Is shooter insured under Grandma’s policy?
On May 1, 2013, Dusty Groom and Brody Heitmann were in Dusty’s truck in the Britton High School parking lot. Dusty had a handgun, which discharged, shooting Heitmann in the head. Heitmann survived and sued Dusty to recover compensation for his injuries. In December 2014, Heitmann and Dusty entered into a settlement agreement. Dusty confessed to a judgment of $1,100,000 for compensatory damages in favor of Heitmann. Pursuant to the settlement, Dusty agreed “to assign to Brody Heitmann any and all claims or related causes of action [Dusty] may have against American Family [Mutual Insurance]” under a policy issued to Dusty’s grandmother, Bonnie Buhl. Heitmann also agreed that he and his heirs would not “execute against or otherwise seek to collect … the judgment entered against Dusty [personally.]”
In February 2015, Heitmann filed a declaratory judgment action against American Family. Heitmann sought a ruling that, on the date of the shooting, Dusty was an insured under Buhl’s policy for purposes of liability coverage. As Dusty’s assignee, Heitmann also sought damages for breach of contract and for American Family’s alleged bad faith refusal to defend and indemnify Dusty under Buhl’s policy.
American Family had issued Buhl a farm/ranch policy for the period ofMarch 15, 2013 to March 15, 2014. The policy insured land and a farmhouse owned solely by Buhl. Section II, Coverage E provided personal liability coverage with a $1,000,000 limit. Tammy Groom, Buhl’s adult daughter, lived on the insured premises with her son, Dusty. Buhl lived on a separate farm, not insured under the policy, with her husband, Jerome. The policy defined Buhl as an insured and provided that “Insured also means your spouse and relatives if residents of your household. It also means any other person under the age of 21 in your care or in the care of your resident relatives.”
During the course of the lawsuit, the parties filed cross-motions for summary judgment. No material facts were in dispute. The parties agreed that Tammy and Dusty resided on the insured premises at the time of the shooting, that Tammy and Dusty were Buhl’s relatives, and that neither Tammy nor Dusty resided with Buhl in her home off the insured premises. The parties also agreed that Dusty was under the age of 21 and in Tammy’s care at the time of the incident.
The competing motions centered on differing interpretations of the policy, with the parties agreeing that the only issue was whether Tammy was a resident relative under the policy. The court found that, because Tammy and Dusty did not reside in Buhl’s house at the time of the incident, Tammy was not Buhl’s resident relative. The court therefore held that Dusty was not an insured under the policy and that American Family had no duty to defend or indemnify him. The court granted American Family’s motion for summary judgment and dismissed Heitmann’s claims. Heitmann appealed.
On appeal, Heitmann made several arguments in support of his contention that Tammy was a resident relative under the policy. He asserted that the policy was premises based and that because the policy excluded “one who does not reside on the premises,” it followed that one who resided on the premises was a “resident” under the policy. Thus Heitmann concluded that Tammy—a relative residing on the insured premises—was a resident relative, and Dusty, a person under 21 in Tammy’s care, would be an insured.
American Family contended that the plain language of the policy provided that Tammy was not a resident relative because she did not reside in Buhl’s house off the insured premises.
Coverage E of the policy provided coverage for personal liability for “compensatory damages which any Insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies.” The definition section of the policy defined Insured and provided:
- Insured means:
- You, and if you are shown in the Declarations as:
(1) an Individual, Insured also means your spouse and relatives if residents of your household. It also means any other person under the age of 21 in your care or in the care of your resident relatives.
“You” and “your” were defined by the policy as:
- You and Your refer to the person(s) or organization shown as Named Insured in the Declarations. These words also refer to your spouse who is a resident of your household.
Buhl was the only named insured in the policy’s declarations.
The court found the policy language to be unambiguous and stated that because Tammy did not claim to be a resident of Buhl’s household, she was not a resident relative. As she was not a resident relative, Dusty, a person under age 21 in her care, was not an insured. The judgment of the lower court was affirmed.
Heitmann vs. American Family Mutual Insurance Company-Supreme Court of South Dakota-July 20, 2016- No. 27549.
