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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE JOSEPH JADCZAK AND CATHERINE JADCZAK, Plaintiffs, v. HOMESITE INSURANCE COMPANY, Defendant. ) ) ) ) ) ) ) ) ) )

C.A. No. 07-0431GMS

JADCZAK PLAINTIFFS' OPENING BRIEF IN SUPPORT OF THEIR MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE "DWELLING" ISSUE

John S. Spadaro, No. 3155 John Sheehan Spadaro, LLC 724 Yorklyn Road, Suite 375 Hockessin, DE 19707 (302)235-7745 Michael L. Sensor, No. 3541 Perry & Sensor One Customs House, Suite 560 P.O. Box 1568 Wilmington, DE 19899-1568 (302)655-4482 Attorneys for Plaintiffs Joseph Jadczak and Catherine Jadczak March 14, 2008

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TABLE OF CONTENTS NATURE AND STAGE OF THE PROCEEDINGS ......................................................................1 SUMMARY OF ARGUMENT .......................................................................................................2 STATEMENT OF FACTS ..............................................................................................................3 A. The Parties.............................................................................................................................3 B. The Insurance Contract .........................................................................................................3 1. The Insuring Agreement and Other Basic Terms ..................................................................3 2. The Policy Form ....................................................................................................................5 C. The Examination Under Oath ...............................................................................................5 D. The May 29, 2006 Fire..........................................................................................................5 E. The Nature and Uniqueness of the Jadczaks' Residential Hangar.........................................6 F. Homesite's Handling of the Hangar Claim ............................................................................8 ARGUMENT...................................................................................................................................9 I. AMBIGUITY FAVORS THE INSURED ..................................................................................9 II. THE RESIDENTIAL HANGAR QUALIFIES AS A "DWELLING" ....................................11 A. The Plain Meaning of "Dwelling" Confirms the Hangar's Status.......................................11 B. Howard Confirms the Hangar's Status................................................................................11 C. The Installation of a Mobile Home Confirms the Hangar's Status .....................................13 D. Homesite's "Description of Dwelling" May Reasonably Be Applied to the Hangar..........14 E. Homesite is Responsible for the Latent Ambiguity ............................................................15 III. HOMESITE'S "OTHER STRUCTURES" ARGUMENT FAILS .........................................16 CONCLUSION..............................................................................................................................18

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TABLE OF AUTHORITIES Easton v. Washington County Ins. Co., 137 A.2d 332 (Pa. 1957).................................................10 Fedorich v. Zoning Board of Appeals, 424 A.2d 289 (Conn. 1979)..............................................13 Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993)..............................................................5 Hercules Inc. v. AIU Ins. Co., 784 A.2d 481 (Del. 2001)................................................................9 Howard v. H. Robert Anderson & Assoc., Inc., No. MC03-20345, 2004 WL 3371968 (Minn. Dist. Ct. Sept. 28, 2004)...............................................................................................11, 12 IKO Monroe, Inc. v. Royal & Sun Alliance Ins. Co. of Canada, Inc., C.A. No. 00-834GMS, 2001 WL 1568674 (D. Del. Dec. 7, 2001) ...............................................10 Metzger v. Clifford Realty Corp., 476 A.2d 1 (Pa. Super. Ct. 1984).............................................10 Nabors v. South Carolina Farm Bureau Mut. Ins. Co., 255 S.E.2d 337 (S.C. 1979)....................13 O'Brien v. Progressive Northern Ins. Co., 785 A.2d 281 (Del. 2001) ............................................9 Penn Mut. Life Ins. Co. v. Oglesby, 695 A.2d 1146 (Del. 1997)...............................................9, 10 Reed v. Tennessee Farmers Mut. Ins. Co., 483 S.W.2d 721 (Tenn. Ct. App. 1972) ............... 13-14 Rhone-Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) ..............................................................................................................................9 State Auto Prop. & Cas. Ins. Co. v. Travelers Indem. Co. of Am., 343 F.3d 249 (4th Cir. 2003)..................................................................................................................................5 Steuart v. McChesney, 444 A.2d 659 (Pa. 1982) ...........................................................................10 Twin City Fire Ins. Co. v. Delaware Racing Assn., 840 A.2d 624 (Del. 2003).............................. 9 Woodward v. Farm Family Cas. Ins. Co., 796 A.2d 638 (Del. 2002).............................................9 Yeager v. Cassidy, 253 N.E.2d 320 (Ohio Ct. Comm. Pleas 1969)...............................................13

