From the Desk of Kyle Riley: Under the Sutton rule, Washington courts presume a tenant is coinsured under its landlord’s insurance policy, unless there is an agreement stating to the contrary. This case discusses whether the tenant is a coinsured with its landlord for the entire property and whether a tenant’s spouse is also a coinsured under the landlord’s insurance policy.
Claims Pointer: (1) A tenant is a coinsured under its landlord’s policy for the entire building, not only the unit she occupies; and, (2) a tenant’s spouse is also a coinsured under the landlord’s insurance policy.
Trinity Universal Insurance Co. v. Cook., in the Court of Appeals of the State of Washington, Division III, No. 29975-9-III, 276 P.3d 372 (May 17, 2012).
Corrine Cook, a tenant at Regal Ridge Apartments in Spokane, Washington, is married to Christopher Cook, but they do not live together. Ms. Cook resides in the apartment with their two children and Mr. Cook regularly visits his family at the apartment. During one of his visits while Ms. Cook and the children were not at the apartment, Mr. Cook smoked a cigarette on the apartment’s balcony. He discarded his cigarette into a plastic pail which ignited a fire. The fire damaged Ms. Cook’s apartment, other apartment units within the building, the exterior, the roof, and the ventilation, heating and cooling units. The estimate of property damage to Ms. Cook’s apartment totaled $49,057 and the property damage to the complex was more than $800,000. The apartment building owner is insured against fire with Trinity Universal Insurance Company of Kansas. There was no express or implied agreement that tenants would not be a coinsured under the landlord’s insurance policy. The insurer paid for repairs to the building.
The insurer sued Mr. and Ms. Cook to recover the amount it paid to repair the building claiming a right to equitable subrogation. Ms. Cook filed a motion for summary dismissal of the suit arguing she should be considered an additional insured under the building owner’s policy and not required to subrogate the loss. Mr. Cook joined Ms. Cook’s motion arguing that he should not be subject to subrogation because he is Ms. Cook’s husband, was in the apartment legally, and was also covered under the insurance policy. The trial court granted the Cooks’ motion and dismissed the insurer’s lawsuit. The insurer appealed to the Washington Court of Appeals.
On appeal, the insurer argued that Ms. Cook is not insured under the landlord’s insurance policy, at least for the damages incurred to portions of the building other than her apartment. Under the Sutton rule the Court presumed Ms. Cook was a coinsured under her landlord’s insurance policy for the property damage to her apartment because there was no express agreement stating to the contrary. The Court also determined that the Sutton rule extends to damage beyond the property Ms. Cook occupied and included all property interests insured by the landlord under its insurance policy. The Court thought it would be economic waste to require each tenant to obtain insurance insuring the entire complex and held that it is implied that a tenant is a coinsured for the entire complex. Since the landlord’s insurance policy covered the entire building, Ms. Cook was a coinsured under the landlord’s policy against damage to the entire building. Thus, the insurer had no right to seek subrogation from Ms. Cook.The insurer also claimed that Mr. Cook was not a tenant; thus, subject to subrogation. The Court determined that it was a reasonable expectation when Ms. Cook signed the lease that the marital community would benefit from it. Mr. Cook was not just a guest, had a right to be there, and was also a coinsured under the landlord’s insurance policy. Thus, Mr. Cook was not subject to subrogation.
The Sutton rule was discussed in more detail in Community Association Underwriters of America, Inc. v. Kalles et al. If you would like to know more about the Sutton rule, read the “Subrogation – Is a Tenant a Landlord’s Coinsured?” case update.
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.