SUPERIOR COURT OF THE STATE OF DELAWARE Sussex County Courthouse ROBERT H. ROBINSON, JR. 1 The Circle, Suite 2

JUDGE Georgetown, DE 19947 Telephone: (302) 856
- 5264 Submitted: June 15, 2022 Decided: September 15, 2022 Robert C. McDonald, Esquire Jeffrey S. Friedman, Esquire Silverman, McDonald & Friedman 1010 North Bancroft Parkway, Ste

. 22 Wilmington, D elaware 19805 Attorneys for Plaintiff
Mark H. Riesenfeld , Esquire Smith & Cohen Law Group 1528 Walnut Street, Suite 400 Philadelphia, P ennsylvania 19102 Attorneys pro hac vice for Plaintiff Marissa D. White, Esq uire Wade A. Adams, III, Esquire Law Offices of Wade A. Adams, III Christiana Executive Campus 111 Continental Drive, Suite 309 Newark , D elaware 19713 Attorneys for Defendants

Re: Donegal Insurance Group v. Sathiyaselvam Thangavel and Sasikala Muthusamy C.A. No.: S21C

- 08

- 013 RHR
Dear Counsel:
Defendant s Sathiyaselvam Thangavel and Sasikala Muthusamy (collectively “Defendants”) were lessees of an apartment owned and managed by Seaford Apartment Ventures, LLC (“Seaford Apartment s ”) . On December 28, 2019, a fire suppression sprinkler was activated in Defendants’ apartment

— allegedly after a drone aircraft they were operating inside the apartment damaged the sprinkler

— that2

caused extensive water damage. Seaford Apartments filed a claim with its insurance company, Donegal Insurance Group (“Donegal” or “Plaintiff”) , which paid $77,704.06 to repair the damage. Donegal filed this complaint , as subrogee of Seaford Apartments , against Defendants , seeking to recover the cost of the repairs. Defendants have moved for summary judgment. For the following reasons, the motion for summary judgment is GRANTED.
A. The Parties’ Contentions
De fendant s argue that they are entitled to summary judgment under the Delaware Superior Court’s holding in Lexington Insurance Co mpany v . Raboin , 1 which adopted the reasoning of Sutton v. Jondahl

. 2 Sutton and Lexington hold that insurance obtained by a landlord is for the mutual benefit of the landlord and tenant , and that therefore the parties should be considered co

- insureds. Unless there is an express agreement or provision in the lease that would place liability on the tenant, the landlord’s insurance carrier cannot obtain subrogation against the tenant ( commonly referred to as the “ Sutton Rule.”) 3
Plaintiff contends that the Sutton Rule does not apply to the present case
. Plaintiff argues that the lease between the Defendants and Seaford Apartments (the “Lease”) constitute s an express agreement between Seaford Apartment s and

1 712 A.2d 1011 (Del. Super. Ct. 1998)

. 2 532 P.2d 478 (Okla. Civ. App. 1975)

. 3 Deloach v. Houser

, 2018 WL 5899080, at * 2 (Del. Super. Ct. Nov. 9, 2018 )

.3

Defendants that make s Defendants liable under the L ease. Plaintiff cites to the following provision:
12. NO LIABILITY FOR LOSS OR DAMAGE TO TENANTS’ PERSONS OR PROPERTY; INDEMNITY TO LANDLORD. (a) Tenants agree to be solely responsible for all loss or damages to Tenants or their property or to any other person which may be situated in the Rental Unit and storage area; gross negligence of Landlord, its servant, agents or employees excepted; In addition, Tenants agree to indemnify and save Landlord harmless from any and all loss occasioned by the tenant’s breach of any of the covenants, terms and conditions of the Agreement, or caused by the tenant(s) family, guests, visitors, agents or employees

. See § 5309. (b) Tenant agrees to procure and maintain adequate content and liability insurance in an amount not less than $300,000.00 to afford protection against the risk s herein assumed

.... 4 The Court requested further argument from the parties as to their interpretation of another provision in the Lease:
29. TENANT RESPONSIBLE FOR DAMAGES. Tenant by accepting this agreement covenants and agrees that tenant will be respon sible for all damages accidentally, maliciously, intentionally, or negligently caused by the tenant, tenant’s family, guests or invitees to any of the property of the landlord. 5
Plaintiff argues this provision further supports its position. Finally, Plaintiff argues that, at the very least, the Lease’s language creates ambiguity and a question of fact that precludes the entry of summary judgment.

4 Defs.’ Mot. Summ. J. Ex. A ( the “Lease”)

. 5 Id

.4

B . Standard of Review Summary judgment may be granted only if, when viewing the facts in the lig ht
most favorable to the non

- moving party, there is no genuine issue of fact and the moving party is entitled to relief as a matter of law. 6 When considering a motion for summary judgment, the Court ’ s role is to examine the record to determine whether

gen uine issues of material fact exist “but not to decide such issues.” 7 This Court “will accept as established all undisputed factual assertions, made by either party, and accept the non

- movant ’ s version of any disputed facts.” 8 “The proper
construction of any contract

... is purely a question of law. ” 9 Delaware courts adhere

“ to an objective theory of contracts, the contract ’ s construction should be that which would be understood by an objective, reasonable third party.” 10 Summary judgment
is appropriate in contract disputes where the language at issue is clear and unambiguous and not subject to multiple interpretations. 11 Ambiguity exists only if the disputed language is “fairly or reasonably susceptible to more than one