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Other Authorities Fed. R. Civ. P. 56.............................................................................................................................1 MERRIAM WEBSTER'S COLLEGIATE DICTIONARY (10th ed. 1993) .......................................11 SHORTER OXFORD ENGLISH DICTIONARY (6th ed. 2007)......................................................13

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NATURE AND STAGE OF THE PROCEEDINGS This consumer coverage case was filed in the Superior Court of the State of Delaware in and for Sussex County on May 25, 2007, and later removed to this Court. Plaintiffs Catherine and Joseph Jadczak proceed under a policy of homeowners insurance sold to them by AIG Insurance Company under its "AIG Homeowners Insurance Program," which was later sold by AIG to Defendant Homesite Insurance Company. The Jadczaks seek, among other relief, a declaration that Homesite must cover the fire-related loss of their residential airplane hangar under the policy's "Coverage A" (titled "Dwelling"). The Jadczaks now move, pursuant to Federal Rule of Civil Procedure 56, for summary judgment on the "dwelling" issue. Specifically, they ask this Court to hold that: · There is no genuine issue of material fact with respect to the unique nature of the Jadczaks' airpark residence: it consists of not one but two dwelling units, one of which is the residential hangar. · Though the insured property indisputably houses two dwelling units (one being the residential hangar), "Coverage A" speaks only in terms of "[t]he dwelling" in the singular. This is a latent ambiguity, and must be construed against Homesite as the policy's drafter. · The loss of the residential hangar must therefore be covered under "Coverage A," and subject to the policy limits thereunder. This is the Jadczaks' opening brief in support of their motion for partial summary judgment on the "dwelling" issue.

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SUMMARY OF ARGUMENT 1. Latent ambiguity exists when policy language, though clear on its face, is rendered unclear by reference to external objects or circumstances. 2. Mr. Jadczak's sworn testimony shows that under any reasonable conception of the term "dwelling," the Jadczaks' residential hangar is a dwelling; meaning that, along with their more conventional dwelling, the Jadczaks' property has two dwelling units. 3. Homesite knowingly insured a residence within a residential airpark -- a residence that conspicuously includes a residential hangar. It thus insured a property containing two dwelling units. Yet its "Coverage A" refers to "dwelling" in the singular. This is a classic case of latent ambiguity. 4. The Homesite policy is a standard form adhesion contract, copyrighted by the

Insurance Services Office (an industry drafting body). Because Homesite is the policy's drafter, the latent ambiguity within "Coverage A" must be construed against Homesite; and fire damage to the hangar must be covered under "Coverage A."

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STATEMENT OF FACTS A. The Parties Plaintiffs Catherine and Joseph Jadczak are natural persons and husband and wife, residing at 29555 Eagles Crest Drive, Milton, Delaware 19968. Defendant Homesite Insurance Company is a Massachusetts corporation that is authorized to transact insurance in Delaware. Homesite assumed policies written by AIG Insurance Company under its so-called "AIG Homeowners Insurance Program." At all times relevant to this case, Homesite served as the Jadczaks' homeowners insurer. B. The Insurance Contract The Jadczaks' residence was insured under Homesite policy no. 30318013, effective for the period August 16, 2005 to August 16, 2006. It was thus in effect on May 29, 2006, when the Jadczaks' residential hangar was destroyed by fire. A copy of the policy is reproduced in the accompanying appendix at pages A1-42. 1 The policy's declarations identify the Jadczaks' residence, at 29555 Eagles Crest Road in Milton, Delaware, as the "Insured Location." A1. The declarations also set forth a

"Description of Dwelling." This provision describes the Jadczaks' "dwelling" to include their "Clapboard structure, Single family home, Primary residence . . . ." Finally, the declarations identify the limit of liability applicable to "Coverage A - Dwelling" as $622,000. Id. 1. The Insuring Agreement and Other Basic Terms The policy sets forth an insuring agreement, requiring Homesite to "provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy." A7. Within the policy's definitions section, the term "insured" is defined to
1

References to the alphanumeric sequence beginning with "A" are to pages of this appendix.

