Opinion
C.A. No. 04C-07-033 RFS.
Submitted: May 18, 2005.
Decided: August 19, 2005.
Paul G. Enterline, Esquire, Georgetown, DE.
Richard K. Goll, Esquire, Goldfein Joseph, Wilmington, DE.
Dear Counsel:
This is my decision regarding the Defendant, The Standard Fire Insurance Company's Motion for Summary Judgment and the Plaintiff, Ruby Williamson's Cross Motion for Partial Summary Judgment. For the reasons set forth herein, the motions are denied.
STATEMENT OF THE CASE
This case arises out of a dispute over The Standard Fire Insurance Company's ("Standard Fire's") refusal to allow coverage for a dwelling insured under its homeowners policy. Ruby Williamson (formerly Ruby Loockerman) ("Williamson") purchased homeowners insurance for a residence in Greenwood, Delaware sometime in 1995. In 1999, Williamson got married and moved out of the residence and into her husband's home. The house sat empty for a while and was then rented out to two consecutive tenants, beginning that same year. Mrs. Williamson left some of her personal property on the premises, including a camper. According to her deposition testimony, she visited the property to swim in a pool there, sometimes staying overnight in the camper. She testified that she stopped spending nights at the property when her husband had a pool put in for her at their joint residence. She thought it had been completed in 2001.
On January 6, 2004, a fire broke out in the kitchen and damaged the dwelling. Standard Fire, however, refused to provide coverage when it discovered that Williamson no longer resided in the dwelling and had rented it out to tenants. Williamson filed a claim in this Court in July 2004 stating that the coverage was willfully and wrongfully denied. In its answer, Standard Fire made a request for declaratory judgment. It asked the Court to determine whether, under the terms and conditions of the policy, the Plaintiff was entitled to coverage when she had bought a homeowners policy rather than a renter's policy and had rented the dwelling out for as many as five years without notifying the insurance agent.
Standard Fire highlights the fact that there are renters policies for those who own a home and rent it out to others. The Court does not find this circumstance to be helpful, however, because there are policies entitled both Homeowners and Businessowners, which permit an insured to rent out her premises.
The issue sub judice is a Motion for Summary Judgment filed by Standard Fire. It argues that the terms of the policy do not cover Williamson because she did not reside in the dwelling at the time of the fire. Williamson responds with her own Cross Motion for Partial Summary Judgment, claiming that the terms of the policy do cover the fire damage, or that, in the alternative, the presence of the camper on the property creates a material issue of fact as to whether she resided on the premises.
STANDARD OF REVIEW
This Court will grant summary judgment only when no material issues of fact exist, and the moving party establishes that it is entitled to judgment as a matter of law. Cole v. Delaware League for Planned Parenthood, Inc., 530 A.2d 1119, 1124 (Del. 1987). The court views the evidence in a light most favorable to the nonmoving party. Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979). When cross motions for summary judgment are filed, "the parties implicitly concede the absence of material factual disputes and acknowledge the sufficiency of the record to support their respective motions." Merrill v. Crothall-American, Inc., 606 A.2d 96, 100 (Del. 1992). If material issues of fact exist or if the Court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, then summary judgment is not appropriate. Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962). The Court's interpretation of an insurance policy is a matter of law. Nat'l Union Fire Ins. Co. v. Fisher, 692 A.2d 892, 895 (Del. 1997).
DISCUSSION
"As a general rule . . . an insurance contract is construed strongly against the insurer, and in favor of the insured, because the insurer drafted the language that is interpreted." Hallowell v. State Farm Mut. Auto Ins. Co., 443 A.2d 925, 926 (1992). This rule does not apply, however, unless there is some ambiguity in the contract language. Id. When the language is clear and unambiguous, a party is bound by its plain meaning. Id. "[A]n ambiguity exists when the language in a contract permits two or more reasonable interpretations." Id.
