INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Sprinkler squabble
Sathiyaselvam Thangavel and Sasikala Muthusamy were tenants who leased an apartment from Seaford Apartment Ventures, LLC. The complaint filed by Seaford Apartment’s insurer, Donegal Mutual Insurance Company, alleged that the tenants hit a sprinkler head while they flew a drone inside the apartment. Water sprayed from the damaged sprinkler head and caused damage to the apartment building.
Seaford Apartment filed a claim with Donegal, which paid $77,704.06 to repair the water damage. Donegal then brought an action against the tenants through subrogation and alleged that the tenants were negligent and breached the property’s rules and regulations. Donegal sought to recover the repair costs from the tenants.
Under the “Sutton” rule, landlords and tenants are co-insureds under the landlord’s fire policy unless a tenant’s lease clearly expresses an intent to the contrary. If the Sutton rule applies, the landlord’s insurer cannot pursue the tenant for the landlord’s damages by way of subrogation.
The tenants moved for summary judgment, and a Delaware superior court ruled in the tenants’ favor that the Sutton rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord’s damages. Donegal appealed.
On appeal, Donegal claimed that the superior court erred because the lease in this case was materially different from the leases in previous cases. The Seaford Apartment lease provisions, according to Donegal, showed a clear agreement that the tenants were liable for the water damage they caused. Even if the lease was unclear, Donegal argued that the case should proceed to discovery if there was any ambiguity about the parties’ intent with respect to the tenants’ liability.
The superior court correctly found that paragraphs in the Seaford Apartment lease did not clearly express an intent that the tenants were responsible for the water damage in this case.
The court of appeals affirmed the superior court’s judgment.
Thangavel and Muthusamy v. Donegal Mutual Ins. Co.—Superior Court of the State of Delaware—July 18, 2023—No. 379, 2022.