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mean "you and residents of your household . . . ." Id. The term "residence premises" is defined as: a. The one family dwelling, other structures and grounds; or b. That part of any other building; where you reside and which is shown as the "residence premises" in the Declarations. Id. There is no dispute that Mr. and Mrs. Jadczak are insureds under the policy, or that their family home on Eagles Crest Drive is the "residence premises." Section I of the policy is titled "Property Coverages." That section sets forth a

specification of coverage under the heading "Coverage A - Dwelling." It provides in part: We cover: 1. The dwelling on the "residence premises" shown in the Declarations, including structures attached to the dwelling; 2. Materials and supplies located on or next to the "residence premises" used to construct, alter or repair the dwelling or other structures on the "residence premises." A8. The issue here is the application of this language to a "residence premises" that contains not one dwelling unit, but two. The policy also sets forth, within this same Section I, a specification of the "Perils Insured Against." With respect to the Jadczaks' "dwelling", this specification requires Homesite to "insure against risk of direct loss to property described in Coverages A and B only if that loss is a physical loss to the property." A12. Accidental fire damage to the Jadczaks' dwelling is covered through this grant of coverage.

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2. The Policy Form The policy's text consists of a standardized form identified as form "HO 00 03 04 91." This form designation appears in the bottom lefthand corner of each page of the policy text. A724. Centered at the bottom of each page are the words "Copyright, Insurance Services Office, Inc., 1990" -- an inscription that confirms the ISO's role in drafting the policy form. 2 There is thus no dispute that, as between Homesite and the Jadczaks, Homesite is the drafter of form HO 00 03 04 91. C. The Examination Under Oath As part of its investigation of the claim, Homesite subjected Mr. Jadczak to a lengthy and painstaking examination under oath (or "EUO") on October 3, 2006. Mr. Jadczak's sworn testimony at the EUO was transcribed by a certified Delaware court reporter. A copy of the resulting transcript, nearly 200 pages long, is excerpted in the appendix at pages A53-76. Much of the undisputed facts on which this motion relies are established and supported by Mr. Jadczak's sworn testimony at the EUO. D. The May 29, 2006 Fire On May 29, 2006 the Jadczaks' residential hangar was destroyed by fire. A54, A61. The fire spread rapidly through the hangar, causing extensive damage and a total loss. A62, A67. The Fire Marshal has indicated that an electrical fire may have been the cause. A65-66. Homesite does not contest the existence of coverage for the fire, or for the particular damage sustained by the hangar. See A77-78 (setting forth Homesite's "offer of payment" for the
2

The Insurance Services Office (or ISO) is "a national insurance policy drafting organization." State Auto Prop. & Cas. Ins. Co. v. Travelers Indem. Co. of Am., 343 F.3d 249, 255 n.9 (4th Cir. 2003). As such, "ISO develops standard policy forms and files or lodges them with each State's insurance regulators . . . ." Hartford Fire Ins. Co. v. California, 509 U.S. 764, 772 (1993). Much of the insurance written in the United States today is written on ISO forms. Id.

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hangar and other items of damage). residential hangar under "Coverage A."

But as will be seen, Homesite refuses to cover the

E. The Nature and Uniqueness of the Jadczaks' Residential Hangar The Eagles Crest subdivision is a residential airpark. Residents of Eagles Crest are pilots and airplane owners who may, if they choose, build residential hangars in which to house their personal aircraft. Mr. Jadczak described the concept thus: There is a bunch of homes that are built on this air park. It's a concept where you keep your airplane at home. It's part of your home, is your hangar. So you get to sleep with your airplane. *** Q: What does air park mean to you? A: Air park means a community of homes that have their airplanes at home with them, and they share the taxiway and runway. A56-57, A58. As a residential hangar, the Jadczaks' hangar was much more than a mere storage space for their aircraft. Not only is it possible to live in the hangar, the Jadczaks actually did live in it continuously for a period of nine months while their "house proper" was under construction. A59, A64. The hangar was thus equipped with all the essentials for a usable dwelling: Q: So it sounds like the hangar was equipped with electricity and water at least. Is that right? A: Everything. Q: Everything. What does everything mean to you, sir? A: Water, sewer, electric, cable, phone, heat, washer, dryer, utility sink. A59.

