Erie Ins. Exchange v. Stephenson, 32A01-9606-CV-207
| Decision Date | 30 December 1996 |
| Docket Number | No. 32A01-9606-CV-207,32A01-9606-CV-207 |
| Citation | 674 N.E.2d 607 |
| Parties | ERIE INSURANCE EXCHANGE, Appellant-Plaintiff, v. Daryl STEPHENSON and Dawn M. Huser, Appellees-Defendants. |
| Court | Indiana Appellate Court |
Erie Insurance Exchange ("Erie") appeals from the trial court's denial of its motion for summary judgment and from the court's grant of summary judgment in favor of Daryl Stephenson and Dawn Huser. This case arose when Huser was injured and filed a lawsuit against Stephenson who resided on the property where the accident occurred. Erie, the insurer, denied coverage to Stephenson and brought a declaratory judgment action. Erie then moved for summary judgment and asserted that it owed no duty to defend or indemnify Stephenson because Stephenson was not an individual covered by the homeowner's insurance policy and because he had failed to comply with the policy's notice requirements. Both Stephenson and Huser filed cross-motions for summary judgment arguing that Erie was required to defend and indemnify Stephenson. The court denied Erie's motion and granted Stephenson's and Huser's motions.
We affirm in part, reverse in part and remand.
Erie presents four issues for our review which we consolidate and restate as:
1. Whether Stephenson was an individual covered under the policy.
2. Whether Stephenson complied with the notice provision of the policy so as to require Erie to defend and indemnify him.1
In 1987, Stephenson moved into the home of his maternal grandmother ("Grandmother"), and Grandmother moved about one-fourth mile away into Stephenson's parents' home. The switch was made so that Stephenson's mother (Grandmother's daughter) could take better care of Grandmother who was in poor health. Stephenson paid the utility bills but did not pay rent. Grandmother maintained homeowner's insurance with Erie and paid real estate taxes on the property.
On July 4, 1990, Stephenson, then aged 23, was entertaining some friends at the residence. He laid bottle rockets on the street in front of the house and launched them horizontally in an attempt to shoot them between the legs of a friend who was standing some distance away. Huser, another friend who was then aged 16, joined in the activity. Huser was struck in the eye with a bottle rocket and was injured.
On June 17, 1994, almost four years later and after Huser had reached the age of majority, she filed a lawsuit against Stephenson to recover for her injury. Stephenson forwarded the suit papers to Erie. This was the first notice that Erie had received of the accident.
In reviewing a motion for summary judgment, this court applies the same standard as applied by the trial court. Walling v. Appel Serv. Co., 641 N.E.2d 647, 648-49 (Ind.Ct.App.1994). Summary judgment shall be granted if "the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ind. Trial Rule 56(C). Neither the trial court, nor the reviewing court may look beyond the evidence specifically designated to the trial court. Seufert v. RWB Med. Income Properties I Ltd. Partnership, 649 N.E.2d 1070, 1072 (Ind.Ct.App.1995).
The construction of a written insurance contract is a question of law for which summary judgment is particularly appropriate. Pennington v. American Family Ins. Group 626 N.E.2d 461, 464 (Ind.Ct.App.1993). If the policy's language is clear and unambiguous, it should be given its plain and ordinary meaning. Tate v. Secura Ins. 587 N.E.2d 665, 668 (Ind.1992). However, where there is ambiguity, insurance policies are to be construed strictly against the insurer. American States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind.1996). This rule is particularly true where a policy excludes coverage and is driven by the fact that the insurer drafts the policy and foists its terms upon the consumer. Id. "The insurance companies write the policies; we buy their forms or we do not buy insurance." Id. (quoting American Economy Ins. Co. v. Liggett, 426 N.E.2d 136, 142 (Ind.Ct.App.1981)).
Erie first contends that Stephenson was not covered under Grandmother's homeowner's insurance policy. The relevant provision states that coverage is provided for certain residents of the homeowner's "household."2 Specifically, Erie claims that coverage should be denied because Stephenson was no longer part of Grandmother's household as she had moved from the residence.
