Many typical homeowner’s insurance policies contain an exclusion for damages as a result of freezing unless the homeowner uses “reasonable care” to maintain heat in the home. While this can be a fact-specific inquiry, the Third Circuit, applying Pennsylvania law, recently upheld a district court’s grant of summary judgment to an insurer, finding no issue of material fact. Jugan v. Econ. Premier Asur. Co., 2018 U.S. App. LEXIS 7218 (3d Cir. Mar. 12, 2018).

The Jugans reported a water loss to Met Life upon discovery in March 2015. The consultant retained by Met Life concluded that the cause of the water infiltration was due to a frozen dishwasher solenoid valve, which was due to insufficient heat within the home (attributed to the low setting found on the thermostat hot water baseboard heat). It was undisputed that outdoor temperatures in and around the date of discovery were sufficient to cause pipe system freeze ups. 

Met Life denied coverage pursuant to policy language that excluded coverage for losses or damage resulting directly or indirectly from “freezing of a . . . domestic appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing.” This “Absolute Freezing Exclusion” was subject to an exception if the insured “used reasonable care to maintain heat in the building” or if the insured “shut off the water supply and drained the plumbing and appliance of water.” In support of its denial, Met Life relied upon facts discovered during its investigation, including admissions by its insureds that since 2009, they frequently left the home empty, sometimes for weeks at a time; that no one had been at the home since October 2014; and Mr. Jugan did not set the thermostat at any particular temperature when he left the home in October 2014. While Mr. Jugan did visit the property once in February 2015, for one or two hours, he similarly did not remember setting the thermostats to any particular temperature, nor could he recall to what temperature the thermostats were set. Further, Mr. Jugan admitted to forgetfulness, due to medications he took for a brain tumor. Mr. Jugan testified that although he was aware of the cold and snowy weather conditions in and around the time of the loss, he did not ask any of his neighbors, who had access to their home, to check on the home around this time.

The Jugans thereafter sued Met Life for breach of the insurance policy. Met Life was successful in its motion for summary judgment, in large part because the Jugans did not submit any counter expert testimony and the affidavit submitted by Mr. Jugan in opposition was declared a sham affidavit because it contained several facts that clearly contradicted his earlier testimony. In upholding the lower court’s decision, the Third Circuit concluded that while it was the Jugan’s burden of proof to establish that the loss alleged fell within the insurance policy’s affirmative grant of coverage, which they did, Met Life similarly met its burden of proof in establishing the applicability of the policy’s Absolute Freezing Exclusion. The court agreed that the exception to the Absolute Freezing Exclusion did not apply, finding that the Jugans failed to point to evidence showing they used reasonable care to maintain heat in their home, and that it was proper to ignore Mr. Jugan’s affidavit. The court stated that whether the Jugans exercised reasonable care to maintain heat in their home was not a question of fact, solely for resolution by a jury, noting that “[a]lthough the issue of reasonable care very often demands a fact-intensive inquiry, summary judgment remains appropriate to dispose of that issue when there is no genuine issue of material fact.” The court noted that although under Pennsylvania law, “regardless of whether an insurance contract is ambiguous, the court should consider ‘the reasonable expectation of the insured’ when construing that contract. . . . the Jugans  . . . pointed to no evidence that would establish a reasonable expectation of coverage under the Policy in the circumstances demonstrated on this record.”

Jugan provides useful insight of the facts typically considered in a coverage dispute involving the freezing exclusion, and how summary judgment may be appropriate despite a seemingly fact-intensive inquiry.