A federal appeals court ordered a new trial for a Baltimore couple who sued their insurance agency for property damages, saying their agent had a responsibility to sell them the appropriate type of coverage.
The U.S. 4th Circuit Court of Appeals said a lower court was wrong to throw out Bernard and Lynn Kapiloff’s suit against United Capitol Insurance Co. for fire and vandalism damages to two of their six industrial properties in Baltimore.
The court, in a decision filed Tuesday, also said the U.S. District Court in Baltimore needs to determine if the buildings were vacant at the time they were damaged, which would have been a violation of the Kapiloffs’ policy.
The Kapiloffs claimed that while the damaged units were vacant at the time, other units in the same buildings were occupied and that the property itself was not, therefore, vacant.
The Kapiloffs, who also own the Montgomery and Prince George’s Sentinel newspapers, claimed vandalism to their building at 2120 W. Lafayette Avenue and a fire at their property at 5101 Andard Avenue resulted in $668,421 in damages. The vandalism occurred in late 1994 and early 1995 and the fire was in February 1995.
“It’s just a case of an insurance company not wanting to pay off on a claim,” said Bernard Kapiloff. “We had cold-turkey evidence that was clear our property was damaged and they had ample time to come out and inspect the place and pay us.”
Lawyers for United Capitol and for Horan Goldman and Co. — the intermediary in the insurance deal between the Kapiloffs and United Capitol — could not be reached for comment Wednesday.
An attorney for Ray Miller, another insurance agent involved in the deal, said he had not seen the decision but that “this doesn’t end the case.
“It just means that we can’t resolve this issue as a matter of law with a judge,” said David McManus Jr., Miller’s attorney. “Now we have to resolve it in front of a jury.”
A three-judge panel of appeals court rejected the Kapiloffs’ claim that United Capitol waited too long to deny their claim. It also ruled that the federal district court has jurisdiction over the case, not the state court as the Kapiloffs claimed.
The court also rejected the Kapiloff’s claim that the insurance company waited too long to reject their claims on the grounds that the couple had misrepresented the status of the properties.
The buildings were inspected in December 1994 but it was not until a full year later that United Capitol said it was rejecting the claims because the Kapiloffs had misrepresented the condition of the properties.
The policy had “vacancy” and “protective safeguards” conditions that said United Capitol would not be liable if the property was vacant for more than 60 days or if security measures, such as alarms and sprinkler systems, were not in place.
The appeals court ordered a fact-finder to determine if the five-unit industrial complex on West Lafayette Avenue should have been classified as vacant. The fact-finder is also to determine whether Horan Goldman was acting on behalf of the Kapiloffs.
“We are still able to claim that the brokers are, in fact, liable for the policy they procured which provided no coverage for my clients,” said Andre Weitzman, an attorney for the Kapiloffs.