INSURANCE-RELATED COURT CASES
Digested from case reports published online
Who is a resident?
On January 6, 2014, Jean Martin was driving her 1994 Ford automobile with her teenage daughter Marina in the passenger seat. Jean was crossing a four-way intersection when a vehicle driven by Santiago Livara struck her car. Jean and Marina were both injured in the collision.
Jean and Marina subsequently sued Livara for negligence in the Virginia Beach circuit court. The parties eventually reached a settlement in which Livara’s insurer paid its maximum liability limit in the amount of $25,000 to both Jean and Marina.
Jean and Marina also sought additional coverage under two different automobile insurance policies issued by North Carolina Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau), to members of the Martin family.
The first policy was issued to David (Jean’s husband) and Jean for the coverage period of October 19, 2013, to February 19, 2014. This policy identified David and Jean as the named insureds and listed three covered vehicles, including the Ford automobile that Jean was driving at the time of the accident. The policy provided medical payments coverage of up to $1,000 per person and uninsured/ underinsured motorist coverage of up to $50,000 per person/$100,000 per accident. Because Jean and Marina both qualified as insureds under this policy, Farm Bureau paid the applicable limits of $1,000 each to Jean and Marina under the medical payments coverage and $25,000 each to Jean and Marina under the underinsured motorist coverage.
In addition, Jean and Marina asserted that they were entitled to medical payments and underinsured motorist coverage under a second Farm Bureau policy. This second policy was issued by Farm Bureau to Mary Martin, who was the mother of David and the paternal grandmother of Marina. The policy was issued for the period of October 13, 2013, to April 13, 2014.
The policy designated Mary as the named insured, identified two covered drivers (Mary and her late husband William), and listed one covered vehicle. The policy provided medical payments coverage of up to $1,000 per person and uninsured/underinsured motorist coverage of up to $100,000 per person/$300,000 per accident. The policy contained the following provisions that were relevant to this appeal:
“Throughout this policy, ‘you’ and ‘your’ refer to the named insured shown in the declarations and the spouse if a resident of the same household … ‘Family member’ means a person related to you by blood, marriage, or adoption who is a resident of your household. This includes a ward or foster child.”
Jean and Marina asserted that they were covered under the policy because they were “family members” of Mary Martin-that is, they were related to Mary and were “residents” of her “household.” Farm Bureau disputed coverage and filed a declaratory judgment action on April 13, 2015,in superior court, Wake County, against Marina, Jean, and David seeking a declaration that they were not entitled to coverage under Mary’s policy because they were not “residents” of Mary’s “household” at the time of the accident.
On March 16, 2016, the defendants filed a motion for summary judgment. On April 20, 2016, a consent order was entered transferring the case to superior court, Currituck County. Farm Bureau filed a cross-motion for summary judgment on May 19, 2017.
On the date of the accident, Mary was the sole owner of the Martin Farm, a 76-acre property located on Knotts Island, North Carolina, that contained two separate houses located on the property. At all relevant times, Mary lived in the “main house” on the farm, while the defendants lived in a separate “guest house” that was also situated on the farm. Both residences were owned by Mary, and Mary never charged the defendants rent to live in the guest house.
The houses shared a single driveway, but were both stand-alone structures located approximately 100 feet from one another. The houses had different street addresses. Mary’s home was located at 213 Martin Farm Lane, while the address of the defendants’ residence was 224 Bay Orchard Lane. With the exception of occasional overnight stays (such as when a power outage occurred at one of the two houses), the defendants and Mary lived separately in their respective homes at all relevant time periods.
Beginning in 2013-approximately a year before the accident-Mary began staying for extended periods of time with her son, Wayne, in Virginia Beach while she received treatment for cancer. As Mary’s health worsened, she was increasingly unable to travel back and forth between North Carolina and Virginia and had to remain primarily at Wayne’s house in Virginia Beach.
A hearing was held on the parties’ summary judgment motions on August 21, 2017. On September 28, 2017, the trial court entered summary judgment in favor of Farm Bureau after concluding as a matter of law that the defendants were not entitled to coverage under the policy.
The defendants appealed to the North Carolina court of appeals, which affirmed the trial court’s order in a divided decision. In its opinion, the court majority concluded that the defendants did not qualify as “residents” of Mary’s “household” and accordingly were not covered under the policy.
On October 8, 2019, the defendants filed a notice of appeal based on the dissent.
To receive coverage under the policy, the state supreme court said, the defendants must qualify as “insureds.” The policy defined an “insured,” for purposes of both medical payments and underinsured motorist coverage, as “[y]ou or any family member.” A “family member” was defined as “a person related to you by blood, marriage, or adoption who is a resident of your household.” (emphasis added). The policy did not, however, define the key terms “resident” or “household.”
According to the state supreme court, one basic prerequisite exists when a party seeks coverage under this kind of provision contained in a relative’s insurance policy-namely, the party must show that he or she actually lived in the same dwelling as the insured relative for a meaningful period of time.
Accordingly, the state supreme court concluded that the court of appeals correctly determined that defendants were not entitled to coverage under the policy and that the trial court appropriately awarded summary judgment in favor of Farm Bureau.
North Carolina Farm Bureau Mutual Insurance Company v. Martin-Supreme Court of North Carolina-December 18, 2020-No. 391A19.