Ro v. Factory Mut. Ins. Co.

Decision Date10 March 2021
Docket NumberNo. 2019-0620,2019-0620
Citation260 A.3d 811,174 N.H. 112
Parties Daniel RO v. FACTORY MUTUAL INSURANCE COMPANY, AS Subrogee of TRUSTEES OF DARTMOUTH COLLEGE Sebastian Lim v. Factory Mutual Insurance Company, as Subrogee of Trustees of Dartmouth College
CourtNew Hampshire Supreme Court

Getman, Schulthess, Steere & Poulin, P.A., of Manchester (Debbie Lorusso Makris on the brief and orally), for plaintiff Daniel Ro.

Law Offices of John B. Schulte, of Bedford (John B. Schulte and Brandon F. Chase on the brief and Mr. Schulte orally), for plaintiff Sebastian Lim.

Monahan & Associates, P.C., of Boston, Massachusetts (Matthew R. Passeri on the brief and orally), for the defendant.


The defendant, Factory Mutual Insurance Company (Factory Mutual), appeals an order of the Superior Court (Kissinger, J.) denying its motion for summary judgment and granting the motion for summary judgment filed by the plaintiffs, Daniel Ro and Sebastian Lim, in their declaratory judgment action seeking a determination that they are implied coinsureds under a fire insurance policy issued by Factory Mutual to the Trustees of Dartmouth College (the Trustees). We affirm.

The trial court's order recited the following facts. In 2016, the plaintiffs were students at Dartmouth College. They lived in separate dormitories on campus, and each paid room and board in addition to tuition. Prior to being assigned a dormitory room, each of the plaintiffs was required to sign a form acknowledging receipt and understanding of the college's student handbook. Included in the handbook were prohibitions on: (1) possessing charcoal grills in student housing; (2) lighting and burning of any item with an open flame in residence halls; and (3) placing items on, and the use of, "the roof, portico, fire escape, or any other architectural feature not designed for recreational or functional use, except in cases of emergency."

The handbook noted that violation of the open flame policy "may" result in liability for damage due to fire. In addition, the handbook placed responsibility on students for claims arising from damage to college property. It provided that student residents "assume any and all liability for damage or claims that result from their own negligence," or that of their visitors or guests, and that student residents who damage or vandalize Dartmouth property "will typically be expected to pay restitution."

One day in October 2016, the plaintiffs set up a charcoal grill on a platform outside a fourth floor window in Lim's dormitory, Morton Hall. The grill started a fire on the platform, which then spread to the roof. Firefighters used a substantial quantity of water to extinguish the fire, and all four floors of the dormitory sustained water damage. Factory Mutual, which insured the building, paid the Trustees $4,544,313.55 and then brought a subrogation claim against the plaintiffs to recover that amount.

The plaintiffs brought the instant action seeking a declaratory judgment that they are implied coinsureds under the fire insurance policy with Factory Mutual. Factory Mutual brought counterclaims for negligence and breach of contract, which the court stayed pending resolution of the declaratory judgment petition. Both parties moved for summary judgment. The trial court denied Factory Mutual's motion and granted summary judgment in favor of the plaintiffs, concluding that "the expectations and equitable considerations that motivated" this court, in Cambridge Mutual Fire Insurance Co. v. Crete, 150 N.H. 673, 846 A.2d 521 (2004), to adopt the doctrine of Sutton v. Jondahl, 532 P.2d 478 (Okla. Ct. App. 1975), "in the context of tenant-landlord lease agreements apply with equal force in the context of on campus housing agreements with college students."

The trial court accordingly concluded that Factory Mutual could not maintain its counterclaims against either plaintiff. Specifically, the court noted, "To the extent Mr. Lim's possessory interest in Morton Hall is insurable, so is Mr. Ro's. Mr. Ro's possessory interest in Morton Hall is analogous to that of a tenant who rents one unit in a residential complex but causes fire damage to another unit in the complex."

On appeal, Factory Mutual argues that the trial court erred in: (1) concluding that the plaintiffs held a possessory interest in their dormitory rooms; (2) failing to conclude that the plaintiffs were licensees "with a revocable personal privilege to occupy Dartmouth College residence halls" and that, therefore, the anti-subrogation rule we adopted in Crete does not apply; and (3) failing to conclude that policies in the student handbook1 negated any presumption that the plaintiffs are implied coinsureds under the fire insurance policy.

