United Capitol Ins. Co. v. Kapiloff

United Capitol Ins. Co. v. Kapiloff

Opinion

 [*490]  OPINION

NIEMEYER, Circuit Judge:

Bernard and Lynn Kapiloff own six commercial properties in Baltimore City, which are located in high risk areas and have been partially vacant over the years. Portions of one property were [**2]  vandalized in December 1994 and again in March 1995, and a fire broke out in another property in February 1995. The Kapiloffs submitted claims totaling $ 668,421 to United Capitol Insurance Company, their insurer, for those losses. United Capitol denied the claims because of "misrepresentations, omissions, and concealments" about the properties and, alternatively, because the properties violated the "vacancy" and "protective safeguards" conditions in its policy. Thereafter, United Capitol sued the Kapiloffs for a declaratory judgment, and the Kapiloffs filed a counterclaim for breach of contract. They also joined their insurance brokers as parties, alleging negligence.

Ruling that the properties were either vacant or lacked protective safeguards and that the "vacancy" and "protective safeguards" conditions in the insurance policy operated to exclude coverage for the losses, the district court entered summary judgment in favor of United Capitol. It also ruled in favor of the insurance brokers who procured the United Capitol policy on behalf of the Kapiloffs on the grounds that suitable insurance was not available in the market and that one broker was not an agent of the Kapiloffs.  [**3]  For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.

Among the six commercial properties that the Kapiloffs own in Baltimore City, two are involved in the insurance coverage disputes in this action. The first property, located at 2120 West Lafayette Avenue, is an industrial complex known as the Acme Business Center. It consists of two structures, both of which use the 2120 West Lafayette address. One structure is subdivided into five sections, referred to as buildings A, B, C, D, and F. The other structure is free-standing and is referred to as Building E. Although the sections of the subdivided building were originally connected by a basement passageway, today sections A, B, and C are connected with each other, but are separated by an internal brick wall from sections D and F. All five sections of this building share the same electrical and wiring system and are powered by an electrical plant that is located in the  [*491]  basement of sections A and B. During the losses involved in this case, sections A, B, and C were vacant, and sections D and F were occupied by a tenant, as was Building E.

The second property, located at [**4]  5101 Andard Avenue, is known as the Empire Industrial Park, and consists of eight separate buildings, some of which share the 5101 address, while others have their own addresses. At the time of the loss to this property, tenants occupied 80% of the industrial park, but Building 292, where the fire damage was sustained, was apparently vacant, although the evidence is not totally clear on this.

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