Just in Time for Thanksgiving -- Second Department Recognizes In-Laws as Relatives

HOMEOWNERS – BODILY INJURY TO INSURED EXCLUSION – "RELATIVE" – INSURANCE LAW § 3420(A)(2) ACTION
Smith v. State Farm Fire & Cas. Co.
(2nd Dept., decided 11/18/2008)

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."  The purpose of this "BI to insured" exclusion is to disincentivize collusive lawsuits that target the HO policy and its indemnification dollars.

In-laws are relatives, whether one likes it (or them) or not.  In this case, plaintiff, the daughter-in-law of State Farm's named insured, apparently sued the public administrator of her father-in-law's estate (the named insured presumably having died intestate, i.e., without a will) for personal injuries she had sustained as a result of the named insured's negligence and recovered a money judgment against the estate.  Plaintiff then commenced this action pursuant to Insurance Law § 3420(a)(2) recover that unsatisfied judgment from State Farm under the named insureds' homeowners policy.

In AFFIRMING the Suffolk County Supreme's order granting summary judgment to State Farm, the Second Department held:

On their motion, inter alia, for summary judgment, the defendants State Farm Fire and Casualty Company and State Farm Insurance Companies (hereinafter together the State Farm defendants), made a prima facie showing of entitlement to judgment as a matter of law. The State Farm defendants demonstrated that the plaintiff, the named insureds' daughter-in-law, who resided in the home of the named insureds at the time of the incident giving rise to her underlying personal injury action against the named insureds, was a resident "relative" of the named insureds. Thus, she was within an exclusion from coverage contained in the homeowner's insurance policy State Farm issued to the named insureds (see Korson v Preferred Mut. Ins. Co., 39 AD3d 483, 484; Randolph v Nationwide Mut. Fire Ins. Co., 242 AD2d 889, 889-890; Smith v Pennsylvania Gen. Ins. Co., 32 AD2d 854, affd 27 NY2d 830; Eisner v Aetna Cas. & Sur. Co., 141 Misc 2d 744, 745). In opposition to the State Farm defendants' motion, the plaintiff failed to raise a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320). To the extent that McGuinness v Motor Veh. Acc. Indem. Corp. (18 AD2d 1100), may be inconsistent with this determination, it should not be followed.

It's the last sentence that caught my eye in this short decision.  McGuinness has been on the books since 1963, the Second Department holding 45 years ago in that case that the undefined term "relative" in an insurance policy was ambiguous and could be construed to be limited to relatives by blood but not affinity.  With the New York courts and Insurance Department now recognizing same-sex marriages performed in other jurisdictions, I guess it was about time for the Second Department to recognize in-laws as relatives.

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.