The justices of the Supreme Court of Delaware ruled against an insurer that was seeking subrogation for repair costs due to water damage occasioned by a drone being flown in an apartment building. The case is Donegal Mut. Ins. Co. v. Thangavel, 2023 Del. LEXIS 227 (Del. 2023). Please note that this opinion has not been released for publication in permanent law reports and is subject to revision or withdrawal. It may have limited precedential value in your jurisdiction.
Sathiyaselvam Thangavel and Sasikala Muthusamy were co-tenants leasing an apartment from Seaford Apartment Ventures, LLC. The fire sprinkler in their apartment caused water damage after it was allegedly hit by a drone being flown indoors. Seaford Apartment Ventures filed a claim with Donegal, who paid nearly $78,000 for repairs. After paying Seaford's claim, Donegal pursued negligence and breach of property rules claims against Thangavel and Muthusamy.
The Seaford lease agreement included a clause that stated the tenants agreed to "be responsible for all damages accidentally, maliciously, intentionally, or negligently caused by the tenant, tenant's family, guests or invitees to any of the property of the landlord." (Emphasis added). According to Donegal's complaint, this clause was evidence of the tenants' agreement to be responsible for the water damage because the damages resulted from their alleged negligence in flying a drone in the apartment.
The defendants relied on Sutton v. Jondahl, a landmark case where the Oklahoma Court of Appeals held that an insurer could not pursue subrogation against the tenants of a rented home covered by the insurer's policy because the tenants had not expressly agreed to assume liability. The minor son of the tenants was conducting "unsupervised chemical experiments" that ended up causing fire damage to the rented property. The court in Sutton reasoned that "when fire insurance is provided for a dwelling[,] it protects . . . the possessory interests of a tenant absent an express agreement by the latter to the contrary."
Three separate Delaware courts had already followed the Sutton rule in holding that, even though the lease agreement in each case included a clause where the tenant assumed liability for all property damaged caused by the tenant, the broad policy language did not indicate that either the landlord or the tenant intended for the tenant to assume liability for negligently caused occurrences. The lower court granted the defendants' motion for summary judgment.
On appeal, Donegal cited Deardorff Associates, Inc. v. Brown, a Delaware case where the court had found a tenant was not protected against subrogation for a negligently caused fire. The Delaware Supreme Court, however, said Deardorff was distinguishable from Thangavel and the other cases because two clauses in the rental agreement at issue in Deardorff expressly stated the landlord was not liable for damages caused by the tenant's negligence, including negligently caused fires.
The justices compared the rental agreements from the earlier cases to the agreement at issue in Thangavel and found no meaningful difference. Summary judgment for the defendant-tenants Thangavel and Muthusamy was affirmed.
Editor's Note: One of the deciding factors in Thangavel and the other cases that had followed the Sutton rule was the absence of a provision where the tenants specifically agreed to assume liability for specific types of damages. Since the landlord wrote the rental agreement, it was in the landlord's power to include a statement where the tenant agreed to be liable for damages from specific perils. Those statements were not included, so the tenant's general assumption for damages resulting from their own negligence did not expand to include damages for which they did not expressly assume liability. Similar to insurance policies, the text of the contract involved is key to determining liability of coverage as the situation dictates.
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