xc e pt f or t he
                 bui l di ng da ma ge c a us e d by t he br e a ki ng i n or
                 e xi t i ng of bur gl a r s .



                 The Cha nc e l l or c onduc t e d a he a r i ng on Se pt e mbe r 8,

1995.      He f ound t he f ol l owi ng ope r a t i ve f a c t s pe r t a i ni ng t o t h e

c a us e of t he l os s :



                 Some one . . . got i nt o t ha t pr ope r t y . . .
                 a nd r i ppe d out t he e l e c t r i c a l c ondui t a nd
                 pa r t s of he a t pu mps a nd a i r c ondi t i oni ng
                 e qui pme nt , a nd ge ne r a l l y, r i ppe d t he i nt e r i or
                 of t he bui l di ng a pa r t , e vi de nt l y t o t a ke t he
                 c oppe r out of t he c ondui t a nd out of t he a i r

                                                      4
               c ondi t i one r a nd out of ot he r             i nt e r i or pa r t s
               a nd por t i ons of t he bui l di ng,              a nd r e move d
               t ha t c oppe r a nd t ook i t wi t h            t he m l e a vi ng t he
               bui l di ng i n a da ma ge d c ondi t i          on.



He d e t e r mi ne d t ha t t he “ va c a nc y” pr ovi s i on r e f e r r e d t o i n t he

c o mp a n y ’ s r e s e r va t i on of r i ght s l e t t e r wa s not a ppl i c a bl e ,

f i n d i n g t ha t t he pr ope r t y wa s i n f a c t oc c upi e d by Smi t h a nd be i n g
                                                1
u t i l i z e d by hi m a s a wa r e hous e .            Cur i ous l y, t he Cha nc e l l or di d

n o t a d d r e s s , i n a ny wa y, She l by’ s de f e ns e ba s e d upon t he
                                                                                          2
e x c l u s i ona r y l a ngua ge pe r t a i ni ng t o l os s c a us e d by t he f t .



                                                    II



               I n Tat a v . Ni c ho l s , 848 S. W 2d 649 ( Te nn. 1993) , t he
                                                   .

Su p r e me Cour t r e i t e r a t e d t he f a mi l i a r ge ne r a l pr i nc i pl e s

a p p l i c a bl e t o t he c ons t r uc t i on of i ns ur a nc e pol i c i e s :



               The analysis used in construing insurance
               policies is well settled. "Insurance
               contracts like other contracts should be
               construed so as to give effect to the
               intention and express language of the
               parties." Blaylock & Brown Construction,
               Inc. v. AIU Insurance Co., 796 S.W.2d 146,
               149 (Tenn. App. 1990). Words in an insurance
               policy are given their common and ordinary
               meaning. Where language in an insurance
               policy is susceptible of more than one
               reasonable interpretation, however, it is
               ambiguous. See e.g., Moss v. Golden Rule
               Life Insurance Co., 724 S.W.2d 367, 368

       1
       The Chancellor also rejected Shelby’s defense that Smith did not have
an insurable interest in the property. Shelby did not appeal this ruling.
       2
       Our review is not restricted to the trial court’s findings. We must
determine if the result reached by the lower court is correct regardless of
“the reasoning employed to reach the result.” Kelly v. Kelly, 679 S.W.2d 458,
460 (Tenn. App. 1984).

                                                    5
               (Tenn. App. 1986). Where the ambiguous
               language limits the coverage of an insurance
               policy, that language must be construed
               against the insurance company and in favor of
               the insured. Allstate Insurance Co. v.
               Watts, 811 S.W.2d 883, 886 (Tenn. 1991).



Id. at 650.         We approach our de novo review with these principles

in mind.



                                                III



               Al t hough not a ddr e s s e d by t he Cha nc e l l or , we be l i e ve

Sh e l b y ’ s de f e ns e ba s e d upon t he “ t he f t ” e xc l us i on i s di s pos i t i v e

o f t hi s a ppe a l .    The r e f or e , we wi l l f i r s t a ddr e s s t ha t i s s ue .    We

wi l l , a s a p a r t of o ur i nqui r y, e xa mi ne t he pl a i nt i f f ’ s t he or y

t h a t Sh e l by s houl d not be pe r mi t t e d t o a s s e r t t hi s e xc l us i on

u n d e r t he f a c t s o f t hi s c a s e .



