(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in
the interests of brevity, portions of any opinion may not have been summarized).
Argued May 3, 1999 -- Decided July 8, 1999
STEIN, J., writing for a unanimous Court.
This appeal involves the meaning of the term “household” as used in a homeowners' liability insurance
policy that provides a defense and indemnification to relatives of the named insured who are residents of the named
insured's household. “Household” is not defined in the policy.
The named insured in this case is Mary Maccia. The homeowners' policy was issued to her by defendant
Allstate Insurance Company (Allstate) in 1962, for coverage relating to her home at 14 Hyde Road in Bloomfield,
which she had purchased in 1931. Maccia lived in her house until 1990, when she had to move into her daughter's
home in Kearny after she was hurt in a fall. Maccia intended to return to her own home when her health improved,
so she left most of her belongings in the home and continued to have all her mail and items such as social security
and pension checks and bank statements delivered to Hyde Road. She also maintained the Allstate policy.
In 1993, Maccia asked her grandson, Donald Callaghan, and his wife, Marcella Callaghan, to move into the
Hyde Road house and care for it because she was concerned about the risk of burglary and vandalism with the house
vacant. Maccia refused the Callaghans' offer to buy the property because she still planned to return when her health
permitted. The Callaghans agreed to pay Maccia $600 a month and to maintain the property. They paid the utility
bills for the property, received their mail there and registered to vote from that address. The Callaghans did not
obtain their own homeowner's policy.
One year later, Dorothy Gibson was knocked down by Marcella Callaghan's dog in a park in Montclair
and was seriously injured. Gibson sued Callaghan and Callaghan filed a third-party complaint against Allstate,
contending that because she resided in Maccia's house she was entitled to a defense and indemnification under
Maccia's Allstate policy. Allstate refused to provide a defense to Callaghan on the ground that she was not an
“insured person” under the policy and the trial court ruled in favor of Allstate on the coverage question. Callaghan
then withdrew her defense to Gibson's lawsuit and a default judgment was entered against Callaghan in the amount
of $190,000 plus interest in favor of Gibson, and in the amount of $40,000 plus interest in favor of Gibson's
husband.
An appeal was taken to the Appellate Division and that court affirmed the denial of coverage, concluding
on the basis of the definition of “household” in Black's Law Dictionary that because Callaghan and Maccia had
never lived together, they were not members of the same household. The Supreme Court granted the petitions for
certification filed by the Gibsons and by Callaghan.
HELD: At the time of Gibson's injury, 14 Hyde Road was Maccia's household within the meaning of the term in
the Allstate homeowner's liability policy and Callaghan was a resident of that household. Callaghan is entitled to a
defense and indemnification under the Allstate policy.
1. Ambiguities in an insurance policy are to be interpreted in favor of the insured and policies are to be construed to
comport with the reasonable expectations of the insured. Clauses that limit or exclude coverage are to be narrowly
construed; those that extend coverage are to be read broadly. (pp. 8-11)
2. Whether a relative of a named insured is a resident of the insured's household depends on the facts of the case
and residing together under a single roof is neither necessary nor sufficient for a finding of a shared “household.”
Cases from other jurisdictions provide examples of the variety of outcomes as the issue has been addressed
elsewhere. (pp.11-19)
3. In this case, the meaning of the term “insured person” in the Allstate policy is ambiguous, for it could be found to
refer to a person residing at the insured premises on Hyde Road or to a person living in the same house as Maccia.
Similarly, “household” is ambiguous and the insurance industry has been aware of that fact for nearly forty years.
Allstate could have defined “household” in the homeowners' policy to limit coverage to relatives living under the
same roof as the named insured or in some other manner, but it did not and the Court will not construe the provision
in dispute to the detriment of the insured. (pp. 20-21)
4. Maccia likely would have assumed for purposes of insurance coverage that 14 Hyde Road was her “household”
so to find otherwise would be to defeat her reasonable expectations. Moreover, 14 Hyde Road remained Maccia's
domicile and indisputably was the residence of the Callaghans. Allstate's unbroken acceptance of Maccia's
premiums since 1962 reflects Allstate's acknowledgment that for purposes of the policy Maccia resided in her own
household at 14 Hyde Road. (pp. 21- 24)
The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law
Division for further proceedings consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, and GARIBALDI
join in JUSTICE STEIN's opinion. JUSTICE COLEMAN did not participate.
