Dattel Family Ltd. Partnership v. Wintz

• Decision Date: 10 October 2007
• Docket Number: No. W2007-00081-COA-R3-CV.,W2007-00081-COA-R3-CV.
• Citation: 250 S.W.3d 883
• Parties: DATTEL FAMILY LIMITED PARTNERSHIP and Travelers Property Casualty Company of America as Subrogee of Dattel Family Limited Partnership v. Mary G. WINTZ.
• Court: Tennessee Court of Appeals

250 S.W.3d 883

DATTEL FAMILY LIMITED PARTNERSHIP and Travelers Property Casualty Company of America as Subrogee of Dattel Family Limited Partnership v. Mary G. WINTZ.

No. W2007-00081-COA-R3-CV.

Court of Appeals of Tennessee, at Jackson.

July 17, 2007 Session.

October 10, 2007.

Permission to Appeal Denied by Supreme Court February 25, 2008.

Joseph L. Broy, Germantown, Tennessee, for Appellants Dattel Family Limited Partnership and Travelers Property Casualty Company of America.

Gary R. Wilkinson and C. Michael Becker, Germantown, Tennessee, for Appellee Mary G. Wintz.

OPINION

HOLLY M. KIRBY, J., delivered the opinion of the Court, in which ALAN E. HIGHERS, J. and BEN H. CANTRELL, SR., J., joined.

This is an insurance case. The plaintiff landlord purchased insurance on an apartment building that he owned. The defendant tenant leased an apartment in the landlord's building. A fire occurred and damaged the apartment building. Pursuant to the insurance policy, the plaintiff insurance carrier paid the landlord to cover the fire damage. The landlord and the insurance carrier, as the landlord's subrogee under the contract of insurance, filed a lawsuit against the tenant, claiming negligence and breach of contract and seeking compensation for the damage to the apartment building caused by the fire. The tenant moved for summary judgment, asserting that, as a tenant, she was an implied co-insured under the landlord's insurance policy, and that consequently the plaintiff insurance carrier had no right of subrogation against the tenant. The trial court granted summary judgment in favor of the tenant. The landlord and the insurance carrier appeal. We affirm, holding that, in the absence of an express agreement to the contrary, the tenant is deemed a co-insured under the landlord's insurance policy, and therefore subrogation against the tenant is not available to the insurance carrier.

Plaintiff Dattel Family Limited Partnership d/b/a Dattel Realty Company ("Dattel") owned a multi-family residential property, known as Embassy Apartments ("Embassy Apartments" or "Building"), located at 505 South Perkins Road in Memphis, Shelby County, Tennessee. Dattel obtained a fire insurance policy for Embassy Apartments from plaintiff Travelers Property Casualty Company of America ("Travelers"). Dattel was the only named insured under the policy.

At some time prior to July 25, 2003, Defendant Mary G. Wintz ("Wintz") entered into an agreement ("Lease Agreement") to lease an apartment in Embassy Apartments. Paragraph 4 of the Lease Agreement states in part, "It is further understood that the Resident shall be liable for all damages done to the premises ... and for all damages done to the premises at any time the Resident shall vacate same, ordinary wear and tear excluded." Paragraph 15 of the Lease Agreement states in full:

It is understood and agreed that the Resident is responsible for the apartment. The Resident is responsible for the care of all walls, doors, door knobs, door keys, locks, mailbox locks, appliances, carpets, drapes, windows, screens, light fixtures, cabinets, commodes, sinks, feces and the entire appearance of the apartment during the term of this lease and until the lease has been terminated by the Landlord. The Resident is responsible for repairing all damages to the apartment other than those caused by normal wear and tear. The Resident is responsible for the insurance of their personal property in the case of fire or other perils that would be covered by a resident's renters insurance policy, as Dattel Realty Company's insurance policies do not cover personal property of the resident. Resident is also responsible for liability that resident may incur as the result of a negligent action by the Resident, both as to individual apartment leased or common areas, including elevators, stairwells, swimming pool, corridors, grounds, parking and paved areas.

On July 25, 2003, a fire occurred at Embassy Apartments, resulting in damage to Wintz's apartment and other parts of the Building as well. In fulfillment of its obligation under the insurance policy, Travelers paid Dattel $144,575.81 to compensate for the damage to the Building caused by the fire. Thereafter, Dattel and Travelers (collectively "Plaintiffs") filed a lawsuit against Wintz, alleging negligence and breach of contract. In the complaint, Travelers asserted that it was "legally and equitably subrogated" to Dattel's right of recovery against Wintz.