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Among the most important features, in terms of making the hangar habitable, was the mobile home that the Jadczaks kept within the hangar. This mobile home could sleep seven at a time, and was used as a guest quarters for visitors, including the Jadczaks' adult children. A63, A75. Indeed, the mobile home's real purpose was to augment the habitability of the hangar: it was not registered as a motor vehicle, and not used as such. A55 (Mr. Jadczak confirms that "[t]here was no registration on the RV.") It served instead as a semi-permanent set of fixtures, precisely as though the Jadczaks had installed a bedroom set and kitchen in the hangar. The hangar was thus a dwelling place in its own right; but it was also a dwelling by virtue of its containing the mobile home. For example, the Jadczaks furnished the hangar with desks and chairs. A69-70. They kept two television sets in the mobile home, and one on the hangar desk. A71. They kept an operating VCR in the hangar, and watched television and video there on a daily basis. A60, A69, A72. They kept a filing cabinet in the hangar, where Mr. Jadczak stored his important papers. A68. They likewise kept a microwave in the hangar, and mounted wall clocks in both the hangar and the mobile home. A74, A76. They also kept a vacuum cleaner in the hangar, and made use of it often. A73. They even maintained an intercom connection between the hangar and their main house. A60. Not surprisingly, the Jadczaks spent much of their time living in the hangar: Q: Would you say you spend a considerable amount of time in the hangar? A: Quite a bit. My wife does wash out there, too, because we had a washer and dryer out there. A59. In short, the Jadczaks' residence has two dwelling units: the main house and the residential hangar.

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F. Homesite's Handling of the Hangar Claim The Jadczaks notified Homesite of the fire loss on May 30, 2006, the day after it occurred. A43. Yet Homesite made no offer of payment on the claim for a full ten months. A77-81 (letter from Homesite's attorneys, confirming "offer of payment" for the hangar and other items of damage). In light of that offer (late and inadequate though it was) there is no dispute that the Jadczaks' fire loss is covered under the Homesite policy. Unfortunately, Homesite has taken the position that the hangar, though covered, is not covered under "Coverage A - Dwelling." Rather, Homesite says that the hangar can only be covered under "Coverage B - Other Structures" -- a determination that, not incidentally, operates to limit the Jadczaks' recovery dramatically: whereas "Coverage A" is subject to a $622,000 limit of liability, the limits for "Coverage B" are just $62,200. A1. Homesite thus seeks to pay far less than is needed to restore the hangar to its pre-fire condition. In fact, the Jadczaks have to date spent $210,000 in out-of-pocket costs to repair and restore the hangar. A84.

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ARGUMENT I. AMBIGUITY FAVORS THE INSURED Under Delaware law, contract construction is a pure question of law. O'Brien v.

Progressive Northern Ins. Co., 785 A.2d 281, 286 (Del. 2001); Hercules Inc. v. AIU Ins. Co., 784 A.2d 481, 489 (Del. 2001); Rhone-Poulenc Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992). The Delaware approach to contract construction is objective and textual, the goal being to "determine the intent of the parties from the language of the contract." Twin City Fire Ins. Co. v. Delaware Racing Assn., 840 A.2d 624, 628 (Del. 2003). Accord, Hercules, 784 A.2d at 489-90 (to same effect). Unilateral intent is thus irrelevant: The true test is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant. Rhone-Poulenc, 616 A.2d at 1196. A contract term is ambiguous when it can be assigned more than one reasonable meaning. Twin City, 840 A.2d at 628; Woodward v. Farm Family Cas. Ins. Co., 796 A.2d 638, 642 (Del. 2002); Hercules, 784 A.2d at 490. Where one party to a contract acts as the

agreement's drafter, Delaware law applies the doctrine of contra proferentem. Thus, ambiguities in an insurance contract "will be construed 'most strongly against the insurance company that drafted it.'" Woodward, 796 A.2d at 642 (quoting Rhone-Poulenc, 616 A.2d at 1196). Accord, O'Brien, 785 A.2d at 288 (noting the insurer's obligation "to state clearly the terms of the policy"); Hercules, 784 A.2d at 492 (same). The Delaware Supreme Court offered a thoughtful explanation of the doctrine of contra proferentem in Penn Mut. Life Ins. Co. v. Oglesby, 695 A.2d 1146 (Del. 1997):

