Page 13 - FDCC Insights Spring 2022

or teaching and learning taking place at the building.69 Moreover, although the insured claimed that it had plans to use the building as a school again in the near future and made roof repairs to that end, the court held that future events were irrelevant in determining whether the building was vacant, as defined by the contract, 60 days prior to the date of the loss.70
In the context of the vandalism clause, the court explained that the purpose of the vacancy provision was to limit the risk of theft and vandalism, which would presumably be deterred by regular activity of a school at the property.71 The fact that no one ever used the building after dark because there was no electricity, no one used the building in the colder months due to a lack of heat, and that the building was only used a handful of times in the warmer months supported enforcement of the vacancy provision.72 The court also found unpersuasive the insured’s argument that its sparse visits to the property to move furniture and to perform maintenance would provide the building with an appearance of occupancy so as to sufficiently minimize the risk of vandalism and theft to what would be considered foreseeable for a school, which was what was contracted for by the parties.73 Because the insured was not conducting customary operations of a school at the property within 60 days of the damage, the court held that the vacancy provision barred coverage for the loss.74
A federal court in Colorado employed similar reasoning in Saiz v. Charter Oak Fire Ins. Co., 2007 WL 2701398 (D. Colo. Sept. 12, 2007), affirmed by Saiz v. Charter Oak Fire Ins. Co., 299 Fed. Appx. 836 (10th Cir. 2008). In Saiz, the insured owner of a family-style restaurant closed the restaurant, but maintained the kitchen equipment, tables, chairs, and dishes in the building that previously housed the restaurant.75 The building also contained an office from which the insured tried to sell the building and conducted restaurant business unrelated to the closed restaurant.76 A few months after the restaurant closed, the building’s sprinkler system activated, resulting in water damage to the building.77
The insurer determined that the sprinkler was activated due to “deliberate tampering,” and denied the insured’s claim based on the policy’s vacancy condition.78 The insurer’s policy contained a limitation stating that it would not pay for loss or damage caused by water or vandalism if the property was vacant for more than 60 consecutive days.79 A property was “vacant” unless “at least 31% of its total square footage was: (i) [r]ented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations; and/or (ii) [u]sed by the building owner to conduct customary operations.”80
The district court agreed with the insurer that the policy did not cover the damage at the restaurant.81 The
69 Id.
70 Id. at *4.
71 Id.
72 Id.
73 Id.
74 Id. at *5.
75 Saiz v. Charter Oak Fire Ins. Co., 2007 WL 2701398, at *1 (D. Colo. Sept. 12, 2007).
76 Id.
77 Id.
78 Id. at *2.
79 Id. at *5.
80 Id. at *1.
81 Id. at *5.
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