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If a husband can demonstrate that his wife set fire to their home in an attempt to intimidate or control his behavior, he may be able to recover for the damage under the insurance policy the couple had obtained on the property.

The Case

After Helen Sterner set fire to the home she lived in with her husband James, she pleaded guilty to a charge of arson with intent to destroy an unoccupied building in violation of Pennsylvania law. At the guilty plea hearing, she admitted under oath that she had “intentionally” set fire to the home using an “ignitable liquid that was poured in both the basement and the dining room areas of the residence” and then igniting it.

Mr. Sterner filed a claim for the loss with the couple’s homeowners’ insurance carrier, Liberty Insurance Company.

Liberty denied the claim on the basis of the policy’s “intentional loss” exclusion.

For his part, Mr. Sterner argued that there was coverage for the damage under an “abuse” exception to the intentional loss exclusion. According to Mr. Sterner, the destruction of the property by Ms. Sterner was an act of “abuse” against him.

He sued Liberty, which then moved for summary judgment.

The Liberty Policy

The Liberty policy excluded coverage for:

Intentional Loss, meaning: any loss arising out of any act an “insured” commits or conspires to commit with the intent to cause a loss. In the event of such loss, no “insured” is entitled to coverage, even “insureds” who did not commit or conspire to commit the act causing the loss.

It also provided that the intentional loss exclusion: will not apply to deny payment to the “insured” who did not cooperate in or contribute to the creation of the loss if the loss: [is otherwise covered] and [a]rises out of abuse to the innocent “Insured” by another “insured”.

The policy defined:  abuse – as defined in the Pennsylvania Protection From Abuse Act; or . . . attempting to cause or intentionally, knowingly or recklessly causing damage to covered property so as to intimidate or attempt to control the behavior of another person.

The District Court’s Decision

The district court denied Liberty’s motion.

In its decision, the district court observed that Mr. Sterner contended that Ms. Sterner “was suffering from serious mental health issues and either intentionally, knowingly or recklessly set fire to the house as a way to intimidate [him] or to control [his] behavior.”

The district court then found that a question of fact existed as to whether Ms. Sterner had set fire to the house in an attempt to intimidate or control Mr. Sterner’s behavior. It observed that she left a note for him, where she, among other things, accused him of adultery and talked of punishing him. Additionally, the district court said, she and Mr. Sterner had recently had a major argument regarding her behavior toward their son-in-law’s parents. The district court also said that any argument that Ms. Sterner had intended to kill herself was “belied by the fact that she evidently left the building immediately upon setting fire to it.”

Accordingly, the district court concluded, because questions of fact existed with respect to whether Ms. Sterner had engaged in abuse as defined in the policy, summary judgment on the breach of contract claim was “inappropriate.”

The case is Sterner v. Liberty Ins. Corp., No. 3:16cv2453 (M.D. Pa. Feb. 22, 2018). Attorneys involved include: For James Sterner, Plaintiff: Scott E. Schermerhorn, LEAD ATTORNEY, Law Office of Scott E. Schermerhorn, Scranton, PA. For Liberty Insurance Corporation, trading as Liberty Mutual, Defendant: Joseph Acquaviva, LEAD ATTORNEY, Bennett, Bricklin & Saltzburg LLC, Philadelphia, Pa; Pamela A. Carlos, LEAD ATTORNEY, Bennett, Bricklin & Saltzburg, LLP, Philadelphia, PA.

FC&S Legal Comment

It is worth noting that the district court also refused to dismiss the second count of Mr. Sterner’s complaint, alleging that Liberty had committed bad faith. The district court found genuine issues of fact surrounded whether Liberty had acted in bad faith in denying the claim and failing to apply the “innocent insured” abuse exception to the “Intentional Loss” exclusion.

FC&S Legal will monitor developments in this case and discuss them as warranted.