The complaint filed by Dattel and Travelers alleged that Wintz negligently discarded into a wastebasket matches that had not been completely extinguished, starting a fire that damaged Wintz's apartment and the rest of the building. They asserted that the fire damage made future performance under the Lease Agreement impossible, giving Dattel the right to terminate the lease; in turn, this triggered Wintz's contractual duties to return the apartment in good condition and reimburse Dattel for the fire damage. Dattel and Travelers alleged that Wintz's failure to return the apartment in good condition or reimburse Dattel was a breach of Wintz's contractual duties under the Lease Agreement.

In her answer, Wintz denied that she discarded the matches as alleged and denied that she breached the Lease Agreement. Wintz affirmatively alleged that any damage caused was the result of the negligence of Dattel or its agents.

Not long after that, Wintz moved for summary judgment. In her motion, Wintz asserted that she was an implied co-insured under the liability insurance policy between Dattel and Travelers. Because she was an implied co-insured, Wintz argued, Travelers had no right of subrogation and, therefore, could not maintain an action against Wintz for damages to the Building.

On December 14, 2006, the trial court granted Wintz's motion for summary judgment. Relying on Allstate Ins. Co. v. Watson, No. M2003-01574-COA-R3, 2005 WL 457846 (Tenn.Ct.App. Feb.25, 2005), aff'd on other grounds, 195 S.W.3d 609 (Tenn. 2006), the trial court found that, in the absence of a provision in the Lease Agreement to the contrary, Wintz was an implied co-insured under the contract of insurance between Dattel and Travelers. Accordingly, the trial court reasoned, Travelers was precluded from asserting a subrogation claim against Wintz. From this order, Dattel and Travelers now appeal.

ISSUE

On appeal, Dattel and Travelers raise the sole issue of whether the trial court erred in holding that Wintz, as Dattel's tenant, was an implied co-insured under the contract of insurance between Dattel and Travelers, and therefore erred in granting Wintz's motion for summary judgment.

STANDARD OF REVIEW

Our review of the trial court's grant of summary judgment is de novo on the record before this Court. Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn.1997). Granting a motion for summary judgment is appropriate only if there are no genuine issues of material fact and if the moving party establishes that it is entitled to judgment as a matter of law. Tenn. R. Civ. P. 56.04 (2006); Bain v. Wells, 936 S.W.2d 618, 622 (Tenn.1997). In addition, summary judgment is proper when "there is no dispute over the evidence establishing the facts that control the application of a rule law." Byrd v. Hall, 847 S.W.2d 208, 214 (Tenn.1993). On appeal, review of the trial court's grant of a motion for summary judgment presents solely a question of law. As such, our review is de novo with no presumption that the trial court's resolution of the legal issue was correct. Bain, 936 S.W.2d at 622.

Moreover, we "view the evidence in the light most favorable to the nonmoving party and must also draw all reasonable inferences in the nonmoving party's favor." Staples v. CBL & Associates, Inc., 15 S.W.3d 83, 89 (Tenn.2000). Therefore, for purposes of this appeal, we assume the truth of the allegation in the complaint that Wintz negligently discarded matches, thereby starting the fire that resulted in the damage to the Building.

ANALYSIS

Our analysis must begin with the Lease Agreement between Dattel and Wintz. "[T]he cardinal rule for interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention as best can be done consistent with legal principles." Petty v. Sloan, 197 Tenn. 630, 277 S.W.2d 355, 360 (1955). We ascertain the parties' intention from what was "actually embodied and expressed in the instrument as written." Id.

Here, it is undisputed that no provision of the Lease Agreement states expressly that Wintz is considered a co-insured or a beneficiary of Dattel's insurance policies. While the Lease Agreement states explicitly that Wintz is expected to obtain renter's insurance to cover her personal property, it does not state that Wintz is obligated to obtain insurance for the Building. Rather, the Lease Agreement references Dattel's insurance policy, stating that "Dattel Realty Company's insurance policies do not cover personal property of the resident." Under paragraph 4 of the Lease Agreement, the parties agreed that Wintz would be held liable for any damage done to her apartment in the course of her tenancy, as well as damage to the Building's "common areas." Thus, while the Lease Agreement states generally that Wintz is "responsible for liability that [Wintz] may incur as a result of negligent action by [Wintz]," it does not state expressly either that Wintz is a co-insured under "Dattel['s] ... insurance policies" on the Building or that Wintz is obliged to obtain her own separate insurance on the Building.

Against this backdrop, Travelers seeks to apply the equitable doctrine of subrogation to recover from Wintz amounts paid to Dattel under Dattel's insurance policy. The doctrine of subrogation permits an insurer who has been "`required to satisfy a loss created by a third party's wrongful act to step into the shoes of the [insured] and pursue recovery from the responsible wrongdoer.'" Travelers Prop....