Opinion
C.A. No. 07C-07-006 THG.
Date Submitted: May 8, 2009.
July 17, 2009.
David C. Malatesta, Jr., Esq., Kent McBride, P.C., Wilmington, DE.
Monica E. O'Neill, Esq., Thomas, Thomas Hafer, LLP, Philadelphia, PA.
Stephen W. Spence, Esq., Phillips, Goldman Spence, P.A., Wilmington, DE.
William B. Wilgus, Esq., Millsboro, DE.
OPINION AND ORDER
Dear Counsel:
This matter is before the Court on Windsor-Mount Joy Mutual Insurance Company's Motion for Summary Judgment. For the reasons that follow, Plaintiff's Motion for Summary Judgment is GRANTED.
PROCEDURAL AND FACTUAL BACKGROUND
Plaintiff, Windsor-Mount Joy Mutual Insurance Company (hereinafter "Plaintiff"or "Windsor"), filed a Complaint for Declaratory Judgment asking this Court to declare that there is no coverage to Defendants, T. Theodore Jones or the Estate of Michael E. Kohut (deceased) (hereinafter collectively referred to as "Defendant Jones"), pursuant to Defendant Jones' homeowners insurance policy. Plaintiff asks this Court to declare that it has no obligation to honor the claim submitted by Defendant Jones for fire damage sustained to the property located at 15276 Hudson Road, Milton, Sussex County, Delaware (hereinafter "the property") on November 21, 2006. Defendant Jones filed an Answer with Counterclaim and Third Party Complaint against Atlantic/Smith, Cropper Deeley LLC (hereinafter "Defendant Atlantic Smith"), an independent broker and insurance agent for Windsor.At all times pertinent to this litigation, T. Theodore Jones and his step-father, Michael E. Kohut, owned the property as joint tenants. Jones resided elsewhere at 1309 Southwest-172 Terrace, Pembroke Pines, Florida, or 187 Lakeside Drive, Lewes, Delaware, for the relevant portion of this matter. Moreover, on or about September 30, 2005, Kohut left the property and began to reside at the Manor at Waymart, an assisted care facility located at 596 Honesdale Road, Waymart, Pennsylvania. As a result, the property was not used by any individual as a day-to-day residence for nearly fourteen months from September 30, 2005, through November 21, 2006.
Jones contacted Defendant Atlantic Smith on or about June 29, 2006, to obtain homeowners insurance coverage for the property. The reason Jones was seeking coverage was because the prior policy had lapsed for non-payment. This bill had been mailed to the property and with no one living there it went unpaid and lapsed. On the application for insurance with Defendant Atlantic Smith, when asked whether the home was the "insured's primary residence", Jones answered "yes". Based on the application submitted by Defendant Atlantic Smith, Windsor issued a policy of homeowners insurance to Jones and Kohut effective June 29, 2006, through June 29, 2007.
The policy provided, in part, the following:
Perils Insured Against-Coverages A, B, C, and D
Coverage A-Residence and Coverage B-Related Private Structures- "We" insure property covered under Coverages A and B for risks of direct physical loss, unless the loss is excluded under the Exclusions Applying to Coverages A and B or under the Exclusions that Apply to Property Coverages.
Exclusion Applying to Coverages A and B: 4. Vandalism- "We" do not pay for loss caused by vandals if the "residence" is vacant for more than 30 days in a row just before the loss. A "residence" being built is not vacant.
Coverage C-Personal Property- "We" insure against direct physical loss to property covered under Coverage C caused by the following perils, unless the loss is excluded under the Exclusions That Apply to Property Coverages:
1. Fire or Lighting
8. Vandalism- However, "we" do not pay for loss to property in the "insured premises" if the "residence" is vacant for more than 30 days in a row just before the loss. A "residence" being built is not vacant.