SUPREME COURT OF NEW JERSEY
A-32/
33 September Term 1998
DOROTHY P. GIBSON and JOHN A.
GIBSON, her husband,
Plaintiffs-Appellants,
v.
MARCELLA CALLAGHAN,
Defendant and Third Party
Plaintiff-Appellant,
v.
COUNTY OF ESSEX, a body politic of
the State of New Jersey,
Defendant and Third Party
Defendant,
v.
ALLSTATE INSURANCE COMPANY, a
foreign corporation registered to
conduct business in the State of
New Jersey,
Third Party Defendant-
Respondent.
Argued May 3, 1999 -- Decided July 8, 1999
On certification to the Superior Court,
Appellate Division.
Stephen J. McCurrie argued the cause for
appellant Marcella Callaghan (McCurrie
McCurrie & McCurrie, attorneys).
William J. O'Day, argued the cause for
appellants Dorothy P. Gibson and John A.
Gibson (Hack, Piro, O'Day, Merklinger,
Wallace & McKenna, attorneys).
John P. McGee argued the cause for respondent
(McDermott & McGee, attorneys).
The opinion of the Court was delivered by
STEIN, J.
This appeal requires us to interpret a clause in a
homeowners' liability insurance policy that provides a defense
and indemnification to relatives of the named insured who are
residents of the named insured's household. The dispute arises
from the fact that the named insured and the relative seeking
coverage do not reside together, nor did they ever reside
together. The insured, an elderly woman, moved out of the house
she owned after suffering an injury, but continued to maintain
her homeowners' insurance policy and intended to return to her
house when she was physically able to do so. Three years later,
the insured's grandson and his wife moved into the vacant house.
The issue is whether the insured's grandson and his wife are
residents of the insured's household, thereby qualifying them as
“insured persons” under the policy.
In 1931, Mary Maccia purchased a one-family house located at
14 Hyde Road, Bloomfield, New Jersey. Maccia resided there until
1990 when she sustained an injury in a fall that required her to
move to her daughter's home in Kearny so that her daughter could
care for her. Because Maccia intended to return to 14 Hyde Road
when her health improved, she did not sell her house. When she
moved in with her daughter, Maccia left many of her belongings,
including her furniture, kitchenware, china, silverware set,
garden and household tools, wedding dress, and “personal
knickknacks” in the house at 14 Hyde Road. She continued to have
her mail, checking account statements, pension checks, social
security checks, health plan notices, property tax assessments,
and Medicare benefits statements sent to 14 Hyde Road. Maccia
took only her clothing and other essential items with her to her
daughter's home in Kearny.
In 1993, because she was concerned about the risk of
burglary and vandalism to her vacant house, Maccia asked her
grandson, Donald Callaghan, and his wife, Marcella, to move into
and care for her house. Donald Callaghan offered to purchase the
property from his grandmother but she declined because she
intended to return to her house when her health improved. The
Callaghans agreed to pay Maccia $600 per month and to maintain
the property. They also paid the electric, gas, heating, phone,
and water bills. The Callaghans received their mail at 14 Hyde
Road and were registered to vote at that address.
Maccia continued to pay the property taxes for her house.
She also maintained her homeowners' liability insurance policy
issued by Allstate Insurance Company. Although the Callaghans
had maintained a homeowners' insurance policy in their names at
their previous residence, they did not purchase a policy when
they moved to 14 Hyde Road.
The parties stipulated that Maccia intended to return to her
house when her health permitted. However, from the time she
moved in with her daughter until the filing of this appeal, she
was unable to return to her house and was confined to her
daughter's home in Kearny.See footnote 11 Nevertheless, the Callaghans still
considered one of the bedrooms in the house to be Maccia's. The
Callaghans visited Maccia at her daughter's home approximately
once each month.