In reviewing rulings on cross-motions for summary judgment, "we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law." Sabato v. Fed. Nat'l Mortg. Ass'n, 172 N.H. 128, 131, 210 A.3d 205 (2019) (quotation omitted). "If our review of that evidence discloses no genuine issue of material fact and if the moving party is entitled to judgment as a matter of law, then we will affirm the grant of summary judgment." Id. (quotation omitted). We review the trial court's application of the law to the facts de novo. Id.

This appeal asks us to determine whether the anti-subrogation doctrine we adopted in Crete applies here. Accordingly, we begin by examining Crete. In that case, a tenant negligently started a fire that caused extensive damage to the building in which his apartment was located. Crete, 150 N.H. at 674-75, 846 A.2d 521. The landlord's insurer paid the landlord for the insured losses and then sought to recover that amount in a subrogation action against the tenant. Id. at 674, 846 A.2d 521. In the insurer's appeal from dismissal for failure to state a claim, the tenant argued that there was "no basis for legal relief because, under the Sutton doctrine, a tenant is considered a coinsured of a landlord with respect to fire damage to leased residential premises," and, therefore, the landlord's insurer "has no right of subrogation against a tenant whose negligence causes fire damage."2 Id. at 675, 846 A.2d 521. We found the Sutton Court's reasoning persuasive and "adopt[ed] an identical rule for residential leases in New Hampshire." Id. Specifically, joining the majority of jurisdictions, we agreed with the Sutton Court's reasoning that " [b]asic equity and fundamental justice upon which the equitable doctrine of subrogation is established requires that when fire insurance is provided for a dwelling it protects the insurable interests of all joint owners including the possessory interests of a tenant absent an express agreement by the latter to the contrary.’ " Id. (quoting Sutton, 532 P.2d at 482 ).

Factory Mutual argues that the Crete doctrine does not apply under the circumstances of this case and that, in any event, the parties contracted out of the doctrine through the student handbook. We first examine whether the Crete doctrine applies.

Factory Mutual asserts that it is the "possessory interest that forms the basis of a tenant's expectation to be insured under a landlord's fire insurance policy and, thus, considered a coinsured under that policy." Accordingly, its argument that the Crete doctrine does not apply rests on the contention that the plaintiffs had no possessory or other insurable interest in Morton Hall. Factory Mutual asserts that "[t]he Plaintiffs’ interest, if any, is akin to that of hotel guests, which have been recognized not to have a possessory interest in the property." It argues that "[s]everal jurisdictions have recognized the distinction between a tenant and a hotel guest on the basis that a tenant ‘acquires an interest in the real estate and has the exclusive possession of the leased premises, whereas the guest acquires no estate and has mere use without the actual or exclusive possession.’ " (Quoting Young v. Harrison, 284 F.3d 863, 868 (8th Cir. 2002) (predicting that if South Dakota were faced with "the issue of whether a hotel guest is a tenant or something less, like a licensee," it would conclude that a hotel guest is not a tenant entitled to statutory protections, but, rather, "is subject to self-help eviction")). Similarly, Factory Mutual argues that the plaintiffs "held nothing more than a license to occupy the campus" and notes that we have held that "[a] license is a transient or impermanent interest which does not constitute an interest in land." LSP Assoc. v. Town of Gilford, 142 N.H. 369, 376, 702 A.2d 795 (1997) (quotation omitted). These arguments lead Factory Mutual to conclude that "Dartmouth College did not convey, and Plaintiffs did not receive, any interest in land."

We conclude that Factory Mutual's reliance on property law doctrines regarding conveyances of estates in land is misplaced. Admittedly, the Sutton Court reasoned that "the law considers the tenant as a co-insured of the landlord absent an express agreement between them to the contrary" under a principle "derived from a recognition of a relational reality, namely, that both landlord and tenant have an insurable interest in the rented premises—the former owns the fee and the latter has a possessory interest." Sutton, 532 P.2d at 482. It then concluded, on principles of "[b]asic equity and fundamental justice," that "when fire insurance is provided for a dwelling it protects the insurable interests of all joint owners including the possessory interests of a tenant absent an express agreement by the latter to the contrary." Id. (emphasis added).

Nevertheless, the Sutton doctrine, as it has been adopted and applied in numerous jurisdictions, has not been confined by strict property law distinctions. As the Nebraska Supreme Court noted, "A shared...

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