Before Terry and Ruiz, Associate Judges, and Kern, Senior Judge.
The opinion of the court was delivered by: Ruiz, Associate Judge
Appeal from the Superior Court of the District of Columbia (Hon. Geoffrey M. Alprin, Trial Judge)
This appeal raises a novel issue concerning the type of interest - other than one based on legal or equitable title - that is insurable. We hold that an insurable interest in property can be shown when a party stands to benefit economically from a unique property or to suffer loss from its destruction, and that Technical Land should have the opportunity to make the necessary showing.
The relationships among the various entities in this appeal are somewhat involved and complicated by legal and bankruptcy procedures, so we describe them in some detail. Technical Land, Inc., the plaintiff-appellant, is a District of Columbia corporation in which William Moore and Judith Deitz Moore are the sole stockholders. Techniarts Video International, Inc. (TVII), also owned and operated by the Moores, had a Use Agreement which allowed it to occupy the property at 1631 Kalorama Road. Techniarts Engineering (Techniarts) is a partnership owned by the Moores which owned equipment that was damaged by water when pipes burst at the building on 1631 Kalorama Road. The subject of this appeal is Technical Land's insurance claim concerning damage to the building itself, not to Techniarts' equipment. *fn1
Techniarts had a business relationship with 1631 Kalorama Associates, the owners of the property at 1631 Kalorama Road, for the purpose of building and developing a motion picture studio on the premises. *fn2 On December 11, 1991, Techniarts filed suit against Kalorama Associates and obtained a judgment in the amount of $131,055.13. See Techniarts Video, Inc. v. 1631 Kalorama Assocs., 572 A.2d 1051 (D.C. 1990). The Moores, on behalf of Techniarts, executed on the judgment and received a Marshal's Deed for the property at 1631 Kalorama Road on September 30, 1992. On December 10, 1992, the Moores obtained a Superior Court order substituting Technical Land as the owner of the property. *fn3 The revised Marshal's Deed to Technical Land was dated January 7, 1993.
On April 1, 1993, a creditor of 1631 Kalorama Road Associates filed an action in the Superior Court against, inter alia, Technical Land, questioning the validity of the January 7, 1993 Marshal's Deed. After Technical Land filed for bankruptcy, the creditor's action was transferred to the United States Bankruptcy Court for the District of Columbia. *fn4 On February 25, 1994, while the litigation contesting the validity of the Marshal's Deed to Technical Land was pending, TVII negotiated a Use Agreement with the Trustee for the Bankruptcy Estate of 1631 Kalorama Associates.
The Use Agreement, approved by the Bankruptcy Court on March 16, 1994, recognized that the right to ownership and possession of the premises was in dispute, but wished "to maximize the value of the property." Until the ownership dispute was resolved, the premise was to be "operated as a motion picture and television production facility." It gave the Trustee exclusive control over the property, including authority to sell the building, but gave TVII the right to use all of the space in the building. In exchange, TVII was responsible for maintenance, payment of utilities and operating expenses. With respect to insurance, the Use Agreement provided:
The Trustee has in place liability and property and casualty insurance at this time. TVII shall in addition maintain its own liability insurance with the estate as loss payee in an amount of not less than $1,000,000 and shall be responsible for insurance of all its own equipment.
The Parties will cooperate in attempting to obtain building insurance that is less expensive in light of the occupancy status of the building.
In June 1994, the Bankruptcy Court declared the Marshal's Deed to Technical Land invalid, *fn5 but Technical Land, with the permission of TVII under the Use Agreement, continued to occupy the building until August 1995, when Technical Land vacated the premises upon expiration of the Use Agreement between the Trustee and TVII.
On December 10, 1993, the same day Technical Land had obtained the Superior Court order assigning the Marshal's Deed from TVII to Technical Land, and some six months before the deed was invalidated by the Bankruptcy Court, Technical Land acquired property insurance on the property at 1631 Kalorama Road from appellee, Firemen's Insurance, pursuant to an order of the Bankruptcy Court. *fn6 The policy covered property damage up to $335,000 per incident, less the amount subject to the co-insurance provision of the policy. It did not cover damage to equipment or loss of business income. Technical Land was the only insured named in the policy.
Technical Land moved into 1631 Kalorama Road on February 28, 1994, *fn7 and immediately discovered significant water damage. *fn8 The Moores promptly contacted Firemen's Insurance to file a claim. On March 6, 1994, William Moore met with Gerald Kaplan, the adjuster assigned to Technical Land's damage claim, at the property. Following this meeting, the Moores conducted emergency repairs to the building at a cost of $125,515.94, which they borrowed from their Techniarts partnership. *fn9 A second loss occurred on June 20, 1994, when a water valve in the heating and air conditioning system burst, damaging the areas that had ...