Insurer sued for coverage of property damage from trespassing nephew

The daughter of a man who died of COVID wants State Auto to cover damage she discovered after evicting the man's nephew, who had moved into the home without permission.

Photo: RAGMA IMAGES/ Shutterstock

State Auto Property and Casualty was hit with an insurance coverage lawsuit after it denied coverage for damages to a covered property, sustained after the homeowner passed away from COVID-19 and his nephew trespassed, moving into the property.

This complaint was first surfaced by Law.com Radar.

The June 21 complaint, brought by the Smith Law Group on behalf of the estate of Dell Johnson, sought coverage for damages to the decedent’s property caused by the decedent’s nephew, who allegedly trespassed and moved into the property on the day that the decedent died from COVID-19.

Lawyers at Plunkett Cooney removed the suit to the Michigan Eastern District Court.

Tiffany Johnson, as a personal representative of the Estate of Dell Johnson, brought the suit against State Auto, alleging that it had been engaged in the business of providing homeowner’s insurance to the Estate and its predecessor Dell Johnson and that it had wrongly denied its coverage of the claim.

According to the complaint, Dell Johnson entered into a Homeowner’s insurance policy with State Auto on Feb. 12, 2020.

On April 4, 2020, Dell Johnson died from COVID-19. His daughter, Tiffany Johnson, informed State Auto and their agents of his passing in May and renewed the coverage. Tiffany Johnson renewed the policy as a rental policy.

However, the same day Dell died, his nephew, Brandon Smith, unlawfully obtained entry into the home. The complaint alleged police would not remove him from the property, leading Tiffany Johnson to commence eviction proceedings.

In November 2020, Tiffany Johnson executed an order of eviction. She informed State Auto and their agents of the claims following the execution of the eviction order, entering the subject property and discovering the damage for the first time after Smith left the home.

In March of 2021, Tiffany Johnson submitted a proof of loss, following the discovery of “extensive damage to the home” and damaged and missing personal property.

According to the complaint, State Auto wrongly rejected the sworn proof of loss that same month, denying coverage of the claim.

The complaint brought claims for breach of contract and violation of MCL 500,2001 ET SEQ.

In terms of the breach-of-contract claim, it was alleged that the initial policy of insurance issued by State Auto had been renewed prior to its expiration and following the death of Dell Johnson. Tiffany Johnson made two claims under two policies, insuring the interests and its predecessors and successors of the home, and its personal property, which included the building, structures and loss of occupancy and use.

When Tiffany Johnson returned to the premises following Smith’s eviction, she discovered extensive damage to the walls, ceilings and floors, in addition to the electric meter being stolen, causing the furnace to cease functioning. The lack of heat in the home led to the pipes bursting.

Tiffany Johnson reported the damage to State Auto, with a claim adjuster inspecting the damage and beginning to process the claim.

The complaint alleged that the policies provided for coverage for all items damaged as described above, yet State Auto denied coverage on both policies, only referencing theft and vandalism in the denial letter.

According to the complaint, the exact amount of damages was in excess of $475,000 and that the policy was in full force and effect throughout 2020, provided coverage for all loss or damages resulting from direct physical loss unless specifically excluded, and that the cause of loss and damage wasn’t excluded by the policies.

It alleged that State Auto’s denial of the claim(s) was in breach of contract, and the denial resulted in Tiffany Johnson suffering damages, including damage to the house and all structures covered by the policy, damage to personal property and other consequential damages.

She also alleged State Auto’s refusal to pay for loss and damages violated the Uniform Trade Practices Act, MCL § 2002, and as a result of its failure to pay her claims, she was entitled to 12% per annum penalty interest.

“In reliance upon Defendant’s representations and the Policy, Plaintiff paid its premiums to State Auto in return for Defendant’s promise to provide benefits as set forth in the policy and addendums,” read the complaint, asserting that the acts and omissions of State Auto violated the Uniform Trade Practices Act.

The complaint alleged that State Auto misrepresented the terms, benefits, advantages or coverage of the policy, failed to pay claims within a reasonable time after the claim was submitted and pursued false defenses to plaintiff’s claims in an attempt to avoid payment.

In terms of relief, the complaint requested an order declaring that the claim and its loss is covered under the policy, an entering of a judgment in whatever amount the plaintiff is deemed to be entitled, plus interest, cost and attorney fees, penalty interest under the Uniform Trade Practices Act, and the granting of any other relief deemed just and equitable.

Johnson’s attorney, Scott F. Smith of Smith Law Group, in Farmington Hills, did not respond to a call for comment.

Related: