WEBVTT
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SJC-12705, Wenda Aquino V
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United Property and Casualty Insurance Company.
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I forgot about this one.
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(man scoffs)
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Oh, man.
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(chuckling and groaning)
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Oh, god.
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Mr. Hochbaum, good afternoon.
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Good afternoon, Your Honor.
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May it please the court, my name is Seth Hochbaum.
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I'm appearing on behalf of Wenda Aquino.
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As an innocent co-insured, Miss Aquino is entitled
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to coverage and Judge Wilson properly so found.
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As the court well knows, chapter 175,
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section 99 prescribes the mandatory fire insurance policy
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in the Commonwealth and has done so for more than a century.
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This court held in Ben Elfman
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and the Appeals Court held in Zashell
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that there can not be any deviation from
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that standard form, nonetheless--
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I understand that but I may have misread your argument,
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but the deviation makes clear, sort of, what the law is.
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Which is that if, I mean, if they'd used
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the proper language would be the same test, wouldn't it?
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Under Cozier that if one of the insured intentionally set
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the fire, no one could recover.
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So I'm not sure if they'd used the proper language,
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wouldn't it have been the same test?
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Well, the test here is, first of all,
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they did not use the correct language.
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I'm just a little mystified by why it's so important
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that they change the language when,
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under the statutory language and the case language,
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it's the same result.
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Respectfully, Your Honor, it's not the same result.
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Well, but it's isn't, again,
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if they'd used the proper language,
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wouldn't, under Cozier, whatever that case is,
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that old case, wouldn't the standard be
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that you don't recover?
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No, because in Cozier, the argument that was made by
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the innocent co-insured there is very different than
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the argument that I'm making here.
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But Cozier interprets this statutory language,
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the statutory insurance provision
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that you say should have been written
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to say that you don't recover if you set a fire.
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Cozier did not interpret the statutory language.
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What Cozier did is it--
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Result certainly did that.
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I know you have a fine distinction
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but it says that, doesn't it?
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The language in the Cozier policy did use the words
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the insured, but the court in Cozier was presented
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with an equitable argument, not the legal argument
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that I am making here, and that makes a world of difference.
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The equitable argument that the insured in Cozier
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was making 81 years ago was that
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the court should read into the policy
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as their interest may appear.
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That is not what I'm arguing here.
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What I'm saying here is that the words the insured,
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as used in chapter 175, section 99,
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as opposed to an insured as used in the UPC policy,
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makes a difference.
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Because the insured as the statute repeatedly
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and exclusively uses throughout means,
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only the insured, him or herself who caused the fire,
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not the innocent co-insured.
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Whereas, an insured, as is used in
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this policy.
Which case says that?
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Which case says that?
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Which Massachusetts case says that that's the meaning of
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the insured under the statutory provision?
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We have the Gonzalez case
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which is Gonzalez versus Liberty Mutual,
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which is Judge Lange, the Hall Case, Judge Ferrara.
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These are Superior court cases.
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Yes, and then we--
Any appellate?
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This statute's been in effect for, how many hundred years?
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It was first enacted, I believe in 1873.
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But we've got a fair amount of time here.
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Any appellate cases say that's the meaning of the insured
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'cause Cozier says the exact opposite.
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So any appellate cases, I don't care what Justice Lange said
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in a Superior Court case, any appellate case?
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We have those two Superior Court cases
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and Judge Woodlock in Shepperson most recently.
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Is that what he said?
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Is that what judge Woodlock said in that case or is,
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he makes that point?
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Judge Woodlock does make that point.
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He concurred with Judge Lange and Judge Ferrara in agreeing
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that the insured refers solely to the culpable insured.
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I'm sorry, no, it's the other way around.
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The insured is divisible, separable,
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whereas an insured is, I'm sorry,
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is potentially both of the insureds,
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including the innocent co-insured.
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So all three of those judges did grapple with
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the language that what the court
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is now being affected with.
They come out to
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the opposite conclusion or the same conclusion?
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When they sever the, do they say that you can recover?
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When the word the is used, the innocent co-insured can
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and should recover.
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Because the insured, as used in the statute repeatedly,
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means only the culpable insured not the innocent co-insured.
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Where the word an is used, as is used in this policy here,
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it means potentially both.
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And in fact, the policy itself makes that clear .
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If the court looks at volume one, page 38,
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which is the policy itself or one of the pages of it,
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the policy for the EPC issue makes it clear
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that an insured means one or more of the insured.
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And that is proscribed by statute.
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I would also just comment on Cozier, since it's come up,
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that, as Judge Wilson correctly found, Cozier,
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though it did briefly reference chapter 175, section 99,
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did not do any kind of analysis of that statute whatsoever,
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which the court is now being asked to do.
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So it's really, I would argue, confined to its facts.
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It did not address whether 799 requires broader coverage,
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which I respectfully submit to this court it does,
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and that's the issue now before this court.
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And as the Iowa Supreme Court discussed
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in Vance versus Pekin Insurance Company,
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it's 457 northwest second, 589,
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Cozier is among those older cases where, historically,
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a husband and wife were treated as a single entity.
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There was no focus as there is today on
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the recent trend of cases nationwide on
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the effects of imputing the arsonists' conduct on
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to the innocent insured.
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And also, there was no discussion at
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the time Cozier was issued 81 years ago about whether it did
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or did not conform with the statute.
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Which, again, is the heart of this appeal.
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There's something which no one in any of
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the briefs has discussed, which I'm perplexed by.
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In Cozier, the question was the voiding,
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the policy shall be void, it was not an exclusion.
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It was the voiding of a policy.
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And basically it says if one insured defrauds
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the company then the policy is void.
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And if the policy is void then neither of
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the insureds can recover.
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Section 99 has a policy about shall be void,
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but nobody is discussing whether anyone is claiming that
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that provision of the policy was violated.
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What do we do with this distinction between
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the voiding of a policy versus the exclusion of recovery?
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Well, here we have, in this case, unlike in Cozier,
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and this is, I guess, another distinction between Cozier
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in this case because in this case,
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as Your Honor is correctly commenting on,
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is that the objectionable language
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is found in an exclusion which, as the court knows,
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is interpreted very narrowly and strictly.
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So we have here a non-compliant exclusion
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which illegitimately or improperly, I should say,
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restricts coverage that is mandated by statute.
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If I could just--
So, I mean,
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the void in, I'm looking at section 99
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and I note that United UPS or UPC has not invoked it.
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But is there any claim that any of
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the insureds here willfully concealed
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or misrepresented any material fact
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or circumstance regarding the insurance or
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the interest of the insured,
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or in case of any fraud or false swearing by the insured?
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Do we have any of that, even by the fiance who died here?
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No, the denial of coverage was premised on the arson,
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not on any other misconduct or fraudulent misstatements
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or anything of that sort.
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So it was strictly the arson, the intentional act committed
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by the decedent only.
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That was the denial of coverage, nothing else.
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And by agreement, I should have comment, of course,
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that Miss Aquino was not at all involved
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with that, was not complicit
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or aware of any of that.
Right,
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I think we understand that.
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Can I ask another question?
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Relates, I guess to the second issue of
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the whether she gets half or gets whole
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if she were to get any.
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She's attendant in common?
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That's correct.
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Okay, so let us imagine, in this case,
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that the fiance did not set the fire but died in the fire.
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What would the check say from the insurance company,
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in terms of who would get paid for
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the full recovery from the home?
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It would be Miss Aquino, the legal representative
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of the decedent's estate and the mortgagee.
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But that is not--
Though it would not be
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that the estate would not get any part of it?
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No, if Mr. Pastrana--
Let's assume Mr. Pastrana
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was blameless in all this.
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Let's assume he just died in a fire that somebody else set.
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Would she have gotten half and the estate have gotten half
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or would it have been a check to each of them,
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for each of them to sign?
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I'm trying to figure out how that would have worked for
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a tenancy in common.
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Well, I think for this notion that it was
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a tenancy in common, if I could just address
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that particular point, I think that that is not
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the determining factor in terms
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of whether she gets half or 100%.
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And I make this point repeatedly in my briefs
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that we have to look at the insurable interest
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of Miss Aquino, not her equity
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or ownership interest in the property.
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And if we look at the insurable interest
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as UPC itself admits, she did have an insurable interest.
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Clearly she lived there and received
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a benefit from the property and suffered
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a loss when it was destroyed.
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She also had the use and enjoyment of the entire property,
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even if her ownership was half.
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It was one half or a fractional interest in
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the undivided whole, and she had, as I said,
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use and enjoyment of the whole,
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and she had an interest in preserving
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the whole of the property.
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And it was the whole of the property
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that was destroyed by fire.
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So she lost her entire insurable interest.
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So she lost more than just her one half ownership interest,
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Miss Aquino lost her entire insurable interest.
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And what Judge Wilson's decision does
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is improperly sever the recovery by the innocent co-insured,
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and in so doing, it completely frustrates
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the purpose of fire insurance policies in the Commonwealth
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which this court has recognized going
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as far back to Wagner in 1891,
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which is to provide a personal contract of indemnity,
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and as this court also held in Kingsley in 1937,
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is the fire insurance policy is intended
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to restore the insured to
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the position she occupied immediately prior
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to the loss and hold her harmless for her loss.
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By giving Miss Aquino one-half of the insurance proceeds,
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she is restored halfway towards meeting those objectives.
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Is there any guidance in
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the appellate case on this at all?
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'Cause Justice Wilson's dealing with a complicated issue
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but is there any case law on how you do this?
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In terms of the halving of
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the recovery?
Yeah.
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There is nothing from the Commonwealth.
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There are plenty of cases that I cite in my briefs,
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including, just by way of example, the Scindra,
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S-C-I-N-D-R-A, Alabama Supreme Court case from 1951.
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But we have no Massachusetts--
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Those cases go both ways already.
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There are cases that go both ways
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and both parties cite them going both ways, but--
261
00:13:43.087 --> 00:13:46.100
But we have mass cases that deal with
262
00:13:46.100 --> 00:13:50.990
this kind of division of insurance proceeds?
263
00:13:50.990 --> 00:13:52.600
None that I could find, no.
264
00:13:52.600 --> 00:13:56.180
And this is an issue of, in terms of the halving,
265
00:13:56.180 --> 00:13:58.180
this is an issue, I believe, of first impression.
266
00:13:58.180 --> 00:14:00.290
But we do have the guidance, as I said,
267
00:14:00.290 --> 00:14:01.947
of this court's decisions
268
00:14:01.947 --> 00:14:04.390
that go back more than 100 years in terms
269
00:14:04.390 --> 00:14:07.840
of what is the purpose of a fire insurance policy?
270
00:14:07.840 --> 00:14:10.840
And is that purpose gonna be fulfilled if
271
00:14:10.840 --> 00:14:14.937
the innocent insured only gets 50% of the recovery,
272
00:14:14.937 --> 00:14:17.910
and, respectfully, I would submit the answer to that is no.
273
00:14:17.910 --> 00:14:21.179
It doesn't do justice to the innocent insured
274
00:14:21.179 --> 00:14:24.408
to get 50 cents out of 100 when she,
275
00:14:24.408 --> 00:14:28.040
in this case, by agreement, has suffered a total loss.
276
00:14:28.040 --> 00:14:30.140
Yeah, but shouldn't it be all or nothing in that
277
00:14:30.140 --> 00:14:33.740
the purpose of insurance, fire insurance is to rebuild?
278
00:14:33.740 --> 00:14:34.770
The purpose of fire insurance
279
00:14:34.770 --> 00:14:36.370
is to--
Not to halfway rebuild.
280
00:14:36.370 --> 00:14:38.310
Right, so she can't build half of a house
281
00:14:38.310 --> 00:14:40.480
and get half of a toilet and so on.
282
00:14:40.480 --> 00:14:42.700
It just leads to a preposterous result
283
00:14:42.700 --> 00:14:43.970
and that's what we have here.
284
00:14:43.970 --> 00:14:46.700
And I would also just observe that somebody
285
00:14:50.010 --> 00:14:52.530
that has a mortgage on a home, just by way of example,
286
00:14:52.530 --> 00:14:54.960
she's jointly and reliable on the mortgage
287
00:14:54.960 --> 00:14:57.200
so she's got to pay 100% of the mortgage
288
00:14:57.200 --> 00:14:59.610
but only gets 50% of the insurance proceeds.
289
00:14:59.610 --> 00:15:01.840
And I think it really just drives home the point
290
00:15:01.840 --> 00:15:05.700
that the result that we have currently,
291
00:15:05.700 --> 00:15:08.260
in this case, just isn't inequitable,
292
00:15:08.260 --> 00:15:11.010
it just doesn't ring true or makes sense.
293
00:15:11.010 --> 00:15:13.560
I see that my time is almost up,
294
00:15:13.560 --> 00:15:15.413
I don't know if the court has any other questions.
295
00:15:15.413 --> 00:15:17.740
I have one, it's just it may not
296
00:15:17.740 --> 00:15:19.217
be particularly relevant to anything
297
00:15:19.217 --> 00:15:21.930
but I know fire insurance statutes change over time.
298
00:15:21.930 --> 00:15:22.763
Yes.
299
00:15:22.763 --> 00:15:25.010
When Cozier was decided, is it the same insurance,
300
00:15:25.010 --> 00:15:27.570
fire insurance statutes we have now?
301
00:15:27.570 --> 00:15:30.250
The statute changed in 1951.
302
00:15:30.250 --> 00:15:33.445
So about 13 years after Cozier was decided.
303
00:15:33.445 --> 00:15:38.010
But as best I can tell, the words the insured,
304
00:15:38.010 --> 00:15:41.184
which are the operable words in this case,
305
00:15:41.184 --> 00:15:45.470
were in effect, even preceding the 1951.
306
00:15:45.470 --> 00:15:49.166
There's no legislative history on this, as to the and an?
307
00:15:49.166 --> 00:15:51.440
There are, there's the Appeals Court case,
308
00:15:51.440 --> 00:15:52.810
I've drawn a blank on its name right now,
309
00:15:52.810 --> 00:15:55.430
that talks about the legislative history of it.
310
00:15:55.430 --> 00:15:57.788
But as best we could--
I think I wrote that one.
311
00:15:57.788 --> 00:15:59.436
(laughing)
312
00:15:59.436 --> 00:16:01.090
I think your owner knows.
313
00:16:01.090 --> 00:16:03.120
Well, I don't know it, I just remember it.
314
00:16:03.120 --> 00:16:05.209
I have a vague memory of having written it.
315
00:16:05.209 --> 00:16:06.310
(laughing)
316
00:16:06.310 --> 00:16:07.333
Okay, thank you.
317
00:16:07.333 --> 00:16:08.833
Okay, thank you.
318
00:16:11.870 --> 00:16:12.920
Mr. Hassett.
319
00:16:12.920 --> 00:16:16.340
Good afternoon Mr. Chief Justice, associate justices.
320
00:16:16.340 --> 00:16:18.570
David Hassett on behalf of UPC
321
00:16:18.570 --> 00:16:20.890
with my colleague, Michael Melville.
322
00:16:20.890 --> 00:16:23.610
If I could just start with the last remark
323
00:16:23.610 --> 00:16:26.700
that my brother made because I think it's really
324
00:16:26.700 --> 00:16:31.140
a misdirection, and under the statutes and under our law,
325
00:16:31.140 --> 00:16:34.290
the mortgagee bank gets paid separately,
326
00:16:34.290 --> 00:16:36.010
it's a separate analysis.
327
00:16:36.010 --> 00:16:39.400
It's actually the subject of some litigation in this case.
328
00:16:39.400 --> 00:16:43.250
But to determine what's equitable and what's fair based on
329
00:16:43.250 --> 00:16:46.368
a mortgage, actually, it's quite to the contrary
330
00:16:46.368 --> 00:16:49.961
that any payout at all that Miss Aquino gets
331
00:16:49.961 --> 00:16:54.961
is gonna be, in part, at least, getting rid of any mortgage.
332
00:16:56.550 --> 00:16:58.570
Because without respect of fault,
333
00:16:58.570 --> 00:17:01.020
the mortgagee would get paid first.
334
00:17:01.020 --> 00:17:02.440
But going back to--
335
00:17:02.440 --> 00:17:06.720
But doesn't that, isn't Justice Gaziano's question right
336
00:17:06.720 --> 00:17:10.080
then that we shouldn't be dividing this up?
337
00:17:10.080 --> 00:17:12.610
It's all about insurance proceeds
338
00:17:12.610 --> 00:17:14.670
to rebuild the house, right?
339
00:17:14.670 --> 00:17:15.780
Isn't it all or nothing.
340
00:17:15.780 --> 00:17:17.900
Do you agree that it's an all or nothing?
341
00:17:17.900 --> 00:17:19.050
No, not at all, Judge?
342
00:17:19.050 --> 00:17:22.500
Do you accept this idea that you can split this in two?
343
00:17:22.500 --> 00:17:26.030
Judge, every jurisdiction that's looked at this,
344
00:17:26.030 --> 00:17:29.540
the majority, the vast majority of jurisdictions,
345
00:17:29.540 --> 00:17:31.720
that have looked at what should the payout be,
346
00:17:31.720 --> 00:17:34.060
if any, is 50%.
347
00:17:34.060 --> 00:17:36.890
Obviously Judge Wilson did it in our case
348
00:17:36.890 --> 00:17:39.950
and limited it to 50% of the policy.
349
00:17:39.950 --> 00:17:42.798
But the vast majority of cases with, maybe,
350
00:17:42.798 --> 00:17:46.270
one or two exceptions throughout the country,
351
00:17:46.270 --> 00:17:50.660
when they indeed payout to the innocent insured,
352
00:17:50.660 --> 00:17:53.447
it's limited to 50%
353
00:17:53.447 --> 00:17:56.850
And the basis for that is policy reason, certainly.
354
00:17:56.850 --> 00:17:59.450
They don't wanna windfall,
355
00:17:59.450 --> 00:18:04.000
to have the innocent co-insured have a windfall.
356
00:18:04.000 --> 00:18:05.840
In this instance--
How is that a windfall?
357
00:18:05.840 --> 00:18:06.690
Yeah.
