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Court rejects insurer’s subrogation bid in Dartmouth dorm fire

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Dartmouth

The New Hampshire Supreme Court affirmed a lower court ruling against Factory Mutual Insurance Co. Wednesday denying its bid to subrogate $4.5 million in damages against two students who started a dorm fire at Dartmouth College.

Daniel Ro and Sebastian Lim were Dartmouth students in 2016 when they set up a charcoal grill on a platform outside a fourth-floor window in Mr. Lim’s dormitory that started a fire that spread to the roof, causing water damage in the dorm’s four floors and leading to Factory Mutual paying the college $4.5 million in damages, according to the unanimous ruling by the New Hampshire Supreme Court in Daniel Ro v. Factory Mutual Insurance Co., as subrogee of Trustees of Dartmouth College and Sebastian Lim v. Factory Mutual Insurance Co., as subrogee of Trustees of Dartmouth College.

The students had signed a receipt acknowledging a handbook that said violating an open flame policy “may” result in liability for damage caused by the fire, and placed responsibility on students for claims arising from damage to college property, according to the ruling.

Factory Mutual brought a subrogation claim against Mr. Ro and Mr. Lim to recover the amount paid.

The trial court granted Mr. Ro and Mr. Lim summary judgment, which the New Hampshire Supreme Court affirmed.

“This appeal asks us to determine whether the anti-subrogation doctrine we adopted” in an earlier case — which held that a landlord’s insurer “has no right of subrogation against a tenant whose negligence causes fire damage” — also applies to students in a college dorm, the ruling said.

The court held that it does. “We note that in other circumstances, courts have found the relationship between a college and its residential students sufficiently similar to that of landlord and tenant to apply landlord/tenant-related doctrines despite the absence of a technical landlord/tenant relationship,” the ruling said.

 An insurer of college dormitories “reasonably expects to pay for negligently caused fires and, in setting its premiums, takes into account that the insured property will be rented to students,” the ruling said.

“The expectation of a reasonable college student is that his or her tuition and other payments to the college contribute to an amorphous ‘pot of money’ out of which the college’s expenses, including fire insurance, are paid,” the ruling said in citing an earlier case and affirming the lower court’s rulings.

Matthew R. Passeri, now an attorney with Crowley & McCarty P.C. in Lynnfield, Massachusetts, who had argued the case on Factory Mutual’s behalf, said in a statement, “I am, obviously, disappointed with the decision by the court. In our view, the college policies effectively placed liability for fire damage upon students who violate the Open Flame in Residence Halls policy.

“The court imposed a strict requirement that a lease must expressly provide that the tenant is not a coinsured under the landlord’s insurance policy or, in this case, that college policies state a residential student is not insured under the college’s fire insurance policy.

“Insurers and risk managers evaluating residential settings must be aware that equitable protections afforded to tenants, students or other residents preclude allocating risk to these individuals absent very specific language to the contrary.”

The students’ attorneys did not respond to a request for comment or could not be reached.