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Homeowner Control over Tenant Marijuana Growing Operation

A recent case touched upon an interesting question: Will Homeowners insurance apply if your tenant’s growth operation ends up burning the place down?  It should be noted that the ruling is very specific to the facts of the case and should not be interpreted as a blanket ruling or finding as to this question.

The case, Mosley v. Pacific Specialty Ins. Co. (2020) Cal. App. LEXIS 451 arose under the following circumstances.

James and Maria Mosley, rented out a home they own that Pacific Specialty Insurance Company (PSIC), insured under a homeowners’ policy. The Mosleys’ tenant (Lopez) started growing marijuana on the Property. To support his marijuana-growing operation, the tenant re-routed the Property’s electrical system to steal power from a main utility line. The tenant’s re-routed electrical system caused a fuse to blow, which started a fire that damaged the Property.

PSIC denied coverage, citing a provision in the Mosleys’ policy that excluded any loss associated with “[t]he growing of plants” or the “manufacture, production, operation or processing of … plant materials.”

The Mosleys sued PSIC after it denied coverage for their loss.  The trial court granted PSIC’s motion for summary judgment, dismissing the Mosleys’ case – they appealed.

On appeal, the Appellate Court found:

“The undisputed evidence shows that (1) the fire was caused by Lopez’s [tenant’s] altering the property’s electrical system and (2) Lopez altered the property’s electrical system to power his marijuana growing operation. Thus, there was a “minimal causal connection” between Lopez’s growing marijuana, the fire, and the resulting loss.  We therefore conclude that the loss resulted from an operation engaged in the growing of plants, which Paragraph E excludes from coverage.”

Mosley v. Pacific Specialty Ins. Co. (May 26, 2020, No. E071287) ___Cal.App.5th___ [2020 Cal. App. LEXIS 451, at *8-9]


The Mosley’s argued that PSIC’s exclusion amounted to providing less insurance coverage than what is required by Section 2071 of the California Insurance Code.  PSIC argued that Section 2071 says, in pertinent part, “an insurer “shall not be liable for loss occurring … while the hazard is increased by any means within the control or knowledge of the insured.” [emphasis added].  The trial court had previously agreed with this argument, finding that the grow operation, along with the bootlegged electricity hookup, increased the risk of fire on the premises and it was within the ”control or knowledge” of the Mosleys.

The Appellate Court soundly rejected PSIC’s argument finding:

“an insured increases a hazard “within its control” only if the insured is aware of the hazard or reasonably could have discovered it through exercising ordinary care or diligence. PSIC does not cite, and we cannot locate, any authority that suggests a landlord-insured is strictly liable for a hazard created by the insured’s tenant even if the insured is unaware of the hazard.”

Mosley v. Pacific Specialty Ins. Co. (May 26, 2020, No. E071287) ___Cal.App.5th___ [2020 Cal. App. LEXIS 451, at *18].


Since it was undisputed that the Mosley’s had no knowledge of the marijuana growing operation on their property and there was likewise no evidence as the whether they could have discovered said operation “by exercising ordinary care or diligence,” it was a question of fact for the jury to decide whether it was in the control of the Mosley’s to avoid increasing the fire hazard to their property.

The Court held:

“By holding the Mosleys responsible for the damage Lopez caused, irrespective of the Mosleys’ knowledge of his conduct or their responsibility for it, the Policy subjects the Mosleys to increased liability—and less favorable coverage that is not “substantially equivalent” to coverage provided under section 2071.”

Mosley v. Pacific Specialty Ins. Co. (May 26, 2020, No. E071287) ___Cal.App.5th___ [2020 Cal. App. LEXIS 451, at *19-20].


The Court reversed and remanded the trial court’s grant of summary judgment.

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