The underlying action giving rise to this appeal is a tort
claim filed against Marcella Callaghan. In September 1994,
plaintiff, eighty-eight-year-old Dorothy Gibson, was seriously
injured when she was knocked down by Marcella Callaghan's dog
while walking in Brookdale Park in Montclair. After Gibson and
her husband filed a complaint against Marcella Callaghan,
Marcella Callaghan filed a third-party complaint against
Allstate, asserting that, because she resided in Maccia's house,
she was entitled to a defense and indemnification under Maccia's
homeowners' policy. Marcella Callaghan also filed a third-party
complaint against the County of Essex. That complaint has been
dismissed and is not implicated in this appeal.
The Allstate policy lists Maccia as the named insured and
identifies 14 Hyde Road as the insured property. The policy
provides:
Losses We Cover:
Allstate will pay all sums arising from an
accidental loss which an insured person
becomes legally obligated to pay as damages
because of bodily injury or property damage
covered by this part of the policy.
We may investigate or settle any claim or
suit for covered damages against an insured
person. If an insured person is sued for
these damages, we will provide a defense
with counsel of our choice, even if the
allegations are groundless, false or
fraudulent. We are not obligated to pay any
claim or judgment after we have exhausted our
limit of liability.
The “Definitions” section of the policy provides:
1. “You” and “your” -- means the person named
on the declarations page as the insured and
that person's resident spouse.
2. “Allstate”, “We”, “Us” or “Our” -- means
the company named on the declarations page.
3. “Insured person” -- means you and, if a
resident of your household:
a) any relative; and
b) any dependent person in your care.
Under the Family Liability Protection section of the policy,
“insured person” also means “any person or organization legally
responsible for loss caused by animals or watercraft covered by
this policy which are owned by an insured person. . . .”
Significant for purposes of this appeal, the policy does not
define the term “household.”
Allstate filed an answer to Marcella Callaghan's third-party
complaint, denying her the right to a defense and indemnification
because she did not, according to Allstate, qualify as an
“insured person” under Maccia's policy. Allstate moved for
summary judgment and, in January 1996, the Law Division granted
Allstate's motion. Plaintiffs filed a successful motion for
reconsideration, and subsequently the court granted Allstate's
motion to sever the coverage issue from the tort action. After a
bench trial, the court issued a written opinion concluding that
Marcella Callaghan did not qualify as an insured under Maccia's
Allstate policy, noting that “[s]uch matters as residence in the
same abode, financial support or dependence, sharing of meals,
socialization and teaching supervision . . . are elements which
determine whether a person is a member of a household.”
Following unsuccessful motions for reconsideration and leave
to file an interlocutory appeal, Marcella Callaghan withdrew her
defense to the tort action and a default was entered against her.
After a proof hearing, judgment was entered in favor of plaintiff
Dorothy Gibson in the amount of $190,000 plus interest, and in
the amount of $40,000 plus interest in favor of Gibson's husband.
In an unpublished per curiam opinion, the Appellate Division
affirmed the trial court's denial of coverage. The Appellate
Division relied on the definition of “household” contained in
Black's Law Dictionary:
Household, n. A family living together.
Schurler v. Industrial Commission,
86 Utah 284,
43 P.2d 696, 699. Those who dwell under
the same roof and compose a family.
Term “household” is generally synonymous
with “family” for insurance purposes, and
includes those who dwell together as a family
under the same roof. Van Overbeke v. State
Farm Mut. Auto. Ins. Co.,
303 Minn. 387,
227 N.W.2d 807, 810. Generally, the term
“household” as used in automobile policies is
synonymous with “home” and “family.”
Bartholet v. Berkness,
291 Minn. 123,
189 N.W.2d 410, 412.
Because Marcella Callaghan and Maccia had never lived together, the court held that they were not members of the same household.
We granted the petition for certification of plaintiffs Dorothy and John Gibson and the petition for certification of defendant/third-party plaintiff Marcella Callaghan. 156 N.J. 426 (1998).
