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Evicting Tenants Over “Illegal” Cannabis Operation Comes Back to Bite Landlords in Coverage

12/13/2018 Blog

A 6th Circuit case decided earlier this year demonstrates how positions taken by insureds in prior litigation can impact or foreclose coverage in subsequent disputes with insurers. See K.V.G. Properties, Inc. v. Westfield Ins. Co., 900 F.3d 818 (6th Cir. 2018).

In K.V.G. Properties, Inc., K.V.G., was unaware that its tenant was operating a cannabis growing operation.  Although Michigan allowed for limited legal marijuana cultivation, there was no evidence the tenant was in compliance with local law.  After a DEA investigation resulted in a search warrant, K.V.G. had the tenant evicted from the property.  K.V.G. then sought recovery from Westfield under its property policy for extensive damage done to the property by the tenant, including torn out walls, and damage to the HVAC, duct work, and roofing. 

Read the full blog post on the Policyholder Perspective blog, here.

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