Initially, we note that "household" is not defined in the insurance contract. Citing Allstate Insurance Co. v. Neumann, 435 N.E.2d 591 (Ind.Ct.App.1982), Erie argues that Stephenson was not part of Grandmother's household because the two did not live under the same roof. In Neumann, we stated:
A household may be defined as consisting of those who dwell under the same roof and compose a family; a domestic establishment. Websters New International Dictionary, Unabridged, 2nd Ed. The term has been said to be synonymous with "family" but broader, in that it includes servants or attendants; all who are under one domestic head.
Id. at 593-94 (emphasis added). There, we affirmed the trial court's conclusion that a houseguest/friend was not a member of the insured's household for purposes of coverage under an automobile liability policy. Id. at 594. Our decision in Neumann did not turn on the "under the same roof" meaning of "household," and we decline to interpret that case to have established a single, exclusive definition of the word. See Kradjian v. American Mfrs. Mut. Ins. Co., 206 A.D.2d 801, 615 N.Y.S.2d 129, 130 (N.Y.App.Div.1994) () (citations omitted).
Instead, we agree with the decision of the New Jersey Supreme Court in Mazzilli v. Accident & Casualty Insurance Co. of Winterthur, Switzerland, 35 N.J. 1, 170 A.2d 800 (1961) which stated that:
Household is not a word of art. Its meaning is not confined within certain commonly known and universally accepted limits. True, it is frequently used to designate persons related by marriage or blood, who dwell together as a family under a single roof. But it has been said also that members of a family need not in all cases reside under a common roof in order to be deemed a part of the household.
Id. 170 A.2d at 804 (citations omitted). As in Mazzilli, we conclude that there is no requirement that members of a household live under the same roof. See id. at 807. Thus, it is possible to maintain two households or to live as a member of one household and still be the "domestic head" of a separate household. If Erie had wanted to invoke the definition which it now espouses, it could have defined the word "household" in the policy. Without a definition, we strictly construe the term against Erie.
Here, Stephenson was a lineal descendant of Grandmother who purchased the insurance on her house. Stephenson lived in the house at all relevant times. Grandmother and Stephenson, functioning as members of the same family, traded places: Grandmother moved out of her house for health reasons and Stephenson moved in. Under these circumstances, we conclude that Stephenson was a member of Grandmother's household. We hold that Stephenson was an individual covered under the policy that Erie issued to Grandmother.
Erie also asserts that it had no duty to defend or indemnify Stephenson because he had failed to comply with the notice requirements of the policy. The insurance contract at issue contains two notice provisions. In a paragraph entitled "Your Duties After A Loss," the first notice requirement provides:
When there is an accident or occurrence anyone we protect will:
(a) notify us or our Agent, in writing, as soon as possible, stating:
1. your name and policy number 2. the time, place, and circumstances of the accident or occurrence;
3. names and addresses of injured persons and witnesses.
Record at 167 (emphasis added). The second provision directs that "any papers that relate to the accident or occurrence" be forwarded to Erie "promptly." Neither party disputes that Stephenson fulfilled his duty under the second notice requirement. However, Erie argues that Stephenson did not notify the company of the accident as soon as possible pursuant to the first notice provision.
The notice requirement of an insurance policy is a material and essential part of the contract. Miller v. Dilts, 463 N.E.2d 257, 265 (Ind.1984). The duty to notify is a condition precedent to the insurance company's liability to its insured. Id. at 260-61. Where prejudice is created by the insured's noncompliance with the policy's provisions, the insurance company is relieved of its liability under the policy. Id. at 261.
We are first asked to determine whether Stephenson fulfilled his duty to provide notice as soon as possible after the accident or occurrence. The term "as soon as possible" has been defined as "notice within a reasonable time" after the accident or occurrence. Shelter Mut. Ins. Co. v. Barron, 615 N.E.2d 503, 507 (Ind.Ct.App.1993), trans. denied. When the facts are not in dispute, what constitutes reasonable notice is a question of law for the court to decide. Id.
In 1990, Huser was injured when a bottle rocket fired by Stephenson struck her in the eye. Nevertheless, Stephenson did not notify the insurance company until 1994, almost four years after the accident. In Miller, 463 N.E.2d 257, our supreme court considered the question of reasonable notice of an accident when it reviewed three cases, two of which dealt with...
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