Misrepresentation, Concealment, or Fraud- This policy is void as to "you" and any other "insured" if before or after a loss:
a. "you" or any "insured" has willfully concealed or misrepresented:
1) a material fact or circumstance that relates to this insurance or the subject thereof; or
2) an "insured's" interest herein; or
b. there has been fraud or false swearing by "you" or any other "insured" with regard to a matter that relates to this insurance or subject thereof.
Owner Occupancy- Unless otherwise indicated on the "declarations", "we" do not pay for the loss that occurs more than 30 days after the date the "insured premises" is no longer "your" permanent place of residence. However, this does not apply:
a. if the "insured premises" remains a permanent residence of a person who was an "insured" under definition 8.a., 8.b., or 8.c. of this policy while the "insured premises" was "your" permanent place of residence; or
b. if "you" die while the "insured premises" is "your" permanent place of residence.
On or about November 21, 2006, an intentionally set fire by vandals severely damaged the property and its contents.
STANDARD OF REVIEW
A motion for summary judgment is properly granted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. When a motion for summary judgment is supported by evidence showing no material issue of fact, the burden shifts to the non-moving party to demonstrate that there are material issues of fact requiring trial. Upon motion for summary judgment, the Court must view the facts in a light most favorable to the non-moving party. The Court will accept as established all undisputed factual assertions, made by either party, and will accept the non-movant's version of any disputed facts. From those accepted facts, the Court will draw all rational inferences that favor the non-moving party. Moreover, the Court's interpretation of an insurance policy is a matter of law.DISCUSSION
Defendant Jones' Representation On The Insurance Application
Delaware's Insurance Code provides that "all statements and descriptions in any application for an insurance policy by or in behalf of the insured shall be deemed to be representations and not warranties." Misrepresentations, incorrect statements, and concealment of facts will not "prevent recovery under the policy or contract unless they are material either to acceptance of the risk or to the hazard assumed by the insurer."A misrepresentation in an insurance policy is an assertion that is contrary to the facts. A misrepresentation is a question of fact when there is conflicting evidence and a question of law when the evidence is susceptible to only one interpretation. Furthermore, a misrepresentation is material "if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so."
Smith v. Keystone Ins. Co., 2005 WL 791387, *2 (Del. Super. 2005).
Id.
Id.(quoting Restatement (Second) of Contracts § 164(2)).
Here, Defendant Jones applied for homeowners insurance from Defendant Atlantic Smith in June of 2006. At that time, Jones affirmed that Kohut occupied the property when questioned about the "insured's primary residence." However, the property had not been occupied on a daily basis because Kohut moved to Pennsylvania in September of 2005. The Plaintiff argues that since the property was unoccupied for approximately ten months before the application, Jones materially misrepresented that the property was the "insured's primary residence." Despite Jones' knowledge of Kohut's status, the Plaintiff was not informed about the unoccupied state of the property before the fire. Consequently, the Plaintiff argues that this non-disclosure is a material misrepresentation which should void the policy.
In response, Defendant Jones skirts responsibility for any alleged misrepresentation by noting, in part, that the insured is not responsible for reading the entire policy which was initially filled out by an agent of the insurance carrier. Yet, as pointed out in Oglesby, the insured is responsible for providing accurate answers and "is held responsible for reading those portions, such as the application, which involve information he provided, and which were required to be truthful at the risk of voiding the policy." While Defendant Jones may not have made a misrepresentation in the insurance application, the Court is unconvinced that Jones' response was entirely accurate and did not have an impact on the insurer's decision to is sue the policy. Thus, Defendant Jones' reliance on Oglesby to alleviate responsibility is unfounded.
Oglesby v. Penn Mut Life. Ins. Co., 877 F. Supp 872, 888 (1994).
Id.
However, even if Jones concealed facts or was less than truthful, the Plaintiff fails to consider both Kohut's intent to return to the property and Jones' belief about Kohut's return to the property at the time Defendant Jones applied for insurance coverage. The intent to reside is a material issue of fact which presents a jury question. If such an intent exists, then it cannot be said that the property was not the residence at issue here.