Insurance policies are contracts of adhesion and, as such, are subject to special rules of interpretation. Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990); Meier v. New Jersey Life Ins. Co., 101 N.J. 597, 611-12 (1986). As this Court noted in Allen v. Metropolitan Life Insurance Co., 44 N.J. 294, 305 (1965), an insurance company is “expert in its field and its varied and complex instruments are prepared by it unilaterally whereas the assured or prospective assured is a layman unversed in insurance provisions and practices.” Therefore, when called on to interpret insurance policies, we “assume a particularly vigilant role in ensuring their conformity to public policy and principles of fairness.” Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992); see also Sparks v. St. Paul Ins. Co., 100 N.J. 325, 335 (1985) (noting that terms of insurance policies are subject to “careful judicial scrutiny to avoid injury to the public”).
Certain well-established rules for interpreting insurance policies have developed from that understanding of the nature of insurance policies. Generally, the words of an insurance policy are to be given their plain, ordinary meaning. Voorhees, supra, 128 N.J. at 175; Longobardi, supra, 121 N.J. at 537. In the absence of any ambiguity, courts “should not write for the insured a better policy of insurance than the one purchased.” Longobardi, supra, 121 N.J. at 537 (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)); see also Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960) (“When the terms of an insurance contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties.”).
However, that ambiguities in an insurance policy are to be interpreted in favor of the insured is fundamental. See Cruz Mendez v. ISU/Ins. Servs., 156 N.J. 556, 571 (1999); Doto v. Russo, 140 N.J. 544, 556 (1995); Hunt v. Hospital Serv. Plan of New Jersey, 33 N.J. 98, 102 (1960). When obligated to construe an ambiguous clause in an insurance policy, courts should consider whether more precise language by the insurer, had such language been included in the policy, “would have put the matter beyond reasonable question.” Doto, supra, 140 N.J. at 557 (quoting Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 7 (1961)); see also Kook v. American Sur. Co., 88 N.J. Super. 43, 51 (App. Div. 1965) (“[C]onsideration should be given [about] whether alternative or more precise language, if used, would have put the matter beyond reasonable question.”).
Further, insurance policies must be construed to comport with the reasonable expectations of the insured. American Motorists Ins. Co. v. L-C-A Sales Co., 155 N.J. 29, 41 (1998); see also DiOrio v. New Jersey Mfrs. Ins. Co., 79 N.J. 257, 269 (1979) (“Recognizing the position of laymen with respect to insurance policies prepared and marketed by the insurer, our courts have endorsed the principle of giving effect to the 'reasonable expectations' of the insured for the purpose of rendering a 'fair interpretation' of the boundaries of insurance coverage.”); Allen, supra, 44 N.J. at 305 (“[An insured's] reasonable expectations in the transaction may not justly be frustrated and courts have properly molded their governing interpretative principles with that uppermost in mind.”). That canon of interpretation is consistent with judicial recognition of the “unique nature” of insurance contracts. See Sparks, supra, 100 N.J. at 338. In exceptional circumstances, “even an unambiguous contract has been interpreted contrary to its plain meaning so as to fulfill the reasonable expectations of the insured.” Werner Indus., Inc. v. First State Ins. Co., 112 N.J. 30, 35-36 (1988); see also Robert E. Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv. L. Rev. 961, 967 (1970) (“The objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.”).
Concerning exclusion clauses that proscribe or limit coverage, we have observed that “[i]n general, insurance policy exclusions must be narrowly construed; the burden is on the insurer to bring the case within the exclusion.” American Motorists, supra, 155 N.J. at 41 (quoting Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)). Conversely, clauses that extend coverage are to be viewed broadly and liberally. Mazzilli, supra, 35 N.J. at 8; Cobra Prods., Inc. v. Federal Ins. Co., 317 N.J. Super. 392, 400 (App. Div. 1999).