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The starting point is the approach to interpreting insurance contracts. They must be interpreted in a common sense manner, giving effect to all provisions so that a reasonable policyholder can understand the scope and limitation of coverage. It is the obligation of the insurer to state clearly the terms of the policy, just as it is the obligation of the issuer of securities to make the terms of the operative document understandable to a reasonable investor whose rights are affected by the document. Thus, if the contract in such a setting is ambiguous, the principle of contra proferentem dictates that the contract must be construed against the drafter. The policy behind this principle is that the insurer or the issuer, as the case may be, is the entity in control of the process of articulating the terms. The other party, whether it be the ordinary insured or the investor, usually has very little say about those terms except to take them or leave them or to select from limited options offered by the insurer or issuer. Therefore, it is incumbent upon the dominant party to make the terms clear. Convoluted or confusing terms are the problem of the insurer or issuer -- not the insured or investor. Oglesby, 695 A.2d at 1149-50 (footnotes omitted). Ambiguity may, of course, be patent or latent. Latent ambiguity exists when policy language, though clear on its face, is rendered unclear by reference to external objects or circumstances. IKO Monroe, Inc. v. Royal & Sun Alliance Ins. Co. of Canada, Inc., C.A. No. 00-834GMS, 2001 WL 1568674, slip op. at *6 (D. Del. Dec. 7, 2001) (Ex. A); Metzger v. Clifford Realty Corp., 476 A.2d 1, 5 (Pa. Super. Ct. 1984). A latent ambiguity typically arises where "'a writing refers to a particular person or thing and is thus apparently clear on its face, but upon application to external objects is found to fit two or more of them equally.'" Steuart v. McChesney, 444 A.2d 659, 663 (Pa. 1982) (quoting Easton v. Washington County Ins. Co., 137 A.2d 332, 336 (Pa. 1957)). The circumstances here -- where the policy refers to "the dwelling" in the singular while the insured property contains two dwelling units -- thus make a classic case of latent ambiguity. Consistent with black-letter law, that ambiguity must properly be construed against Homesite.

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II. THE RESIDENTIAL HANGAR QUALIFIES AS A "DWELLING" A. The Plain Meaning of "Dwelling" Confirms the Hangar's Status English is nothing if not versatile. It can be wielded with fineness and precision, so that the speaker (or writer) can convey simplicity or nuance as the case requires. "Dwelling," meanwhile, is among the language's simpler terms. It means a place where people live. Dictionary.com thus offers, as a primary definition of the term, "a building or place of shelter to live in . . . ." A88. A respected collegiate dictionary likewise sets forth just a single entry for "dwelling," to the same effect: "a shelter (as a house) in which people live." MERRIAM WEBSTER'S COLLEGIATE DICTIONARY 361 (10th ed. 1993). There can be no genuine dispute that the Jadczaks' residential hangar meets this (universal) definition of "dwelling." As Mr. Jadczak's sworn testimony shows, the couple lived in the hangar in every meaningful sense. They and their guests slept in the hangar; they cooked, ate, bathed and worked in the hangar; they did laundry and watched TV there. Mr. Jadczak's affidavit confirms, meanwhile, that the hangar was heated and insulated to render it habitable as a dwelling. A92, ¶4. And so the Jadczak's residential hangar was just that: residential. B. Howard Confirms the Hangar's Status The hangar's status as a dwelling is underscored by Howard v. H. Robert Anderson & Assoc., Inc., No. MC03-20345, 2004 WL 3371968 (Minn. Dist. Ct. Sept. 28, 2004). In Howard the homeowner owned a primary residence in Excelsior, Minnesota and a second property in Shevlin, Minnesota. He obtained homeowners coverage through an insurance agent, who placed the business with Lumbermens. But the Lumbermens policy set forth an endorsement that barred coverage for structures "located away from the residence premises" where those structures were "used as a dwelling." Howard, slip op. at *2 (Ex. B).