This Court has previously examined the concept of residency in the context of homeowners insurance and determined that intent is an integral component of this examination. In Engerbretsen, for instance, a multi-factor approach was adopted to determine the meaning of "resident of the household" for homeowners insurance coverage. An important factor in this examination is the "intent of the occupier and the policyholder." Furthermore, the "subjective or declared intent of the [occupier], while a fact to be considered, is not controlling, but the intended duration must be determined only after a thorough examination of all the relevant facts and circumstances surrounding the relationship."
See,e.g., Engerbretsen v. Engerbretsen, 675 A.2d 13, 19 (Del. Super. 1995).
Id.
Id. citing Pamperin v. Milwaukee Mut. Ins. Co., 197 N.W.2d 783, 788 (1972).
More specifically, this Court has found that in a homeowners insurance policy "residence" includes 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." The Court has also concluded that the intent to establish residence is generally a question left for the jury to decide.
Williamson v. Standard Fire Ins. Co., 2005 WL 6318348, *5 (Del. Super. 2005) (quoting Webster's Third New International Dictionary at 1931 (1993)).
Id.
As indicated, a question of fact remains that a jury must resolve about Defendant Jones' representation on the insurance policy. In other words, reasonable people can disagree as to whether Kohut intended to return to live on the property when the insurance policy was made or whether Jones believed that Kohut intended to return home. By then, Kohut had resided at an assisted-living facility for nearly ten months. However, given the present record, the Court cannot say that Kohut never intended to return to the property and abandoned it. This issue of residence cannot be discounted merely because the property remained vacant up to the date of the fire. To be sure, many in an assisted-living facility hope or expect to return home and certainly family members may regard assisted-living care as a temporary situation. In light of the foregoing, Defendant Jones' representation on the insurance policy regarding the "insured's primary residence" cannot be construed by the Court as a misrepresentation and would be a question of fact for a jury to examine.
Since material issues of fact exist concerning the misrepresentation on the insurance application allegedly attributable to Defendant Jones, summary judgment on this basis alone is inappropriate.
The Subject Property Was Vacant for More Than Thirty Days Prior to the Fire Loss
The scope of insurance coverage in Delaware is determined by the language of the insurance policy. If the language of the insurance policy is unambiguous, the parties are bound by its clear meaning. In addition, the Court should not consider extrinsic evidence to determine the intent of the parties where the language of the insurance policy is straightforward. However, when the language of the insurance policy is ambiguous, it will be construed "most strongly against the insurance company that drafted it."
Woodward v. Farm Family Cas. Ins. Co., 796 A.2d 638, 641-42 (Del. 2002).
ABB Flakt, Inc. v. National Union Fire Ins., Co of Pittsburgh, Pa., 731 A.2d 811, 816 (Del. 1999).
Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127, 129 (Del. 1997) (quoting Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992)).
Under the terms of the homeowners insurance policy, Windsor would "not pay for loss caused by vandals if the `residence' is vacant for more than 30 days in a row just before the loss." Defendant Jones' asserts that the term "vacant" in the policy is reasonably susceptible to multiple interpretations. The suggestion is made that this ambiguity should be construed against Windsor under the contra proferentem principle of contract construction. Defendant Jones largely relies on case law from other jurisdictions suggesting that a dwelling may not be "vacant" in circumstances where the property at issue was not devoid of objects or people. Because Kohut's personal property remained in the subject property, the house was "winterized", and Jones made "frequent" visits to the home, Defendant Jones maintains that the subject property was not "vacant."
See Chowdhury v. LMI Ins. Co., 1997 WL 54453, *3 (C.A.3 (Pa.)).
Defendant Jones' reliance on Chowdhury is misguided. The Chowdhury decision is not binding on the Court and can readily be distinguished from the present case. The Chowdhury Court examined the vacancy of rental property and ultimately found that ambiguity existed in that contract and context. As Chowdhury explains, "the fact that the insurance contract was for rental property (thus contemplating gaps between the leases of tenants) clouds the issue even further."
Id.
Id.
