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Mendota v. Gallegos - 5/7/2013

Arizona Court of Appeals Division One Holds that for the Purposes of an Insurance Policy, a “Household” Is Evaluated Based upon the Totality of the Circumstances.

Martin Gallegos purchased an auto insurance policy that covered himself as well as any family members who lived in the same “household.”  Martin had been living with his mother, step-father, and brother in the family’s Peoria home for approximately four years until a few months prior to the purchase of the policy, when Martin decided to start renting a room at a friend’s house so that he could party more.  Shortly thereafter, Martin began spending more time at his girlfriend’s house, eventually staying five nights a week at her place.  Throughout all of this time, Martin maintained a room at the Peoria home, listed it as his address, would have meals at the home on the weekends, and intended to move back “whenever [he] was done [partying].”

Martin’s brother, Eric, lived at the Peoria home.  Eric was injured in an accident and filed a claim under Martin’s policy.  The insurance company sued Eric, seeking a declaration that he was not a resident of Martin’s “household,” and thus not entitled to coverage under the policy.  The trial court denied the request for declaratory relief, holding that at the time of the accident, Eric was a resident of Martin’s “household.”

The court of appeals affirmed.  The court analyzed the claim in two parts: (1) what was Martin’s household; and (2) was Eric a resident of that household?  As to the first issue, Mendota argued that because Martin spent most of his time outside of the Peoria home, it was not his household.  The court of appeals rejected this emphasis on physical presence alone, holding instead that a household is determined based upon an evaluation of the “totality of the circumstances.” 

The court stated that a household is defined by at least three attributes: (1) “a close-knit group of individuals who treat each other like family, and deal with each other intimately and informally;” (2) “a connection to a shared dwelling place where its members develop and maintain their close-knit, intimate, and informal relationships;” and (3) “a degree of permanency and intention to integrate into the family unit and remain a member for more than a mere transitory period.”  Applying this test, the court agreed with the trial court’s finding that for the purposes of the policy, Martin’s household was the Peoria home.

As to the question of whether Eric was a “resident of the household,” the court held that the phrase was unambiguous and affirmed the trial court’s finding that Eric was a resident of Martin’s household.

Judge Norris authored the opinion; Judges Gould and Howe concurred.

Posted by: Yaser Ali

Posted On: 5/30/2013