358
00:18:06.690 --> 00:18:09.840
Just how is that a windfall for the innocent insured
359
00:18:09.840 --> 00:18:14.020
who's lost what she had before the fire?
360
00:18:14.020 --> 00:18:15.285
They made payments.
361
00:18:15.285 --> 00:18:19.566
Yes, well, first of all, I think Judge Gants alluded
362
00:18:19.566 --> 00:18:22.670
to this, it's tenancy in common.
363
00:18:22.670 --> 00:18:24.760
So there's no right of survivorship.
364
00:18:24.760 --> 00:18:29.342
So the part of the property that's owned,
365
00:18:29.342 --> 00:18:32.200
she only has half of the property in terms of
366
00:18:32.200 --> 00:18:35.260
the tenancy in common number one, that's number one.
367
00:18:35.260 --> 00:18:38.140
Number two, it's a contractual issue
368
00:18:38.140 --> 00:18:41.850
and there is policy language with limitational liability,
369
00:18:41.850 --> 00:18:46.130
as two, the named insurance interest in the policy.
370
00:18:46.130 --> 00:18:49.750
So the outcome, with respect to if there would be
371
00:18:49.750 --> 00:18:54.340
a payout, what would it be, 50% is the best outcome
372
00:18:54.340 --> 00:18:57.248
because otherwise you run the risk of having
373
00:18:57.248 --> 00:19:02.248
a arsonist who doesn't die in the fire,
374
00:19:02.630 --> 00:19:05.580
either posthumously, if he does die, obviously,
375
00:19:05.580 --> 00:19:09.567
his heirs would get that benefit or, if he doesn't die,
376
00:19:09.567 --> 00:19:12.550
and the money goes into the house and they rebuild,
377
00:19:12.550 --> 00:19:14.677
he has an interest in that property.
378
00:19:14.677 --> 00:19:17.810
And a lot of the cases we cite in our brief address
379
00:19:17.810 --> 00:19:21.430
that very public policy concern.
380
00:19:21.430 --> 00:19:24.600
But if I may go back, briefly, to Cozier,
381
00:19:24.600 --> 00:19:26.930
the Cozier decision is very clear.
382
00:19:26.930 --> 00:19:29.426
But we'll get to Cozier in a second.
383
00:19:29.426 --> 00:19:30.670
Yes, Your Honor.
So let's stick
384
00:19:30.670 --> 00:19:32.183
with this issue.
385
00:19:32.183 --> 00:19:36.010
So let me ask you the same question I asked your brother.
386
00:19:36.010 --> 00:19:37.890
First of all, is there anything in the policy
387
00:19:37.890 --> 00:19:39.230
that says this is the tenancy in common
388
00:19:39.230 --> 00:19:42.140
as opposed to a tenancy by the entireties?
389
00:19:42.140 --> 00:19:43.030
I'm sorry, Judge.
390
00:19:43.030 --> 00:19:44.860
Does the insurance company know, I mean,
391
00:19:44.860 --> 00:19:46.380
would the insurance company know that it's
392
00:19:46.380 --> 00:19:48.740
a tenancy in common as opposed to
393
00:19:48.740 --> 00:19:50.220
a tenancy by the entireties?
394
00:19:50.220 --> 00:19:52.610
No, I think, Your Honor, when my brother alluded
395
00:19:52.610 --> 00:19:54.820
to how would a check draft be issued,
396
00:19:54.820 --> 00:19:58.660
if there's no dispute and you have two named insureds
397
00:19:58.660 --> 00:20:00.307
and there's a complete loss,
398
00:20:00.307 --> 00:20:02.400
what you would expect is that both of
399
00:20:02.400 --> 00:20:04.840
the named insureds would be on the draft
400
00:20:04.840 --> 00:20:07.600
to the policy limit based on whatever examination
401
00:20:07.600 --> 00:20:08.780
of damages there were.
So if he had died in
402
00:20:08.780 --> 00:20:12.769
the fire and was blameless for it,
403
00:20:12.769 --> 00:20:17.533
you would, first, pay whatever the mortgage,
404
00:20:17.533 --> 00:20:19.230
the amount that it was paid was
405
00:20:19.230 --> 00:20:21.300
first go to pay off the mortgage,
406
00:20:21.300 --> 00:20:22.133
correct?
Yes.
407
00:20:22.133 --> 00:20:26.490
Which the deceased could have been a co-mortgagee on,
408
00:20:26.490 --> 00:20:27.936
co-mortgagor.
Right.
409
00:20:27.936 --> 00:20:29.780
And then with regard to the balance,
410
00:20:29.780 --> 00:20:33.500
it would be paid to Miss Aquino and Mister,
411
00:20:33.500 --> 00:20:38.063
I forgot his name, the fiance,
412
00:20:39.024 --> 00:20:41.710
I'm sorry, if he had died, you're saying it would go
413
00:20:41.710 --> 00:20:46.150
to her alone or would it go to her and the estate?
414
00:20:46.150 --> 00:20:51.150
Yes, Judge, I think following that scenario to Pastrana,
415
00:20:51.250 --> 00:20:53.360
Your Honor, he's the one that did die, in fact.
416
00:20:53.360 --> 00:20:54.690
Right.
He's the fiance.
417
00:20:54.690 --> 00:20:56.190
Right.
It would, in theory,
418
00:20:56.190 --> 00:20:59.880
reach ultimately to his heirs
419
00:20:59.880 --> 00:21:02.250
and-or under his estate or representative.
420
00:21:02.250 --> 00:21:05.290
What would your check say if he had if he had died
421
00:21:05.290 --> 00:21:06.180
and was blameless?
422
00:21:06.180 --> 00:21:07.730
The balance after
423
00:21:07.730 --> 00:21:09.120
the mortgage is paid.
Administrator of.
424
00:21:09.120 --> 00:21:10.355
Sorry?
425
00:21:10.355 --> 00:21:12.270
It very well could be administrator
426
00:21:12.270 --> 00:21:15.070
of or executor of the estate of.
427
00:21:15.070 --> 00:21:16.440
So we would say Miss Aquino and
428
00:21:16.440 --> 00:21:18.504
the administrator of the estate of and both would have
429
00:21:18.504 --> 00:21:19.576
to sign off--
Particularly here,
430
00:21:19.576 --> 00:21:20.409
Your Honor, that's what I would expect.
