Breach of an insurance contract; Policy interpretation; “Vacant”; “Tenant” or “owner or general lessee”; Doctrine of noscitur a sociis; Conducting “customary operations”; Relevance of the public health response to COVID-19

The court held that plaintiff was a “general lessee” under the parties’ commercial property insurance policy, and no reasonable juror could find that the building in question “had not been vacant for 60 days prior to the burst pipe.” Thus, it affirmed summary disposition for defendant-insurer. The building sustained water damage caused by the building’s fire-suppression sprinkler bursting after freezing. The policy stated that “coverage would not be provided for certain losses plaintiff suffered if the building was ‘vacant for more than 60 consecutive days’ before the loss or damage occurred. One such loss was for ‘[s]prinkler leakage, unless you have protected the system against freezing[.]’” Plaintiff conceded that it did not do so. But the policy defined “vacant” in two ways, one in respect to a tenant and the other in respect to the owner or general lessee. The parties disputed how to construe the policy “language and which definition of ‘vacant’ applies.” The court found that the “central inquiry is the nature of plaintiff’s possessory interest in the building. If [it] had an interest in a ‘unit or suite rented or leased to’ it, then it is a ‘tenant.’ If it had a possessory interest in ‘the entire building,’ then it is an ‘owner or general lessee.’ Here, plaintiff’s possessory interest was in the entire building, not merely a ‘unit or suite.’” Although it was “undisputed that plaintiff did not own the building, the policy’s inclusion of ‘general lessee’ appears designed precisely for situations like this: where a party technically does not own the building but exercises owner-like control over the entire premises under the terms of its lease.” In addition, “the building was vacant unless plaintiff—the general lessee—was using it to ‘conduct customary operations.’” While plaintiff was preparing to reopen its bowling center, “being prepared to open, even with the intention to do so later that month, is not the same as actually being open.” The customary operations of a bowling alley involve “members of the public paying for access to its space and specialized equipment to enjoy the sport of bowling.” Plaintiff did “not dispute that bowling had not yet resumed.” Finally, the court found that the timing of the public health response to COVID-19 was not relevant. Defendant “did not assume the risk of insuring a vacant building—regardless of why it was vacant.”