This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
A two-year-old foster child, placed in a licensed foster home for long-term care by the Children, Youth and Families Department (CYFD), drowned in a hot tub at the foster home. The foster parents were insured under a homeowner's policy issued by Farmers Insurance Company of Arizona, which excluded coverage for bodily injury to any resident of the residence premises. The Risk Management Division (RMD) of New Mexico, which provides insurance coverage for public employees, sought to determine whether the foster child was a "resident" under the policy, thereby excluding coverage (paras 2-3).
Procedural History
- District Court, January 24, 2001: Granted summary judgment in favor of Farmers Insurance Company, concluding that the foster child was a resident of the foster home and that the resident exclusion applied to deny coverage for his death (para 4).
Parties' Submissions
- Appellant (RMD): Argued that the district court erred in concluding that the foster child was a resident under the policy and that the resident exclusion applied. Contended that the term "resident" is ambiguous and requires further factual development. Also argued that the home care services exclusion should not apply to foster care (paras 4-5).
- Appellee (Farmers Insurance Company): Maintained that the foster child was a resident of the foster home under the policy and that the resident exclusion applied to deny coverage. Argued that the policy language was clear and unambiguous (paras 4-5).
Legal Issues
- Whether the foster child was a "resident" of the foster home for the purposes of the resident exclusion in the homeowner's insurance policy.
- Whether the district court erred in granting summary judgment without sufficient factual development regarding the applicability of the resident exclusion (paras 1, 6).
Disposition
- The Court of Appeals reversed the district court's summary judgment and remanded the case for further proceedings to determine whether the foster child was a "resident" under the policy (para 21).
Reasons
Per Castillo J. (Bustamante and Fry JJ. concurring):
- The term "resident" in the insurance policy was found to be ambiguous, as it was undefined and subject to multiple reasonable interpretations depending on the context (paras 7-10).
- The court emphasized that ambiguous terms in insurance contracts must be construed in favor of the insured and that exclusion clauses should be narrowly interpreted (para 11).
- The court outlined a two-factor test for determining whether the foster child was a "resident": (1) the intent of the parties to the insurance contract, and (2) the nature of the child's stay in the foster home, including the State's objective intention and the subjective relationship between the foster child and foster parents (paras 15-19).
- The court noted that additional facts, such as CYFD documentation, the intended duration of the child's placement, and the relationship between the foster child and foster parents, must be developed to resolve the issue (paras 17-19).
- Public policy considerations, such as preventing collusion in insurance claims, were also deemed relevant to the analysis (para 20).
- The court concluded that the district court erred in granting summary judgment without sufficient factual development and remanded the case for further proceedings consistent with the outlined factors (paras 21-22).