Young et al v. The Hartford Insurance Company

Filing 25

///ORDER granting 14 Motion for Summary Judgment; denying 20 Motion for Summary Judgment. The Hartford's motion for summary judgment is GRANTED, the Young's cross-motion for summary judge is DENIED, and the clerk shall enter judgment accordingly and close the case. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Benjamin Young
and Kathy Young
v.

Civil No.
11-cv-240-JL
Opinion No. 2012 DNH 056

The Hartford Insurance
Company
MEMORANDUM ORDER
This is a dispute over the scope of liability coverage under
a homeowners’ insurance policy issued to plaintiffs Benjamin and
Kathy Young by defendant The Hartford Insurance Company.

In

relevant part, the coverage applies only to claims arising out of
the dwelling where the Youngs “reside,” and does not apply to
claims arising out of their “business.”

Based on these

limitations, The Hartford denied coverage to the Youngs for a
lawsuit against them by their tenant for personal injuries he
allegedly suffered at the premises.

The Youngs responded by

filing suit against The Hartford in Rockingham Superior Court,
seeking a declaratory judgment that the policy covered the claim.
See N.H. Rev. Stat. Ann. § 491:22-a.
The Hartford removed the case here, see 28 U.S.C. § 1441(a),
invoking this court’s diversity jurisdiction, id. § 1332(a)(1),
because The Hartford--appropriately enough--is located in
Hartford, Connecticut, while the Youngs are not citizens of that

state, and the amount in controversy exceeds $75,000.1

The

Hartford then answered and counterclaimed for a declaratory
judgment that the policy’s coverage did not extend to the
tenant’s lawsuit.

The parties have now cross-moved for summary

judgment, see Fed. R. Civ. P. 56, based on undisputed facts set
forth in a joint stipulation.

After hearing oral argument, the

court grants The Hartford’s motion for summary judgment, and
denies the Youngs’ motion for summary judgment.
The relevant stipulated facts are as follows.

The Youngs

own the premises in question, a house in North Hampton, New
Hampshire, and resided there between 1984 and 2007.

After

purchasing a house in Wisconsin, however, the Youngs obtained
drivers’ licenses and voter registrations in that state in late
2007.

In the summer of 2007, they listed their house in New

Hampton for sale, and started renting it out (though they
“resided there for a substantial period of time in 2008”).

1

Challenging this conclusion, the Youngs moved to remand the
case, see 28 U.S.C. § 1447(c), arguing that the amount in
controversy did not exceed $75,000 because, in their tenant’s
lawsuit against them, the parties had stipulated to a prejudgment attachment in the amount of $50,000. Yet the Youngs
acknowledged that “[t]here was certainly a possibility of
recovery in excess of $75,000” in the tenant’s suit. Because it
follows that the amount in controversy in this suit, seeking
coverage against that one, exceeds $75,000, the court denied the
motion to remand. See Order of June 29, 2011.
2

In January 2009, they began renting the New Hampton house to
another couple, Daniel Stanley and Lisa Gosling, initially on a
one-year lease agreement and thereafter on a month-to-month
basis.

During the tenancy, which did not end until September

2010, the Youngs did not reside at the New Hampton house, but in
Wisconsin, and they also spent time in North Carolina.
Coverage under the Youngs’ homeowners’ insurance policy with
the Hartford ran from May 21, 2009 to May 21, 2010.

In September

2010, Stanley filed suit against the Youngs in Rockingham County
Superior Court, seeking recovery for personal injuries he
allegedly suffered in an “incident involving a tree” on the
premises on April 22, 2010.

The Youngs notified The Hartford of

the suit on October 10, 2010, seeking coverage under their
homeowners’ insurance policy.

The Youngs returned to the New

Hampton house that same month, after Stanley and Gosling left.
The Hartford promptly denied the Youngs’ claim.
The Hartford initially defended this decision on a number of
grounds.

Now, it raises only two, as noted at the outset.

First, The Hartford argues that the Youngs did not “reside” at
the premises at any time during the life of the policy, including
when the alleged accident giving rise to Stanley’s lawsuit
occurred.

Second, and independently, The Hartford argues that

Stanley’s lawsuit arises out of the Youngs’ “business” in renting
3

the property to him.

The court need not reach the second

argument because the first argument is correct, and requires the
entry of summary judgment in favor of The Hartford and against
the Youngs.
The relevant liability insurance provisions of the Youngs’
homeowners’ policy state that The Hartford will defend and
indemnify them against a claim “for damages because of ‘bodily
injury’ or ‘property damage’ caused by an ‘occurrence’ to which
the coverage applies” and “pay the necessary medical expenses
that are incurred or medically ascertained within three years of
an accident causing ‘bodily injury.’”

Specifically excluded from

these coverages, however, are “‘[b]odily injury’ or ‘property
damage’ arising out of a premises” owned, rented to, or rented to
others by an insured “that is not an ‘insured location.’”

The

policy defines the term “insured location,” in relevant part, as
“[t]he ‘residence premises,’” defining that term, in turn (and
again in relevant part), as “[t]he one family dwelling where you
reside.”

