Tenants renting a house from the insured caused a fire by tapping into neighbor's electrical system to operate and conceal a marijuana crop. See Kochendorfer v. Metro. Prop. & Cas. Ins Co., 2012 U.S. Dist. LEXIS 51032 (W.D. Wash. April 11, 2012).
The insurer made an initial payment of $30,052.83 for the loss. The insured submitted a proof of loss in the amount of $323,823.49. An appraisal panel eventually awarded to the insured a total of $311,270 in replacement cost value and $240,077 in actual cash value. The award accounted for structure repairs, clean-up/remediation, code upgrades and temporary repairs. The insurer paid actual cash value for the structure and temporary repairs, but denied coverage for code upgrades and clean/up remediation awards.
The insured sued and filed for partial summary judgment. Regarding the code upgrade, the insurer conceded some level of repair was required, but argued a lesser amount was owed than the value set by the appraisal panel. The court rejected this argument in the absence of some showing of unfairness in the appraisal process. No such showing had been made.
Regarding the clean-up/remediation award, the insured relied on the efficient proximate cause doctrine. Because tenant vandalism was a covered cause of loss under the policy and because the vandalism of the property was the efficient proximate cause of the loss, the insured was entitled to the cost of clean-up and remediation associated with the marijuana grow operation and fire. The insurer presented no argument that the clean-up/remediation due to tenant vandalism was not a covered even under the policy. Therefore, the insured was entitled to partial summary judgment on the issue of clean-up costs/remediation.