               Smi t h a r gue s t ha t be c a us e ne i t he r t he r e s e r va t i on of

r i g h t s l e t t e r nor t he c ove r a ge de ni a l l e t t e r me nt i one d t he da ma g e

“ [ c ] a u s e d by or r e s ul t i ng f r om t he f t ” e xc l us i ona r y pr ovi s i on,

Sh e l b y ha s e i t he r wa i ve d i t s r i ght s unde r t ha t pr ovi s i on or i s

e q u i t a b l y e s t oppe d f r om r e l yi ng upon t hos e r i ght s .     W di s a gr e e .
                                                                                e



               I t i s c l e a r t ha t She l by ha s not e x pr e s s l y wa i ve d

r e l i a n c e on t he “ t he f t ” pr ovi s i on, a s t he r e s e r va t i on of r i ght s

l e t t e r c ont a i ns t he f ol l owi ng s t a t e me nt :




                                                 6
                  No a c t of a ny Compa ny r e pr e s e nt a t i ve , whi         le
                  i nve s t i ga t i ng, n e got i a t i ng s e t t l e me nt of   t he
                  c l a i m o r d e f e ndi ng a l a ws ui t , s ha l l be
                  c ons t r ue d a s wa i vi ng a ny Compa ny r i ght s .           The
                  Compa ny r e s e r ve s t he r i ght unde r t he pol i           cy
                  t o de ny c ove r a ge t o your [ s i c ] or a nyone
                  c l a i mi ng c ove r a g e unde r t he pol i c y.



Th e q u e s t i on t he n i s whe t h e r She l by s houl d be e qui t a bl y e s t opp e d

f r o m a s s e r t i ng t hi s e xc l us i ona r y pr ovi s i on.     As s t a t e d by t he

Co u r t o f Appe a l s i n t he c a s e of Gi t t e r v . Te nne s s e e Far me r s M .
                                                                                      ut

I ns . Co . , 450 S. W 2d 780, 783 ( Te nn. App. 1969) ,
                      .



                  [ t ] he e s s e nt i a l e l e me nt s of a n e qui t a bl e
                  e s t oppe l a s r e l a t e d t o t he pa r t y c l a i mi ng t he
                  e s t oppe l , a r e , ( 1) l a c k of knowl e dge a nd of
                  t he me a ns of knowl e dge of t he t r ut h a s t o t he
                  f a c t s i n que s t i o n; ( 2) r e l i a nc e upon t he
                  c onduc t of t he p a r t y e s t oppe d, a nd ( 3) a c t i on
                  ba s e d t he r e on o f s uc h a c ha r a c t e r a s t o
                  c ha nge hi s pos i t i on pr e j udi c i a l l y.     Pr ov i de nt
                  W hi ngt on I ns . Co. v . Re e s e ( 1963) , 213
                    as
                  Te nn. 355, 373 S. W 2d 613.  .



I d.     The Gi t t e r c our t not e d t ha t “ t he c r ux of t he i s s ue on

e q u i t a b l e e s t oppe l i s whe t he r t he c ompl a i na nt r e l i e d on t he s e

s t a t e me nt s a nd t hi s c onduc t a nd t he r e by c ha nge d he r pos i t i on

p r e j ud i c i a l l y. ”   I d.   Subs e que nt c a s e s de a l i ng wi t h e qui t a bl e

e s t o p p e l h a ve l i ke wi s e e mpha s i z e d t he r e l i a nc e a nd de t r i me nt a l

c h a n g e of pos i t i on r e qui r e me nt s .       Se e Robi ns on v . Te nne s s e e

Fa r me r s M . I ns . Co. , 857 S. W 2d 559, 563 ( Te nn. App. 1993) ( “ Th e
             ut                      .

b u r d e n of pr oof i s on t he i ns ur e d t o pr ove t ha t a

mi s r e p r e s e nt a t i on wa s ma de a nd t ha t t he i ns ur e d r e a s ona bl y r e l i e d

u p o n t h e mi s r e pr e s e nt a t i on. ” ) ; Spe ar s v . Comme r c i al I ns . Co. of



