Schroeder v. Georgia Farm Bureau Mutual Insurance , 211 Ga. App. 302 ( 1993 )

Johnson, Judge.

The Schroeders filed an action against Georgia Farm Bureau Mutual Insurance Company (Farm Bureau) to recover damages incurred as a result of Farm Bureau’s refusal to pay their insurance claim for a fire loss which destroyed their residence and the personal property it contained. The trial court granted Farm Bureau’s motion for summary judgment, denied as moot the Schroeders’ cross-motion for summary judgment, and the Schroeders appeal from both rulings. We affirm.

In asserting that it was entitled to judgment as a matter of law, Farm Bureau argued that the Schroeders had no insurable interest in the property, that the Schroeders had made material misrepresentations on their application for insurance, that they had violated a condition of the policy by using the residence in furtherance of a “business pursuit” thereby voiding the policy as a matter of law, and that it was not guilty of bad faith in denying coverage. Thereafter, the Schroeders filed a cross-motion for summary judgment in which they argued that Farm Bureau was estopped from denying coverage based upon lack of insurable interest due to its knowledge of the true ownership of the property at the time the policy was issued, that the Schroeders’ conduct did not constitute a “business pursuit” within the meaning of the policy, that there was no causal connection between the Schroeders’ conduct and the loss they incurred, that the policy language relied upon by Farm Bureau in denying coverage was contrary to Georgia law, and that the Schroeders were entitled to bad faith penalties as a matter of law.

The undisputed facts in the record show that in September 1985, Farm Bureau issued the homeowners’ insurance policy which is at issue in this case providing coverage on the Schroeders’ residence. Approximately 15 to 20 feet from their house, the Schroeders operated a store called Mac’s Bait & Tackle. Farm Bureau had issued a separate business policy covering the store. In October 1990, the Schroeders installed three coin-operated video games and two coin-operated pool tables in two rooms of their residence. A sign was placed in their store indicating the availability of the machines and directing customers to their residence, where they were invited to operate these games and tables. The video games and pool tables were owned by Huckleberry Amusement, and the Schroeders received one-half of the gross proceeds they generated. On average, the Schroeders received approximately $300 per month in income from the operation of the video games and pool tables.

On December 25, 1990, a fire totally destroyed the Schroeders’ residence and their personal property contained therein. The fire was caused by a wood heater located in the residence, not by the video games or pool tables. In fact, it is undisputed that the video games and pool tables were not in operation on the day of the fire.

In granting Farm Bureau’s motion for summary judgment, the trial court found, as a matter of law, that the Schroeders did have an insurable interest in the property, but that the Schroeders’ operation of the video game and pool table business in the house voided the homeowners’ policy. The Schroeders’ cross-motion for summary judgment was denied as moot. In their appeal, the Schroeders contend that the trial court erred in granting Farm Bureau’s motion for summary judgment and in denying their motion for summary judgment.

The policy provided on its first page that “[Farm Bureau] will provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy.'’'’ (Emphasis supplied.) The special provisions section of the policy contained the following language: “(a) The residence premises is not seasonal; (b) no business pursuits are conducted on the residence premises. . . .” (Emphasis in original.)

1. The Schroeders assert as error the trial court’s determination that the Schroeders’ introduction of a business pursuit into their residence voided the insurance policy as a matter of law. We disagree.

As noted above, it is undisputed that the Schroeders were operating video games and pool tables for profit in the insured residence premises. The special provisions section of the policy quoted above constitutes a representation in clear and unambiguous terms that no business pursuits are conducted on the residence premises. “While an ambiguous insurance contract will be liberally construed in favor of the insured, one which, when construed reasonably and in its entirety, unambiguously and lawfully limits the insurer’s liability, cannot be expanded beyond what is fairly within its plain terms. . . . Where the language fixing the extent of the liability of the insurer is unambiguous and but one reasonable construction is possible, the court must expound the contract as made.” (Citations and punctuation omitted.) Ga. Farm Bureau Mut. Ins. Co. v. Fire &c. Ins. Co., 180 Ga. App. 777, 778 (350 SE2d 325) (1986).

It is clear from the record that the Schroeders’ pursuit of their video game and pool table business continued up through the date of the loss, although the games were not in operation on the day of the fire. Therefore, appellants’ reliance on Ga. Farm &c. Ins. Co. v. Brown, 260 Ga. 160 (390 SE2d 586) (1990), is misplaced. The insurance company in Brown asserted that a change in ownership of property barred coverage. However, the property had been reconveyed to the original insured at the time of the loss. As a result, the court held that the various conveyances did not contribute to the loss, so coverage was not terminated. That case did not hold, as appellants would have it, that if the change of condition did not contribute to the loss it should not bar coverage. Nor is such an interpretation otherwise the law in Georgia. There is no requirement that a causal connection between the increased risk, in this case the operation of a commercial enterprise, and the loss itself be shown. See Grigsby v. Houston Fire &c. Ins. Co., 113 Ga. App. 572, 574 (3) (148 SE2d 925) (1966); American Alliance Ins. Co. v. Pyle, 62 Ga. App. 156 (8 SE2d 154) (1940).

The quid pro quo set forth at the outset of the policy, “(w)e will provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy,” provided sufficiently clear notice to the insureds that coverage would not lie in the event the insureds failed to comply with its provisions, such as the specific condition in this policy that “(n)o business pursuits are conducted on the residence premises.”

“An insurance company may fix the terms of its policies as it wishes, provided they are not contrary to law, and it may insure against certain risks and exclude others.” (Citations and punctuation omitted.) McMillon v. Empire Fire &c. Ins. Co., 209 Ga. App. 378, 380 (433 SE2d 429) (1993). The Schroeders’ operation of the video game and pool table business in their residence voided the policy in this case as a matter of law, and the trial court did not err in granting Farm Bureau’s motion for summary judgment on that basis.

2. In light of the foregoing, we hold that the trial court’s ruling that the Schroeders’ cross-motion for summary judgment was moot was correct.

Judgment affirmed.

Pope, C. J., Birdsong, P. J., Cooper, Andrews and Smith, JJ., concur. Beasley, P. J., concurs specially. McMurray, P. J., and Blackburn, J., concur in part and dissent in part.