With those principles in mind, we turn to the governing language in Maccia's homeowners' policy, “resident of your household.” As this Court stated almost forty years ago in Mazzilli, supra, 35 N.J. at 8, [h]ousehold 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.
Accordingly, whether a relative of a named insured is a resident
of that insured's household “will depend on the facts of each
case.” Sjoberg v. Rutgers Cas. Ins. Co.,
260 N.J. Super. 159,
164 (App. Div. 1992); see also Miller v. United States Fidelity &
Guar. Co.,
127 N.J. Super. 37, 41 (App. Div. 1974) (“[The meaning
of 'resident of your household'] may vary according to the
circumstances in each case.”).
That two people reside under the same roof is neither
necessary nor sufficient for a finding that those people share a
“household.” In Mazzilli, supra, the insured owned a piece of
property on which two houses were located. 35 N.J. at 3. The
insured lived in one house, which was covered by a homeowners'
insurance policy, and his son and wife, from whom he was
separated, lived in an adjacent cottage on the property.
Following the entry of a judgment against her in a tort action,
the insured's wife sought indemnification under the insured's
policy as a “resident of the [insured's] household.” Id. at 5-7.
In holding that the insured's wife was a member of the insured's
household, the Court noted that “the term 'household' or
'resident of the household' cannot be so limited and strait
jacketed as always to mean, regardless of facts and
circumstances, a collective body of persons who live in one
house.” Id. at 14. The Court concluded that the specific facts
of that case supported the insured's belief that the premises
“was all one place where the entire family was living.” Id. at
15.
Conversely, Fireman's Fund v. Caldwell,
270 N.J. Super. 157
(Law Div. 1993), presented a situation where two sisters lived
together in a home owned and insured by one of them. They shared
a common bath and kitchen, and the non-insured sister paid rent
to the insured sister. After sustaining injuries in a fall, the
non-insured sister sought to recover damages from the insurer.
The insurer denied coverage, relying on a clause that excluded
coverage for injuries to the named insured or a resident of the
insured's household. Id. at 160-61. In denying the insurer's
motion for summary judgment, the court found that there were
factual issues regarding “[w]hether [the] sisters shared
sufficient prerogatives of family life so as to constitute a
single social unit.” Id. at 167. The court noted that relevant
factors in determining whether the sisters shared a common
household would include whether the rent paid was at fair market
value and whether the sisters paid for food and household goods
jointly or separately, allocated housekeeping responsibilities,
and ate meals together. Ibid.
In determining whether there is a common household, our
courts often consider whether the insured and the relative
seeking coverage share a “substantially integrated family
relationship.” See Mazzilli, supra, 35 N.J. at 19; Arents v.
General Accident Ins. Co.,
280 N.J. Super. 423, 429 (App. Div.
1995); Miller, supra, 127 N.J. Super. at 44. For example, in
Arents, supra, the insured's father sought coverage under the
insured's automobile liability policy. That policy contained a
clause that provided coverage to any relative who was a resident
of the insured's household. 280 N.J. Super. at 425. The insured
lived primarily in an apartment in New York City but also
maintained a bedroom in his parents' house, where he regularly
spent two nights a week. In holding that the insured's father
was entitled to coverage as a resident of the son's “household,”
the court considered the fact that the insured kept clothing at
his parents' house, that he had a car garaged, registered, and
insured at that address, and that he made household repairs. Id.
at 425-26. The court noted that “[a] 'substantially integrated
family relationship' is the touchstone of a household.
Exclusivity of residences or households is not demanded. . . .”
Id. at 429 (citation omitted).
Similarly, in Miller, supra, 127 N.J. Super. at 44, the
Appellate Division found that, for purposes of insurance
coverage, a child who lived with his mother during the week and
with his father on weekends was a resident of both parents'
households because the child shared a “substantially integrated
family relationship” with both his mother and his father. See
also Cal-Farm Ins. Co. v. Boisseranc,
312 P.2d 401, 406 (Cal.
Dist. Ct. App. 1957) (holding that child who lived part of time
with each parent was member of father's household despite fact
that child was residing with mother at time of accident); cf. Fay
v. John Waldron Corp.,
117 N.J.L. 123, 126-27 (1936) (holding
that, under workmen's compensation statute, where decedent lived
with children at his sister's house on weekends and stayed in
rooming hotel in different town during week, children were
members of decedent's household).