                                                    7
Ne wa r k , N. J . , 866 S. W 2d 544, 549 ( Te nn. App. 1993) ( “ The pa r t y
                             .

a l l e g i n g wa i ve r mus t s how how he ha s be e n pr e j udi c e d by a ny

c h a n g e of pos i t i on. ” )



                I n t he c a s e a t ba r , Smi t h ha s not de mons t r a t e d t ha t h e

u n d e r t o ok a pr e j udi c i a l c h a nge i n pos i t i on ba s e d upon She l by’ s

l et t er s .   Our r e s e a r c h r e v e a l s t ha t a c ont e nt i on qui t e s i mi l a r t o

Smi t h ’ s ha s b e e n ma de i n a t l e a s t t wo pr i or Te nne s s e e c a s e s , a nd

wa s s u mma r i l y r e j e c t e d i n bot h i ns t a nc e s .   The f i r s t c a s e

e l i c i t e d t he f ol l owi ng c omme nt s f r om t he Supr e me Cour t :



                The s e c ond c ont e nt i on, t ha t t he r e wa s a
                wa i ve r of t he pol i c y pr ovi s i ons me nt i one d, or
                t ha t t he I ns ur a nc e Compa ny i s e s t oppe d t o
                r e l y t he r e on, mus t be de ni e d.

                The s e de f e ns e s , wa i ve r a nd e s t oppe l , a r e
                ba s e d on a l e t t e r wr i t t e n by t he Compa ny t o
                Le we l l yn whe r e i n i t poi nt e d out c e r t a i n
                pol i c y pr ovi s i ons unde r whi c h i t c ont e nde d i t
                wa s not l i a bl e unde r i t s pol i c y.         Howe ve r ,
                s i nc e i n t hi s s a me l e t t e r , t h e I ns ur a nc e
                Compa ny r e s e r ve d e ve r y de f e ns e a va i l a bl e t o
                i t unde r t he pol i c y, and t he r e i s no s howi ng
                what s oe v e r of an y har m or i nj ur y t o t he
                appe l l ant be c aus e of t he l e t t e r , t he de f e ns e s
                ar e not good.



Le we l l y n v . St at e Far m M . Aut o. I ns . Co. , 438 S. W 2d 741, 7 4 2 -
                                 ut                             .

4 3 ( Te n n. 1969) ( e mpha s i s a dde d; f oot not e omi t t e d) .



                I n Spe ar s v . Comme r c i al I ns . Co. of Ne war k, N. J. ,

s u p r a , t h e f ol l owi ng wa s s a i d:




                                                  8
               Pl a i nt i f f a l s o c ont e nds t ha t Comme r c i a l
               wa i ve d i t s d e f e ns e t o t he e f f e c t t ha t
               pl a i nt i f f ha d no t s uf f e r e d a n i nj ur y c a us e d
               by a c c i de nt .      Pl a i nt i f f ba s e s t hi s c ont e nt i on
               on a l e t t e r s e nt t o pl a i nt i f f by Comme r c i a l
               pr i or t o t hi s s u i t .        I n t hi s l e t t e r ,
               Comme r c i a l a dvi s e d pl a i nt i f f t ha t i t woul d
               not be pa yi ng l i f e t i me be ne f i t s unde r t he
               a c c i de nt pr ovi s i on of t he pol i c y be c a us e “ hi s
               ba c k i nj ur y oc c ur r e d i n 1943 pr i or t o t he
               e f f e c t i ve da t e of [ t he ] pol i c y a nd not whi l e
               t he p ol i c y i s i n f or c e . ” I t i s pl a i nt i f f ’ s
               a s s e r t i on t ha t t hi s i s i nc ons i s t e nt wi t h t he
               pos i t i on t a ke n by Comme r c i a l i n t hi s
               l i t i ga t i on- - t ha t t he i nj ur i e s c ompl a i ne d of
               i n pl a i nt i f f ’ s c ompl a i nt we r e not c a us e d by
               a c c i de nt a l me a ns .

