Shepard v. Keystone Ins. Co., Civ. A. No. HAR-89-3379.

• Decision Date: 31 July 1990
• Docket Number: Civ. A. No. HAR-89-3379.
• Citation: 743 F. Supp. 429
• Parties: Jerry SHEPARD, Plaintiff, v. KEYSTONE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Maryland

743 F. Supp. 429

Jerry SHEPARD, Plaintiff, v. KEYSTONE INSURANCE COMPANY, Defendant.

Civ. A. No. HAR-89-3379.

United States District Court, D. Maryland.

July 31, 1990.

William N. Butler, Howard, Butler & Melfa, Towson, Md., for plaintiff.

Edson A. Bostic, Cozen and O'Conner, Philadelphia, Pa., and Donald Arnold, Bel Air, Md., for defendant.

MEMORANDUM OPINION

HARGROVE, District Judge.

Presently before this court is Defendant Keystone Insurance Company's Motion for Summary Judgment. A response and reply have been filed. The issues have been fully briefed. No hearing is deemed necessary. Local Rule 105.6. (D. Md.).

FACTS

This action arises out of an insurance coverage dispute. Plaintiff Jerry Shepard ("Shepard") seeks compensation under an insurance contract, issued by Defendant Keystone Insurance Company ("Keystone") for losses sustained in a fire at property located at 316 Philadelphia Road, Joppa, Maryland. The contract, Policy No. 41209220, is a homeowner's policy which provides coverage for damages, including loss from fire, to the "resident premises" and to the personal property of the insured.

The property was previously owned by Shepard's mother, Inez Shepard. By 1985, Inez Shepard could not keep up the mortgage payments. Title was transferred to her son so that he could assume payments to avoid foreclosure. Shepard himself had not lived on the property since 1980. At approximately the same time Shepard assumed the title, his mother moved out, leaving the house vacant. On October 9, 1986, Shepard obtained the insurance policy in dispute. The premises burned down on May 13, 1987.

When Shepard attempted to recover for the losses caused by the fire, Keystone refused to pay, alleging that since the house had not been occupied by Shepard for seventeen years, or by anyone for two years, it was not a "residence premises." Since the contents of the house had belonged to Shepard's mother rather than Shepard himself as the insured, Keystone maintains that they are not covered under the policy either. Therefore, Keystone requests that this Court grant summary judgment in its favor regarding damages to the building and to the personal property.

Summary Judgment will be granted when "there is no genuine issue as to any material fact, and if the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Courts do not "weigh the evidence and determine the truth of the matter." Id. at 249, 106 S.Ct. at 2510. However a mere "scintilla of evidence" is not enough to frustrate a motion for summary judgment; the pleadings must show evidence from which the finder of fact could reasonably find for the party opposing judgment. Id. at 252, 106 S.Ct. at 2512. "There can be no genuine issue of material fact when a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

Shepard is a Maryland resident. Keystone is a Pennsylvania corporation with its headquarters and principal place of business in Philadelphia, Pennsylvania. Jurisdiction with this court is based upon diversity of citizenship. 28 U.S.C. § 1332. Accordingly the Court will apply Maryland substantive law.

I.

When interpreting insurance contracts, Maryland law requires that words be given their customary and normal meaning. C. & H. Plumbing and Heating, Inc. v. Employees Mutual Casualty Co., 264 Md. 510, 511, 287 A.2d 238 (1972); Government Employees Insurance Co. v. DeJames, 256 Md. 717, 720, 261 A.2d 747 (1970). However where the terms are ambiguous, they are to be construed most favorably to the insured. American Automobile Insurance Co. v. Master Building Supply and Lumber Co., 179 F.Supp. 699, 704 (D.Md.1959) (applying Maryland law).

There is no ambiguity as to the meaning of the terms "residence" or "reside" in the insurance contract between Shepard and Keystone. The definitions and terms of coverage are set out simply on the first two pages. The terms "residence" and "reside," as employed throughout the policy, clearly refer to a place that is occupied by the insured as a dwelling place or home, at least on a temporary basis.

The insurance application, signed by Shepard, describes the property as a private home. The policy is called a homeowner's policy, and this title is stated clearly on the cover. See Defendant's Exhibit E. The first page of the policy states that the insured location means a "residence premises" which is the part of the premises structures "used by you as a residence." Id. at 1. Provisions describing the insured location indicate that, if there are structures on the property, these should be owned and used by the insured for present or future occupancy, either on a temporary or permanent basis. Id.