The policy does not separately define “reside.”

The Hartford argues that, because the Youngs did not
“reside” at the New Hampton house at any point while the policy
was in effect, including at the points when Stanley made his
claim for bodily injuries and when the incident giving rise to
that claim allegedly occurred, the house was not an “insured
4

location.”

This, the Hartford explains, excludes the claim,

which arises out of those premises, from the policy’s liability
coverage.

The Youngs do not question any step of this analysis

aside from the assertion that they did not “reside” at the
premises during the relevant time (which they agree was either at
the time of Stanley’s accident or at the time when he made his
claim against them).
“The interpretation of insurance policy language is a
question of law for this court to decide” and, in deciding it,
the court must “look to the plain and ordinary meaning of the
policy’s words in context” and “construe the terms of the policy
as would a reasonable person in the position of the insured based
on more than a casual reading of the policy as a whole.”

Bates

v. Phenix Mut. Fire Ins. Co., 156 N.H. 719, 722 (2008) (quotation
marks omitted).

As the Youngs themselves point out, the New

Hampshire Supreme Court has “considered the meaning of the term
‘resident’ in the insurance context on multiple occasions,” and,
“[i]n such decisions, ha[s] defined residence as . . . ‘the place
where an individual physically dwells, while regarding it as his
principal place of abode.’”

Belanger v. MMG Ins. Co., 153 N.H.

584, 587 (2006) (quoting Concord Grp. Ins. Cos. v. Sleeper, 135
N.H. 67, 70 (1991)).

This “definition of ‘residence’ considers

two factors that must occur simultaneously:
5

(1) the person must

physically dwell at the claimed residence; and (2) the person
must regard the claimed residence as his principal place of
abode.”

Id.

Based on this definition, which the Youngs accept as
controlling, and their unqualified stipulation that they “did not
reside at the Premises during the tenancy of Stanley,” it is
exceedingly difficult to understand their position that they did
in fact “reside” at the premises at the relevant time (Stanley’s
tenancy lasted for the whole life of the insurance policy and
beyond).

They did not “physically dwell” at the premises during

that time; instead, as they expressly stipulate, they then
“resided in Wisconsin.”
While the Youngs say in their summary judgment memorandum
that “until their North Hampton, New Hampshire house sold, they
intended to return,” that statement is not included in the joint
stipulation, and is otherwise unsupported).

It makes no

difference anyway, at least so far as the court can understand
it.

What the Youngs seem to be saying is that, if the house

remained unsold for some period of time--a period they have not
attempted to define--they would have returned.

Yet they do not

explain how this sort of contingency plan amounts to “physically
dwelling” in a house where they admittedly did not reside.

6

As the Hartford notes, the decision by a federal court of
appeals in Gardner v. State Farm & Fire Casualty Co., 544 F.3d
553 (3d Cir. 2008), is right on point here.

The homeowners’

policy there, just like the one here, provided no liability
coverage for claims arising out of premises that were not “the
residence premises,” defined as “where you reside.”

Id. at 560.

Relying on this exclusion, the insurer denied coverage for a
claim for injuries on the premises in an accident that occurred
nearly eight months after the insured had moved out and started
leasing the premises, first under a six-month written lease and
then on a month-to-month basis.

Id. at 556-57.

The court,

applying Pennsylvania law that “an individual’s residence for
purposes of an insurance policy is his ‘factual place of abode,’
which is ‘a matter of physical fact,’” ruled that the insured
“simply was not residing at the [insured] Property” after moving
out.

Id. at 560.
Significantly, the court rejected the argument--just like

the one the Youngs make here--that the property remained the
insured’s residence because he harbored “the intent to return to
the Property, and actually return[ed] there to live after [the
tenant] left.”

Id. (bracketing by the court omitted).

The court

ruled that “these facts are irrelevant to a determination of [the
insured’s] residence” because--just like the Youngs here--“[a]s a
7

matter of physical fact he was living not at the property but,
rather, was living” at the house where he had moved.

Id.

This

reasoning is fully in accord with New Hampshire law requiring
that a person “physically dwell” at the insured premises in order
to “reside” there, see Belanger, 153 N.H. at 587, and lends
strong support to the conclusion that the Youngs did not “reside”
at the North Hampton house within the meaning of the policy.
The Youngs also argue that the policy is ambiguous.

As

already noted, excluded from the policy’s liability coverages are
“‘[b]odily injury’ or ‘property damage’ arising out of or in
connection with a ‘business’ conducted from an ‘insured location’
or engaged in by an ‘insured.’”

But this exclusion states that

it does not apply to “[t]he rental or holding for rental of an
‘insured location’ [o]n an occasional basis if used only as a
residence.”2

The Youngs argue that, “[b]ecause renting the

entire insured location for any period of time meant that [they]
would not reside at the insured location during the term of the
tenancy,” the policy contains “ambiguous and contradictory
language regarding the right to rent.”

