Tred R. Eyerly | Insurance Law Hawaii
The court found there was no coverage for a misrepresentation claim against the insured sellers of a residence. Am. Family Mut. Ins. Co. v. Coyne, 2022 U.S. Dist. LEXIS 186417 (E.D. Mo. Oct. 12, 2022).
Aaron and Tobi Beckman purchased a home from Denise Coyne. The Bockmans alleged in the underlying suit that Coyne represented that the property had a “2-car garage.” A disclosure statement signed by Coyne stated she had disclosed all conditions which might lower the value of the property or adversely affect the Bockman’s decision to buy the property. After purchasing the property, the Bockmans learned that they could not fit their two vehicles in the attached garage. The Bockmans alleged that substantial remediation was necessary to expand the depth of the garage to fit two cars within it.
The underlying suit alleged that Coyne had was engaged in fraud, misrepresentation and concealment by omitting material facts in connection with the sale of the home. Coyne allegedly engaged in negligent misrepresentation by failing to inform the Bockmans of the depth of the attached garage.
American Family issued a homeowners policy and a personal liability umbrella policy to Coyne. American Family filed a declaratory judgment action against the Bockmans and Coyne seeking a declaration that there was no insurance coverage afforded under either policy.
The Bockmans contended that the underlying complaint alleged an “occurrence” under the policies. The underlying complaint alleged that the negligent misrepresentation resulted in the Bockmans’ loss of use of the property. The court observed that the negligent misrepresentation claim may qualify as an “occurrence.” However, the underlying complaint did not clearly allege “property damage” under the policies.
The Bockmans admitted that there was no physical harm to tangible property, but argued they experienced a “loss of use” of the two-car garage because it did not accommodate their vehicles. The umbrella policy included provisions stating that “loss of use of tangible property that is not physically injured” was a covered loss.
The court held that the underlying complaint did not allege “property damage” because the purported damage to the garage predated the Bockmans’ purchase of the house and was not caused by the alleged occurrence. The Bockmans merely asserted that they subjectively experienced a diminution in value of their property because they were unable to fit their vehicles into the garage. They colud not show that the representations caused the garage to decrease in size or experience any other physical change. The court also noted that the garage could fit two smaller cars. Further the Bockmans could have used the garage for storage or other uses.
The court therefore granted summary judgment in favor of American Family.
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