Although a person may have more than one residence, a person
may have only one domicile. American Employers' Ins. Co. v. Elf
Atochem N. Am., Inc.,
157 N.J. 580, 590 (1999); Miller, supra,
127 N.J. Super. at 42; see also Collins v. Yancey,
55 N.J. Super. 514, 521 (Law Div. 1959) (“It is not uncommon in our way of life
for persons to have one or more residences based on reasons of
health, society, business or employment, without in any wise
relinquishing their domicile.”). “Domicile has been . . .
defined as the place where a person 'has his true, fixed,
permanent home, and principal establishment, and to which,
whenever he is absent, he has the intention of returning.” State
v. Benny,
20 N.J. 238, 250 (1955) (quoting Story, Conflict of
Laws § 41, at 40 (8th ed.)); accord State v. Atti,
127 N.J.L. 39,
41-42 (1941), aff'd,
128 N.J.L. 318 (1942).
Intent is similarly relevant where a relative seeks coverage
after having moved away from an insured's household. In that
context, the inquiry is whether the relative intends to return to
the insured's household or, conversely, whether the relative
intends to separate permanently from the insured's household.
Neidhoefer v. Automobile Ins. Co.,
182 F.2d 269, 273 (7th Cir.
1950) (“We think that the important and perhaps controlling
feature in situations of the instant character is the intent
possessed by the departing member of a family.”); see also
Sjoberg, supra, 260 N.J. Super. at 164 (finding that daughter,
who was living in Florida with mother when injured, was member of
father's family “residing in his household” in New Jersey because
there was no indication of intent to sever father-daughter
relationship); Crossfield v. Phoenix Ins. Co., 77 N.J. Super.
476, 479 (App. Div. 1962) (holding that son of insured not member
of insured's household because son lived apart from insured and
“had separated himself from [the insured's] household . . . with
the intention of permanently so separating himself”).
Allstate relies in part on cases from other jurisdictions
that have held that a relative may not be entitled to coverage as
a member of a named insured's “household” even where that
relative resides with the insured. See, e.g., Drake v. Donegal
Mut. Ins. Co.,
422 F. Supp. 272, 273 (W.D. Pa. 1976) (holding
that mother, who lived on second floor of building owned and
insured by daughter, was not resident of household of her
daughter, who lived on first floor of building); Jacobs v. Fire
Ins. Exch.,
278 Cal. Rptr. 52, 59 (Ct. App. 1991) (holding that
step-great-grandson who lived with parents in one unit of duplex
owned by step-great-grandmother was not resident of her household
for insurance coverage purposes despite fact that step-great
grandmother lived in other unit of duplex); Hoff v. Hoff,
1 A.2d 506, 508 (Pa. Super. Ct. 1938) (holding that, as matter of law,
son was not member of father's household despite fact that they
lived in same house); cf. Hawkeye Sec. Ins. Co. v. Sanchez,
460 N.E.2d 873, 876 (Ill. Ct. App. 1984) (holding that claimant might
have been resident of insured's “house” but was not resident of
insured's “household” because claimant was living only
temporarily in insured's house and agreed to move out when
renovations were completed); Thomas v. Vigilant Ins. Co.,
401 N.W.2d 351, 353 (Mich. Ct. App. 1986) (holding that son who
resided in house owned and insured by parents not resident of
parents' household because parents lived elsewhere); Cain v.
Parent,
574 So.2d 497, 500 (La. Ct. App. 1991) (holding that
daughter who rented house owned and insured by her mother not
entitled to coverage as “resident of [mother's] household”
because mother resided in different house). Those cases
enunciate several criteria for determining whether a relative of
an insured is a resident of that insured's household, including
whether the relative and the insured share meals or divide the
bills, Drake, supra, 422 F. Supp. at 273, whether the relative
pays rent to the insured, Thomas, supra, 401 N.W.
