Riverside Insurance v. Kolonich , 122 Mich. App. 51 ( 1982 )

J. P. Swallow, J.

(dissenting). I respectfully dissent. The majority reverse and remand on the grounds that summary judgment was improvidently granted and that an evidentiary hearing is necessary to determine if waiver or estoppel apply.

The underlying negligence action was commenced against plaintiffs insured on October 23, 1980. The insurance company caused an answer to be filed on its insured’s behalf on November 6, 1980. This action for declaratory relief was filed some three months later on February 5, 1981. Only Kolonich, the plaintiff in the underlying action, appealed.

Under the subject contract of insurance, the insurer was obligated to provide a defense to his insured and, upon any failure to do so, even if refusal was made in good faith, the insurer would be liable for a default judgment, even if in excess of the policy limits. Frank Stockdale v Jamison, 99 Mich App 534; 297 NW2d 708 (1980). The duty to defend may extend to actions which are groundless, false, or fraudulent so long as the allegations against the insured are even arguably within policy coverage and any doubt as to whether or not a complaint against an insured alleges a liability of the insurer to defend under the policy must be resolved in the insured’s favor. Detroit Edison Co v Michigan Mutual Ins Co, 102 Mich App 136; 301 NW2d 832 (1980). See also Elliott v Casualty Ass’n of America, 254 Mich 282; 236 NW 782 (1931); Shepherd Marine Construction Co v Maryland Casualty Co, 73 Mich App 62; 250 NW2d 541 (1976).

An insurer, impressed with a duty to defend, who doubts that a claim is within coverage afforded by the policy must necessarily, after assumption of defense, be afforded a reasonable opportunity to resolve the coverage question by declaratory relief without waiving any contractual rights. Security Ins Co v Daniels, 70 Mich App 100; 245 NW2d 418 (1976).

For a nonparty to a contract of insurance to assert waiver or estoppel as against an insurer’s contractual rights, he must show that he has been prejudiced by action of the insurer as to a consequential right under the contract of insurance. Hoffman v Professional Underwriters, 259 Mich 633; 244 NW 184 (1932); Beals v Central Mutual Auto Ins Co, 269 Mich 477; 257 NW 868 (1934); Meirthew v Last, 376 Mich 33; 135 NW2d 353 (1965).

In my opinion, the insurer’s timely filing of this action should negate any claim of prejudice. Security Ins Co v Daniels.

The insurance contract in question is clear and unambiguous that it does not apply to business pursuits. See State Mutual Cyclone Ins Co v Abbott, 52 Mich App 103; 216 NW2d 606 (1974).

Also in State Mutual Cyclone Ins Co, a panel of this Court, citing to Home Ins Co v Aurigemma, 45 Misc 2d 875, 880; 257 NYS2d 980, 986 (1965), and Fadden v Cambridge Mutual Fire Ins Co, 51 Misc 2d 858, 862; 274 NYS2d 235, 241 (1966), adopted the New York definition of the term "business pursuits”. Home Ins Co v Aurigemma contains an exhaustive discussion of authorities relied upon in developing the subject definition, holding specifically:

1. Language employed must be accorded connotation which a policy holder of ordinary intelligence would usually attach to it.

2. For purposes of exclusion from comprehensive personal liability protection of standard home owners policy, the term "business pursuits” comprehends both continuity and profit motive.

The trial court, in granting summary judgment, relied upon the deposition of plaintiffs insured, Mary Jo Taylor, as taken in the underlying action. An objective analysis of that deposition establishes that Mrs. Taylor had been interested in ceramics for about five years, maintained a kiln and an inventory of more than 100 ceramic molds and more than 100 pieces of greenware upon her premises. The activities conducted upon the premises were the teaching of ceramic classes more than one night a week to groups ranging in number from five to ten, as well as the sale and firing of ceramic pieces. A fee was charged students for the taking of classes and a consideration was received for services performed or for items sold.

It is also undisputed that Rosemary Kolonich, plaintiff in the underlying action, at the time of her slip and fall on Taylor’s sidewalk, had specifically come to the premises to have a ceramic piece fired.

From my reading of Home Ins Co v Aurigemma, I would hold that the two-pronged test (continuity and profit motive) as adopted by State Mutual Cyclone Ins Co is satisfied by the admissions contained in Mrs. Taylor’s deposition.

The existence of defendant Taylor’s claim that she considered her pursuits as a hobby, did not advertise, had many family members among her clientele, and possessed no records to show if the activity generated a profit or loss are subjective considerations and should not disturb the holding of the trial judge. There is no outstanding issue of material fact to prevent the granting of declaratory relief by summary judgment. Burroughs Corp v Detroit, 18 Mich App 668, 674-675; 171 NW2d 678 (1969).

Further, I do not agree with appellant’s claim that, because Mary Jo Taylor conducted the business, her husband, David Taylor, is entitled to coverage. It is the type of risk that is covered or excluded by the policy, not the individual insured.

Having answered the first three issues raised by appellant, the remaining issue, in my opinion, is rendered moot.

I would affirm.