In Continental Ins. Co. v. Roberts, et al., 04-12566 (11th Cir., June 3, 2005), the insurer sought to establish that the claimant was a member of the named insured's "household" so as to secure a decreased limit of liability coverage under the terms of its policy. The Eleventh Circuit Court of Appeals did not agree.
There are many instances of coverage litigation in which interested parties seek to establish that a particular individual is a "member" or "resident" of the named insured's "household" to obtain insurance coverage. For example, in Farmers Auto Ins. Co. v. Gittelson, 244 Ill. App. 3d 888 (1st Dist. 2003), the named insureds' daughter was killed in an automobile accident and her estate asserted a claim for underinsured motorist benefits on the basis that the deceased was a "resident" of her parents household. However, the evidence established that the daughter was an adult, with a college degree, working full time in Chicago where she rented an apartment and had opened a bank account. Thus, even though she had regularly visited her parents in their Wisconsin home, where she kept a bedroom and personal belongings, the weight of the evidence demonstrated that she was no longer a "resident" of her parents' "household."
Continental v. Roberts involves an issue similar to that presented in Gittelson, except that in Roberts, it was the insurer which sought to establish that the claimant was a member of the named insured's "household" in order to avail itself to a decreased limit of liability coverage under the terms of its policy.
The Roberts case arose from a tragic accident in which Steven Gimopoulos suffered severe spinal injuries after diving head first from Polly Roberts' boat into shallow water. Roberts was insured under a boatowner's policy which was issued by Continental. The policy provided liability coverage with a $100,000 limit for bodily injuries arising out of the operation of the boat. The coverage was limited, however, by another provision in the policy, which stated that the "boating liability coverage for any claim by any family member(s) shall be limited to $25,000 per accident." The policy defined the term "family member" as "any member of the named insured's household." The term "household" was not defined.
Mr. Gimopoulos made a claim under Roberts's policy with Continental for damages resulting from his injuries. Continental investigated the claim and discovered that Gimopoulos and Roberts had been living together in an intimate relationship for 20 months prior to the time of the accident. The couple shared meals and expenses, and Roberts allowed Gimopoulos to carry a cell phone and credit card in her name. Based on those facts, Continental concluded that Gimopoulos was a member of Roberts' "household" and, therefore, that his recovery under the Continental policy was limited to $25,000.
Continental filed suit to confirm the correctness of its position in federal district court, seeking a declaration that Gimopoulos was entitled only to $25,000 under the policy. Continental argued that the word "household," as used in the policy, included all people living together in one dwelling, regardless of whether they were related by blood, marriage, or adoption. Therefore, because Gimopoulos and Roberts were living together, Gimopoulos was a "member" of Roberts' "household."
Gimopoulos and Roberts claimed that the word "household" as used in Continental's policy was limited to people who shared a dwelling and were also related by blood, marriage, or adoption. Because Gimopoulos was not related to Roberts in any of those ways, he was not a member of her "household" and was entitled to the full $100,000 of liability coverage.
On cross-motions, the district court entered summary judgment for Gimopoulos and Roberts. The court found that both interpretations of "household" were reasonable and, therefore, the term was ambiguous and had to be construed against Continental.
Thereafter, Continental appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit affirmed the district court's judgment. Applying Florida law, the court found "ample grounds" for concluding that the interpretation of "household" offered by Gimopoulos and Roberts was reasonable. The court cited dicta in five Florida appellate court decisions, stating that an essential characteristic of a "household" member is "close ties of kinship"—a relation by blood, marriage, or adoption. (See, for example, Dwelle v. State Farm Mutual Auto Ins. Co., 839 So. 2d 897, 898-99 (Fla. 1st Dist. Ct. App. 2003).) While dicta cannot establish decisional law, it can serve to show the reasonableness of an interpretation of a word or term.
The court rejected Continental's attempt to distinguish the case from the precedent on which the court relied. In Universal Underwriters Ins. Co. v. Evans, 565 So. 2d 741 at 742 (Fla. 5th Dist. Ct. App. 1990), the court determined that two unrelated roommates were not members of the same "household" for purposes of the insurance policy at issue. The Evans court noted an absence of any indication that the men had a relationship beyond being roommates or had any intention of forming a "social unit." However, the Evans court did not say that the existence of such a relationship or intention would be enough to form a "household."
The Roberts court also pointed out that the Evans court viewed with favor precedent from the court of appeals which stated "all members of the household have ties of blood, marriage or adoption among themselves. Merely dwelling under the same roof does not constitute them members of the same household, but such is the result when they share common bounds of kinship." General Guarantee Ins. Co. v. Broxie, 239 So. 2d 595 at 597 (Fla. 1st Dist. Ct. App. 1970).
