Insurance Policy Interpretation Of “Theft”

Policy holders in Grand Prairie, Mansfield, Arlington, Crowley, Grapevine, Hurst, Dallas, Fort Worth, and all across the state of Texas will be amazed at the different ways they can have claims denied based on the langauge in the policy. For instance, what does the term “theft” mean in an insurance policy?
The Fifth Circuit Court of Appeals in Dallas, decided a case on July 2, 2010, where the main issue was the meaning/definition of the word “theft”. The style of the case is, Nautilus Insurance Company v. Francis Steinberg and Morton Rudberg. This case originated in the 95th Judicial District Court, Dallas County, Texas. The opinion in this case was issued by Justice Morris.
Central to this case is the meaning of the word “theft” as used in an insurance policy that excludes “damage caused by or resulting from theft.”
Here are relevant facts. Steinberg and Morton were the insured parties under a commercial property insurance policy issued by Nautilus Insurance Company. The policy covered a building located in Dallas, Texas. Among the policy’s provisions was coverage for “vandalism,” which was defined as “willful and malicious damage to, or destruction of, the described property.” The vandalism coverage provision also contained a “theft” exclusion, which stated: We will not pay for loss or damage caused by or resulting from theft, except for building damaged caused by the breaking in or exiting of burglars.
On March 26, 2007, Leonard Heard climbed onto the roof of the building, opened the air conditioning units and removed copper pipes and electrical wiring. While on the roof, he was found and arrested by the Dallas police. The police report showed he was arrested for theft but he was indicted for criminal mischief and pleaded guilty and was convicted of that offense.
Nautilus was notified of the damage to the building. Nautilus then denied the claim because there was no coverage under the policy for “theft.”
Nautilus was then sued by the policyholders.
The court discussed various issues in the case but in relevant part stated how the relevant exclusion in this case states that Nautilus will not pay for losses and damages caused by or resulting from “theft.” The term “theft” is not defined in the policy. In the case of the word “theft” the Texas Supreme Court has held that the term is to be given the same meaning in an insurance policy that it has under the criminal law.
Texas Penal Code, Section 31.03(a), states that a person commits theft when he “unlawfully appropriates property with intent to deprive the owner of property.” Section 31.01(4) says to “appropriate” property, a person must “acqure or exercise control over property other than real property.” The courts then devotes much more discussion into the definitions of property and what it means to appropriate property and other issues.
Next the court stated, “To show theft under Texas law, it is not necessary to establish that the property was removed or carried away from the premises. Any removal of the property, no matter how slight, from its customary location is sufficient to show control over the property for purposes of theft.” They then stated, “The undisputed evidence here shows that Heard removed the copper pipes from the air conditioning units. The act of removing the pipes was sufficient to show control over the property for purposes of theft.”
In this case it was Nautilus’s burden to show, that Heard had the intent to deprive the policyholders of the property. Intent is a question of fact to be determined by the trier of fact from all the surrounding circumstances.
Ultimately the appeals court remanded this case to the trial court to determine whether a “theft” had occurred based on the discussions in this case. That the trial court had mistakenly determined that the property had to be taken off the premises for a theft to occur and that this was the wrong standard to be using based on the discussion in the case.
This case serves as a perfect illustration of why an experienced Insurance Law Attorney must be consulted when a policyholder finds themselves in a position where their claim is being denied. The meaning and interpretation of the words and phrases in the insurance policy will often vary based on the circumstances surrounding the claim being made.