PerSONa Non Grata Not a Household Resident and Therefore Not an Insured Under the Father's Farmowners Policy

FARMOWNERS – "HOUSEHOLD" – RESIDENT RELATIVE – INSURED STATUS
Farm Family Cas. Ins. Co. v Nason
(4th Dept., decided 11/10/2011) 

If your adult son stayed sometimes on your property in a separate but uninsured trailer and sometimes off premises with his girlfriend, did not reside with other members of your family, and was not welcome in your home, could he be considered a member of your household for purposes of qualifying as an insured under your homeowners or farmowners insurance policy?  No, says the Appellate Division, Fourth Department.

Farm Family insured property on which Gerald Nason, Sr., had his home and a dairy business.  Under the terms of that policy, Nason's relatives were insureds only if they were residents of his "household."  Eric Pommerenck died as the result of injuries that he sustained on farm property owned by Nason while examining a hay elevator that had been offered for sale by Nason's son, Gerald R. Nason, Jr., the defendant in this declaratory judgment.  Nason Jr. did not reside exclusively on his father's residence property but also resided at times with his girlfriend at another location.  Pommerenck's estate commenced a wrongful death action against, among others, Nason Sr. and Nason Jr., and Farm Family commenced this action seeking a declaration that it owed no duty to defend or indemnify Nason Jr. in the underlying action on the ground that he was not an insured under its policy. Supreme Court, Erie County (Sedita, J.) denied Farm Family's motion for summary judgment and it appealed.

In REVERSING the lower court's order and declaring that Farm Family was not obligated to defend or indemnify Nason Jr. in the underlying wrongful death action, the Appellate Division, Fourth Department, while noting that the undefined term "household" has been characterized as being ambiguous, found that Farm Family has submitted sufficient evidence to support the conclusion that Nason Jr. was not a member of his father's household, and thus did not qualify as an "insured" under his policy with Farm Family at the time of the underlying accident:

"The term household has been characterized as ambiguous or devoid of any fixed meaning in similar contexts . . . and, as such, its interpretation requires an inquiry into the intent of the parties . . . The interpretation must reflect the reasonable expectation and purpose of the ordinary business [person] when making an insurance contract . . . and the meaning which would be given it by the average [person] . . . Moreover, the circumstances particular to each case must be considered in construing the meaning of the term" (General Assur. Co. v Schmitt, 265 AD2d 299, 300 [internal quotation marks omitted]). In addition, "the term should . . . be interpreted in a manner favoring coverage, as should any ambiguous language in an insurance policy" (Rohlin v Nationwide Mut. Ins. Co., 26 AD3d 749, 750). 

Here, plaintiff established that Nason did not consider defendant to be a member of his household, nor would he have anticipated that defendant would be afforded coverage under his insurance policy inasmuch as defendant lived separately from Nason, either in a trailer on the subject property or with a girlfriend. The trailer was not listed in the policy as an alternate residence. Furthermore, members of the Nason family testified at their respective depositions that defendant did not reside with the other members of the family and, indeed, was not welcome in the family home. Consequently, plaintiff established as a matter of law that defendant was not a member of Nason's household within the meaning of the policy (see Matter of Hartford Ins. Co. of Midwest v Casella, 278 AD2d 417, 418, lv denied 96 NY2d 710; Walburn v State Farm Fire & Cas. Co., 215 AD2d 837; cf. Korson v Preferred Mut. Ins. Co., 55 AD3d 879, 880-881), and defendants failed to raise a triable issue of fact (see generally Zuckerman v City of New York, 49 NY2d 557, 562).