2d at 353, and
whether the relative and the insured “live together as a group or
unit of permanent or domestic character, with one head, under one
roof or within a common curtilage, who direct their attention
toward a common goal consisting of their mutual interest,”
Jacobs, supra, 278 Cal. Rptr. at 58 (footnotes omitted).
In a case with facts substantially similar to those before
us, the Indiana Court of Appeals considered whether a grandson
was a resident of his grandmother's household for purposes of
insurance coverage. Erie Ins. Exch. v. Stephenson,
674 N.E 2d
607 (1996). As a result of her poor health, the grandmother
moved out of her house so that she could reside with and be taken
care of by the grandson's parents. The grandson moved into the
grandmother's vacant house. He paid the utility bills but did
not pay rent. The grandmother maintained her homeowners'
insurance policy and continued to pay the real estate taxes on
her house. When he was sued in a negligence action, the grandson
sought a defense and indemnification under the grandmother's
homeowners' policy. Citing Mazzilli, supra, the Indiana court
declined to adopt “liv[ing] under the same roof” as the “single,
exclusive definition of the word ['household'].” Erie, supra,
674 N.E.
2d at 610. The court held that the grandson was a
resident of the grandmother's household, despite the fact that
the grandmother had not resided there for approximately three
years. Ibid. That holding was based on the fact that the
grandson was a “lineal descendant” of his grandmother and that
the grandmother and her grandson “function[ed] as members of the
same family, trad[ing] places.” Ibid.
We hold that, at the time plaintiff Dorothy Gibson was
injured by Marcella Callaghan's dog, Marcella Callaghan was a
resident of Maccia's household. We decline Allstate's invitation
to adopt the restrictive definition of “household” contained in
Black's Law Dictionary. Residence under a common roof is not the
touchstone of a “household”; rather, the meaning of “household”
will vary depending on the circumstances of a given case. See
Mazzilli, supra, 35 N.J. at 8; Miller, supra, 127 N.J. Super. at
41.
We find that, under the unique set of circumstances
presented in this appeal, the meaning of “insured person” in
Maccia's homeowners' policy is ambiguous. Specifically,
“resident of your household” is readily susceptible of two
interpretations: a resident of 14 Hyde Road (the insured
premises), or a person residing in the same house as Maccia.
Because the language of the policy is ambiguous, we are required
to construe the disputed terms in favor of the insured. Cruz
Mendez, supra, 156 N.J. at 571. We find ample support in the
record for our conclusion that 14 Hyde Road was Maccia's
household, despite the fact that she was residing elsewhere: she
intended to return to her house when her health permitted; she
continued to have all of her mail sent to 14 Hyde Road; she
continued to pay the property taxes; and most of her personal
possessions remained in her house. We hold, therefore, that
Marcella Callaghan was entitled to a defense and indemnification
from Allstate for the tort action filed against her.
The insurance industry has known for almost forty years that
the term “household” is susceptible of several interpretations.
See Mazzilli, supra,
35 N.J. 1. If Allstate intended to limit
coverage to relatives who resided under the same roof as Maccia
or shared a “substantially integrated family relationship” with
her, it could have so defined “household” in Maccia's homeowners'
policy. See id. at 16 (“If the insurer wished to impose such a
restriction [that residents of a household must live under a
common roof] it would have been a simple matter to do so by
express language.”); see also 495 Corp. v. New Jersey Ins.
Underwriting Ass'n,
86 N.J. 159, 171 (1981) (Clifford, J.,
concurring) (“One may reasonably assume that [the insurance
industry] has available perceptive and competent counsel aware of
judicial decisions interpreting its standard policy, sensitive to
the need to mold that policy to those decisions, and skilled in
the craft of explicit expression.”). Therefore, we will not
construe the disputed clause to the detriment of the insured.
