The opinion of the court was delivered by: NEAHER
Plaintiffs in this civil action seek to recover losses allegedly sustained as a result of a burglary of their apartment on May 7, 1976. They claim under a residential crime insurance policy issued to them pursuant to Section 602(d) of the Housing and Urban Development Act of 1970, P.L. 91-609, redesignated as Part C and §§ 1231-34 of the Urban Property Protection and Reinsurance Act of 1968, As amended, 12 U.S.C. §§ 1749bbb-10a Et seq. Defendant refused to compensate plaintiffs, relying upon a limitation of recoverable losses to those resulting from burglary as defined in the federal crime insurance policy and established by federal regulation, 24 C.F.R. § 1933.5. Burglary therein
"means the felonious abstraction of insured property from within the premises by a person making felonious entry therein by actual force and violence, evidenced by visible marks upon, or physical damage to, the exterior of the premises at the place of such entry."
Plaintiffs contend that testimony and other evidence adduced at the trial held in this matter are sufficient to raise an inference that there was a felonious abstraction within the meaning of the policy's limitation and that they are therefore entitled to judgment in the sum of $ 1,900.00 with interest. The following constitutes the court's findings of facts and conclusions of law pursuant to Rule 52, F.R.Civ.P.
Plaintiffs testified that when they returned home from work on May 7, 1976, at approximately 6 p.m., Mr. Sydor inserted the key into the lock in the front door of the apartment, but the door opened by itself. They entered and found their possessions scattered around the apartment. Plaintiffs called the police who came and after a brief investigation completed a report, which noted that the complainants stated that the entry to the apartment was apparently accomplished by "lockpicking." There were no broken windows or other signs of entry.
Sydor testified that only he and his wife possessed keys to the apartment and that when they left the apartment in the morning, he had locked the door. He also testified that upon inspection of his front door after the burglary, he noted scratches on the cylinder of the lock which he had not observed before. He thereafter called a locksmith who came and installed a new cylinder the following day. The original cylinder was preserved in plaintiffs' custody until they delivered it to their attorney in this action. The cylinder was admitted into evidence as Plaintiffs' Exhibit 5.
Robert Kaplan, the licensed locksmith who removed plaintiffs' cylinder after the burglary, testified that a lock such as plaintiffs can be opened without a key by raking the pins with a "picking instrument." He "assumed" entry was made by picking if there were no open windows or the like. On cross-examination, he testified that the marks on the cylinder face could have been made by any metal object, such as a key, knife, screwdriver, etc., or by a lockpick.
In December 1976, plaintiffs submitted a claim to the insurance agency responsible for their policy. They were later visited by an adjuster who took a written statement, which plaintiffs signed. See Plaintiffs' Exh. 12. In this statement, plaintiffs purportedly stated to the adjuster that there were "no signs of visible entry." The meaning and effect of this statement were disputed at trial. Sydor testified that the insurance adjuster, Thomas Harbin, used his own language in phrasing the statement, and although plaintiffs signed it, they objected to various statements and only signed because the adjuster said they would be paid on the claim if they did. Sydor also claimed that the statement that there were no sign of visible entry was only intended to indicate there were no broken windows, and that he did show Harbin the marks on the lock. Defendant refused to pay on the claim by letter dated November 1, 1976, relying on the limitation of recovery to loss by forcible entry evidenced by visible marks.
Mrs. Sydor testified substantially along the lines outlined above. She did, however, state that she was not responsible for the entry on the police report that the lock had "apparently" been picked, although she signed the report.
The defense case consisted of the testimony of Thomas Harbin, who said that the statement he took from the Sydors was signed after they read it and were told to make any necessary corrections. Harbin also testified that he had no motive to disallow the claim since his fee for the investigation was only $ 42 whereas his fee, if he settled the claim, would have been $ 250.
In 1968, Congress enacted the Urban Protection and Reinsurance Program, 12 U.S.C. § 1749bbb Et seq., which was intended to offer federal incentives to the States and insurance industry to deal with the problem of property insurance and its excessive cost. The civil disturbances and riots that occurred in cities from 1964 through 1968 had caused insurers to withdraw from certain areas or increase premiums beyond the means of residents of those areas. The 1968 Act was aimed at remedying some of these problems. 1970 U.S.Code Cong. & Admin.News, pp. 5582, 5505-06.
Congress' dissatisfaction with the effectiveness of the 1968 Act resulted in the enactment of certain amendments in 1970, which authorized the Secretary of Housing and Urban Development to
"make crime insurance available at affordable rates within such State (as he determines a critical market unavailability for crime insurance exists) through the facilities of the Federal government. Such insurance shall be provided upon such terms and conditions, and subject to such deductibles and other restrictions and limitations, as the Secretary deems appropriate . . . ." 12 U.S.C. § 1749bbb-10a(b).
Under this Act, the Secretary is accorded broad and flexible authority in providing lines of property insurance and wide discretion in promulgating terms and conditions of such insurance. See 1970 U.S.Code Cong. & Admin.News, pp. 5582, 5607-08. One such condition is the limitation of recoverable ...