Moreover, even though the concept of vacancy has received limited discussion under Delaware law, the Court has addressed the assessment of vacancy fees pursuant to the City of Wilmington Code. In Adjile, it was found that "placing a `For Sale' sign on the property, stating a property can be rented, having a business own the property solely for the purpose of selling that property, or having a person come to the property a few hours a week does not constitute occupancy pursuant to the terms of the Wilmington Code, nor does it justify the waiver of vacancy fees."
Adjile, Inc. v. Wilmington, 2007 WL 2028536 (2007).
Id. at *5. (emphasis added).
Likewise, other jurisdictions have concluded that the lack of a day-to-day resident at an insured property renders that property vacant under an insurance policy notwithstanding the household contents. As Langill notes, property may be considered vacant despite sporadic entry since "at the critical and likely times for vandalism and arson, there was no one in the house to discourage, see, or hear marauders, or to hear the activation of smoke detectors."
See Langill v. Vt. Mut. Ins.Co., 268 F.3d 46 (1st Cir. 2001); Vushaj v. Farm Burearu Gen. Ins. Co., 2009 WL 693653 (6th Cir. 2009).
Langill at 48-49.
The Vushaj Court's reasoning is similarly persuasive in light of Langill and Adjile. Examining a homeowners policy where a vacancy provision was contested even though the home was unoccupied, the Vushaj Court noted
Any reading of the contract results in the conclusion that the purpose of the provision in question is to protect the insurance company from the increased risk that accompanies insuring a house that does not have an occupant. Plaintiff's assertion that a structure must be wholly empty for the provision to take effect is therefore unpersuasive. When plaintiff's definitions of the terms are accepted, absurdity results. For example, a fully furnished house would never be considered to be vacant, even if no person entered the house for years, simply because the furniture in the house prevented the structure from being "completely empty." Because terms must be interpreted in the context of the contract in which they appear, we conclude that the terms "vacant" and "unoccupied" mean "not routinely characterized by the presence of human beings."
Vushaj at 3-4.
Like Vushaj, the language of the insurance policy here is unambiguous. The policy clearly excludes coverage when the property was vacant for thirty days in a row before a loss. The term "vacant" in the context of the contract is fairly read as not being routinely characterized by the presence of human beings. Defendant Jones fails to offer any evidence to suggest that anyone lived at the property on a regular basis after Kohut departed in September of 2005.
Moreover, Jones' visits to the property, the winterization of the home, and the presence of Kohut's personal property in the subject property fail to convince the Court that the property was occupied. Actually, the fact that the property was winterized strongly supports a "vacant" ruling. Considering the obvious and increased risk insurers have when insured property is without routine human presence, sporadic or irregular interaction with the property runs contrary to the concept of occupancy inherent in the vacancy provision. Defendant Jones was free to seek coverage to account for the vacancy at the property. Under these circumstances, Windsor should not bear the responsibility for Defendant Jones' failure to do so.
The Fire Marshal determined that the fire was intentionally set by unknown individuals. When the arson occurred, the property had been vacant for far longer than thirty days in a row. As a result, Windsor has no obligation to honor the claim for fire damage submitted by Defendant Jones pursuant to the insurance policy, since no issue of material fact exists regarding the vacancy exclusion.
Accordingly, as a matter of law, the Court finds that the "vacancy" provision in the insurance contract is clear and unambiguous and that the subject property was vacant for more than thirty days prior to the fire loss. The Court is satisfied that no material issues exist to preclude summary judgment on this issue.
CONCLUSION
Windsor is entitled to summary judgment since the terms of the applicable insurance policy are clear and unambiguous and the subject property was vacant for more than thirty days prior to the fire loss. Under the insurance policy, there is no genuine issue of material fact as to this matter, and Defendant Jones did not meet its burden to demonstrate that material issues of fact do exist regarding the vacancy provision. Therefore, Plaintiff's Motion for Summary Judgment is hereby GRANTED.
IT IS SO ORDERED.