Jury Verdict Finding Named Insured Was Residing in Insured Premises Affirmed

PROPERTY – HOMEOWNERS – RESIDENCY REQUIREMENT – POLLUTION EXCLUSION – ASBESTOS CONTROL COSTS – LOSS OF RENTS

Cotillis v. New York Cent. Mut. Fire Ins. Co.
(3rd Dept., 2/22/2018)

Last month I blogged about a Third Department case in which summary judgment was denied on the issue of the residency requirement of a homeowners insurance policy.  Last week, the Third Department affirmed a jury verdict against a homeowners insurer on the same issue.

In September 2013, a fire damaged plaintiff's two-family house, where plaintiff claimed to lived in the top-floor unit and rent the first-floor unit. NYCM disclaimed coverage on the basis that plaintiff did not reside at the insured premises on the date of loss. Following a trial, the jury found that plaintiff was a resident of the insured premises and awarded damages of $163,938.94 for the dwelling, $7,873,02 for personal property and $39,600 for additional living expenses (loss of rents).  After unsuccessfully moving to set aside the verdict, NYCM appealed.

In AFFIRMING the jury's verdict on the dwelling, the Third Department rejected NYCM's argument that the evidence was legally insufficient for the jury to conclude that plaintiff was a resident of the insured premises at the time of the loss and reiterated the relevant legal principles:

The insurance policy at issue provides coverage to a dwelling on the "residence premises." As relevant here, "residence premises" is defined as "[t]he two, three or four family dwelling where you reside in at least one of the family units." The policy, however, does not define "reside" and, therefore, "[t]he standard for determining residency for purposes of insurance coverage requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain" (Dean v Tower Ins. Co. of N.Y., 19 NY3d 704, 708 [2012]; see Sosenko v Allstate Ins. Co., 155 AD3d 1482, 1482 [2017]; Fiore v Excelsior Ins., 276 AD2d 895, 896 [2000], lv dismissed [96 NY2d 755 [2001]). Whether a person resides in any particular location is generally a fact-based determination (see Yaniveth R. v LTD Realty Co., 27 NY3d 186, 194 [2016]). 

The Third Department then recapped the trial evidence supporting the jury's residency finding:

At trial, plaintiff's daughter-in-law testified that she and her husband, plaintiff's son, approached plaintiff to see if she could watch their daughter, plaintiff's granddaughter, during the day. The daughter-in-law stated that plaintiff agreed to so "as long as it was temporary." As such, starting in April 2013, plaintiff stayed at her son's house and babysat her granddaughter in the morning. Aside from a bed and a dresser, plaintiff did not bring other household furnishings from the insured premises to her son's house. Approximately two or three times a week, when the daughter-in-law returned early from work, she would take plaintiff to the insured premises where plaintiff would check the mail and perform household chores. Plaintiff testified that she ate meals at the insured premises, stayed at the insured premises during some weekends, did not change her mailing address from the insured premises and planned to return there after her son stopped working. Plaintiff also testified that she considered the insured premises her home. Furthermore, the fire investigator who testified on behalf of defendant stated that his inspection of the unit where plaintiff lived contained items and furnishings indicative of a person living there. In our view, the foregoing proof was sufficient to establish that plaintiff's stay at her son's house was temporary in nature (see New York Cent. Mut. Fire Ins. Co. v Kowalski, 222 AD2d 859, 861 [1995]) and that she was a resident of the insured premises at the time of the loss. 

Homeowners insurers considering denying dwelling coverage based on the named insured's lack of residency would be wise to review what this jury found to be sufficient evidence of such residency:

• the insured was staying with her son and daughter-in-law temporarily; 
• she had moved only a bed and dresser to her son's house; all other household furnishings remained behind; 
• she would return to the dwelling 2-3 times a week to check mail and perform household chores; 
• she ate some meals at the insured dwelling; 
• she stayed at the insured dwelling during some weekends; 
• she had not changed her mailing address; and
• she considered the insured premises her home.  

NYCM also argued that the amount awarded for the demolition of the insured premises should have been $16,400 and not $28,900, because the latter figure, as testified to by an insurance adjuster, included asbestos control, which NYCM contended was excluded by the policy's pollution exclusion.  That exclusion negated coverage for a loss "caused directly or indirectly" by an ordinance or law requiring an insured "to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants." In rejecting that argument, the Third Department held that "[e]ven assuming that 'pollutants' in the policy at issue encompassed asbestos, the record does not demonstrate that asbestos directly or indirectly caused the loss."

