Pursuant to the Sutton Doctrine, first announced in Sutton v. Jondahl, 532 P.2d 478 (Okla. Ct. App. 1975), some jurisdictions consider a tenant a coinsured of its landlord absent an express agreement to the contrary. In Ro v. Factory Mut. Ins. Co., No. 2019-0620, 2021 N.H. LEXIS 34 (Mar. 10, 2021), the Supreme Court of New Hampshire held that the Sutton Doctrine, adopted by New Hampshire in Cambridge Mut. Fire Ins. Co. v. Crete, 846 A.2d 521 (N.H. 2004), extends to resident students in a college dormitory. Thus, absent specific language to the contrary, a student is an implied coinsured under the fire insurance policy issued for his or her dormitory.
In 2016, two students at Dartmouth College, Daniel Ro and Sebastian Lim, set up a charcoal grill on a platform outside of a fourth-floor window in the Morton Hall dormitory. The grill started a fire on the platform that ultimately spread to the roof of the dormitory. During fire suppression efforts, all four floors of the dormitory sustained significant water damage. Following the loss, the building’s insurer, Factory Mutual Insurance Company (Insurer), paid $4,544,313.55 to the Trustees of Dartmouth College for the damages.
Following the loss, the two students sought a declaratory judgment that they were implied coinsureds under the fire insurance policy issued by Insurer. Insurer brought counterclaims for negligence and breach of contract, which were stayed pending the resolution of the declaratory judgment petition. The trial court granted summary judgment in favor of the plaintiffs, finding that New Hampshire’s adoption of the Sutton doctrine in Crete “in the context of tenant-landlord lease agreements appl[ies] with equal force in the context of on campus housing agreements with college students.” Accordingly, the trial court ruled that Insurer could not sustain its counterclaims. Insurer appealed, arguing that Crete does not apply to college students and even if it did, the policies in Dartmouth College’s student handbook negated any presumption that the plaintiffs are implied coinsureds under its fire insurance policy.
On appeal, Insurer asserted that the Crete/Sutton doctrine did not apply because the principles of these holdings imply a possessory interest in the property being insured. Insurer argued that a college student is akin to a hotel guest rather than a tenant and students should not be entitled to the protections of Crete/Sutton. The court rejected this approach, looking at the broader scope of the relationship between a college student and the college to ascertain whether the relationship was sufficiently similar to that of a landlord and tenant to apply the Crete/Sutton doctrine. Here, Dartmouth College provided a furnished room to the students, the students inhabited and resided in the dormitories, could store their personal property inside their rooms, could make use of the dorm to their liking, had “swipe” cards providing exclusive access to the building, and could control who could and could not enter their rooms. While the Supreme Court noted there were some restrictions on plaintiffs’ occupancy that were not present in a traditional landlord/tenant relationship, the court found that the restrictions were not sufficient to form the basis of an exception to Crete.
Further, the court noted three main policy reasons behind Crete that apply in the context of a college residence agreement. First, a reasonable college student would expect the college to have fire insurance to protect college property and Dartmouth College’s website confirmed this expectation, stating that Dartmouth College insures college-owned property through an All-Risk blanket policy, with fire named as a covered peril. Second, the students would expect their tuition to contribute to the payment of insurance premiums. Third, the court noted that if the burden were to be shifted so that “each student resident were to obtain insurance on the building in which he or she resides, Dartmouth College’s dormitories would be vastly over insured.” In light of the above, the court found that Crete should apply.
After determining that Crete applied in this context, the court next addressed whether the language in Dartmouth College’s student handbook was sufficient to negate the anti-subrogation rule established in Crete. The “Open Flame in Residence Hall” policy in the handbook explicitly prohibited the burning of items with open flames and stated “violations may result in…assessment of the cost of any repairs associated with damage caused by the open flame.” Insurer asserted that this reference to potential liability was sufficient to negate the anti-subrogation rule, while the plaintiffs argued that in order to negate the anti-subrogation rule, the contract must explicitly inform the tenant of the need to purchase its own insurance.
The court sided with the plaintiffs, determining that to negate the anti-subrogation doctrine, the contract must explicitly address the issue of insurance. The court noted that none of Dartmouth College’s policies explicitly required the plaintiffs to purchase separate insurance nor did they specifically address that they may be subject to a subrogation action if they failed to do so. Further, Dartmouth College’s Damage and Vandalism policy advised students to carry personal property insurance. The explicit reference to the need to obtain personal property insurance, without the recommendation to obtain fire insurance, implied that there was not a need to obtain separate fire insurance. Finally, the court noted that Insurer should have known it was insuring a college dormitory and that students may violate college policies. As such, they presumably adjusted the premiums in light of this enhanced risk.
Based on the court’s ruling, subrogation professionals should be mindful of potential anti-subrogation issues even outside of traditional landlord-tenant relationships. Additionally, to avoid any potential Crete/Sutton issues in New Hampshire, a landlord should explicitly reference the tenant’s need to obtain separate insurance.