No Coverage for a Non-Non-Owned Car

PERSONAL AUTO – NON-OWNED CAR – HOUSEHOLD RESIDENT RELATIVE – TIMELY DISCLAIMER – INSURANCE LAW § 3420(D)(2)
Konstantinou v. Phoenix Ins. Co.
(4th Dept., decided 6/11/2010)

David Thurston was operating his sister Tynette Thurston's Chevy Celebrity when he crashed into the plaintiff's vehicle, killing that vehicle's passenger and seriously injuring its driver.  Plaintiff sued the Thurston siblings and their mother, Brenda Henderson, with whom they allegedly resided.  After obtaining a judgment against the Thurston siblings, plaintiff commenced this action pursuant to New York Insurance Law § 3420(a)(2) and (b)(1) against Henderson's personal auto insurer, Phoenix Insurance Company, for liability coverage under Henderson's policy with Phoenix.  Wayne County Supreme Court (Kehoe, J.) granted Phoenix's motion for summary judgment, dismissing the complaint, and plaintiff appealed.

Henderson's personal auto policy with Phoenix provided:

We will pay damages for which the insured becomes legally responsible because of bodily injury or property damage caused by accident and arising out of the ownership, maintenance or use of your car or any non-owned car.

The policy listed Henderson as the only named insured and a Chevrolet Lumina as the only covered vehicle. The policy defined "your car" as, among other things, "any vehicle described on the declarations page of [the] policy." Because the Celebrity was not listed on the declarations page, it was not covered under the "your car" category.

The policy also defined a "non-owned car" as

a land motor vehicle with at least four wheels designed to be used mainly on public roads, or a trailer. However, it must not be owned by or furnished or available for the regular use of you or a relative.

 The policy further explained that "You and your mean the person [listed as the named insured on the declarations page, i.e., Henderson, and that] . . . Relative means your relative, residing in your household."

In AFFIRMING the order granting summary judgment to Phoenix, the Fourth Department concluded that the Celebrity did not qualify as a "non-owned car" under Henderson's policy with Phoenix because it was owned by Tynette Thurston, Henderson's daughter and resident of Henderson's household, and was available for the regular use of David Thurston, Henderson's son and also resident of Henderson's household.  The appellate court also held that the timely disclaimer requirement of New York Insurance Law § 3420(d) did not apply because the Celebrity did not qualify as a covered vehicle under the Phoenix policy, and plaintiff's claim fell outside the scope of coverage of that policy:

Contrary to plaintiff's contention, the court properly determined that the Thurston siblings were relatives of Henderson who resided in her household and that the Celebrity therefore was not a "non-owned car" for which defendant would be required to provide coverage with respect to the accident in question. A person is a resident of a household for insurance purposes if he or she " lives in the household with a certain degree of permanency and intention to remain' " (Matter of State Farm Mut. Auto. Ins. Cos. v Jackson, 31 AD3d 1171, 1171). Although Tynette Thurston lived at college at the time of the accident, defendant submitted evidence in support of the motion establishing that she was a resident of the household inasmuch as she lived with Henderson during the summers, received mail at Henderson's house, stayed there every other weekend, and listed that address on the Celebrity's title and insurance (see Dutkanych v United States Fid. & Guar. Co., 252 AD2d 537, 538; see also Matter of Prudential Prop. & Cas. Ins. Co. [Galioto], 266 AD2d 926). Thus, because the Celebrity was owned by a relative of Henderson who was a resident of her household, it was not a "non-owned car" under the terms of the policy entitled to coverage by defendant. 

Moreover, it was undisputed that David Thurston was a relative of Henderson who was a resident of her household, and defendant submitted evidence in support of the motion establishing that the Celebrity was available for his regular use inasmuch as he had unrestricted access to the Celebrity while Tynette Thurston was at college and had used it several times prior to the accident (see generally Newman v New York Cent. Mut. Fire Ins. Co., 8 AD3d 1059, 1060). Thus, the Celebrity also was not a "non-owned car" within the meaning of the policy because it was available for the regular use of a relative of Henderson who was a resident of her household. 

Contrary to plaintiff's further contention, the Celebrity is not entitled to coverage under Henderson's policy with defendant on the ground that defendant failed to disclaim coverage in a timely manner. It is well established that "[d]isclaimer pursuant to [Insurance Law § ] 3420 (d) is unnecessary when a claim falls outside the scope of the policy's coverage portion. Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed" (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188; see State Farm Fire & Cas. Co. v Whiting, 53 AD3d 1033, 1035; see generally Zappone v Home Ins. Co., 55 NY2d 131, 137-139).