The Third Department did agree, however, with NYCM that the loss of rents award was double what it should have been, modifying the judgment to reduce it by $19,800.  The trial evidence established that plaintiff intended to derive rental income from only the downstairs unit.  Moreover, to the extent that the jury awarded this amount for monies expended by plaintiff for alternative housing, plaintiff failed to establish that she "incurred" any such expenses as required under the policy.

The HOME in HOMEowner's Insurance -- Questions of Fact on Policyholder's Residence Preclude Summary Judgment

PROPERTY – HOMEOWNERS – RESIDENCY REQUIREMENT
Sosenko v. Allstate Ins. Co.
(3rd Dept., decided 11/30/2017)

No, not HOME as in four-fifths of the Greats Lakes.  The home or residence question again, as it bears on structure coverage under a homeowner's insurance policy.

Core Holding:  Contradictory statements of the policyholder regarding the extent of her own physical presence at the premises are alone sufficient to create an issue of fact that may not be resolved by summary judgment.

Homeowner's insurance is written and intended to insure the policyholder's home -- where the named insured resides.  Many homeowner's insurance policies limit structure coverage to the "insured premises", which includes the "residence premises", which are, in turn, defined as the single-family building structure "where you [the named insured] reside."  Residency reduces certain risks of loss, and premium rates for HO policies are based, in part, on the presumption that the named insured resides in the insured premises.  Seems logical and reasonable, don't it?

HO policies that require residency, however, do not define "reside", causing the New York Court of Appeals in 2012 to conclude that the policy term "residence premises", without a definition of "reside", is ambiguous.  In the seminal case of Dean v. Tower Ins. Co. of NY, the Court of Appeals instructed that "[t]he standard for determining residency for purposes of insurance coverage requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain[.]"

Something more than temporary or physical presence.  Some degree of permanence and intention to remain.

On January 15, 2014 plaintiff purchased a single-family home and acquired a homeowner's insurance policy from Allstate.  After closing, plaintiff's father started renovating the home, which was destroyed by fire on February 16, 2014.  Allstate disclaimed coverage on the basis that plaintiff was not residing at the premises at the time of the loss.  Plaintiff sued for breach of contract and, after completion of discovery, moved for summary judgment.  The motion record included the following:

• the premises had been unoccupied for at least two years prior to its acquisition by plaintiff and had no electrical service, running water or a functioning furnace; 
• following the closing plaintiff's father did renovation work at the premises nearly every day and had succeeded in stripping the interior walls on both floors of the two-story house and removing much of the existing wiring; 
• in doing the renovation work, plaintiff's father obtained electricity from a gasoline-powered generator, heated the premises with a wood stove located on the first floor and brought water to the premises that he stored in a tank
• when she acquired the premises, plaintiff was residing with her father and, shortly before the fire, she had relocated to an apartment;
• plaintiff testified that she had slept at the premises on several occasions, an average of two to four nights per week, and that she had intended for the premises to be her permanent residence once renovations were completed;
• Allstate's investigator testified that in a statement he obtained from plaintiff shortly after the fire plaintiff stated that she was not living at the premises; and 
• in an affidavit submitted in opposition to plaintiff's motion, Allstate's investigator also averred that when he interviewed plaintiff by telephone eight days after the fire, she stated that at the time of the fire she was in the process of relocating from her father's home to the apartment and, notably, that she had not been to the premises during the two weeks immediately preceding the fire and had stayed overnight at the premises only once.

Supreme Court denied plaintiff's motion and plaintiff appealed.

In AFFIRMING the denial of plaintiff's motion for summary judgment, the Appellate Division, Third Department, held:

On this record, plaintiff's summary judgment motion was properly denied. The Court of Appeals has held that evidence similar to the record in this case presented issues of fact regarding residency that precluded the grant of summary judgment (see Dean v Tower Ins. Co. of N.Y., 19 NY3d at 708-709). Moreover, as Supreme Court correctly held, the contradictory statements that plaintiff made regarding the extent of her own physical presence at the premises are alone sufficient to create an issue of fact that may not be resolved by summary judgment.

And predictions on what the jury will find?  Was plaintiff "residing" in the insured premise at the time of the fire or not?

