Home used to illegally grow pot. Still a residence for insurance purposes?
Homeowners allege that Auto-Owners improperly denied their insurance claim, which sought coverage for property damage due to an illegal marijuana grow operation.
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A federal court has ruled that a jury must decide whether the insureds’ property was used “principally” as a residence for purposes of their insurance policy when they conceded that virtually the entire home was used to further an illegal marijuana grow operation.
Homeowners sought coverage for property damage
Connie and Edward Weingarten sued Auto-Owners Insurance Company, their homeowner’s insurer, alleging that Auto-Owners had improperly denied their insurance claim, which sought coverage for property damage due to an illegal marijuana grow operation. The Weingartens asserted causes of action for breach of insurance contract, breach of the duty of good faith and fair dealing, and statutory unreasonable delay or denial.
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Auto-Owners moved for summary judgment, contending that its policy did not cover the Weingartens’ claimed losses because the property was not being used “principally” as a private residence.
The Weingartens conceded that “virtually the entire house” was being used to further a marijuana grow operation.
The Weingartens, however, also provided the court with pictures and video showing the property’s condition when law enforcement discovered the grow operation; these materials were part of the district attorney’s file for the prosecution of the individuals allegedly growing marijuana at the property.
Insurer: Primarily used as a marijuana grow, not a private residence
In response, Auto-Owners contended that the video and photographs illustrated that the property was principally used as a marijuana grow operation, and not as a private residence.
The court denied the insurer’s summary judgment motion, concluding that, although a very close call, the video and pictures created a disputed issue of material fact as to whether the residence was used principally as a private residence — that is, whether the “chief; primary; [or] most important” use for the property was as a private residence.
In its decision, the court said that the pictures revealed that the individuals using the property paid for internet and received mail at the property. Moreover, the court added, the video showed that the house contained a dining room table, photographs and art on the walls, a couch, a television, a washing machine and a bottle of detergent with clothes hanging nearby, and a pool table.
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In the court’s opinion, these aspects of the video demonstrated that individuals “may have used the house for entertainment, daily meals, and regular chores,” which was some indicia that the house was used principally as a private residence.
Additionally, the court observed, the video showed mattresses in two bedrooms; a desk, an office chair, and a night stand in one of the bedrooms; a bathroom with a toothbrush and mouthwash on the sink; clothes in one of the closets; and a coffee pot with coffee grounds in the kitchen.
Disputed issue of fact
The court ruled that this evidence, viewed in a light most favorable to the Weingartens, created a disputed issue of fact as to whether the individuals growing marijuana were principally using the house as their private residence.
The court concluded by pointing out that the video and photographs also contained “significant footage supporting the notion that the house was used principally as a marijuana grow operation.” Based on this footage and on the Weingartens’ admission that the growers used “virtually the entire house in this operation,” the court said that it was “doubtful” that the Weingartens would be able to prove the house was used principally as a private residence, but the court said that it would not substitute its judgment for that of a jury.
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The case is Weingarten v. Auto Owners Ins. Co., No. 17-cv-01401-MEH (D. Colo. April 17, 2018).
Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at smeyerowitz@meyerowitzcommunications.com.