Further, a contrary holding would defeat the reasonable
expectations of Maccia, the insured. See DiOrio, supra, 79 N.J.
at 269. That Maccia would take for granted that for purposes of
insurance coverage her “household” was 14 Hyde Road is
understandable because that was the very property that was the
insured premises under her homeowners' policy. In addition, when
the Callaghans moved in to Maccia's house they did not obtain
homeowners' liability insurance, despite having maintained such
insurance on their previous residence. Although it is unclear
from the record why the Callaghans decided not to purchase
insurance, they justifiably could have assumed that they were
covered under Maccia's policy.
We consider also the argument advanced by plaintiff Dorothy
Gibson that because the Callaghans and Maccia shared the same
domicile they were necessarily residents of the same household.
That Maccia intended to return to her house when her health
improved, combined with all the other indicia of domicile,
indicates that 14 Hyde Road remained her domicile. That
conclusion supports our holding that 14 Hyde Road also
constituted Maccia's household for purposes of coverage under the
Allstate policy.
We find it somewhat ironic that Allstate suggests that
Donald and Marcella Callaghan, who were living in Maccia's home
in order to protect it from vandalism, a risk covered by Allstate
under the policy, are not residents of Maccia's household.
Moreover, plaintiffs' counsel informed this Court at oral
argument that the policy has been in effect and Maccia has been
paying the premiums on the policy since 1962. Allstate's receipt
and acceptance of Maccia's premiums for so long a period
persuasively reflects Allstate's understanding that the policy's
definition of “insured person” as including Maccia and any
relative “resident of [her] household” constituted a concession
and acknowledgment that, for purposes of the policy, Maccia
resided in her own household at 14 Hyde Road. If Allstate
intended to contest Maccia's residence in her own “household,” as
that term was used in the policy, then it was obligated to use a
definition of “insured person” that acknowledged the possibility
that Maccia might no longer reside at the insured premises.
We are not persuaded by the cases from other jurisdictions
cited by Allstate. The cases that deny coverage to a relative
residing in a house owned by a named insured who lives elsewhere,
e.g., Cain, supra,
574 So.2d 497; Thomas, supra,
401 N.W.2d 351,
are readily distinguishable. In those cases, although the named
insured owned the insured house, the named insured did not live
there and had no intention of ever living there. In essence, the
named insured was a landlord and the tenant in the insured
premises happened to be a relative. Conversely, it is
uncontested that Maccia intended to return to 14 Hyde Road. To
the extent those cases rely on residence under a common roof as
an absolute prerequisite to a finding of a shared “household,” we
reject their reasoning.
Nor do the cases that equate “household” with a
“substantially integrated family relationship” between the
insured and the relative seeking coverage dictate a different
outcome. The inquiry in those cases was whether the relative
seeking coverage, who did not reside exclusively in the insured
premises, had a sufficient connection to the insured premises to
be considered a member of that “household.” In this appeal, that
the Callaghans are residents of 14 Hyde Road is beyond dispute:
they live in the house, receive their mail there, and are
registered to vote there. Rather, the question is whether, at
the time plaintiff Dorothy Gibson was injured, 14 Hyde Road was
Maccia's household within the meaning of that term as used in
Allstate's policy. We conclude that it was.
The judgment of the Appellate Division is reversed. We remand the matter to the Law Division for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, and GARIBALDI join in JUSTICE STEIN's opinion. JUSTICE COLEMAN did not participate.
NO. A-32/33 SEPTEMBER TERM 1998
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
DOROTHY P. GIBSON and JOHN A.
GIBSON, her husband,
Plaintiffs-Appellants,
v.
MARCELLA CALLAGHAN,
Defendant and Third Party
Plaintiff-Appellant,
v.
COUNTY OF ESSEX, a body politic
of the State of New Jersey,
Defendant and Third Party
Defendant,
v.
ALLSTATE INSURANCE COMPANY,
a foreign corporation registered to
conduct business in the State of New Jersey,
Third Party Defendant-
Respondent.
DECIDED July 8, 1999
Chief Justice Poritz PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINIONS BY
Footnote: 1 1 At oral argument, the Court was informed that Mrs. Maccia is now deceased.