What Does It Mean To "Reside" for Insurance Purposes?

PROPERTY – RESIDENCY REQUIREMENT – CHANGE IN OCCUPANCY – AGENT LIABILITY
Harrison v. Allstate Indemnity Co.
(Sup. Ct., Steuben Co., decided 3/3/2017)

In 2009 plaintiffs moved 5-6 miles from the insured dwelling, their home of more than 15 years, to live with and care for Mrs. Insured's ill mother.  They both changed the address on their drivers licenses and used their new address on their income tax returns. In July of 2010, Mr. Insured spoke with his Allstate agent to inform them that plaintiffs were living at the new address.  As a result of that contact, the billing address for policy renewals was changed to the new address, but no other changes were made to the policy itself.

At some point after the plaintiffs had moved, plaintiffs' two sons, a cousin, and a friend began staying at the insured dwelling at different times and for various amounts of time. The house was destroyed by a fire on August 30, 2012. After plaintiffs filed a claim for insurance coverage, Allstate disclaimed liability on the ground that, as plaintiffs had not resided in the home for nearly three years, the home did not meet the policy's definition of a covered "dwelling".

Plaintiffs sued Allstate and their agent and, after discovery, Allstate and plaintiffs moved for summary judgment.  In denying summary judgment to both sides, Steuben County Supreme Court Justice Marianne Furfure held:

In this case, the term "reside" is not defined in the policy and, therefore, it is possible that under the circumstances of this case, plaintiffs may be found to have resided at Pine Hill for insurance policy purposes even while they were caring for Mrs. Harrison's mother on Dodge Avenue for an extended period of time. While residency does require some temporary or physical presence, a degree of permanence and intention to remain at the property is a necessary component (Government Empls. Ins. Co. v. Paolicelli, id.; Yaniveth R. v. LTD Realty Co., Id.; Dean v. Tower Ins. Co. of NY, Id. at 708-709; Auerbach v. Otsego Mut. Fire Ins. Co., Id.). It is possible that, despite the length of time plaintiffs spent at the Dodge Avenue home, the average person might assume that regular maintenance and visits to the Pine Hill property during that time satisfied the policy's requirements (Dean v. Tower Ins. Co. of NY, Id. at 708-709). Plaintiffs' evidence that they had always intended that their absence from Pine Hill to be temporary and that they planned to return as soon as possible, coupled with the fact that they left all of their possessions at Pine Hill, continued to pay the taxes and make improvements to the property raises a question of fact whether, under these circumstances, plaintiffs have satisfied the insurance policy requirement that they reside in the insured premises. This question of fact precludes a grant of summary judgment to both parties (Dean v. Tower Ins. Co. of NY, Id.; cf. Vela v. Tower Ins. Co. of NY, 83 AD3d 1050 [2nd Dept. 2011]; New York Cent. Mut. Fire Ins. Co. v. Kowalski, 222 AD2d 859, 860 [3rd Dept. 1995]).  (Bold added.)

In rejecting Allstate's argument that there was a undisclosed change in occupancy to the home in breach of the policy's condition requiring notice of same, Supreme Court further held:

The term "occupancy", like the term "reside", is also not defined in the contract. Under the circumstances of this case, it is fair to assume that the average insured person may reasonable believe that notification is not necessary if the insureds, while residing at the property, have friends and family stay over for an extended and indefinite time. Before an insurance company is permitted to avoid policy coverage, it must satisfy the burden which it bears of establishing that the exclusions or exemption apply in the particular case, and that they are subject to no other reasonable interpretation (Dean v. Tower Ins. Co. of NY, Id.; citing Seaboard Sur. Co. v. Gillette Co., Id.). The burden is on the insurance company to show that there is no material question of fact that the notification requirement applies in this case. Allstate has not met that burden because there is a question of fact, in the first instance, whether plaintiffs met the insurance policy requirement of residence and whether the presence of their sons, a cousin, and a family friend constitutes a change in the occupancy of the residence sufficient to trigger the notification obligation (Dean v. Tower Ins. Co. of NY, Id.). Therefore, Allstate's motion for summary judgment dismissing the complaint on the grounds that plaintiffs breached the insurance contract is denied.