431
00:21:20.409 --> 00:21:23.260
Both would have to sign off on the check.
432
00:21:23.260 --> 00:21:25.110
Oh, yeah, and if there's an estate,
433
00:21:25.110 --> 00:21:29.960
whoever the representative was that had been appointed
434
00:21:29.960 --> 00:21:31.471
would sign off on the check.
435
00:21:31.471 --> 00:21:34.010
And I think all the cases
436
00:21:34.010 --> 00:21:36.610
that have looked at this have come down
437
00:21:36.610 --> 00:21:39.900
to the distinction we have seen is whether
438
00:21:39.900 --> 00:21:42.655
it's half of the policy or it's half of
439
00:21:42.655 --> 00:21:45.510
the damages up to the policy.
440
00:21:45.510 --> 00:21:48.750
And in this instance, Judge Wilson found
441
00:21:48.750 --> 00:21:52.820
that it's appropriate for it to be half of the policy.
442
00:21:52.820 --> 00:21:55.100
One of the reasons for that, and I think it's
443
00:21:55.100 --> 00:21:57.630
a critical reason, Your Honor, your honors,
444
00:21:57.630 --> 00:22:00.380
is that if you're going to have
445
00:22:00.380 --> 00:22:04.003
the innocent insured collect against
446
00:22:04.003 --> 00:22:07.840
the case law, against Cozier.
447
00:22:07.840 --> 00:22:09.350
So if you're gonna go against Cozier,
448
00:22:09.350 --> 00:22:12.500
allow an innocent insured to collect,
449
00:22:12.500 --> 00:22:14.690
to do that, you would have to determine
450
00:22:14.690 --> 00:22:19.490
that the is, in fact, several.
451
00:22:19.490 --> 00:22:22.930
In other words, it's not joint, as Cozier determined.
452
00:22:22.930 --> 00:22:27.280
Cozier court determined the means the insureds.
453
00:22:27.280 --> 00:22:30.190
So the idea, contractually, was when
454
00:22:30.190 --> 00:22:33.320
the insurer on one side of the table said I'll agree
455
00:22:33.320 --> 00:22:37.230
to insure this loss at this location, your home,
456
00:22:37.230 --> 00:22:40.510
and you two who live there signed it,
457
00:22:40.510 --> 00:22:43.530
the understanding was neither of you can burn it
458
00:22:43.530 --> 00:22:46.920
to the ground and come back and collect on it.
459
00:22:46.920 --> 00:22:51.170
So if one does it, nobody can collect on the loss.
460
00:22:51.170 --> 00:22:52.640
That's what Cozier says--
461
00:22:52.640 --> 00:22:55.330
But Cozier was focusing on the provision of
462
00:22:55.330 --> 00:22:57.803
the policy which says the policy is void.
463
00:22:59.360 --> 00:23:01.376
Yes, Judge.
And you've not,
464
00:23:01.376 --> 00:23:05.100
and I understand that if the policy is void
465
00:23:05.100 --> 00:23:06.950
that nobody collects on it.
466
00:23:06.950 --> 00:23:08.426
Correct.
Because the policy is
467
00:23:08.426 --> 00:23:13.426
a nullity, but you're not claiming that this policy is void.
468
00:23:14.620 --> 00:23:16.510
Well, Judge, what we're saying based on
469
00:23:16.510 --> 00:23:20.570
the language in the statute, 175-99,
470
00:23:20.570 --> 00:23:25.303
and in our UPC policy, is that it is an exclusion
471
00:23:25.303 --> 00:23:28.520
that does not permit recovery.
472
00:23:28.520 --> 00:23:33.280
And the way the statute reads is not liable
473
00:23:33.280 --> 00:23:36.940
for damages caused by neglect of the insured
474
00:23:36.940 --> 00:23:38.560
to use all reasonable means to save
475
00:23:38.560 --> 00:23:40.557
and preserve the property.
476
00:23:40.557 --> 00:23:44.250
This company shall not be liable while
477
00:23:44.250 --> 00:23:46.550
the hazard is increased by any means within
478
00:23:46.550 --> 00:23:47.640
the control--
I understand, I understand.
479
00:23:47.640 --> 00:23:50.400
But you're not claiming that the policy is a nullity
480
00:23:50.400 --> 00:23:52.580
because of the conduct of Mr. Pastrana,
481
00:23:52.580 --> 00:23:55.770
you're claiming this policy still exists.
482
00:23:55.770 --> 00:23:59.280
That there's an exclusion that prevents him
483
00:23:59.280 --> 00:24:01.500
from receiving any of the money,
484
00:24:01.500 --> 00:24:03.177
or actually prevents her from receiving any of the money.
485
00:24:03.177 --> 00:24:05.690
The way the policy is drafted, yes, Your Honor,
486
00:24:05.690 --> 00:24:07.810
that's the language that excludes
487
00:24:07.810 --> 00:24:09.880
the innocent insured from recovery.
488
00:24:09.880 --> 00:24:14.850
So but even if we were to say Cozier are still good law,
489
00:24:14.850 --> 00:24:18.710
would it apply only to fraud committed
490
00:24:18.710 --> 00:24:22.050
by an insured which voids the policy?
491
00:24:22.050 --> 00:24:24.810
And you're asking us to extend the meaning of Cozier
492
00:24:24.810 --> 00:24:29.230
to include not merely the voiding of a policy by fraud
493
00:24:29.230 --> 00:24:34.230
but also the exclusion of recovery from an innocent insured.
494
00:24:37.494 --> 00:24:41.100
Judge, I am asking the court to look at
495
00:24:41.100 --> 00:24:46.100
the term of the word the as used in Cozier,
496
00:24:46.232 --> 00:24:50.760
and apply it jointly so that the innocent co-insured
497
00:24:50.760 --> 00:24:55.330
is unable to recover when one insured commits arson
498
00:24:55.330 --> 00:24:56.720
and destroys a property.
499
00:24:56.720 --> 00:25:00.680
If I could read from Cozier, we think the policy in question
500
00:25:00.680 --> 00:25:03.590
was joint and that the plaintiff can not recover.