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When the Shevlin property was destroyed by fire, Lumbermens denied coverage, and the homeowner sued the agent. The agent then impled Lumbermens, who moved for summary judgment on the basis of its endorsement -- arguing that a cabin located on the Shevlin property qualified as a dwelling. The court's analysis mirrors the issue here: Lumbermens asserts that Defendant [insurance agent] . . . negligently issued the Policy and its accompanying endorsement even though the endorsement unambiguously excluded coverage of the Shevlin Property because it was being used as a "dwelling." *** The word "dwelling-house" is defined as "[t]he house or other structure in which a person lives; a residence or abode." "Dwelling" is also defined as "a shelter (as a house) in which people live." The court finds that given these definitions and the usual and accepted meaning applied to the word "dwelling," the structure that Plaintiff [homeowner] referred to as his cabin on the Shevlin Property was indeed a dwelling. Plaintiff admitted that he lived in the structure 18 to 20 weekends per year, including stays of a week or more, and slept and cooked meals there while pursuing recreation. A picture of the structure confirms this court's conclusion for the structure had a stone chimney, a door, several windows, and contained a stove and oven for cooking, as well as a wood-burning stove for heat and a propane-powered lighting system.

Howard, slip op. at *2, *5 (citations omitted) (Ex. B). Howard recognizes that even a primitive structure -- here, a cabin with neither an electrical supply nor running water -- can qualify as a dwelling if people choose to live in it. The plain meaning of "dwelling" is thus controlling; and there can be no genuine dispute that the Jadczak's hangar squarely fits that meaning.

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C. The Installation of a Mobile Home Confirms the Hangar's Status The fact that the Jadczaks installed their unregistered mobile home in the hangar, for no other purpose than to render the hangar habitable, further cements the hangar's status as a genuine dwelling. The very definition of "mobile home" makes this clear: mobile home a large transportable structure, as a large caravan, set up permanently and used as living accommodation. SHORTER OXFORD ENGLISH DICTIONARY 1809 (6th ed. 2007). Or consider these alternative definitions, once again from Dictionary.com: mobile home a large house trailer, designed for year-round living in one place. *** A large trailer, fitted with parts for connection to utilities, that can be installed on a relatively permanent site and that is used as a residence. A86. Case law likewise confirms that the Jadczaks' obvious purpose in installing the mobile home within the hangar was to make the latter a dwelling: A mobile home indisputably is within the meaning of dwelling which is defined in Webster's Seventh New Collegiate Dictionary as "a building or other shelter in which people live." Yeager v. Cassidy, 253 N.E.2d 320, 322-23 (Ohio Ct. Comm. Pleas 1969). See also Fedorich v. Zoning Board of Appeals, 424 A.2d 289, 292 (Conn. 1979) (Connecticut Supreme Court recognizes that mobile homes "are considered permanent dwellings when placed upon concrete foundations"); Nabors v. South Carolina Farm Bureau Mut. Ins. Co., 255 S.E.2d 337, 338 (S.C. 1979) (South Carolina Supreme Court refers to insureds' mobile home as "the dwelling"). In fact, property insurers themselves often issue standard form homeowners policies -- complete with the usual references to "dwelling" -- to mobile home owners. See Reed v. Tennessee

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Farmers Mut. Ins. Co., 483 S.W.2d 721, 724 (Tenn. Ct. App. 1972) (describing the mobile home owner's policy as "the regular printed form and . . . the same form used generally to cover building[s] and dwellings and . . . not a special policy specifically designed for the coverage of mobile homes or house trailers.") The Jadczaks thus installed a semi-permanent dwelling within the hangar itself, while simultaneously outfitting the hangar with a washer and dryer, a TV and VCR, and other necessaries. They made the hangar not just a dwelling, but a comfortable dwelling at that. D. Homesite's "Description of Dwelling" May Reasonably Be Applied to the Hangar As noted above, the policy's declarations set forth a "Description of Dwelling." It

identifies a "Clapboard structure, Single family home, Primary residence . . . ." A1. But while this description cannot logically apply to the main house, it can reasonably apply to the Jadczak's residential hangar. Specifically, both the main house and the hangar are indisputably part of the Jadczak's single-family home and primary residence. There is thus no principled basis on which to exclude either structure from these categories. But the term "clapboard structure" is another matter. As Mr. Jadczak's affidavit makes clear, the main house has, and has always had, a Dryvit exterior. A92, ¶2. Dryvit is somewhat like stucco or cement in appearance. It does not remotely resemble a board exterior (like clapboard).3 But the hangar, by contrast, has a Hardie board exterior. A92, ¶3. At the risk of stating the obvious, a Hardie board exterior is by definition a board exterior. To the layman's eye, in fact, it looks identical to clapboard siding.
3

See jameshardie.com

For an illustration of Dryvit's appearance, which is nothing like clapboard's, see http://www.dryvit.com/products.asp?country_id=1 (last visted March 13, 2008).