Under Standard Fire's Homeowners policy, the "insured" is defined as "you and the following residents of your household: a. your relatives; b. any other person under the age of 21 who is in the care of any person named above." There is no dispute that Williamson was the insured in the policy. The "insured location" consists of:
a. The residence premises
b. The part of any other premises, other structures, and grounds, used by you as a residence and which is shown in the Declarations or which is acquired by you during the policy period for your use as a residence;. . . .
"`[R]esidence premises' means the one or two family dwelling, other structures, and grounds or that part of any other building where you reside and which is shown as the `residence premises' in the Declarations." (Emphasis added). The policy lists the location of the "residence premises" as RD 16, Greenwood, DE 19950.
Standard Fire's insurance policy consists of two sections: Section I — Property Coverages, and Section II — Liability Coverages. Section I embodies the parameters for coverage of the dwelling (Coverage A), other structures (Coverage B), personal property (Coverage C), and for loss of use (Coverage D). The relevant section, "Coverage A — Dwelling" provides:
We cover:
a. The dwelling on the residence premises shown in the Declarations used principally as a private residence, including structures attached to the dwelling on the same or contiguous foundation . . .
Only one Delaware case has directly addressed the interpretation of a homeowners policy in a similar context. In Shreckengast v. State Farm Fire Cas. Co., 1998 WL 731566 (Del.Super.Ct.), the Court was faced with the plaintiffs' attempt to get coverage under their homeowners policy for an apartment damaged by a tree. They owned the apartment but used it solely as a rental property. The Court concluded:
I find that [the Shreckengasts] cannot recover because the Homeowner's Policy did not encompass the apartment building. When terms of a policy are clear, the Court should enforce the policy as written. This policy distinctly provides coverage only for structures in which the Shreckengasts resided, on a permanent or temporary basis. As stipulated, the plaintiffs never resided or occupied any portion of the apartment building.Id. at *3. The Shreckengasts' policy, however, explicitly stated that "property regularly rented or held for rental to others by an insured" was not covered. Id. at *3 n. 18. The policy in this case contains no such exclusion. Williamson's situation is further distinguished from the Shreckengasts' by the fact that she did reside in the dwelling for a period.
In the policy here there is, at the very least, a minimum residency requirement. This is evidenced by the use of the term "residence premises" along with the language defining that term. If this were a case like Shreckengast, 1998 WL 731566, for example, and Williamson had used the dwelling only as a rental property, the result would be clear. The policy would not provide coverage.
Standard Fire's homeowners policy contains no language establishing whether an insured must continuously reside on the premises, nor does it explicitly forbid temporary absences or the possibility that an insured might reside on the premises for a few years and then rent it out for a few years.
The policy contains no exclusion in Coverage A for a dwelling that is rented. Cf. Shreckengast, 1998 WL 731566. The absence of such an exception is significant because Coverage B for other structures does contain an exclusion, which states:
WE DO NOT COVER OTHER STRUCTURES:
b. USED IN WHOLE OR IN PART FOR BUSINESS PURPOSES: OR
c. RENTED OR HELD FOR RENTAL TO ANY PERSON NOT A TENANT OF THE DWELLING UNLESS USED SOLELY AS A PRIVATE GARAGE. Use of Coverage B does not reduce the amount of coverage available to you under Coverage A — Dwelling.
Furthermore, SECTION II — LIABILITY COVERAGES includes personal liability (Coverage E) and medical payments to others (Coverage F). Under Section II's Exclusions, the Policy provides that Coverages E and F "do not apply to bodily injury or property damage:"
d. Arising out of the rental or holding for rental of any premises by any insured. This exclusion does not apply to the rental or holding for rental of an insured location:
(1) on an occasional basis if used only as a residence.
(2) in part for use only as a residence, unless a single family unit is intended for use by the occupying family to lodge more than two roomers or boarders;. . . .
This exclusion in Section II shows that the policy anticipates that an "insured location" may be rented out either in part or on an occasional basis. In addition, this exception is listed only as a Section II exclusion, applying to Coverages E and F. Section I, Coverage A, contains no similar exclusion limiting coverage of the dwelling if it is rented. Looking at the policy as a whole, it is clear that nothing in it prohibits the dwelling from being rented, at least on an occasional basis.