501
00:25:03.590 --> 00:25:05.430
The act of her husband in burning
502
00:25:05.430 --> 00:25:09.500
the insured buildings was an act of the insured,
503
00:25:09.500 --> 00:25:12.880
and as such it was a fraud upon the defendants
504
00:25:12.880 --> 00:25:15.440
which rendered the policies void in accordance
505
00:25:15.440 --> 00:25:16.360
with their terms, as you have said, Judge.
506
00:25:16.360 --> 00:25:19.565
Well, of course if the policy is void, there's no policy.
507
00:25:19.565 --> 00:25:20.981
So no one can recover.
508
00:25:20.981 --> 00:25:23.450
But here there is a policy.
509
00:25:23.450 --> 00:25:24.800
Here, there's a policy
510
00:25:24.800 --> 00:25:26.920
and it's more narrowly saying that
511
00:25:26.920 --> 00:25:31.630
the innocent co-insured does not collect when the insured
512
00:25:31.630 --> 00:25:35.450
or co-insured intentionally burns down the property.
513
00:25:35.450 --> 00:25:37.680
And, Your Honor, if I may--
514
00:25:37.680 --> 00:25:41.611
The intentional burning is the fraud, not any kind
515
00:25:41.611 --> 00:25:44.070
of misrepresentation.
Yes
516
00:25:44.070 --> 00:25:46.050
It's not the misrepresentation.
517
00:25:46.050 --> 00:25:48.372
It may or may not come under
518
00:25:48.372 --> 00:25:53.130
the umbrella of failing, neglecting the premises,
519
00:25:53.130 --> 00:25:55.730
but I think it's the fraud itself as well
520
00:25:55.730 --> 00:25:58.300
as increasing the hazard.
521
00:25:58.300 --> 00:26:03.300
Did the old statutory mandated provision use
522
00:26:03.910 --> 00:26:05.500
the word fraud in it?
523
00:26:05.500 --> 00:26:06.570
Yes, it did.
524
00:26:06.570 --> 00:26:11.130
Is that why the court, you focused on this fraud
525
00:26:11.130 --> 00:26:12.730
and nullifying the policy?
526
00:26:12.730 --> 00:26:16.210
Was this more tracking the old statutory language?
527
00:26:16.210 --> 00:26:17.170
It's both, Judge.
528
00:26:17.170 --> 00:26:19.997
It's tracking that fraud language
529
00:26:19.997 --> 00:26:22.560
and I would add another provision
530
00:26:22.560 --> 00:26:26.900
that we put in our brief that also supports
531
00:26:26.900 --> 00:26:31.520
the language used in the UPC policy.
532
00:26:31.520 --> 00:26:33.722
It says this company shall not be liable while
533
00:26:33.722 --> 00:26:37.140
the hazard is increased by any means within
534
00:26:37.140 --> 00:26:40.080
the control or knowledge of the insured,
535
00:26:40.080 --> 00:26:44.080
which appears to be a little bit more on point
536
00:26:44.080 --> 00:26:47.400
when the insured intentionally burns down the property.
537
00:26:47.400 --> 00:26:52.330
We are not alleging there was a misstatement or concealment,
538
00:26:52.330 --> 00:26:56.180
and we're certainly not alleging that Aquino was part of it.
539
00:26:56.180 --> 00:26:59.360
We're conceding that she, in fact,
540
00:26:59.360 --> 00:27:02.580
is an innocent co-insured in all of this.
541
00:27:02.580 --> 00:27:04.670
And then, Your Honor, I would add that
542
00:27:04.670 --> 00:27:09.500
the legislative intent here is a very significant issue
543
00:27:09.500 --> 00:27:13.460
when looking to what is going to happen going forward
544
00:27:13.460 --> 00:27:16.300
because the policy and my brother,
545
00:27:16.300 --> 00:27:19.100
the last argument raised it with respect
546
00:27:19.100 --> 00:27:21.260
to a reenactment of a statute.
547
00:27:21.260 --> 00:27:23.153
So this policy, the New York policy
548
00:27:23.153 --> 00:27:27.700
that was adopted in 1951, used the same terminology.
549
00:27:27.700 --> 00:27:30.240
And Judge Kafker was asking my brother about it.
550
00:27:30.240 --> 00:27:33.260
Basically they termed, they used the,
551
00:27:33.260 --> 00:27:35.430
they continued to use the,
552
00:27:35.430 --> 00:27:39.440
knowing in this court needs to be in a position
553
00:27:39.440 --> 00:27:43.120
to adopt a construction of legislative intent,
554
00:27:43.120 --> 00:27:45.740
that the legislator knows what these courts,
555
00:27:45.740 --> 00:27:48.170
any courts have said about definitions,
556
00:27:48.170 --> 00:27:51.930
the legislator adopted the,
557
00:27:51.930 --> 00:27:55.870
knowing that this court had said the is joint so--
558
00:27:55.870 --> 00:27:57.820
Except for it wasn't in connection
559
00:27:57.820 --> 00:28:00.140
with this actual statute, right?
560
00:28:00.140 --> 00:28:02.240
I mean, there was no interpretation
561
00:28:02.240 --> 00:28:04.419
of the statute in Cozier.
562
00:28:04.419 --> 00:28:09.419
I would qualify this as a subsequent enactment
563
00:28:09.700 --> 00:28:12.850
of the same standard fire policy.
564
00:28:12.850 --> 00:28:15.090
It's a New York fire policy and
565
00:28:15.090 --> 00:28:19.210
the relevant terminology contains the same language, the.
566
00:28:19.210 --> 00:28:22.020
So in terms of it being a separate statute
567
00:28:22.020 --> 00:28:23.830
with no connection, no.
568
00:28:23.830 --> 00:28:28.428
In fact, it follows the previously enacted statute
569
00:28:28.428 --> 00:28:32.217
with some changes in 1951.
570
00:28:32.217 --> 00:28:36.363
And so, by doing that, the legislature knew
571
00:28:36.363 --> 00:28:39.300
that they weren't going to be changing,
572
00:28:39.300 --> 00:28:43.550
limiting, adding anything to this interpretation
573
00:28:43.550 --> 00:28:46.960
because this court had clearly said
574
00:28:46.960 --> 00:28:50.490
if somebody burns down the house that lives in the house
575
00:28:50.490 --> 00:28:53.680
that's a co-insured, nobody's collecting on that.