Finally, the court declined to grant summary judgment dismissing the agent from the action. Allstate's records indicated that normal protocol when a mailing address change was made was to "question insured about use of property and if they were aware of insured not living there or letting others live there they would have changed to [landlords package] policy or discussed second residence".  In the court's opinion, this was sufficient to raise a question of fact regarding what plaintiffs advised the agent and whether there was a failure by Allstate's agent to follow company protocol or notify Allstate of the change in use, given their move to the in-laws' residence for that prolonged period of time.

Note:  This is a lower court decision.  I'll monitor for appellate treatment.

Separated and Non-Resident Spouse Found Entitled to SUM Coverage as "Insured"

SUM – "INSURED" – RESIDENCY REQUIREMENT
Matter of Preferred Mut. Ins. Co. v. Bath
(Sup. Ct., Ulster Co., decided 6/2/2009)

What happens when one policy form defines an "insured" one way and another policy endorsement defines it in another way?

Victoria Bath separated from her husband and moved out of the marital residence in early May 2008.  Less than one month later, on June 1, 2008, she was injured when the driver of the car in which she was riding lost control and the vehicle flipped over. The driver was later charged with driving while intoxicated.  His auto insurer settled with Bath for the $25,000 liability limit of his policy, and Bath then sought SUM coverage from Preferred Mutual under a personal auto policy that had been issued to her husband in his name alone.  Preferred Mutual denied SUM coverage on the basis that Bath's physical separation from her husband in early May 2008 ended her status as an "insured" under the terms of the SUM endorsement of the policy.  Bath demanded arbitration and Preferred Mutual commenced this special proceeding for a stay.

The main personal auto policy form (probably a PP 00 01 form) defined "you" and "your" as follows:

A.  Throughout this policy, "you" and "your" refer to:

1. The "named insured" shown in the Declarations; and

2. The spouse if a resident of the same household. 

 If the spouse ceases to be a resident of the same household during the policy period or prior to the inception of this policy, the spouse will be considered "you" and "your" under this policy but only until the earlier of:

1. The end of 90 days following the spouse's change of residency[.]

The prescribed SUM endorsement, however, defined an "insured" as:

I.  Definitions. For purposes of this SUM endorsement, the following terms have the following meanings:

(a) Insured. The unqualified term "insured" means:

(1) You, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse[.]

Preferred Mutual argued that the SUM endorsement's more narrow, regulatorily prescribed definition of "insured" controlled and that, since Bath had moved out of the marital residence a few weeks before the accident, she did not qualify as an "insured" for SUM coverage purposes.

Ulster County Supreme Court Justice Henry Zwack disagreed, finding this to be "a classic 'ambiguity' in its purest etymological sense: it leads the reader in two directions at the same time."  In ruling in favor of coverage and dismissing the petition, Justice Zwack held:

Both parties to this litigation agree that the dilemma must be resolved. They disagree, not only on the ultimate resolution, but on its method. Petitioner urges that the standard to be applied is one of plain meaning and "impartial interpretation" (Reply Affirmation at para 22), since the SUM language is mandated by statute (see Walton v Lumberman's Mut. Cas. Co., 88 NY2d 211, 214 [1996]). Respondent, on the other hand, insists that the general rule construing inconsistencies in insurance policy language against the drafter should be applied (see Wagman v American Fidelity & Cas. Co., 304 NY 490 [1952]). 

The prescribed language of the SUM endorsement, when read alone, is clear and unambiguous. What removes its clarity and creates the ambiguity is petitioner's facially contradictory definition, ostensibly applicable "throughout th[e] policy." The mandatory SUM language existed first; petitioner wrote its policy and incorporated the pre-existing SUM language. Accordingly, if the unambiguous SUM language loses its clarity because petitioner chose to draft language of its own that contradicts the definitions of the SUM endorsement, the Wagman standard should apply, as it is petitioner and not the Insurance Department that created the ambiguity.

The balance of the analysis is simple. Petitioner's policy provides coverage to respondent under one definition of its terms, then excludes her from coverage under another definition. Resolution of the inconsistency against the drafter of the inconsistent language results in coverage for respondent. 