Single-Family Home + One Mailbox + One Meter + One Gas Bill + One Policy = One Household

HOMEOWNERS – BODILY INJURY TO INSURED EXCLUSION – "HOUSEHOLD" – LEAD POISONING CLAIM
Korson v. Preferred Mut. Ins. Co.
(2nd Dept., decided 10/28/2008)

Homeowners insurance policies exclude liability coverage for "bodily injury to you [the named insured(s)], and if residents of your household, your relatives, and persons under the age of 21 in your care or in the care of your resident relatives."  I've never seen a definition of the term "household" in a homeowners policy.  The purpose of this "BI to insured" exclusion is to disincentivize collusive lawsuits that target the HO policy and its indemnification dollars.

Plaintiff Steven Korson and his brother, Dean, resided in a single-family house located in Warwick, New York. Dean, his wife Brenda, his stepdaughter Crystal Wise, and Crystal's daughter, Dean's step-granddaughter, Aaliyah Powell lived on the second floor, while Steven resided on the first floor and in the basement.  In 2005, Crystal brought an action against Steven and Dean to recover damages for injuries allegedly sustained by Aaliyah as a result of lead poisoning while Aaliyah and Crystal resided in the house.

Both Steven and Dean were named insureds under a homeowners policy issued by Preferred Mutual for the residence.  Preferred Mutual denied liability coverage for the underlying lead poisoning claim based on the policy's exclusion of coverage for "bodily injury to you, and if residents of your household, your relatives, and persons under the age of 21 in your care or in the care of your resident relatives."  The policy did not define "household".

Steven commenced this declaratory judgment (DJ) action for coverage and moved for summary judgment.  Affirming the Orange County Supreme Court's denial of that motion with leave to renew upon the completion of discovery, the Second Department previously held that in order to prevail on the motion, Steven was required to "establish either that Aaliyah was not in Dean's care" or "that Dean did not reside with the plaintiff," and that Steven's moving papers established neither. After completion of discovery, which included the parties' depositions and a full inspection of the premises by Preferred Mutual, Steven renewed his summary judgment motion, seeking, in addition to a declaration of coverage in the underlying action, attorney's fees incurred in both that action and this one.  Orange Supreme denied the renewed motion and Steven appealed.  Again.

On this second appeal, the Second Department MODIFIED the order appealed from by affirming the denial of summary judgment to Steven, but granting reverse summary judgment (when the record shows that any party other than movant is entitled to summary judgment, the nisi prius judge or an appellate court may "search the record" and grant such judgment without the necessity of a cross-motion, even to a nonappealing party, pursuant to CPLR 3212[b]) to Preferred Mutual, holding:

The issue presented is whether or not Dean resided with the plaintiff in the latter's household. The term "household," as used in insurance policies, has been characterized as ambiguous and devoid of any fixed meaning. Its interpretation requires an inquiry into the intent of the parties (see Auerbach v Otsego Mut. Fire Ins. Co., 36 AD3d 840, 841; Matter of Hartford Ins. Co. of Midwest v Casella, 278 AD2d 417, 418; General Assur. Co. v Schmitt, 265 AD2d 299, 300; Schaut v Fireman's Ins. Co. of Newark, 130 AD2d 477, 478-479). The interpretation must reflect the reasonable expectation of the ordinary business person and the circumstances particular to each case must be considered (see Auerbach v Ostego Mut. Fire Ins. Co., 36 AD3d at 841; Matter of Hartford Ins. Co. of Midwest v Casella, 278 AD2d at 418; General Assur. Co. v Schmitt, 265 AD2d at 300; Schaut v Fireman's Ins. Co. of Newark, 130 AD2d at 479).

