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Vol. 3, Iss. 15
November 5, 2014

The Curious Coverage Provision: Real Estate Manager As An Insured

I’ve always found it curious that ISO’s standard form CGL policy includes, as an insured, any person (other than an employee or volunteer) or any organization while acting as the named insured’s real estate manager. There is nothing wrong with covering an insured’s real estate managers if insurers so desire. But does this provision need to be in a CGL policy’s standard form terms and conditions, except, say, one issued to condominium associations or commercial property owners? After all, I suspect that, looking at all insureds across the board, very, very (make that one more very) few insureds actually have a real estate manager. I’m sure there’s some historic reason for this. The fact that there is so little litigation over the “real estate manager as an insured” provision proves my point.

In any event, since the “real estate manager as an insured” provision doesn’t get out much, I thought I’d discuss Moon v. Cincinnati Insurance Co., No. 14-10264 (11th Cir. Oct. 24, 2014), where it was the sole issue in the case.

A two-year old child drowned in a swimming pool at a home occupied by Shawn and Tanya Moon. Terry Moon, Shawn’s father, owned the home. He had bought the home from Shawn and Tanya to avoid foreclosure and he was allowing them to live there to help them out.

At the time of the accident, Tanya Moon was babysitting the child. At issue was the availability of coverage, for the subsequent suit and $10 million judgment, under a Cincinnati Insurance Company policy issued to Terry Moon, the owner of the home. In addition to Terry Moon, the insurance policy extended coverage to “[a]ny person . . . while acting as [Terry Moon’s] real estate manager.”

The district court held that no coverage was owed to Shawn and Tanya Moon for the wrongful death action as they were neither the insured nor acting as real estate managers at the time of the accident. On appeal, the Moons argued that they were real estate managers.

So their argument went, since the term “real estate manager” is undefined in the policy, it is ambiguous and must be strictly construed in favor of coverage. The Moons asserted “that a ‘real estate manager’ is ‘one who simply takes care of an owners’ (sic) needs with regard to a piece of real estate.’ They argued that, because they took care of the home they leased from Shawn Moon’s father, Terry, they were real estate managers as well as lessees.”

The Eleventh Circuit rejected the argument, noting that, as the district court concluded, “the term real estate manager has an accepted meaning in the industry and is not ambiguous. The industry term ‘real estate manager’ implicates real estate transactions rather than routine maintenance.” The court also looked at the issue from a practical side: “Furthermore, to extend the definition of real estate manager to include a tenant who performs routine maintenance on the home he is leasing would render meaningless the policy’s lack of coverage for tenants of the property. Indeed, it would transform every tenant, family member or friend living in another’s home, who cuts the yard or paints a wall, into a covered real estate manager. This is not a reasonable interpretation of real estate manager.”

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