The appropriateness of this result can be cross-checked by the application of the familiar canon of construction which holds that the specific shall take precedence over the general (Cf. Delaware & Hudson Ry. Co. v McDonald, 126 AD2d 29, 32 [3d Dept 1987]). Petitioner's expansive definition of "you" provides a specific formula for the determination of the termination of coverage for a non-resident spouse at the end of ninety (90) days. The general language of the SUM endorsement merely states that a spouse will be covered "while [a] resident[] of the same household," yet is silent as to whether coverage terminates at the moment when a spouse decides to leave the household, after the spouse has established a different residence, or after the spouse has removed all possessions from the former household. The specific language of the main policy provides clear guidance and fixes a definite terminus for coverage; the general SUM endorsement language does not. Coupled with the unequivocal statement that the specific definition will apply "throughout this policy," there can be little doubt that respondent falls within the definition of covered individuals.

Petitioner contends that the clear statement that the policy's definition would apply "throughout" is countered by the statement that appears immediately before the SUM endorsement: "THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY." This statement is so general as to be meaningless. It cannot be reasonably interpreted as superseding the definition that was said, by petitioner, to apply "throughout the policy." 

To say that the SUM endorsement "changes" the policy is at best surplusage and at worst misleading. If the SUM endorsement did not "change" the policy there would be no point in its inclusion. If the policy already provided exactly the same SUM coverage as the endorsement describes, reiterating the terms of that coverage in an endorsement that did not "change" the policy would be pointless. Therefore, to state expressly that the endorsement "changes the policy" means nothing. If, on the other hand, the true purpose of the statement is to provide petitioner with the ability to claim that its own choice of apparently clear wording that its definitions would apply "throughout this policy" was in fact really intended to mean "only until we choose to use a different definition," it is an intent that cannot be effectuated at respondent's expense. As noted supra, ambiguous language in a contract of insurance is to be construed against the insurer. If petitioner's language was chosen to mean one thing while appearing to mean another, it cannot be enforced.

You can't blame Preferred Mutual for attempting to apply the plain and unambiguous words of the SUM endorsement's "insured" definition.  The potential flaw in Justice Zwack's interpretation of the seemingly inconsistent definitions is his overlooking of the modifying prepositional and adjectival phrase "as the named insured", following the "you" in the SUM endorsement's definition.  The court's decision completely ignores that phrase, rendering it meaningless in comparative construction with the main policy form's definition of "you".  If Justice Zwack had focused on this language and actually applied the "specific over the general" canon of contract construction he cites, he would have found the more specific definition of "insured" in the regulatorily prescribed SUM endorsement to control, leaving Bath uncovered for SUM.  The decision does not indicate whether counsel for Preferred Mutual made this particular argument.

Earlier this month I perfected an appeal in a first-party property coverage case to the Fourth Department in which my core argument pivots on the "specific over general" canon of insurance policy interpretation.  In Rocon Mfg. v Ferraro (199 AD2d 999, 1000 [4th Dept 1993]), the Fourth Department stated that “where ‘there [is] an inconsistency between a specific provision and a general provision of a contract * * * the specific provision controls[.]’"  I'll let you know how that appeal turns out, if Ray Zuppa doesn't beat me to the punch.  No widows or "potential" widows in that case.  Just rich country club members and some wet sand.

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.

Clothing + Toothbrush + Joint Custody Arrangement = Resident for UM Coverage Under Father's Fiance's Auto Policy

AUTO – UM – RESIDENT OF HOUSEHOLD – INFANT CLAIMANT OF DIVORCED PARENTS – SPECIAL PROCEEDING TO STAY UM ARBITRATION – CPLR § 7503
Matter of Allstate Ins. Co. v. Moreno
(Sup. Ct., Suffolk Co., decided 6/5/2008)

While riding his bicycle, Robert Giffone, Jr. was hit by an uninsured motor vehicle and injured. His divorced parents Catherine and Robert Sr., who lived separately, made a claim for UM coverage and then demanded arbitration of that claim under a personal auto policy Allstate had issued to Robert Sr.'s fiance, Nancy Moreno, who married Robert Sr. seven weeks after the accident.

The Allstate SUM policy endorsement (which included UM coverage) defined the term "insured" as "the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse."

Allstate commenced this special proceeding for a permanent stay of the UM arbitration, contending: (1) that Robert Sr. was not an "insured" under the Moreno policy; and (2) that even if he were, Robert Jr. was not a resident of his household.

