Low, Ball & Lynch’s

WEEKLY LAW RESUME

October 7, 2004 Issue      By: Raymond Coates

Coverage - Homeowners Policy - Residents

Safeco Insurance Company of America v. Jamey Lynn Parks

Court of Appeal, Second District

(August 26, 2026)

The residence of children who come from split families is often hard to determine when trying to decide if there is coverage under either a homeowners policy or an automobile policy.  This case exemplifies those problems. 

Michelle Miller, age 17, went on a date with Jamey Parks, age 21.  They drove from Santa Maria to Santa Barbara.  On the way back, Miller drove because Parks was intoxicated.  The car had a flat tire.  Parks became angry.  They called a friend, Teresa Cooney, who came out to pick them up in her vehicle with a friend, Isaiah Rivera.  Rivera drove the vehicle.  When Parks again became angry, Rivera, Cooney and Miller had him exit the vehicle on the freeway shoulder and they drove back to Santa Maria without him.  Parks, while walking on the freeway, was struck by a passing motorist and sustained severe injuries.  He sued Miller, Cooney and Rivera for negligence.  Cooney’s auto insurer provided a defense to all three and settled Parks’ claim against Cooney and Rivera for its policy limits.  The parties then stipulated to binding arbitration of Parks’ claim against Miller, which resulted in an award of $2,197,886.  Miller assigned rights against Safeco Insurance Company of America (Safeco) to Parks.

Safeco insured Eddie Barnette under a homeowners policy covering his home.  The policy covered insureds, who were defined as the named insured and residents of his household including relatives, and any person under the age of 21 who was in his care.  The policy excluded injuries arising out of the use of an automobile. 

Miller’s parents were divorced.  Her father had legal custody of her.  Miller spent some time with her mother, who resided with Eddie Barnette.  Safeco conducted an investigation, which determined Miller lived primarily with her father.  Miller stated she lived with her father.  Safeco interviewed Eddie Barnette and Miller’s mother, which further solidified the fact that Miller lived with her father.  Miller stayed occasionally with her mother on weekends and on other special occasions.  Based upon this information, Safeco declined to defend Miller. 

Parks sued Safeco for breach of contract and for bad faith.  The trial court found Safeco had a duty to defend Miller and indemnify her for the entire judgment.  This matter was appealed.

The Court of Appeal reversed.  The trial court found the automobile exclusion did not apply because the breach of duty did not arise out of the use of an automobile, but rather abandoning Parks on the roadway.  The Court of Appeal did not comment on this issue.  However, on the issue of residence, the Court noted that the trial testimony differed from the information given to Safeco prior to the time it declined the defense.  At trial, Michelle Miller and her mother indicated that Eddie Barnette had pressured them to give Safeco the information they gave.  They indicated Miller spent substantial time at the Barnette residence.  Based upon that information, the trial court concluded Miller was an insured under the Safeco policy. 

The Court focused on when the duty to defend is determined.  The Court stated this duty is determined at the inception of the third party lawsuit.  In deciding whether Safeco owed a duty to defend Miller, the Court noted that a child may have more than one residence at the same time.  Residence is a place of some permanency, rather than a place of temporary stay.  To qualify as a resident under the Safeco policy, Miller had to be a member of Barnette’s household and under his care.  A household was stated to be a collection of persons living together under one head.  Under the facts known to Safeco before it declined the defense, Miller did not meet the policy definition of an insured.  There was no evidence that she was a member of Eddie Barnette’s household or under his care.  Thus, Safeco had no duty to defend her and did not act in bad faith in refusing to do so.  As long as Safeco made an informed decision based upon the information known to it at the time of tender, there was no liability.  Safeco did not act unreasonably when it relied upon the sworn testimony of its insured and other persons who had personal knowledge of the facts.  The fact that some of the evidence was later renounced, did not make the original refusal to defend unreasonable.  The judgment was therefore reversed. 

COMMENT

The decision as to whether to defend a person who may be a resident of an insured’s household is a treacherous one fraught with peril due to the fact that it turns on the facts.  The lesson from this case is that a tender may safely be denied only where there is a thorough investigation of the facts prior to the time the tender is denied. 

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