576
00:28:53.680 --> 00:28:57.420
The legislature knew that 13 years before
577
00:28:57.420 --> 00:29:00.660
the statute was, in fact, enacted,
578
00:29:00.660 --> 00:29:05.080
and they didn't elect to change it to a different word
579
00:29:05.080 --> 00:29:07.870
that would, in fact, protect the co-insured.
580
00:29:07.870 --> 00:29:11.800
So the basic fundamental construction
581
00:29:11.800 --> 00:29:16.800
of legislative intent here supports the understanding
582
00:29:17.000 --> 00:29:19.770
that the legislature knew when it used
583
00:29:19.770 --> 00:29:22.272
the word in term, the,
584
00:29:22.272 --> 00:29:26.700
that an innocent co-insured would not be able to collect,
585
00:29:26.700 --> 00:29:30.830
and there couldn't be any clearer decision in Cozier.
586
00:29:30.830 --> 00:29:35.830
And it's on-point, the couple in our case, they were--
587
00:29:36.300 --> 00:29:37.146
I'm confused.
588
00:29:37.146 --> 00:29:39.070
In response to Justice Budd's question
589
00:29:39.070 --> 00:29:42.450
which so was the legislation,
590
00:29:42.450 --> 00:29:45.850
the mandatorily-required insurance provision
591
00:29:45.850 --> 00:29:50.850
was not in place when Cozier was decided here or was it?
592
00:29:50.850 --> 00:29:51.730
Yes, it was.
593
00:29:51.730 --> 00:29:53.735
It was?
Was a different provision.
594
00:29:53.735 --> 00:29:58.735
It was the prior statute in place
595
00:29:59.947 --> 00:30:04.666
that then got replaced or re-enacted after they adopted
596
00:30:04.666 --> 00:30:08.390
the New York fire standard policy,
597
00:30:08.390 --> 00:30:10.330
which many states did at the time.
598
00:30:10.330 --> 00:30:12.880
Do we have cases that are just limited
599
00:30:12.880 --> 00:30:16.540
to the New York, kind of, statute in determining
600
00:30:16.540 --> 00:30:17.683
what the and an mean?
601
00:30:20.215 --> 00:30:23.870
The cases that we've cited relative to the meaning yet,
602
00:30:23.870 --> 00:30:25.330
judge, the--
Yes, that's right.
603
00:30:25.330 --> 00:30:28.310
Are they just those involving the New York,
604
00:30:28.310 --> 00:30:30.970
kind of, insurance that we have in Massachusetts?
605
00:30:30.970 --> 00:30:35.970
No, they're using the same language as we are now,
606
00:30:36.090 --> 00:30:37.510
obviously, because it's enacted.
607
00:30:37.510 --> 00:30:39.800
But there's no specific other case.
608
00:30:39.800 --> 00:30:42.675
Massachusetts had this decision at the time,
609
00:30:42.675 --> 00:30:46.150
I'm not aware that New York did at that time.
610
00:30:46.150 --> 00:30:47.748
My memory, ugly as it is,
611
00:30:47.748 --> 00:30:50.500
is that there were three different kinds
612
00:30:50.500 --> 00:30:53.040
of basic fire insurance policies in the nation
613
00:30:53.040 --> 00:30:55.660
and that Massachusetts has one of them,
614
00:30:55.660 --> 00:30:57.830
and I think it's the New York kind.
615
00:30:57.830 --> 00:30:59.947
Yes, it is, that's correct, Your Honor.
616
00:30:59.947 --> 00:31:02.340
And so the sort of, I think,
617
00:31:02.340 --> 00:31:06.220
now is the field, in terms of interpretation, of statutes.
618
00:31:06.220 --> 00:31:08.184
So if you're gonna look at the and and,
619
00:31:08.184 --> 00:31:09.750
and what it means, I think you just looked at
620
00:31:10.717 --> 00:31:12.220
the New York, sort of, cases, wouldn't you?
621
00:31:12.220 --> 00:31:14.899
No, we didn't cite any specific ones, Your Honor.
622
00:31:14.899 --> 00:31:15.732
All right, okay.
623
00:31:15.732 --> 00:31:19.990
So let me, I guess, ask the basic issue.
624
00:31:19.990 --> 00:31:24.530
Your insurance company is innocent, you did nothing wrong.
625
00:31:24.530 --> 00:31:27.910
Mrs. Aquino is innocent, you did nothing wrong.
626
00:31:27.910 --> 00:31:30.010
Who should should suffer?
627
00:31:30.010 --> 00:31:32.500
Judge, I think the insurance company,
628
00:31:32.500 --> 00:31:34.560
if they're guilty of anything,
629
00:31:34.560 --> 00:31:36.990
was being very transparent in their language.
630
00:31:36.990 --> 00:31:39.120
Well, I mead, actually, there's the separate issue
631
00:31:39.120 --> 00:31:41.970
is they claim you're guilty of not mirroring the policy.
632
00:31:41.970 --> 00:31:43.905
Put the 93A issue aside.
633
00:31:43.905 --> 00:31:48.905
I guess the question is if Mrs. Aquino is innocent,
634
00:31:50.130 --> 00:31:54.090
and isn't insured, why should she suffer
635
00:31:54.090 --> 00:31:57.940
for what her fiance did when
636
00:31:57.940 --> 00:32:01.070
what her fiance did did not void the policy?
637
00:32:01.070 --> 00:32:04.527
Because, Judge, it works as an exclusion in that the
638
00:32:04.527 --> 00:32:07.720
the is considered joint in that one action--
639
00:32:07.720 --> 00:32:09.160
I know you're referring, I mean,
640
00:32:09.160 --> 00:32:11.340
but the question is, in terms of what the legislature meant
641
00:32:11.340 --> 00:32:14.790
to do, who, in your view, did the legislature mean to,
642
00:32:14.790 --> 00:32:17.100
which innocent party did the legislature mean
643
00:32:17.100 --> 00:32:18.290
to bear the burden here?
