Background
Keith Regan and his fiancée leased a two-story townhome owned by Tamikia Jones and managed through Peerliss Properties. In March 2022, Regan fell backward from the top of the interior stairs and sustained significant injuries. He alleged that the top step deviated from applicable code requirements and sued Jones, Peerliss Property Management and Development, LLC, and their insurers.
State Farm Fire and Casualty Company, which had issued Jones a homeowner’s policy covering the townhome as the residence premises, moved for summary judgment. It argued that the policy’s business-pursuits and rental exclusions barred personal-liability coverage because Jones rented the entire townhome to Regan and collected monthly rent through her property-management business. The district court agreed, dismissed State Farm with prejudice, and Regan appealed.
The Court’s Holding
The First Circuit affirmed after de novo review. It held that Regan’s injuries arose out of Jones’s rental business and the rental of the insured premises, bringing the claim within both exclusions. The interior staircase was integral to the two-story townhome, Regan used it because he leased the property’s upstairs living space, and Jones could not have rented the entire townhome without it. That relationship supplied the required causal connection between the rental activity and the injury.
The court distinguished Blue Ridge Insurance Co. v. Newman, where a falling tree was not sufficiently related to the insured’s prior rental of a property that was vacant when the loss occurred. Here, Jones was actively renting the townhome when her tenant was injured, and the stairs were directly connected to the tenant’s use of the leased premises. Because the exclusions eliminated any duty to indemnify, State Farm also owed no duty to defend.
The court also rejected Regan’s argument that factual disputes remained over whether Jones had been sold the wrong insurance product. State Farm met its initial summary-judgment burden, while Regan submitted no evidence supporting his questions about the policy’s formation or renewal. Speculation and conjecture could not defeat the motion.
Key Takeaways
- A tenant’s injury on an integral part of an actively rented dwelling may “arise out of” the rental even when the tenant was using the property as a residence.
- The nonbusiness-pursuits exception did not preserve coverage because the injury was causally connected to the insured’s rental activity.
- Questions about how an insurance policy was marketed or sold do not create a genuine factual dispute without supporting evidence.
Why It Matters
The decision illustrates the breadth of rental and business-pursuits exclusions in homeowner’s policies when an insured leases an entire residence. It also distinguishes conditions integral to a leased dwelling from property features whose connection to rental activity is merely incidental.
For litigants opposing summary judgment on insurance coverage, the opinion underscores that unsupported questions about policy procurement cannot substitute for admissible evidence once the insurer establishes that an exclusion applies.