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Jackson v. The Standard Fire Insurance Co.

United States District Court, D. Maryland

August 1, 2019

WILLIAM JACKSON, Plaintiff,
v.
THE STANDARD FIRE INSURANCE COMPANY, Defendant.

          MEMORANDUM OPINION

          THEODORE D. CHUANG UNITED STATES DISTRICT JUDGE

         On October 4, 2014, Plaintiff William Jackson returned home from a month-long trip to discover that a malfunctioning toilet had caused thousands of gallons of water to flow throughout his house, causing significant water and mold damage, which to this day has not been fully remediated. After submitting a claim to his insurance company, Defendant The Standard Fire Insurance Company ("Travelers",, a dispute ensued over whether and to what extent the water and mold damage should be covered by the Policy. Unable to reach an agreement on the proper interpretation of the Policy's mold limitation and subsequent coverage of Jackson's damages, Jackson filed suit against Travelers.

         Presently pending is Travelers' Motion for Summary Judgment. A hearing was held on this Motion on June 25, 2019. For the reasons set forth below, Travelers' Motion for Summary Judgment is DENIED.

         BACKGROUND

         I. The Policy

         As of October 4, 2014, Jackson had a homeowner's insurance policy ("the Policy") from Travelers to provide insurance on his home located in Fort Washington, Maryland ("the House"). The Policy, which had been renewed effective January 12, 2014, generally covered "direct physical loss to the property." Joint Record ("J.R.") 30. Specifically, it provided $378, 000 of coverage for the House, $264, 600 of coverage for Jackson's personal property, and $113, 400 of coverage for loss of use of the House. Travelers acknowledges that water damage to the House from a toilet malfunction is a covered loss under the Policy, subject to various exclusions and limitations.

         As to exclusions, the Policy contains a list of "excluded perils" which are subject to the Policy's Anti-Concurrent Causation ("ACC") Clause, which states:

We do not cover any direct or indirect loss or damage caused by, resulting from, contributing to or aggravated by any of these excluded perils. Loss from any of these perils is excluded regardless of any other cause of event contributing concurrently or in any sequence to the loss.

         J.R. 13. This provision applies whether or not the loss event: "(1) Results in widespread damage; (2) Affects a substantial area; or (3) Occurs gradually or suddenly." Id.

         Mold is not listed among the original list of exclusions subject to the ACC Clause.

         However, the Policy contains an endorsement relating to mold ("the Mold Endorsement") that adds an exclusion for:

"Fungi," Other Microbes or Rot, meaning any loss or cost resulting from, arising out of, caused by, consisting of, or related to, "fungi," other microbes or rot. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.

         J.R. 47. The Mold Endorsement also provides a form of "Additional Coverage" for "Limited 'Fungi,' Other Microbes or Rot Remediation" (the "Mold Limitation".. The Mold Limitation provides up to $5, 000 of coverage for mold remediation as follows:

         If a loss caused by a Peril Insured Against under Section I results in "fungi", other microbes or rot, [Travelers] will pay for:

(1) Remediation of the "fungi," other microbes or rot. This includes payment for the reasonable and necessary cost to:
(a) Remove the "fungi," other microbes or rot from covered property or to repair, restore or replace that property; and
(b) Tear out and replace any part of the building as needed to gain access to the "fungi," other microbes or rot;
(2) Any reasonable and necessary increase in living expense you incur so that your household can maintain its normal standard of living or loss of fair rental value if the "fungi," other microbes or rot makes the "residence premises" not fit to live in. We do not cover loss or expense due to cancellation of a lease agreement; and
(3) Any reasonable and necessary testing or monitoring of air or property to confirm the absence, presence or level of the "fungi," other microbes or rot, whether performed prior to, during or after removal, repair, restoration or replacement.

         J.R. 47.

         II. The Insurance Claim

         On October 5, 2014, after being away on business for approximately one month, Jackson returned to the House and discovered significant damage. While Jackson was away, thousands of gallons of water flowed through the House after a toilet on the main level malfunctioned. As Jackson walked through the House that day, hearing the water under his feet with each step, he noted that the walls were sweaty because of humidity from the flood, floors were buckled, the basement ceiling had collapsed, and the basement was extremely saturated. Mold was present in various places on various items in the basement and throughout the House.

         Jackson tried to dry the interior of the House and his personal property using fans and towels. Jackson reported the damage to his insurer, Travelers, which conducted an initial site visit and inspection the next morning, October 6, 2014. During this visit, Travelers advised Jackson of the $5, 000 Mold Limitation in the Policy.

         After Travelers provided Jackson with a list of cleaning companies to perform initial water and mold mitigation, Jackson advised Travelers that he wanted a hygienist to inspect the property. On October 16, 2014, Travelers then told Jackson to hold off on hiring a mitigation company and instead provided him a list of two industrial hygienists that could provide a protocol for mold remediation. On October 22, 2014, during another site inspection, Travelers issued a $3, 000 advance on the Mold Limitation to cover the mold testing and remediation, $750 for temporary housing, and $1, 500 as a security deposit advance.

         Jackson opted to hire a company not identified on Travelers' list, EFI Global, Inc., as he was entitled to do, which then conducted a "limited moisture investigation" on October 20, 2014. J.R. 281. The EFI report described visible water and mold damage on the main level and basement level. Specifically, most damage on the main level was in the master bedroom, where the defective toilet was located, including visible mold on lower portions of furniture and footwear in the master bedroom. The majority of the damage was in the basement, where the ceiling and some walls had collapsed and mold was visible "on just about every piece of furniture, fabric, and contents." J.R. 282.

         Although Travelers had told Jackson that a mold test was needed, EFI only took moisture readings, leading Travelers to notify Jackson that it would hire a hygienist to more fully inspect the home. Travelers hired Environmental Solutions, Inc. ("ESI"), which conducted its inspection of the House on November 12, 2014 and provided a report with the results of mold tests. ESI reached a similar conclusion to that of EFI and found that most of the basement was affected by water damage and subsequent fungal growth.

         On December 3, 2014, Travelers notified Jackson that Rolyn Estimates ("Rolyn") would be contacting him to schedule times to inspect the home to prepare certain cost estimates. Travelers tasked Rolyn with preparing three estimates-one for the cost of emergency water mitigation services, one for the cost of damages caused by water, and one for the cost of damages caused by mold. Eric Huzzy from Rolyn contacted Jackson and visited the House on December 8, 2014 to conduct an inspection and prepare the estimates.

         On December 19, 2014, Travelers informed Jackson that South River Restoration ("SRR") would be scheduling a visit. Travelers had asked SRR to prepare estimates on the costs to pack, store, and return the salvageable contents of the House, to clean the House, and to replace damaged contents. When SRR personnel attempted to conduct its inspection on December 29, 2014, Jackson refused to allow them to enter. Travelers told Jackson that he had a duty under the Policy to allow Travelers and its contractors to view the premises and continued to request permission to enter. While he was refusing entry to SRR, Jackson retained a different company, 2J Enterprises, LLC, to compile an inventory of the contents of the ...


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