                The pa r t y a l l e gi ng wa i ve r mus t s how how he
                ha s be e n pr e j udi c e d by a ny c ha nge of
                pos i t i on.    Pr ude nt i al I ns ur anc e Co. of
                Ame r i c a v . Fal l s , 169 Te nn. 324, 87 S. W 2d         .
                567, 569 ( 1935) .         W l e we ha ve s e r i ous
                                             hi
                doubt s a s t o whe t he r t he r e ha s be e n a ny
                c ha nge of pos i t i on by Comme r c i a l , t he r e ha s
                be e n no s howi ng by pl a i nt i f f how he ha s be e n
                pr e j udi c e d b y Comme r c i a l ’ s a l l e ge d “ c ha nge of
                pos i t i on. ” Thi s a r gume nt i s l i ke wi s e wi t hout
                me r i t .



Sp e a r s , 866 S. W 2d a t 549.
                     .



                As pr e vi ous l y i ndi c a t e d, Smi t h ha s not s hown

d e t r i me nt a l r e l i a nc e upon She l by’ s a s s e r t i ons i n i t s r e s e r va t i o n

o f r i gh t s a nd d e ni a l l e t t e r s .   He r e f e r s t o t he f a c t t ha t he

r e p a i r e d t he bui l di ng a t h i s own e xpe ns e ; but we do not s e e ho w

i t c a n be c l a i me d t ha t t hi s a c t i vi t y wa s pr e j udi c i a l t o hi m or

e v e n t a ke n i n r e l i a nc e on She l by’ s s t a t e me nt s i n t he t wo l e t t e r s .

Th e r e f o r e , we r e j e c t Smi t h’ s c l a i ms of wa i ve r a nd e s t oppe l .




                                                  9
                       W now t ur n our a t t e nt i on t o t he “ t he f t ”
                        e

e x c l u s i ona r y l a ngua ge of t he pol i c y upon whi c h She l by r e l i e s .

Th a t e x c l us i on i s f ound i n a s e c t i on of t he pol i c y e nt i t l e d

“ COVERED CAUSES OF LOSS. ”                 The r e l e va nt por t i ons of t ha t s e c t i o n

o f t h e pol i c y a r e a s f ol l ows :



               A.      COVERED CAUSES OF LOSS
                       . . . . Cove r e d Ca us e s of Los s me a n
                       t he f ol l owi ng:

                                            *       *      *

                       8.      Vandal i s m me a ni ng
                                             ,
                               wi l l f ul a nd ma l i c i ous
                               da ma ge t o, or de s t r uc t i on
                               of , t he de s c r i be d
                               pr ope r t y.

                               W wi l l not pa y f or l os s
                                e
                               or da ma ge :

                                            *       *       *

                               b.         Ca us e d by or
                                          r e s ul t i ng f r om
                                          t he f t , e xc e pt
                                          f or bui l di ng
                                          da ma ge c a us e d
                                          by t he br e a ki ng
                                          i n or e xi t i ng
                                          of bur gl a r s .



( b o l d p r i nt i n or i gi na l ) .     The pl a i nt i f f doe s not c l a i m t ha t a n y

o f t h e c l a i me d l os s r e s ul t e d f r om “ da ma ge c a us e d by t he br e a ki n g

i n o r e xi t i ng of bur gl a r s . ”         The r e f or e , t he i s s ue i s s qua r e l y

p r e s e n t e d: I s t he pl a i nt i f f ’ s l os s one r e s ul t i ng f r om va nda l i s m,

a c o v e r e d e ve nt , or da ma ge “ [ c ] a us e d by or r e s ul t i ng f r om t he f t , ”

a n e x c l ude d l os s ?




                                                   10
                   W be l i e ve t he pa r t i e s , by t he l a ngua ge of t he pol i c y ,
                    e

i n t e n d e d t o e xc l ude f r om c ove r a ge t he t ype of l os s c l a i me d by t h e

p l a i nt i f f i n t hi s c a s e .    I t i s s i gni f i c a nt t ha t t he e xc l us i ona r y

l a n g u a g e pe r t a i ni ng t o da ma ge “ [ c ] a us e d by or r e s ul t i ng f r om

t he f t ” f ol l ows i mme di a t e l y a f t e r l a ngua ge pe r t a i ni ng t o t he

c o v e r e d l os s of va nda l i s m.       W be l i e ve t he pa r t i e s pur pos e l y
                                               e

i n t e n d e d t o r e f l e c t t he i r unde r s t a ndi ng t ha t da ma ge f r om t he f t

wo u l d n ot be i nc l ude d wi t h i n t he ge ne r a l c onc e pt of va nda l i s m.