At a hearing of this matter, counsel for all parties stipulated that at the time of the accident, the Allstate policy named Robert A Giffone, Sr. as an insured driver. Additionally, the respondents introduced a copy of a New York State Insurance Identification Card issued by Allstate to Mr. Giffone under the Moreno policy for his 1995 Jeep Cherokee. That ID card specifically stated that "An authorized NEW YORK insurer [Allstate] has issued an Owner's policy of Liability Insurance . . . to: Giffone, Robert A." The hearing evidence also included a copy of the Allstate Auto Policy Declarations, which confirmed that the policy for Mr. Giffone's Jeep Cherokee included UM/SUM coverage.

Based on that evidence, Suffolk County Supreme Court Justice Peter Mayer ruled that "the respondents * * * established that respondent Robert A. Giffone, Sr. was, himself, an insured under the subject Allstate policy at the time of Robert Jr.'s accident[.]" Justice Mayer also found that Robert Jr. was a resident of both his parents' households:

The evidence has also established that although Robert Jr. resided with his mother, Catherine Giffone, at the time of the accident, he also resided with his father under a joint custody arrangement. It is well settled that a person may have more than one residence for purposes of insurance coverage (Hochhauser v. Elec. Ins. Co., 46 AD3d 174, 844 NYS2d 374 [2d Dept 2007]; Dutkanych v United States Fid. & Guar. Co., 252 AD2d 537, 675 NYS2d 623 [2d Dept 1998]). Whether a person is a resident of an insured's household requires something more than temporary or physical presence and requires at least some degree of permanence and intention to remain (Hochhauser v. Elec. Ins. Co., supra; New York Cent. Mut. Fire Ins. Co. v Bonilla, 269 AD2d 599, 704 NYS2d 819 [2d Dept 2000]; Allstate Ins. Co. v Rapp, 7 AD3d 302, 776 NYS2d 285 [1st Dept 2004]).

In opposition to Allstate's petition, the respondents submit affidavits from both of Robert Jr.'s parents, respondent Mr. Giffione and Catherine Giffone. The sworn affidavits establish that at the time of the May 8, 2006 accident, both parents shared joint custody of Robert Jr., and that Robert Jr. resided with his father on alternate weekends and during summers. More specifically, Robert Jr. had his own bedroom and kept clothing and a toothbrush at his father's house on a year-round basis. These facts sufficiently establish that as a child of divorced parents, Robert Jr. was, in fact, a resident of both parents' households on the date of his accident (citations omitted).

UM coverage applied, Allstate's application for a stay of arbitration was denied, and the parties were directed to proceed to arbitration pursuant to the applicable policy provisions.

20-Day SOL for Commencing Special Proceeding to Stay UM Arbitration Held Not Applicable to Question of Whether Claimant Qualifies as "Insured"

AUTO – UM – CPLR § 7503(C) – 20-DAY SOL TO COMMENCE SPECIAL PROCEEDING FOR STAY – RESIDENCY ISSUE
Matter of Interboro Ins. Co. v. Maragh
(2nd Dept., decided 5/27/2008)

In what sometimes is called the shortest SOL in New York, CPLR § 7503(c) provides that a UM insurer which fails to commence a special proceeding to stay arbitration within 20 days after being served with a notice of intention or demand to arbitrate is generally precluded from objecting to the arbitration thereafter. The New York courts have held that an otherwise untimely petition to stay arbitration may be entertained, however, when its basis is that the parties never agreed to arbitrate the dispute in the first place or that a condition precedent to arbitration has not been met.

In this case, Interboro Insurance Company, which had comenced this special proceeding more than 20 days after being served with a demand to arbitrate, contended that the claimaint did not qualify as an "insured" under the UM provisions of the policy because he did not reside with the named insured, his mother, at the time of his accident.

In REVERSING the lower court's dismissal of the petition as untimely and remitting the matter back to Supreme Court for a hearing on the claimant's residency issue, the Second Department held:

In this case, Interboro raised a factual issue through sworn statements of Chouquette, its named insured, who denied that Maragh, her son, was a resident of her household at the time of the accident. * * * The provision of the subject policy for uninsured motorists coverage defines an "insured" as the named insured or any "family member," the latter being defined as "a person related to [a named insured] by blood . . . who is a resident of [the named insured's] household." Resolution of the factual issue as to whether Maragh was an insured under the subject policy is a condition precedent to arbitration (citations omitted). Further, if Maragh was not an insured under the subject policy, then no agreement to arbitrate existed between him and Interboro, and the 20-day time limit set forth in CPLR 7503(c) is inapplicable[.]