With no further guidance from the terms of the policy, the Court looks to the meaning of the terms "residence" and "reside." Williamson lived on the premises for several years. The definition in the policy of "residence premises" indicates that in order to qualify for coverage for her dwelling, she must have resided on some portion of the residence premises at some point. The pertinent question is does an insured's extended absence from the premises render it not a "residence premises"?
Other state courts differ as to how long an insured must reside in a dwelling or on the residence premises in order for it to qualify for coverage under a homeowners policy. Some interpret the policies as requiring the insured to have resided in the premises at the time of the fire or other damage. See Shepard v. Keystone Ins. Co., 743 F. Supp. 429, 430-32 (D. Md. 1990) (finding no ambiguity in the terms "residence" and "reside" and concluding that the contract specifically required the property to be a dwelling in which the insured was living); Whitaker v. Grange Mut. Cas. Co., 2004 WL 2245112 (Ohio App. 2 Dist.) (upholding trial court's finding that the contract unambiguously required that the Whitakers reside in the dwelling in order for it to be insured).
Others have found that the terms "where you reside" and "occupied by" are merely descriptions of the dwelling at the time the policy takes effect. See Ins. Co. of North America v. Howard, 679 F.2d 147, 148-49 (9th Cir. 1982) (interpreting Oregon law and finding that a widow who had rented her house for a year while she was in Florida was covered by her homeowners policy because it was only an "occasional rental"); Farmers Ins. Co. of Oregon v. Trutanich, 858 P.2d 1332, 1336-38 (Or.Ct.App. 1993) (finding "where you reside" language was insufficient to take rented house out of coverage under homeowners policy). Thus, if the insurance company wants to have the homeowners policy terminate when he vacates the home or rents it out, it must provide so explicitly and unambiguously in the policy. Howard, 679 F.2d at 149.
Still another Court has found the term "where you reside" to be ambiguous because it does not specifically require continuous physical presence or forbid temporary absences by the insured. FBS Mortgage Corp. v. State Farm Fire and Cas. Co., 833 F. Supp. 688, 693 (N.D. Il. 1993). That Court, interpreting Illinois law, also noted that the phrase "residence premises" was ambiguous because it failed to establish "when and for how long the named insured must be physically present at the Insured Premises in order to `reside' there." Id.
In this regard, Applemans' Insurance Law and Practice differentiates the conflicting results in the case law by distinguishing the results based on the language of the policies, stating:
The definition of the identification clause term "residence premises," as "the one-or two-family dwelling, other structures and grounds; or that part of any other building where you live, shown as the residence premises in the Declarations" has been held not to require that an insured must actually reside on the described premises . . . The definition merely identifies the covered premises; and the clause "where you live" merely describes the space that is covered when an insured lives in a multi-unit dwelling.
Actual residence by the insured is required, however, by the slightly differently worded definition of "residence premises," as "the one or two family dwelling, other structures, and grounds or that part of any other building where you reside and which is shown as the `residence premises' in the Declarations."
4A John Alan Appleman Jean Appleman, Insurance Law and Practice § 2832 (Supp. 2005) (Emphasis in original). The language in Standard Fire's policy is identical to the second example, which requires actual residence.
Considering the case law and the language specific to the policy before it, the Court finds the phrase "where you reside," and the term "residence premises" to be unambiguous. 15 Holmes' Appleman on Insurance 2d § 113.3, at 405 has this to say about judicial construction of ambiguous language:
When contract language has more than one possible interpretation, but has a single settled legal meaning or interpretation, then that meaning or interpretation applies. Only in the absence of an established legal meaning does the ambiguity require judicial construction. In essence, that is the "plain meaning" rule.
