Articles Posted in US Court of Appeals for the Sixth Circuit

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Some of KVG’s commercial tenants got caught growing marijuana in their rental units and caused substantial damage to the premises before the police caught them. KVG speedily evicted the tenants and sought coverage from its insurers for nearly $500,000 in related losses. Westfield denied the claims. The Sixth Circuit affirmed summary judgment for Westfield, reasoning that the damage was excluded by the policy, which is the Building and Personal Property Coverage Form. Under this Form, Westfield agreed to pay for “direct physical loss of or damage to Covered Property . . . caused by or resulting from any Covered Cause of Loss.” A “Covered Cause of Loss” is any “Risk[] Of Direct Physical Loss,” with several exclusions, including that Westfield “will not pay for loss or damage caused by or resulting from” any “[d]ishonest or criminal act by you, any of your partners, members, officers, managers, employees (including leased employees), directors, trustees, authorized representatives or anyone to whom you entrust the property for any purpose.” While cultivating marijuana is a crime under federal law, it is protected by Michigan law under certain conditions but no reasonable jury could find that KVG’s tenants complied with Michigan law. View "K.V.G. Properties, Inc. v. Westfield Insurance Co." on Justia Law