                   Our hol di ng i s bol s t e r e d by t he de f i ni t i on of va nda l i s m

f o u n d i n t he pol i c y- - ” wi l l f ul a nd ma l i c i ous da ma ge t o, or

d e s t r u c t i on of , t he de s c r i be d pr ope r t y. ”      Thi s de f i ni t i on r e f e r s

t o t h e t ype of da ma ge c a us e d by va nda l s a s t ha t c onc e pt i s

o r d i n a r i l y unde r s t ood, i . e . , da ma gi ng s ome t hi ng s i mpl y f or t he

s a k e o f da ma gi ng i t .        The c onc e pt of t he f t i s e nt i r e l y di f f e r e n t .

A t h i e f e nt e r s a bui l di ng i n or de r t o s t e a l s ome t hi ng; c e r t a i nl y

a t h i e f ’ s pr i ma r y f oc us i s not t he ma l i c i ous de f a c i ng,

d e s t r o y i ng, or da ma gi ng of pr ope r t y.          I f t he mot i va t i on a nd e nd

r e s u l t i s t ha t of t he f t a nd t he c l a i me d l os s i s “ [ c ] a us e d by o r

r e s u l t [ s ] f r om [ t ha t ] t he f t , ” t he r e i s no c ove r a ge .



                   I n t hi s c a s e , e ve r y knowl e dge a bl e wi t ne s s t e s t i f i e d

t h a t t h e a ppa r e nt mot i va t i on f or t he e nt r y i nt o Smi t h’ s bui l di n g

wa s t h e s t e a l i ng of c oppe r wi r i ng a nd t ubi ng.             Si gni f i c a nt l y,

Smi t h h i ms e l f s o t e s t i f i e d i n s e ve r a l i ns t a nc e s , i n c l udi ng t he

f o l l o wi ng:




                                                    11
               Q: Now, t hi s phot ogr a ph a nd your t               e s t i mony
               r e ga r di ng Fr a nk Ba r r y He a t i ng & Ai       r , i t i s my
               unde r s t a ndi ng t h a t ba s i c a l l y, t ha t     whoe ve r
               di d t hi s t o your bui l di ng, wa s i nt            er es t ed i n
               t he c oppe r ?

               A: Ye s .

               Q: The y wa nt e d a nd di d t a ke a l l t he c oppe r t ha t t he y
               c oul d t a ke out of t hi s bui l di ng?

               A: Ye s .

                       *               *               *               *

               Q: And i t i s your be l i e f a s you s i t he r e t oda y, t ha t
               t he ma i n t hi ng t ha t t he s e pe opl e we r e i nt e r e s t e d i n wa s
               t he c oppe r a nd t he va l ue t o s e l l t ha t c oppe r ?

               A: W l l , t h a t ’ s my opi ni on, ‘ c a us e l i ke I s a y, t h e r e ’ s
                     e
               ot he r bui l di ngs a l l ove r t own t he y wa s doi ng i t a t t h e
               s a me t i me .



Ro b e r t E. Kr z e mi ns ki , a l i c e ns e d e l e c t r i c a l c ont r a c t or who di d

e l e c t r i c a l r e pa i r s t o t he bui l di ng, t e s t i f i e d a s f ol l ows :



               Q: And wha t di d you di s c ove r whe n you ma de
               your i ni t i a l i ns pe c t i on?

               A: The bui l di ng wa s va c a nt a nd s ome one ha d
               gone i n t he r e a nd I be l i e ve t he pr i ma r y
               r e a s on f or be i ng t he r e wa s t o ge t s c r a p
               c oppe r .     The y we r e a f t e r wi r e , t he y we r e
               a f t e r p l umbi ng, t he y we r e a f t e r r e f r i ge r a t i on
               t ubi ng, a l l ki nds of c oppe r t he y we r e
               pr i ma r i l y a f t e r .