2

While an internal

The exclusion also does not apply to renting the insured
location “in part for use only as a residence” or “in part, as an
office, school, studio or private garage.” Neither of these
exclusions applies here, as the Youngs do not dispute that they
rented the entire house to Stanley and Gosling.
8

inconsistency in the provisions of an insurance policy can create
an ambiguity, see Oliva v. Vt. Mut. Ins. Co., 150 N.H. 563, 565
(2004), the clauses of the policy preserving liability coverage
in case the premises are rented, on the one hand, and negating
that coverage if the insured does not reside on the premises, on
the other, are actually consistent with each other.
As The Hartford points out, the Youngs’ argument overlooks
the fact that renting the entire insured location as a residence
will not trigger the “business” exclusion only if done “on an
occasional basis.”

Renting the insured location “on an

occasional basis” is consistent with maintaining “residence”
there because, while “residence” requires physically dwelling in
a place, it does not exclude intermittent periods of physical
absence.

See Belanger, 153 N.H. at 587-88 (ruling that daughter

was a “resident” of her mother’s household even though she “spent
a few nights” elsewhere); Concord Grp., 135 N.H. at 69-71
(recognizing that insured’s grandson could be a “resident” of her
household despite living elsewhere for weeks at a time).

So it

is not a “practical impossibility,” as the Youngs argue, to rent
a home for “occasional” periods while nevertheless maintaining
“residence” there.

In fact, that describes the common situation

of renting out one’s home while away on vacation or the like, as
a number of courts have observed in finding homeowners’ policies
9

unambiguous despite their provision for “occasional” rentals.
See, e.g., Allstate Ins. Co. v. Sylvester, No. 07-360, 2008 WL
2164657, at *7 (D. Haw. May 21, 2008);

State Farm Fire & Cas.

Co. v. Wonnell, 533 N.E.2d 1131, 1333 (Ill. App. Ct. 1989); Hess
v. Liberty Mut. Ins. Co.. 458 So. 2d 71, 72 (Fla. Dist. Ct. App.
1984); cf. Villanueva v. Preferred Mut. Ins. Co., 851 N.Y.S.2d
742, 743-44 (N.Y. App. Div. 2008) (construing provision for
“occasional rental” to include “one-time rental of [a] summer
home for a five-month period” during ski season).
That the liability provisions of the policy extend to
rentals of the premises “on an occasional basis,” then, creates
no ambiguity as to their coverage over rentals that last the
entire life of the policy--during which the insureds admittedly
“reside” elsewhere.

Nor is the policy ambiguous, as the Youngs

suggest, because it fails to define what “on an occasional basis”
means.

To the contrary, that phrase “is commonly used, readily

understood, and therefore unambiguous.”

Oliva, 150 N.H. at 566-

67 (ruling that “in the care of” was not ambiguous).
The policy provision allowing rentals of the whole premises
“on an occasional basis” unambiguously excludes rentals lasting
for the complete life of the policy, as was the case here.3

3

Of course, the phrase “on an occasional basis” could be
ambiguous as applied to certain rental situations of shorter
10

Indeed, a number of courts have interpreted similar (if not
identical) policy language as unambiguously excluding rentals of
a like nature.

See, e.g., Gardner, 544 F.3d at 559-60 (rental

for 11 months); Allstate, 2008 WL 2164657, at *6-*7 (renting at
least part of property every night for a year, on average, while
not living there); Citizens Prop. Ins. Corp. v. Wise, 926 So.2d
403, 204 (Fla. Dist. Ct. App. 2006) (two-year rental as part of
effort to sell); Sicard v. Mass. Prop. Ins. Underwriting Ass’n,
864 N.E.2d 1259 (table), 2007 WL 1175752, at *3 (Mass. App. Ct.
2007) (rental for entire policy period); State Farm Fire & Cas.
Co v. Piazza, 131 P.3d 337, 338 (Wash. Ct. App. 2006) (“long term
rental arrangements and total absence of the homeowner for over
two years”).

The Youngs provide no authority to the contrary.

In sum, the Youngs’ insurance policy with The Hartford was,
as they acknowledge, a homeowners’ policy.

It should come as no

surprise, then, that its liability coverages do not reach beyond
the Youngs’ “home,” i.e., the place where they reside.

In this

sense--which is the only relevant one--the Youngs’ North Hampton
house was not their “home” at any time during the life of their

duration, see Villanueva, 851 N.Y.S.2d at 743-44, but the fact
“that terms of a policy of insurance may be construed as
ambiguous when applied to one set of facts does not make them
ambiguous as to other facts which come directly within the
purview of such terms.” 2 Lee R. Russ, Couch on Insurance
§ 21:14 (3d ed. 2008 & 2011 supp.). That is the case here.
11

homeowners’ policy.

So the policy does not provide liability

coverage against Stanley’s claim as a matter of law.

Thus, The

Hartford’s motion for summary judgment4 is GRANTED, the Youngs’
cross-motion for summary judgment5 is DENIED, and the clerk shall
enter judgment accordingly and close the case.

SO ORDERED.

____________________________
Joseph N. Laplante
United States District Judge
Dated:
cc:

March 16, 2012

R. Peter Taylor, Esq.
Harvey Weiner, Esq.
Robert A. McCall, Esq.

4

Document no. 14.

5

Document no. 20.
12