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One Two Many Dwellings: Southern District of New York Holds Building Is Not Covered As “Two-Family Dwelling” Under Homeowners’ Policy

June 21, 2024

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In Clyton Hall v. Mountain Valley Indemnity Co., Mountain Valley issued a homeowners’ policy to Hall, the owner of a three-story building with one unit on each of the ground, second, and third floors. 2024 WL 2943747, at *1 (S.D.N.Y. June 10, 2024). The Policy provided coverage for damage to the “dwelling on the ‘residence premises’” identified in the Declarations. Id. The Policy’s Broad Form further defined the “residence premises” as (1) a one-family dwelling occupied by the insured; or (2) a two-family dwelling where the insured occupies at least one of the family units. Id. 

In 2022, a fire rendered the building uninhabitable, prompting Hall to request property damage coverage. Id. at 2. After investigation, Mountain Valley disclaimed coverage, concluding the building constituted a three-family dwelling, not a “residence premises” under the Policy. Id. Mountain Valley contended that the definition of “two-family dwelling” referred to the number of families the dwelling could structurally accommodate. Id. at 4. In turn, Hall argued that it concerned “the number of families living in the building and not the number of units.” Id.

Evaluating the parties’ cross-motions for summary judgment, the Court affirmed Mountain Valley’s interpretation of the Policy. First, the Court noted that Mountain Valley’s interpretation was consistent with New York jurisprudence, which established that the number of units in a building is based on the building’s structural configuration—not the number of families living therein. Id. at 5. Second, the Court concluded that the Policy’s definition of “residence premises” was unambiguous, only permitting coverage “of a dwelling with at most two family units.” Id. In contrast, the building at issue contained three family units, each with its own kitchen, bathroom, living space, and entrance. Id. at 6. Thus, each floor constituted a “self-contained unit,” rendering the entire building a three-family dwelling. Id. 

Finally, the Court rejected Hall’s argument that the “residence premises” should be defined under the Declaration as the building’s address, without reference to the units contained therein. Id. at *7. The Court emphasized that the Policy must be read as a whole, and the Broad Form limited the “residence premises” referenced in the Declaration to a one or two-family dwelling. Id. 

Clyton Hall v. Mountain Valley Indemnity Company
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