                       *               *               *               *

               Q: Al l r i ght . Do you r e me mbe r we t a l ke d a bout , a nd I
               t hi nk you ki nd of de s c r i be d i t f a i r l y c l e a r l y f or us ,
               a bout how t he y t ook a l l t hi s wi r i ng out ?

               A: Uh- huh.

               Q: And t he y t ook a l l t he c oppe r out of t he a i r
               c ondi t i oni ng uni t ?



                                                 12
                A: Ye a h.

                Q: The y we r e a f t e r t he c oppe r we r e n’ t t he y?

                A: I t hi nk a t t ha t t i me c oppe r wa s pr e t t y e xpe ns i ve .
                W l l , c oppe r ha s be e n hi gh f or t he l a s t f i ve ye a r s .
                 e
                But pr i or t o t ha t i t wa s pr e t t y c he a p.



                Smi t h di d not of f e r a ny pr oof s ugge s t i ng t ha t a ny pa r t

o f t h e da ma ge t o hi s bui l di ng wa s c a us e d by t he ma l i c i ous a c t o f

a n o t h e r , i . e . , da ma ge s i mpl y f or i t s own s a ke .     W f i nd a nd ho l d
                                                                          e

t h a t t h e c a us e of Smi t h’ s l os s wa s da ma ge due t o t he f t of t he

c o p p e r wi r i ng a nd t ubi ng, a nd not due t o c ove r e d va nda l i s m.            Th e

d a ma g e t o t he bui l di ng oc c ur r e d be c a us e t he t hi e f or t hi e ve s

wa n t e d t o ge t t o t he c oppe r .        The Ge or gi a c a s e of Pac i f i c

I nd e mni t y Co. v . N. A. , I nc . , 172 S. E. 2d 192 ( Ga . App. 1969)

r e a c h e s t he s a me c onc l us i o n ba s e d upon a na l ogous f a c t s .



                I t i s a n e l e me nt a r y c onc e pt of i ns ur a nc e l a w t ha t

p a r t i e s a r e f r e e t o a l l oc a t e r i s ks of l os s a s t he y s e e f i t .   If

t h e p o l i c y of i ns ur a nc e r e f l e c t i ng t he a l l oc a t i on of t hos e r i s k s

i s c l e a r a nd una mbi guous , a s i n t hi s c a s e , we a ppl y i t a s

wr i t t e n.   The pa r t i e s h e r e c hos e t o e xc l ude f r om c ove r a ge t he

r i s k o f da ma ge t o t he pr e mi s e s c a us e d by or r e s ul t i ng f r om t he f t .

Un f o r t u na t e l y f or Smi t h, t hi s i s e xa c t l y t he ki nd of da ma ge t h a t

o c c u r r e d i n t hi s c a s e .   The Cha nc e l l or ’ s j udgme nt i s c ont r a r y t o

t h e f a c t s i n t hi s c a s e .



                Si nc e we f i nd t ha t She l by’ s de f e ns e ba s e d on i t s t he o r y

t h a t t h e pl a i nt i f f ’ s l os s wa s c a us e d by or r e s ul t e d f r om t he f t i s

                                                 13
s u s t a i n e d by t he pr oof , we do not f i nd i t ne c e s s a r y t o a ddr e s s

i t s a l t e r na t i ve de f e ns e t he or y t ha t t he pr e mi s e s we r e va c a nt a t

t h e t i me of t he l os s .       Obvi ous l y, i t i s not ne c e s s a r y t o a ddr e s s

t h e p l a i nt i f f ’ s i s s ue pe r t a i ni ng t o t he a l l e ge d ba d f a i t h of

Sh e l b y .



                 For t he a f or e me n t i one d r e a s ons , t he j udgme nt of t he

Ch a n c e l l or i s r e ve r s e d a nd t he c ompl a i nt di s mi s s e d a t Smi t h’ s

c os t s .     Cos t s on a ppe a l a r e t a xe d a nd a s s e s s e d t o Smi t h.




                                               ______________________________
                                               Cha r l e s D. Sus a no, J r . , J .


CONCUR:


_ _ _ _ _ _ _ ____________________
Ho u s t o n M Godda r d, P. J .
                .


_ _ _ _ _ _ _ ____________________
Do n T. M M r a y, J .
               c ur




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