Recent Michigan Federal Court Decision Proposes Definition of "Resident" for Homeowner's Policy Purposes

While Michigan courts have often been in the background in shaping insurance jurisprudence, a recent decision heralds a development in one area of the law. In a recent decision, the federal court for the Western District of Michigan has proposed a definition for the term "resident" for the purpose of the standard homeowner's policy. Prior to this decision, Michigan courts like their counterparts in leading jurisdictions, had failed to propose a definition for this term. The majority of States have required either an intent to stay on a permanent basis or have held that the individual was not a resident even though the person lived in the house but lived there independently.

In Forest Mann Insurance v Stark, et al, the Western District Federal Court was called upon to address whether a child who was temporarily living with her grandparents could recover under her grandparents' homeowner's insurance policy for injuries she sustained from a riding lawnmower at their home. The policy at issue did not cover "residents of [the household]." The court determined that the child was not a "resident" for policy purposes because the child's mother intended to stay at the grandparents' home temporarily until "her marital problems were resolved." The factual record revealed that the child's [the household]." The court determined that the child was not a "resident" for policy purposes because the child's mother intended to stay at the grandparents' home temporarily until "her marital problems were resolved." The factual record revealed that the child's mother had changed her mailing address to that of her parents' home. Nonetheless, the mother subjectively viewed the change of residence as merely temporary. The court noted that although the mother had changed her mailing address, "[t]his act [did&cb; not necessarily indicate that she consider herself a resident of her parents' house."

Attempting to defeat coverage, defendant's relied upon a policy exclusion barring coverage for children "in the care of" the insured grandparents. Addressing this exclusionary provision, the court concluded it did not apply to defeat the child's claim, although she was riding with her grandfather on his lawnmower when the accident occurred. The exclusion did not apply because there was no evidence that the grandfather had "general supervisory control" over the child. Prior to the Stark decision, there was scant Michigan law interpreting the term "resident" for purposes of a homeowners' insurance policy. Moreover, other jurisdictions offered scant guidance in this area of the law.

Using several leading Michigan decisions in the no-fault insurance context for guidance, the court addressed the issue of "resident" for coverage purposes. Critical to the analysis was the flour-part litmus test in Workmen v DAIIE. Under the Workmen test, the factors to be considered in determining whether a claimant is a "resident" of an insured's household or "domiciled in the same household" include: (1) the subjective or declared intent of the claiment to remain, either permanently or for an indefinite period of time in the household, (2) the formality of the relationship between the claiment and the members of the household, (3) whether the claiment lives in the same house, within the same curtilage, or upon the same premises as the insured, and (4) whether the claiment has another place of lodging.

The court also relied upon several recent cases in various Michigan courts which addressed the residency issue for purposes of a homeowner's policy. For example in Vanguard Insurance Co v Racine, the Michigan Court of Appeals held that a child's estate could recover against the father's homeowner's policy where the child died in an accident while visiting his divorced father for the weekend. This was despite an exclusion for "residents." The court noted, however, an ambiguity between the policy's use of the term "resident" and the phrase "regularly residing." In Vanguard, the Michigan court used the existence of the ambiguity to construe the policy in favor of coverage, consonant with accepted rules of policy construction.

More recently, the Court of Appeals in Henderson v State Farm, Fire & Casualty Co, decided that a teenage girl living temporarily with her boyfriend and his mother was covered by the mother's homeowner's policy. The policy covered the girl because she was "in the care of" the insured party, the mother, while she lived there.

Unlike the facts of Vanguard and Henderson, the court concluded in favor of coverage despite a factual record which showed that the injured child had moved to the grandparents' home and resided there for a period of time prior to the injury; the child's mother filed a change of address form with the post office which stated that the move was not "temporary" and moreover, the mother's driver's license indicated her parents' address on the front.

The Racine and Henderson decisions viewed together suggested a trend to apply the Workmen test strictly to define "resident" to limit coverage. Stark suggests a trend to promote coverage where a strict application of Workmen in light of the facts would have lead the court to conclude that the child was a "resident" of the grandparents' home thus barring coverage. If the Vanguard, Henderson and Stark decisions viewed together are indicative, these decisions may represent a national trend to construe homeowners' policies to promote coverage.