644
00:32:18.290 --> 00:32:20.350
You're claiming that the legislature wanted
645
00:32:20.350 --> 00:32:24.660
the innocent co-insured to bear the burden
646
00:32:24.660 --> 00:32:26.080
and not the insurance company to bear
647
00:32:26.080 --> 00:32:27.080
the burden.
Absolutely Judge,
648
00:32:27.080 --> 00:32:31.670
because there is coextensive in their obligations
649
00:32:31.670 --> 00:32:33.177
to the insurance company.
650
00:32:33.177 --> 00:32:35.840
And the one promise they're making is
651
00:32:35.840 --> 00:32:37.730
the house may get struck by lightning,
652
00:32:37.730 --> 00:32:40.220
somebody else may burglarize it and burn it,
653
00:32:40.220 --> 00:32:44.153
but we, the named insureds, can't burn it down
654
00:32:44.153 --> 00:32:46.330
and then collect on the policy.
655
00:32:46.330 --> 00:32:48.070
But you understand that in Cozier,
656
00:32:48.070 --> 00:32:52.420
the court found that that Mr. Cozier burned it down with
657
00:32:52.420 --> 00:32:55.543
the intent to defraud the insurance company?
658
00:32:56.500 --> 00:32:57.333
Yes, Your Honor.
659
00:32:57.333 --> 00:32:58.950
And we don't have that here, do we?
660
00:32:58.950 --> 00:33:00.830
Judge, we have an intentional act
661
00:33:00.830 --> 00:33:02.340
and that's what we have--
An intentional arson
662
00:33:02.340 --> 00:33:03.520
but we don't have any intent
663
00:33:03.520 --> 00:33:05.880
to defraud the insurance company.
664
00:33:05.880 --> 00:33:08.180
Judge, I'm not sure if it is that clear.
665
00:33:08.180 --> 00:33:09.330
I want to take that back.
666
00:33:09.330 --> 00:33:12.720
I understand there's fraud but I don't know whether
667
00:33:12.720 --> 00:33:15.930
or not the record in Cozier was developed to say
668
00:33:15.930 --> 00:33:18.130
to fraud just the insurance company.
669
00:33:18.130 --> 00:33:21.230
But I will say in cases where they've been--
670
00:33:21.230 --> 00:33:22.063
I mean, I'll read it.
671
00:33:22.063 --> 00:33:23.107
"While the policies were enforced,
672
00:33:23.107 --> 00:33:24.847
"the buildings were damaged or destroyed by fires
673
00:33:24.847 --> 00:33:26.357
"which were sett by the husband with intent
674
00:33:26.357 --> 00:33:28.160
"to defraud the defendant companies."
675
00:33:28.160 --> 00:33:29.400
So in Cozier
Okay.
676
00:33:29.400 --> 00:33:30.690
you have that intent.
677
00:33:30.690 --> 00:33:31.890
I gather you're not claiming,
678
00:33:31.890 --> 00:33:33.590
since you're not claiming that the policy is void,
679
00:33:33.590 --> 00:33:37.280
you're not claiming fraud on behalf of Mr. Pastrana.
680
00:33:37.280 --> 00:33:39.430
No, we're not saying fraud in the sense
681
00:33:39.430 --> 00:33:41.570
of intentionally, at that moment, Judge.
682
00:33:41.570 --> 00:33:43.130
And based on the facts of our case,
683
00:33:43.130 --> 00:33:45.327
it wouldn't support, necessarily,
684
00:33:45.327 --> 00:33:47.240
in our case that they would do that.
685
00:33:47.240 --> 00:33:49.340
But a number of other cases dressing
686
00:33:49.340 --> 00:33:52.532
this issue haven't limited either the exclusion
687
00:33:52.532 --> 00:33:57.390
or the limitation of recovery by
688
00:33:57.390 --> 00:33:59.930
the innocent co-insured to whether it
689
00:33:59.930 --> 00:34:02.140
was intentionally fraud or not.
690
00:34:02.140 --> 00:34:05.760
In our case, it appeared to be an angry situation,
691
00:34:05.760 --> 00:34:08.640
it involved a handgun, so that's a separate issue.
692
00:34:08.640 --> 00:34:09.810
I agree, Your Honor.
693
00:34:09.810 --> 00:34:11.300
But in this case, Your Honor, I think,
694
00:34:11.300 --> 00:34:13.440
at the end of the day, what we're looking for
695
00:34:13.440 --> 00:34:17.575
the court to determine is that it's a joint obligation,
696
00:34:17.575 --> 00:34:22.010
relative to the responsibilities of the named insureds
697
00:34:22.010 --> 00:34:26.021
to the contract, and, getting back to the first issue we had
698
00:34:26.021 --> 00:34:28.710
which was what happens to the payout,
699
00:34:28.710 --> 00:34:30.610
I should note or I'd like to note
700
00:34:30.610 --> 00:34:33.450
that this is gonna be a situation where,
701
00:34:33.450 --> 00:34:37.265
even if the innocent co-insured doesn't get a direct check,
702
00:34:37.265 --> 00:34:39.650
the property is there,
703
00:34:39.650 --> 00:34:43.470
that will be owned without any encumbrances based on
704
00:34:43.470 --> 00:34:48.140
the mortgagee being in line to obtain whatever
705
00:34:48.140 --> 00:34:50.970
there was for purposes of a mortgage on the property.
706
00:34:50.970 --> 00:34:54.570
So it's not that nothing is obtained through all this,
707
00:34:54.570 --> 00:34:57.050
it's just that there isn't an affirmative check
708
00:34:57.050 --> 00:35:00.610
for all of the damages which is what my brother would like.
709
00:35:00.610 --> 00:35:02.160
Although, pragmatically, depending on
710
00:35:02.160 --> 00:35:04.200
the size of the mortgage,
711
00:35:04.200 --> 00:35:08.150
if she doesn't get enough money from the insurance company
712
00:35:08.150 --> 00:35:10.850
then they'll foreclose on the mortgage.
713
00:35:10.850 --> 00:35:13.240
And the bank will end up owning the property.
714
00:35:13.240 --> 00:35:16.320
Depending upon the amount of mortgage, Your Honor.
715
00:35:16.320 --> 00:35:17.250
Okay, thank you.
716
00:35:17.250 --> 00:35:18.300
Thank you.