My father, after serving as the president of his condominium association, astutely concluded: “Condo living isn’t for everyone.” For sure. It involves close proximity to your neighbors, shared common space and lots of rules – some you don’t like and some you may not even know about.

Condo living, and its perils, is at the heart of Keeley v. Travelers Home and Marine Insurance Co., No. C16-0422 (W.D. Wash. June 21, 2016).

Brian and Tereasa Keeley live in a condominium in Seattle. Their unit is directly above a unit owned by Laura Curcio. In April 2009, the Keeleys installed hardwood floors in their unit. “In early 2010, Mr. Keeley realized that he overlooked a provision in the condo bylaws stating that ‘no Owner shall install hard surface flooring within a Unit except with the prior written consent of the Unit Owner below, if any.’ On February 1, 2010, Mr. Keeley alerted Curcio that he had installed the flooring without obtaining her consent. Curcio made no complaint at that time.”

But that changed. In early 2013, Curcio began to complain to the Keeleys about noise that she attributed to their floor. In February 2014, Curcio sent a letter, through legal counsel, making a formal claim against the Keeleys, stating that their installation of the hardwood flooring interfered with her use of her unit and that the condo bylaws gave her “the absolute right to prevent [the Keeleys] from installing hardwood floors in [their] Unit.” The next month, Curio filed suit against the Keeleys, seeking an injunction requiring them to remove their hardwood flooring and preventing them from its future installation without Curcio’s consent.

The Keeleys sought coverage under their homeowner’s policy with Travelers. The policy provided coverage for damages because of “bodily injury,” “personal injury” or “property damage” caused by an “occurrence.”

Travelers denied coverage. The Keeleys and Curio entered into a settlement. The Keeleys agreed to remove the floors and pay Curio $3,442. The total cost to the Keeleys, to remove the floors, temporarily vacate their unit and pay Curcio, was just over $22,000.

The Keeleys filed a coverage action against Travelers. The court addressed Travelers’s motion to dismiss and the Keeleys motion for summary judgment.

Travelers argued that there was no “property damage,” defined as “physical injury to, destruction of, or loss of use of tangible property.” The court disagreed: “Here, the subject property damage is Curcio’s loss of use of her condo based on the alleged excessive noise.” The court rejected Traveler’s argument that there was no showing that the noise prevented Curcio from using her unit. As the court saw it: “[p]roperty in a thing [includes] the unrestricted right of use, enjoyment, and disposal. Anything which destroys one or more of these elements of property to that extent destroys the property itself. Curcio described the noise as ‘unbearable,’ clearly identifying a restriction on her enjoyment of the unit. The Court thus finds that there was ‘property damage’ at issue.”

While Travelers struck out on its “no property damage” argument (and its “no damages” argument -- see Tapas column), it succeeded in convincing the court that there was no “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions[.]”

The court looked to Washington law for the definition of “accident:” “‘an accident is never present when a deliberate act is performed unless some additional unexpected, independent and unforeseen happening occurs which produces or brings about the result of injury or death.’ ‘The means as well as the result must be unforeseen, involuntary, unexpected and unusual.’ ‘The accident need not be caused by ‘an unconscious, nonvolitional act.’ Rather, the act must be ‘done with awareness of the implications or consequences of the act.’”

The Keeleys analogized their situation to a 2007 Washington appellate case, holding that it was an accident where the insured turned on the irrigation system in an onion field, causing onions to rot. The court found that to be an “accident” because there was “no evidence that the insured knew or should have known that turning on the irrigation system would damage the crop. Thus, . . . turning on the irrigation, although intentional, was not deliberate.”

But the court did not see the Keeleys’ situation being on all fours with the onion crop case: “The Keeleys argue that the present situation is analogous to Hayles [onion crop case], alleging that a ‘reasonable person in Mr. Keeley’s position might not have been aware—indeed might have been completely unaware—that installing new floors would require consent, that consent would not be forthcoming, or that the Keeleys’ floors would affect anyone else’s unit.’ But in Hayles, the insured ‘had no duty to observe the crop and no authority to decide when the crop needed water or when it needed to be dry.’ The same cannot be said for the Keeleys: as members of the condo association, they had a duty to abide by the condo bylaws. And, though the Keeleys were not actually aware they were in violation, [another case] makes clear that an insured’s subjective knowledge does not govern. Rather, the Court focuses on what a reasonable person in the Keeleys’ position knew or should have known. While the Keeleys’ predicament is certainly unfortunate, the Court cannot say that a reasonable person ignores his or her own duty.”

Held: “[T]he harm resulting from the floor’s installation was not truly an ‘unexpected, independent, and unforeseen happening.’ As such, there was no ‘occurrence’ within the meaning of the policy.”