While the definition of "residence premises" may not indicate for how long the insured must reside on the premises and whether the insured must reside there on a continuous basis, it is a term that is understood to require some degree of bodily presence. In Delaware, the term "resident" is often equated with the legal term of "domicile." For example, under the State tax law, a resident individual of the state is defined as an individual:
(1) Who is domiciled in this State to the extent of the period of such domicile; . . . or
(2) Who maintains a place of abode in this State and spends in the aggregate more than 183 days of the taxable year in this State.
10 Del. C. § 1103.
Domicile is said to require bodily presence plus the intent to make the place one's home. See Black's Law Dict. 1310 (7th ed. 1999). See also Fritz v. Fritz, 187 A.2d 348, 349 (Del. 1962) ("[A] domicile is defined as a dwelling place with the intention to make that place the resident's permanent home. It requires a concurrence of the fact of living at a particular place with the necessary intention of making that the permanent home."). Because there is no exclusion or other limitation in Standard Fire's policy on the time an insured must be living on the resident premises in order to be considered residing there, the Court finds the plain meaning of residence to be the combination of a temporary or permanent presence on the property, with the intent to make the property one's home.
This plain meaning is well understood in the common vocabulary. Webster's Third New International Dictionary at 1931 (1993) defines a "residence" as "the act or fact of abiding or dwelling in a place for some time; an act of making one's home in a place." It also defines one as "a temporary or permanent dwelling place, abode or habitation to which one intends to return as distinguished from a place of temporary sojourn or transient visit." Similarly, a note to the definition of "reside" states, "reside, despite the fact that it is somewhat formal, may be the preferred term for expressing the idea that a person keeps or returns to a particular dwelling place as his fixed, settled or legal abode." Id.
When the policy does not give a specific answer to the question of how long is too long of an absence from a premises, as in this case, a Court must turn to the facts to determine whether the insured still had the intent to make the residence her home. Intent, however, is generally a question left to a jury to decide.
In this regard, Mrs. Williamson moved out of the dwelling at RD 16 in Greenwood in 1999, five years before the fire. She also testified that she had not stayed in her camper since her husband had a pool installed at their house. She stated that she believed the pool was completed in 2001, about three years before the fire occurred. It does not appear that Williamson has removed the camper or the personal property she had stored there.
Given the present record, the Court finds summary judgment is inappropriate. There remains a question of fact that the jury must resolve. Standard Fire's policy permits that, at the very least, an insured may rent out the dwelling on an occasional basis. Occasional means "from time to time" or "now and then." Reasonable people can disagree as to whether Mrs. Williamson's renting of her property to tenants amounts to something more than an occasional rental or whether she had abandoned the property as a home. Moreover, neither party addressed in their briefs Williamson's intent to either abandon the house as a home or to return to it at some time in the future. Without a stipulation on that issue, the Court cannot decide whether Williamson "resided" on the premises.
Williamson also argues that she would have coverage of the loss in the main house if she resided in the camper. The camper was not rented. However, if the camper is regarded as her dwelling, then the rented house would come under the "other structure" exclusion in Coverage B.
Williamson also argues that Standard Fire should be estopped from denying coverage, or that it waived coverage because it received information that would have placed it on notice that she had left the premises. She bases this argument on a record of a phone call made by her to Standard Fire on October 18, 1999. She received the record in the discovery process from Standard Fire. During the phone conversation, Williamson apparently requested a duplicate copy of her renewal policy.
Denise Taylor, a representative of Standard Fired testified by deposition that an employee of the insurance company, Willard Everett ("Everett") had taken Williamson's call. The record of the call indicated that she had not received her annual renewal. Assuming Everett had followed the normal company policy, he would have requested her mailing address and had a new copy sent to her. There is no way to confirm that company policy was followed and there is apparently no record that that was what was done. Williamson herself has no recollection of the telephone conversation.
The facts underlying Williamson's claims of estoppel and waiver are speculative at best. She has presented insufficient facts on this issue for the Court to be able to find summary judgment in her favor.
CONCLUSION
Considering the foregoing, summary judgment is denied.IT IS SO ORDERED.