This matter is before the court by way of plaintiff's motion for summary judgment in a declaratory judgment action. The case raises the question as to what level of socialization and domesticity must be reached, apart from kinship and joint residency, to establish a household. The issue is presented in the context of the interpretation of a provision in a homeowner's policy which excludes from liability coverage personal injury claims made by relatives residing in the policyholder's household.
The controversy developed as follows: defendants Georgia Caviness (Caviness) and Bertha M. Caldwell (Caldwell) are sisters. Caldwell owns what appears to be a two family dwelling situated at 374 East 24th Street, Paterson, New Jersey. Caldwell's ownership of the property extends from at least 1974 to the present. Caldwell also owned property at 73 Godwin Avenue, Paterson, New Jersey. The record before the court on this motion is unclear as to when Caldwell acquired the Godwin Avenue property or whether her ownership continued on February 23, 1990.
From at least 1974 through June 1990, Caldwell maintained a homeowner's liability insurance policy (the policy) with plaintiff Fireman's Fund. The policy covered the East 24th Street property and perhaps the Godwin Avenue premises, although as to the latter parcel, the record is at best ambiguous.
Sometime prior to February 23, 1990, Caviness took up residence in her sister's home. Her sister lived in the first floor apartment which consisted of five rooms, two of which were bedrooms. An unidentified tenant occupied the second floor apartment. At her deposition, Caviness testified she asked her sister to allow her to reside in one of the two bedrooms because
her doctor preferred she not live alone. Caviness's testimony reveals this relationship to be more than familial. Initially, Caviness paid rent weekly, but subsequently, that was changed to monthly. Caviness was emphatic that these arrangements did not contemplate the provision of care by her sister because she was "not sick." Other than sharing common bath and kitchen facilities, the record does not provide additional details as to which, if any, prerogatives of family life the parties enjoyed.
On February 23, 1990, Caviness apparently was injured in a fall which allegedly occurred at the East 24th Street property. The record does not reflect additional details of the incident except that the matter ultimately matured into litigation.
Subsequent to the receipt of a notice of claim for damages from Caviness's attorneys, Fireman's Fund sent Caldwell a letter acknowledging the existence of her sister's claim and advising of its intention to investigate. However, plaintiff cautioned Caldwell that its investigation was proceeding under a "reservation of rights." The Caviness claim apparently eluded an amicable adjustment and litigation ensued. Fireman's Fund assigned counsel to defend Caldwell.
On June 9, 1992, Fireman's Fund informed Caldwell in writing of its determination that the Caviness claim fell outside the scope of coverage afforded under her policy. Fireman's Fund reasoned that Caviness, as a relative residing with Caldwell, qualified as an "insured" under the policy and consequently, no coverage was afforded. Thereafter, Fireman's Fund commenced the within declaratory judgment action against both Caldwell and Caviness, seeking a determination that the Caviness litigation fell beyond the penumbra of coverage provided by Caldwell's policy. Plaintiff also requests authorization to withdraw its defense of Caldwell in the Caviness lawsuit. Caviness has appeared in this action, but Caldwell has defaulted.
The disputed policy contains a definitional section. Section 3 defines "insured" as follows: "'Insured' means you and residents of your household who are: (a) relatives;. . . ." (emphasis added).
Section 4 defines "insured location" as "the residence premises." The term "household" is not defined in the policy.
Section 2 of the policy delineates liability coverages. Coverage is afforded up to the policy limits for a claim or suit brought against the insured for damages resulting from bodily injury or property damage caused by an occurrence. It is undisputed that, if covered, the Caviness accident would qualify as an "occurrence" under the policy.
The policy also contains a section denominated "Section II -- Exclusions." Section 2(f) excludes coverage for personal liability claims arising out of "bodily injury to [the policyholder] or an insured within the meaning of ...