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(collecting images of residential homes with Hardie board siding). Homesite's Description of Dwelling, with its reference to a "clapboard structure," thus makes sense only as applied to the residential hangar. E. Homesite is Responsible for the Latent Ambiguity As Mr. Jadczak testified, he and his wife outfitted the residential hangar as a dwelling and used it for that purpose for nearly a full year prior to the construction of their main house: Q: You said earlier that you lived in the RV actually inside the hangar for a period of nine months. Is that right, sir? A: That's right. A64 (emphasis added). As a property insurer, Homesite had the right and opportunity to inspect the property carefully before insuring it. It is clear that, with the Jadczaks actually living in the hangar for months prior to the main house's completion, any reasonably diligent inspection would have alerted Homesite's underwriter to the presence of two dwellings on the property -and, by extension, the presence of a latent ambiguity in the policy itself. But no diligent inspection was made. Instead, Homesite did what property insurers generally do: it issued the policy, collected the premium, and moved on to the next sale. The result is a policy that refers to "dwelling" in the singular when the facts on the ground reveal "dwellings" in the plural. The Jadczaks' property thus has two dwellings. The resulting latent ambiguity must be construed against Homesite, which failed to tailor its policy language to the property it insured. The residential hangar is a "dwelling," and should therefore be covered under "Coverage A."

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III. HOMESITE'S "OTHER STRUCTURES" ARGUMENT FAILS Homesite argues that fire damage to the residential hangar should be covered under "Coverage B," and therefore subject to that coverage part's dramatically lower limit of liability. Specifically, Homesite says: Coverage A does not include the hanger (sic) which I note is set apart from the dwelling by clear space. Moreover, Mr. Jadczak testified that the hangar is set apart from the actual house. Fire damage to the hanger (sic) is therefore appropriately valuated under Coverage B - Other Structures of the Homesite policy which says: We cover other structures on the "residence premises" set apart from the dwelling by clear space. ***

A78. But this argument presupposes the conclusion it seeks to prove. That is, to say that the hangar is "set apart from the dwelling" is to assume, against all evidence, that the hangar is not itself "the dwelling." One might just as easily conclude that the main house is an "other structure" by virtue of being set apart from the residential hangar. The same flawed logic attaches to Homesite's fuzzy reference to the "actual house." Is not the hangar every bit as "actual" a dwelling as the main house? After all, what is it that "actualizes" the house's status as a dwelling? The fact that it is fully furnished with the staples and accessories of residential living? Or the fact that the Jadczaks actually do their "living" there? For these features apply equally to the residential hangar, where the Jadczaks "actually" read, work, eat, bathe, sleep and watch TV. Homesite's argument is thus a circular one: The house (and not the hangar) is the dwelling because the dwelling is the house. But in fact, both structures are dwellings -- a conclusion compelled by the plain and universal definition of "dwelling," as understood by

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ordinary speakers of standard English. Fire damage to the Jadczaks' residential hangar should thus be covered under "Coverage A."

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CONCLUSION For the reasons set forth above, plaintiffs Catherine and Joseph Jadczak respectfully request the entry of summary judgment in their favor on the "dwelling" issue. Respectfully submitted, /s/ John S. Spadaro John S. Spadaro, No. 3155 John Sheehan Spadaro, LLC 724 Yorklyn Road, Suite 375 Hockessin, DE 19707 (302)235-7745 Michael L. Sensor, No. 3541 Perry & Sensor One Customs House, Suite 560 P.O. Box 1568 Wilmington, DE 19899-1568 (302)655-4482

Attorneys for Plaintiffs Joseph Jadczak and Catherine Jadczak March 14, 2008

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