6 Moore v. Sizemore , 405 A.2d 679 (Del. 1979); Super. Ct. Civ. R. 56. 7 Merrill v. Crothall

-

Am., Inc. , 606 A.2d 96, 99

- 100 (Del. 1992). 8 Id. 9 Rhone

- Poulenc Basic Chemicals Co. v. Am. Motorists Ins. Co. , 616 A.2d 1192, 1195 (Del. 1992). 10 Leaf Invenergy Co. v. Invenergy Ren ewables LLC , 210 A.3d 688, 696 (Del. 2019) ; see also GMG Cap

. Inv

. , LLC v. Athenian Venture P ’r s I, L.P

. , 36 A.3d 776, 780 (Del. 2012) ( “Contract terms themselves will be controlling when they establish the parties ’ common meaning so that a reasonable person in the position of either party would have no expectations inconsistent with the contract language”). 11 GMG Cap

. Inv

. , LLC , 36 A.3d at 783

.5

meaning.” 12 The Court ’ s function in construing a lease is to ascertain and give effect to the mutual intention of the parties as manifested by its term s
. 13 As with all
contracts, this Court should give effect to all of its provisions if possible

. 14
C . Discussion
I find that the language in Paragraphs 12 and 29 of the Lease is substantially the same as the language of the lease s considered in Lexington , 15 Deloach v.
Houser , 16 and State Farm Fire & Casualty Co mpany v. Lambert. 17 In each of these cases, the trial court rejected the insurer’s argument that the lease contained an express agreement placing liability for damage on the tenant and found that the
Sutton Rule controls

. In the present matter , t he Lease must be considered in its entirety and particular provisions should not be considered in isolation. As in Lexington , the

12 Alta Berkeley VI C.V. v. Omneon, Inc ., 41 A.3d 381, 385 (Del. 2012). 13 Schwartzman v. Weiner , 319 A.2d 48, 51

– 52 (Del. Super. Ct. 1974)

. 14 Roffman v. Wilm

. Hous. Auth. , 179 A.2d 99, 102 (Del. 1962)

. 15 The court quoted the lease as follows: “ Resident agrees to indemnify and save Owner harmless from any and all loss occasioned by Resident’s breach of the covenants, terms and conditions of this general agreement or caused by his family, guests, visitors, agents or employees. Resident is required to furnish insurance coverage on all personal property within the leased premises an d public areas of this community, at the expense of the Resident. ” 712 A.2d 1011 , 1013 (Del. Super. Ct. 1998). 16 “To distinguish the Lexington holding, [Plaintiff] directs the Court to various lease provisions concerning the tenant’s obligation to return t he property in good condition, to pay for damages in excess of normal wear and tear, and to pay for any damages to the landlord’s property caused by the tenant or his relatives or guests.” 2018 WL 5899080, at *1 (Del. Super. Ct. Nov. 9, 2018). 17 The court noted the following language in the lease: “[T]he tenant will be responsible for damages to the unit and premises, other than normal wear and tear” and “repair of tenant

- caused damages must be completed by the owner at the expense of the tenant.” 2017 WL 5 593784, at *3 (D. Del. Nov. 21, 2017).6

Lease contemplates an allocation of risk between the landlord and tenant. The Lease requires the tenant to pay a security deposit and to ob tain and maintain insurance for personal property and liability of at least $300,000.00. In Lexington , the Superior
Court expressly addressed whether a tenant is an implied co

- insured under the landlord’s fire insurance policy for purposes of a subrogation action by the
landlord’s insurance carrier against a residential tenant. 18 The Superior Court determined that, absent some clearly expressed intent in the lease to the contrary,
tenants are considered co

- insureds for the purposes of preventing subrogation even where the tenant’s alleged negligent conduct caused the loss. 19 There is no ambiguity
in the language of the Lease. I note that the important policy considerations underlying the Sutton Rule apply in the present case. For example, the Lexington decision referenced the landlord’s “generally dominant relationship over the residential tenant, th e typical assignment of risk of loss for fire, the practical effect that rental payments contribute to the cost of the landlord’s fire insurance premiums, the mutual benefits derived by the parties from dividing respective liabilities, and the efficiency o f not carrying duplicative insurance coverage on the same property.” 20 Here, the possible damage caused by fire and water are similar in nature, such that the Sutton Rule can be

18 712 A.2d at 1014

. 19 Id. at 1017. See also Deloach , 2018 WL 5899080, at *1

. 20 712 A.2d at 1016.7

extended to water damage. Those policy considerations are echoed in Deloach , where the Superior Court noted the following important policy considerations: “each tenant cannot reasonably be expected to purchase their own insurance for damage to
a multi

- million dollar apartment compl ex, the tenant’s only insurable interest being in his own apartment, and landlords are better able to insure the whole premises and pass the cost of such insurance on to all tenants in rent.” 21
I find the language of the Lease in the present case is substa ntially similar to
the language of the lease s in Lexington , Deloach , and Lambert , and that the Sutton Rule applies. Plaintiffs have not cited

— and cannot cite

— to language in the Lease
that differentiate s this Lease from the lease s in similar Delaware cases

. T herefore,
Defendants’ Motion for Summary Judgment is GRANTED
. IT IS SO ORDERED. Sincerely, Robert H. Robinson, Jr. Judge

21 2018 WL 5899080, at *1

.