In this case, it was incumbent upon the plaintiff to make a prima facie showing that he maintained a separate household from his brother Dean; he failed to do so. For example, the plaintiff's papers revealed that at the relevant time, the subject house was a single-family home, with a single mailbox, and one electric meter. There was one gas bill for the subject address. There was unrestricted access between the areas of the home in which the plaintiff lived, and in which Dean and his family lived. Furthermore, the homeowner's policy indicates that both the plaintiff and Dean are named insureds with respect to "12 Orchard Street" in Warwick, New York. There is no indication in that document that their reasonable expectation was to insure anything other than one household. Accordingly, the Supreme Court correctly denied the plaintiff's motion for summary judgment.

Furthermore, under the circumstances, the record warrants granting the defendant's request, which it made in the Supreme Court and makes again in this Court, that summary judgment be awarded in its favor, upon searching the record (see CPLR 3212[b]). Since the plaintiff is not entitled to the subject coverage, his claims for attorney's fees incurred in the underlying personal injury action and in this action likewise fail.

Ordinarily it is the insurer's burden to prove the applicability of an exclusion but in this case, the named insured was moving for summary judgment, which explains the Second Department's statement that "[i]t was incumbent upon the plaintiff to make a prima facie showing that he maintained a separate household from his brother Dean [but] he failed to do so."

Son-In-Law Tenant Residing in "Additional Residence Rented to Others" Not an "Insured"

HOMEOWNERS – ADDITIONAL RESIDENCES RENTED TO OTHERS – TENANT OF NAMED INSURED – "INSURED" – "RESIDENT" OF NAMED INSURED'S HOUSEHOLD
Ramos v. OneBeacon Ins. Co.
(Sup. Ct., Queens Co., decided 9/2/2008)

OneBeacon issued a homeowners policy to Giovanni and Giuseppa Scuderi for their residence and two rental properties, which the policy identified and designated as "Additional Residences Rented to Others". The Scuderis' daughter and son-in-law, Davis Ramos, rented and lived with their two children in one of those two rental properties. Ramos hired George Georgiadis to do some plumbing renovations at their rental property and allegedly injured him with a saw. Georgiadis sued Scuderi and Ramos for his injuries, and OneBeacon denied liability coverage under the Scuderi homeowners policy to Ramos because he was not an "insured" under that policy. Ramos did not have renters insurance at the time of the Georgiadis accident. Ramos brought this declaratory judgment action for coverage under the Scuderi policy. Following discovery, OneBeacon moved for summary judgment.

The Scuderis' homeowners policy with OneBeacon defined "insured" as:

3. Insured means you and residents of your household who are:

a. Your relatives; or

b. Other persons under the age of 21 and in the care of any person named above.

OneBeacon's senior business analyst testified during her EBT that the Scuderi homeowners policy did not cover the acts of tenants of the rental properties because “household” does not include tenants. Further, if a tenant of a rental premises wanted to purchase coverage, it would be purchased under a separate renter’s policy.

Ramos testified that he had resided at the rental premises where the underlying accident occurred with his wife and two children on a permanent basis on the date of that accident and for some time prior to that accident. His wife's parents did not reside there and had never resided there.

Scuderi testified that he had resided his own home - the primary location on OneBeacon's policy- for more than 20 years. His daughter and son-in-law did not reside with him but lived, approximately five to ten minutes away, at the rented premises where the underlying incident occurred.

On these facts, Queens County Supreme Court Justice Orin Kitzes granted summary judgment to OneBeacon, declaring that it did not owe Ramos defense and indemnification coverage under the Scuderis' homeowners policy in relation to Georgiadis' underlying personal injury action:

Review of the parties’ deposition transcripts and the documentary evidence submitted herein, which includes a copy of the OneBeacon insurance policy purchased by defendant Scuderi, demonstrates (1) that Ramos did not reside with Scuderi at the Scuderi residence, (2) that Ramos lived with only his wife and children and the premises where the underlying incident occurred, and (3) that Ramos was a renter, or lessee, of the premises where the incident occurred. Since defendant Scuderi, the named insured, did not reside with his son-in-law Ramos at the premises where the underlying incident occurred, and Ramos did not live in or occupy the premises where defendant Scuderi resided on the date of the underlying incident, Ramos cannot be considered a relative who resided in the named insured’s household (see Biundo v New York Central Mutual, 14 AD3d 559 [2005]; cf. Auerbach v Otrego Mut. Fire Ins., Co., 36 AD3d 840 [2007]). Further, it is clear that defendant Scuderi insured the property where Ramos resided where and the underlying incident occurred as a rental property, not as a second residence (see Walburn v State Farm Fire and Cas. Co., 215 AD2d 837 [1995]). Thus, since Ramos is a tenant of the rental property where the incident occurred, and the subject insurance policy unequivocally provides that there is no coverage for Ramos as a tenant of that property, the court finds that defendant OneBeacon has demonstrated a prima facie entitlement to an award of summary judgment in his favor (see generally Alvarez v Prospect Hospital, 68 NY2d 320 [1986]).

Hearing Ordered to Determine Whether Infant Claimant Was Resident Relative Living in Insured's Household

UM – RESIDENT RELATIVE – "HOUSEHOLD" – STAY OF ARBITRATION
Matter of Government Employees Ins. Co. v. Fudge
(Sup. Ct., Suffolk Co., decided 7/15/2008)

GEICO brought this special proceeding to stay arbitration of the uninsured motorist (UM) coverage claim filed by of its policyholder holder, Donna Fudge, as guardian of infant Miguel Cuevas. Fudge testified in an EUO and swore in an affidavit that Cuervas was her nephew through marriage and was living with his brother and her in her downstairs apartment of a two-apartment home when the accident occurred. Fudge also averred that she was Cuervas' de facto guardian and was providing financial support to him. Fudge's mother married Cuervas' grandfather, making Cuervas' mother Fudge's step-sister. In opposition to Geico's petition, Fudge also averred that Miguel’s mother was presently in a shelter and Miguel only saw his father on Sundays for three to four hours.

Geico's policy defined an "insured" under the SUM endorsement as "you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse[.]" The policy further defined a “relative” as “a person related to you who resides in your household.” The term "related" was not defined or limited by the policy.

In finding there to be a triable issue of fact as to whether Miguel Cuevas resided in policyholder's "household”, Suffolk County Supreme Court Justice Sandra Sgroi ruled:

The Court notes that under the circumstances involved herein, even if Cuevas was living in the upstairs apartment and Fudge was not acting as the Respondent’s de facto guardian and providing financial support, it is possible that the circumstances involved in this living arrangement would require the Court to find that Cuevas was part of the “household” of Fudge.

* * * * *

It has been held, where the term relative was defined in the policy “a person who regularly resides in [the named insured‘s] household and is related to [the named insured] by blood, marriage or adoption”that the husband of the daughter of the policy holder was an insured (see, Matter of Nationwide Mut. Ins. Co. (Hodge), 224 A.D.2d 770,636 N.Y.S.2d 946) and that the step-daughter of the policy holder was an insured (see, Smith v. Pennsylvania Gen. Ins. Co., 32 A.D.2d 854, 300 N.Y.S.2d 975, afld 27 N.Y.2d 830, 316 N.Y.S.2d 436, 265 N.E.2d 258; see also, Matter of New York Cent. Mut. Fire Ins. Co. (Prehoda by Prehoda), 23 1 A.D.2d 829,830,647 N.Y.S.2d 66,67-foster child held to be an “insured”; Developments in Uninsured and Underinsured Motorist Coverage, 69-OCT N.Y. St. B.J. 18,20,1997). Here, the policy does not apparently even attempt to limit the definition of “related” to the extent that it was limited in Matter of Nationwide Mut. Ins. Co. (Hodge) (supra). While any ambiguity in the policy will be construed against the insurer for the benefit of the policy holder and in favor of the infant who is alleged to be the “relative” of Fudge(see, McGuinness v. Motor Vehicle Acc. Indemnification Corp., 18 A.D.2d 1 100,239 N.Y.S.2d 920), the Court will take evidence at the hearing on the issue both of whether the infant was a resident and whether the infant was a relative of Donna Fudge, as that term is used in the policy.