The court also cited dictionary definitions of the word "household" as including the word "family." Gimopoulos and Roberts were not required to show that their interpretation of the term "household" was the only correct one. Rather, they merely were required to show that their interpretation was reasonable, thereby giving rise to ambiguity and requiring the policy to be construed in their favor.
Judge Hill filed a dissenting opinion in which he observed that, in the litigation, Gimopoulos and Roberts attached more importance to a marriage license than they ever had before. The couple lived, essentially, as husband and wife for 20 months without a marriage license, but now claimed the absence of one was of great significance in the interpretation of Continental's policy. Further, the couple had obtained legal counsel so that Gimopoulos could sue Roberts. Counsel for Roberts advised her to confess judgment in that action.
The judge pointed out that the purpose of the limitation clause in Continental's policy was to discourage collusive claims by persons in a close relationship with the insured. He cited other dictionary definitions of "household" to include "a social unit comprised of those living together in the same dwelling place." In Judge Hill's view, there was no genuine ambiguity present. He found that the interpretation of the term "household" which Gimopoulos and Roberts relied on was not reasonable and felt that judgment should have been entered for Continental.
Relevant Case Law from Other Jurisdictions
The following cases from various jurisdictions contain an analysis of "household" most directly related to the issue presented in Continental v. Roberts.
State Farm Mut. Auto. Ins. Co. v. Davidson, 1989 Me. Super. LEXIS 192 (1989)
- A "household" may consist of a social, financial or physical unit, and is therefore an ambiguous term.
Shear v. West Am. Ins. Co., 464 N.E.2d 545 (Ohio 1984)
- A "household" is a family or social unit.
Rice v. Jodrey, 482 N.E.2d 1313 (Ohio App. 1984)
- Distinguishes Shear in a situation involving a "domestic servant."
- Looks at distinction between a family-like environment and a true family (or replacement for a family).
- Places weight on permanence of the living situation.
The following cases place reliance on the term "family" to define what a "household" is.
Lontkowski v. Ignarski, 95 N.W.2d 230 (Wis. 1959)
- Quotes the Supreme Court in holding that "[p]ersons who dwell together as a family constitute a household."
- Suggests this may be more than blood relation by referring to language in the policy that refers to "a member of the household other than a private chauffer or domestic servant."
Southern Farm Bureau Cas. Ins. Co. v. Williams, 543 S.W.2d 467 (Ark. 1976)
- Follows the same definition as Wisconsin and suggests that other jurisdictions have done the same: Mississippi, Maryland, Minnesota, Alabama.
The following cases are not as closely related to the issues presented in Continental v. Roberts as those cited above, but may be helpful in the analysis of similar issues.
Waller v. Rocky Mountain Fire & Cas. Co., 535 P.2d 530 (Or. 1975)
- Focuses on the need for members of a household to "dwell or live together" regardless of the other meanings that "household" might have.
Hodge v. Estrada, 1978 U.S. Dist. LEXIS 17792 (D.P.R. 1978)
- Differentiates what might be a standard requirement that a member of a "household" dwell primarily in the relevant location with regard to absences of servicemen.
Allstate Ins. Co. v. Elwell, 513 A.2d 269 (Me. 1986)
- Here, an auto policy provided "insured" status to "residents of the named insured's household," but then excluded liability coverage for "bodily injury" to "any person . . . related by blood, marriage, or adoption . . . if such person resides in the same household." The court found that these provisions did not give rise to an ambiguity.
Gerace-Flick v. Westfield Nat'l Ins. Co., 2002 Ohio App. LEXIS 5250.
- Suggests that simply being a family member does not make one a "household" member; some level, maybe even a high level, of cohabitation is required.
- Rejects a New Jersey Supreme Court holding that an individual could maintain two households or "live as a member of one household and still be the 'domestic head' of a separate household."
In these days of alternative living arrangements, lines which were once clearly defined have become blurred. The common understanding of what constituted a "household" or "family" in 1960, and the typical living arrangements of that era, are far different from what is understood and typical nowadays. Thus, in the author's opinion, Judge Hill's observations in his dissent in Roberts have merit.
Nevertheless, as experienced underwriters and coverage counsel know, policy language must evolve to adapt to change. What is "reasonable" in the eyes of some, may be "unreasonable" to others, and people's views change with the passage of time. From the prospective of insurers, the best practice is to always spell out with as much particularity as possible the limitations of coverage intended in the policy. To do otherwise is to invite debate over what is a "reasonable" interpretation of a term and open the door to an argument that the undefined term is ambiguous.
The author is grateful for the assistance of summer associate Chance Hodges for his assistance in gathering and preparing the survey of the law of various jurisdictions which appears in this article.