Why is it not Obvious that a Motocross Raceway is Not a Home?

Liability Policy Limited to Insured Residence Premises

Houses are often homes. Not all houses are homes. Not all properties with a house are residences or residence premises.

Insurance policies never cover every conceivable potential exposure the insured faces. By their terms the policy limits its exposure based on the requirements and needs of the insured and the willingness of an insurer to take on that risk.

FACTS

In Shelley Lynn Yocom v. Ram Mutual Insurance Company, A18-1320, State of Minnesota in Court of Appeals (April 15, 2019) a person seeking indemnify from an insurer claimed that a motocross raceway was part of a residence premises entitling the owner of the property to liability protection although the injury occurred at Midway Recreation Park.

Yocom was struck from behind by a golf cart driven by Jamey Swanson. The property on which the raceway is located is jointly owned by Jack and Cynthia Stamschror, who also serve as officers of the raceway corporation. In addition to the raceway, there is a home on the Stamschrors’ 40-acre property.

THE POLICY

At the time of the accident, Swanson had homeowner’s insurance with respondent RAM Mutual Insurance Company. The policy’s Incidental Liability Coverages include: “Motorized Vehicle Coverage. We pay for the bodily injury or property damage which: a. occurs on the insured premises and is a result of the ownership, operation, maintenance, use, loading or unloading of: (1) a motorized vehicle if it is not subject to motor vehicle registration because of its type or use; or (2) a recreational motor vehicle.”

The policy defines “insured premises” to include “that part of residential premises not owned by an insured while temporarily used by an insured.” “Recreational motor vehicle” is defined as “a motorized vehicle . . . , trailer or attached apparatus designed or used for recreation, vacation or leisure-time activities.”

THE LITIGATION

Following the accident, Yocom sued Swanson, the Stamschrors, Midway Recreation Park, Inc., and the entity that leased Midway Recreation Park for the race. Yocom alleged various acts of negligence with regard to use, maintenance, and oversight of the raceway. She settled her claims against Swanson for his $300,000 liability limit pursuant to a Miller-Shugart agreement. She then sued the insurer to recover that amount from RAM Mutual.

Both parties moved for summary judgment on the issue whether the policy affords coverage to Swanson. In support of her motion, Yocom submitted a 2013 county property tax statement showing the Stamschrors’ property is classified as agricultural homestead and residential homestead for tax purposes.

The district court determined that the policy does not provide incidental-liability coverage because Midway Recreation Park is not a “residential premises . . . used by the insured.” Accordingly, the district court granted summary judgment to RAM Mutual.

DECISION

The interpretation of an insurance policy is a question of law as applied to the facts presented. Insurance policies, like other contracts, are governed by the language used, which is given its usual and accepted meaning. Because insurers draft insurance policies, any ambiguity is construed in favor of the insured, but the court has no right to read an ambiguity into plain language of an insurance policy in order to construe it against the one who prepared the contract.

Yocom asserted that the district court erred by interpreting “residential premises” to exclude the property on which she was injured. She contended that the district court erred by “ignoring” evidence that the county classified the entire property as residential.

The Accident Did Not Occur on “Residential Premises.”

It is undisputed that the golf cart Swanson was driving at the time of the accident is a “recreational motor vehicle” for purposes of incidental-liability coverage. Accordingly, the sole coverage issue is whether Swanson was operating the golf cart on “that part of residential premises not owned by an insured while temporarily used by an insured.”

The policy does not define “residential premises.” But it defines “residence” as “a building used principally for family residential purposes.” When read together, “residential premises” refers to a building in which someone lives.

The policy generally defines “insured premises” as “the residence shown on the declarations as the described location” and “related private structures and grounds at that location.” The incidental liability coverages extend this definition to residential premises owned by someone other than the insured, but do not alter the general “insured premises” definition. In other words, the policy contemplates coverage for injuries that occur at private family homes.

Applying this meaning of “residential premises,” the Minnesota appellate court could only conclude that Swanson is not entitled to incidental liability coverage in connection with this accident. Yocom provides no evidence that the area Swanson was using—the raceway—was “part of residential premises.” She does not allege that the raceway area was residential in nature; the accident occurred while she and Swanson were attending a public motocross event. She offers no evidence that any person actually lived at the house located on the 40-acre property or the house’s proximity to the raceway. And in all of her submissions to the district court, Yocom fails to even suggest that Swanson used the property for residential purposes. Therefore, the court of appeals concluded the policy does not cover Yocom’s injuries.

County Tax Records Do Not Create Genuine Issues of Material Fact.

Yocom urged the court to treat county tax records as conclusive evidence that her injuries occurred while Swanson was temporarily using another’s residential premises. Alternatively, she asserted the records create a fact issue precluding summary judgment.

The county records do not purport to describe how any part of the property is actually used, let alone the raceway portion where the public motocross event took place. Merely creating a metaphysical doubt as to a factual issue is not sufficiently probative with respect to an essential element of the case to permit reasonable persons to draw different conclusions and will not defeat summary judgment.

The undisputed material facts show Swanson and Yocom were both at the raceway, for a public motocross race, when the accident occurred. There is no evidence that either party was at or near a house. And even if we credit Yocom’s argument that a property can simultaneously be used for both residential and non-residential purposes, she offers no evidence of such use by the Stamschrors. In sum, RAM Mutual’s policy does not cover Yocom’s claims against Swanson.

ZALMA OPINION

Only a lawyer would have the gall to argue that a raceway is a residence premises. Since the accident took place while both participants were attending a motocross event and were not in, on, upon or even near a house, the policy language defeated coverage. It is amazing that even after losing at trial the parties were willing to go forward with an appeal on such slim claims of coverage.