469_C326
SIGNIFICANT
OTHER NOT SUBJECT TO SUBROGATION
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Homeowner |
Subrogation |
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Insureds |
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On January 31, 2002, a fire caused extensive damage to a
house owned by Lisa Deveau. At the time of the fire, Deveau shared her home with her fiancé, Stephen Palumbo.
Palumbo had moved in with Deveau shortly after she
purchased the house, approximately two and a half years before the fire
occurred. The couple equally shared all the expenses of the house, including
the homeowners insurance. Palumbo would give Deveau cash
or checks to cover his share of the expenses, and Deveau
would pay the bills.
Deveau was the sole named insured under an
Allstate Insurance Company homeowners policy covering
the house. The policy was issued to Deveau as the
insured, but the couple assumed that Palumbo would be covered because he was Deveau’s fiancé and a cohabitant of the house, and because
he paid a share of the homeowners premium.
Palumbo made many improvements to Deveau’s
property, including installing a water heater. After the fire, it was
determined that the water heater had been installed improperly, and that this
improper installation had been the cause of the fire.
Allstate eventually paid Deveau
$62,615.25 to cover her expenses and damages. The insurer then filed an
equitable subrogation action against Palumbo, alleging that it was entitled to
reimbursement because Palumbo’s negligence had caused the fire.
The lower court and the appellate court found in favor of
Allstate. The Supreme Court of Connecticut then certified the case for appeal.
The court began its analysis by acknowledging that the lower
court had emphasized the nature of Deveau and
Palumbo’s relationship as dispositive. The court
noted that the facts showed that their relationship was more than that of host
and social houseguest or landlord and tenant. The court also noted, however,
that the trial court did not address whether or not it was inequitable, under
the facts, to allow subrogation. The
court stated that neither Deveau nor Palumbo would
have reasonably believed that Deveau would bring an
action against Palumbo for his negligent acts.
Although Deveau did not expressly
tell Palumbo that she was obtaining the insurance for the benefit of both
herself and him, she regularly accepted his contribution toward the premium
payment. The court noted that “[c]ourts have long
recognized that where one party has agreed with another to obtain insurance for
their mutual protection, the insurer will not be allowed to recover its losses
from the noninsured party by means of subrogation or indemnity.” It then
concluded that the “totality of the circumstances” weighed against subrogation.
The judgment of the Appellate Court was reversed, and the
case was remanded with instructions to reverse the judgment of the trial court
and render judgment in favor of Palumbo.
Allstate Insurance Company vs.
Palumbo-No.
18276-Supreme Court of Connecticut-May 18, 2010-994 Atlantic Reporter 2d 174