Goodman v. Economy Premier Assurance Company

Background

Dr. Malka L. Goodman sued as trustee of the Aviel Goodman Revocable Trust and as assignee of Dr. Aviel Goodman. Aviel Goodman, Malka Goodman's son, owned the Pierce and Walter Butler House in St. Paul, Minnesota. No one had lived there since Aviel was incarcerated on July 20, 2018, but Malka Goodman and Jeannine Ferland regularly checked the property. Ferland also cared for Aviel's cat until September 2018.

The house was insured under an Economy policy from January 5, 2018, through January 5, 2019. The policy covered freeze damage if the insured used reasonable care to keep the house heated or drained all water from its plumbing and appliances. From November 7 through November 13, 2018, temperatures in St. Paul fell below freezing. Around November 15 or 16, a third-floor pipe froze and burst, and radiators on the second and third floors also froze and cracked. Ferland discovered standing water on November 20, 2018.

Economy denied coverage, concluding that the loss resulted from freezing and that reasonable care had not been used to keep the premises heated. Economy also stated that water had not been drained from all plumbing. Malka Goodman alleged breach of contract and sought a declaration that Economy had to pay repair, replacement-cost, historic-preservation, and building-code expenses.

Standing

Economy argued that Malka Goodman lacked standing because she was not the named insured and because the policy required Economy's written consent before an interest could be transferred. The court rejected that argument. Aviel had assigned his claims to his own revocable trust, of which he was the sole beneficiary, and Malka Goodman was acting as trustee. The court stated that the policy rights and proceeds had not been assigned to Malka Goodman personally and that Economy identified no authority prohibiting an insured from assigning insurance interests to the insured's own trust.

Summary Judgment

Summary judgment is a decision without a trial when there is no genuine dispute about a fact important to the outcome and the moving party is entitled to judgment under the law. Under Minnesota law, the insured first must show a basic case for coverage. If the insurer relies on a policy exclusion, the insurer must show that the exclusion applies.

The court concluded that Malka Goodman established that Aviel had an Economy policy, so Economy had to show that the freeze-related exclusion applied because Aviel failed to exercise reasonable care to heat the home. Because the policy did not define reasonable care, the court used the care that a reasonable person would have taken under the circumstances.

The court noted that Malka Goodman offered no expert testimony or explanation for the freeze. The parties agreed that the gas boiler was operating and that no boiler-system service was needed to restore heat. The court nevertheless held that it could not decide as a matter of law that Aviel had exercised reasonable care. Viewing the evidence in the light most favorable to Economy, the court found a genuine dispute of material fact about whether Aviel sufficiently heated the home.

The court therefore denied Plaintiff's Motion for Summary Judgment as to the breach-of-contract claim. Economy's request for summary judgment under Federal Rule of Civil Procedure 56(f)(1) was also denied because the same factual dispute remained.

Declaratory Judgment

The court did not reach the requested declaratory judgment concerning replacement costs, building-code expenses, and compensatory damages because summary judgment was not warranted on the underlying insurance-coverage issue.

Disposition

On December 23, 2020, Judge Paul A. Magnuson ordered that Plaintiff's Motion for Summary Judgment was DENIED.