"Residence premises" is later defined as a "one or two family dwelling and grounds, or that part of any other building where you reside and which is shown as the residence premises" in the declaration. Id. at 2. The declaration indicates that 316 Philadelphia Road, Joppa, is the "residence premises" being insured. Thus, the contract specifically requires that this property be a dwelling in which the insured is living.

Further, the policy only states that it covers "dwellings used principally as private residences," and "other structures on the residence premises separated from the dwelling by a clear space." Noticeably excluded are dwellings used for purposes other than private residences, i.e., dwellings not used for habitation by the insured. Accordingly, it is clear on the face of the policy that the property covered must be a place currently occupied by the insured as his home.

Courts construing Maryland law have found the meaning of the terms "residence" and "reside" to be consistent with the definitions afforded them by Shepard's insurance policy with Keystone. This Court, in distinguishing between "residence" and "domicile," has determined that residence requires "bodily presence as an inhabitant of a given place." T.P. Laboratories, Inc. v. Huge, 197 F.Supp. 860, 863 (D.Md.1961). In election cases, Maryland courts have also held "residence" to be the place of actual physical presence or abode. See Dorf v. Skolnik, 280 Md. 101, 371 A.2d 1094 (1977); Bainum v. Kalen, 272 Md. 490, 495, 325 A.2d 392 (1974). Furthermore, in provisions setting forth qualifications for political office, Article III, Section 9 of the Maryland Constitution employs the term "reside" to indicate the present address of the candidate.

It is also evident that Shepard himself understood and accepted the usage of "reside" and "residence" as used in the policy. In a thirty-five minute taped interview between Shepard and investigators employed by Keystone, the terms were used on fourteen separate occasions by the investigators in their attempt to determine whether Shepard's use of the property met the requirements of his policy. See Defendant's Exhibit H. At no time did Shepard dispute the use of the terms or request clarification as to their meaning. On the contrary, his statements clearly demonstrate that he understood "reside" to mean the place where he lives, as it is defined in the policy. Id.

In his answers to the questions posed by Keystone's investigators, Shepard contends that his residence has been 3214 Philadelphia Road for the last four years. Id. at 1. He had resided at the insured property when his parents purchased it in 1955; but after acquiring title he only "resided there in spurts, when visiting his mother." Id. at 3. No one was residing in the house at the time of the fire. Id. Shepard admits that he never intended to use the property as a residence. Id. at 14. He states that he assumed the mortgage simply to relieve his mother of the burden and to keep the property in the family. Id. at 5. The telephones were disconnected. He did not even possess keys to the house. Id. at 6, 9. It is obvious that the house was vacant at the time of the fire.

Shepard cites Cal-Farm Insurance Co. v. Boisseranc, 151 Cal.App.2d 775, 312 P.2d 401 (1957), to support his statement that the meaning of "residence" varies according to the circumstances of the case. The issue before the Cal-Farm court was whether a child of divorced parents was a resident of his father's household for the time necessary to qualify for insurance. Id. 312 P.2d at 402. The important element was the time period necessary to constitute residency, rather than the concept of living on the premises. Id. 312 P.2d at 406. There was never any doubt that "resident" meant "lived within the household." Thus, the issue in Cal-Farm is not relevant to this Court's consideration of the motion for summary judgment.

It is the obligation of the insured to read and understand the terms of his insurance policy, unless the policy is so constructed that a reasonable man would not attempt to read it. Croteau v. John Hancock Insurance Co., 123 N.H. 317, 461 A.2d 111 (1983). If the terms of the policy are inconsistent with his desires, he is required to notify the insurer of the inconsistency and of his refusal to accept the condition. Martinez v. John Hancock Insurance Co., 145 N.J.Super. 301, 367 A.2d 904 (1976). See also Monumental Life Insurance Co. v. Taylor, 212 Md. 202, 213-214, 129 A.2d 103 (1957); Commercial Casualty Co. v. Schmidt, 166 Md. 562, 570, 171 A. 725 (1934); Eagle, Star and British Dominions Insurance Co. v. Main, 140 Md. 220, 224, 117 A. 571 (1922). Shepard never expressed disatisfaction with any of the terms in the policy.

The terms of the insurance policy between Shepard and Keystone were clear on the face of the contract. Shepard obviously understood their meaning. It was his responsibility to read his policy carefully. As the insured, Shepard was required to live on the residence premises. He did not do so....