Title: Community Credit Union v. Homelvig
Citation: 487 N.W.2d 602
Docket Number: 920001
State: north-dakota
Issuer: north-dakota Supreme Court
Date: July 28, 1992

487 N.W.2d 602 (1992) COMMUNITY CREDIT UNION OF NEW ROCKFORD, NORTH DAKOTA, Plaintiff and Appellant, v. Lynn HOMELVIG and Cindy Homelvig, husband and wife, Defendants and Appellees. Civ. No. 920001. Supreme Court of North Dakota. July 28, 1992. *603 Michael J. Morley, of Morley &amp; Morley, Ltd., Grand Forks, for plaintiff and appellant. Argued by Robert M. Light. William P. Harrie (argued), of Nilles, Hansen &amp; Davies, Ltd., Fargo, for defendants and appellees. ERICKSTAD, Chief Justice. The Community Credit Union of New Rockford appeals from a district court summary judgment dismissing its action against Lynn and Cindy Homelvig. We affirm. The Homelvigs leased a house from the Credit Union on a month-to-month basis with an option to purchase. The agreement between the parties was oral; no written lease agreement was ever signed by the parties. The Credit Union insured the house with a policy issued by Cumis Insurance Society. The Homelvigs obtained renters insurance, including liability coverage, from North Star Mutual Insurance Company. On August 22, 1990, a fire destroyed the kitchen and caused smoke damage to the remainder of the house. Cumis paid $38,307 to the Credit Union for the damages. Cumis then brought this subrogation action in the Credit Union's name, alleging that the Homelvigs negligently caused the fire. The Homelvigs moved for summary judgment, asserting that they were co-insureds under the Cumis policy and that subrogation was barred as a matter of law. The district court concluded that the Homelvigs were co-insureds under the Cumis policy and granted summary judgment. Cumis, through the Credit Union, appealed. The purpose of summary judgment is to promote the prompt and expeditious disposition of a legal conflict on its merits, without trial, if no material dispute of fact exists or if only a question of law is involved. E.g., Stuhlmiller v. Nodak Mutual Insurance Co., 475 N.W.2d 136, 137 (N.D.1991); United Electric Service &amp; Supply, Inc. v. Powers, 464 N.W.2d 818, 819 (N.D.1991). The dispositive issue in this case is a question of law: whether a tenant is an implied co-insured on a landlord's fire insurance policy as a matter of law, absent an express agreement to the contrary. If the tenant is a co-insured under the policy, subrogation is unavailable. See Agra-By-Products, Inc. v. Agway, Inc., 347 N.W.2d 142, 145 (N.D.1984); 6A Appleman, Insurance Law and Practice § 4055 (1972); 16 Couch, Insurance Law § 61:137 (2d ed. 1983). The great majority of courts which have addressed this issue have held that, absent an express agreement to the contrary, a tenant is an implied co-insured under the landlord's fire policy and subrogation is barred. See, e.g., Tate v. Trialco Scrap, Inc., 745 F. Supp. 458 (M.D.Tenn.1989); Alaska Insurance Co. v. RCA Alaska Communications, Inc., 623 P.2d 1216 (Alaska 1981); Liberty Mutual Fire Insurance Co. v. Auto Spring Supply Co., 59 Cal. App. 3d 860, 131 Cal. Rptr. 211 (1976); Safeco Insurance Cos. v. Weisgerber, 115 Idaho 428, 767 P.2d 271 (1989); New Hampshire Insurance Group v. Labombard, 155 Mich.App. 369, 399 N.W.2d 527 (1986); Safeco Insurance Co. v. Capri, 101 Nev. 429, 705 P.2d 659 (1985); Sutton v. Jondahl, 532 P.2d 478 (Okl.Ct.App.1975); Fashion Place Investment, Ltd. v. Salt Lake County, 776 P.2d 941 (Utah Ct.App.1989); Cascade Trailer Court v. Beeson, 50 Wash. App. 678, 749 P.2d 761 (1988). As noted by one leading commentator: 6A Appleman, supra, § 4055, 1991 Supp. at 79. Professor Keeton also advocates the majority rule: Keeton &amp; Widiss, Insurance Law § 4.4(b) at 340-341 (1988) (footnote omitted). The seminal case setting forth the majority rule is Sutton v. Jondahl, supra, in which the tenant's son had caused a fire damaging the insured premises. Concluding that the landlord's insurer could not seek subrogation against the tenant, the court reasoned: Sutton v. Jondahl, supra, 532 P.2d at 482. Other courts have expanded the Sutton rationale, addressing various public policies which support the rule. For example, in Safeco Insurance Co. v. Capri, supra, 705 P.2d at 661, the Supreme Court of Nevada stated: See also New Hampshire Insurance Group v. Labombard, supra, 399 N.W.2d at 531. The court in Tate v. Trialco Scrap, Inc., supra, 745 F. Supp. at 473, also emphasized that it is the tenant who ultimately bears the cost of the landlord's insurance premiums: Other policy arguments in favor of the majority rule include preventing windfalls to insurers and preventing multiple policies and overlapping coverage. See, e.g., Tate v. Trialco Scrap, Inc., supra, 745 F. Supp. at 473; Safeco Insurance Cos. v. Weisgerber, supra, 767 P.2d at 274. The cases adopting the majority rule are well-reasoned and highly persuasive. We hold that, absent an express agreement to the contrary, a tenant is an implied co-insured under the landlord's insurance policy and the insurer may not seek subrogation against the tenant. The district court did not err in holding that the Homelvigs were implied co-insureds under the Cumis policy. Accordingly, summary judgment was appropriate. The judgment is affirmed. VANDE WALLE, LEVINE, MESCHKE and JOHNSON, JJ., concur.