Allstate Insurance Co. v. Kelsey

BUTTLER, J.

Defendant Kelsey, as personal representative of Tyler Kelsey, appeals from a declaratory judgment entered pursuant to an order granting plaintiff Allstate Insurance Company’s (Allstate) motion for summary judgment. The trial court held that an insurance policy Allstate issued to defendant Loper excludes coverage of a claim for wrongful death of Tyler arising out of Loper’s baby-sitting activities. We affirm.

Loper was baby-sitting one and one-half-year-old Tyler in her home when a ladder fell on him in his playpen, causing fatal injuries. The ladder, which was leaning against the house before its fall, had been used the day before the accident to pick blackberries on the Loper property. The record contains no explanation of why the ladder fell.

At the time of Tyler’s death, Loper had a policy of insurance with Allstate, which provides:

“SECTION II - FAMILY LIABILITY

“PART 1 - COVERAGE X

“FAMILY LIABILITY PROTECTION

“LOSSES WE COVER

“We will pay all sums arising from the sáme loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage covered by this part of the policy.

* * * *

“EXCLUSIONS - LOSSES WE DO NOT COVER

* * * *

“(8) We do not cover bodily injury or property damage arising out of the business pursuits of an insured person.

“We do cover:

“a) activities normally considered non-business;

“b) the occasional and part-time business activities of an insured person who is a student under 21 years of age.”

“Definitions Used Throughout This Policy

<<* * * * *

“5 ‘Business’ - means:

“a) any full or part time trade, profession or occupation and the use of any part of any premises for such purposes; * * *”

Allstate brought this declaratory judgment action against Loper and Kelsey seeking to establish that Loper was conducting a business pursuit on her premises, which was excluded from coverage by section 8 of the policy.

Plaintiff and both defendants moved for summary judgment, and the trial court ruled in favor of Allstate. The court concluded that Loper’s baby-sitting was a business as defined by the insurance contract and that the death of the child was caused by a failure adequately to supervise the child, or a failure to maintain the baby-sitting premises in a safe condition, in either of which cases the death arose out of the business pursuit of the insured and is not covered as an “activity normally considered non-business” under section 8(a) of the policy.

Kelsey argues that the trial court erred in granting summary judgment for Allstate and in not granting summary judgment for him for two reasons: (1) the baby-sitting Loper provided Tyler was not a “business pursuit,” as defined by the insurance contract, and (2), even if Loper’s babysitting was a “business pursuit,” the injuries causing Tyler’s death were caused by Loper’s negligence in leaving the ladder leaning against her house in an unstable condition in the course of the “non-business activity” of picking berries. He argues that the accident should be covered under the exception to the business pursuits exclusion contained in section 8(a) of the policy.

We agree with the trial court that Loper’s babysitting was a “business pursuit” within the policy definition. There is no dispute on the facts. Loper advertised her babysitting service in the newspaper over a period of several months. She expected and received compensation for the service. For one family, she had regular hours during which she baby-sat. Kelsey contends that, even though Loper’s baby-sitting for other children might be a business pursuit under the policy, the sitting she did for the Kelseys was not, because she did it primarily as a favor with no profit motive, had no regular schedule and did not keep track of her time. She stated, however, that she was told that she would be paid $0.70 per hour by the Kelseys and, also, that she worked an average of 14 hours per week baby-sitting for them. The facts support the conclusion that Loper was engaged in a part-time occupation of baby-sitting and used part of her home for that purpose. That activity is excluded from coverage.

Kelsey’s second contention that, even if Loper’s baby-sitting activity is not covered, the fact that the death of Tyler was caused by a ladder, not connected to baby-sitting, falling on the child brings the case within the exception of the exclusion is not persuasive. There is no relevance in the fact that the ladder that fell on the child had been used the day before in the course of a non-business activity — berry picking. If the premises were in an unsafe condition because the ladder was left in an unstable condition, the fact that the ladder had been used earlier for some unrelated purpose does not affect Loper’s liability or coverage any more than if she had left a loaded shotgun in a place where the child could reach it.

Safeco Ins. Co. v. Leslie, 276 Or 221, 554 P2d 469 (1976), on which Kelsey relies, is inapposite. There, the insured had taken a gun to the service station where he worked. Another employe was injured when he knocked it to the floor, causing it to discharge. The injured employe sued the employer and also an employe, who was the insured under Safeco’s homeowner’s policy. Safeco filed a separate proceeding for a declaration that the exclusion from coverage was applicable and that it was not obligated to defend the claim against the injured employe. Although the insured was a gun enthusiast who wanted a gun with him wherever he went, the trial court found that he took the gun to the service station to protect the large amounts of cash that accumulated there. The court affirmed the trial court’s holding that the exclusion applied, because there was a business purpose in the insured’s taking the gun to work, even though he also had a personal reason for doing so.

A proper application of the analysis employed in Safeco requires the conclusion that the injury here is excluded. The critical question in that case was whether the insured had a business purpose in taking his gun to work on the night in question. The question here is whether the insured adequately supervised the child or maintained her business premises in an unsafe condition, not whether she took the ladder, used for non-business purposes, to another’s premises where it injured still another. In the latter case, the exclusion would not apply.

Gulf Insurance Co. v. Tilley, 280 F Supp 60 (ND Ind 1967), aff’d 393 F2d 119 (7th Cir 1968),¹ on which Kelsey also relies, comes closer to supporting his position. In that case, the insured was caring for a child in her home for compensation and the child sustained burns when she overturned a percolator the insured was using to make coffee for herself and a friend. Analyzing an insurance provision essentially identical to the one at issue in this case, the court explained:

“[The provision] may fairly be read as saying that, as a general proposition, there will be no liability coverage with respect to an insured’s ‘business pursuits,’ but that, as an exception to this broad rule, coverage will be extended to liability which arises, even though connected in some causal manner with the insured’s ‘business pursuits,’ out of an act or omission that is ordinarily not associated with or related to the insured’s business pursuits. In other words, to give any meaning at all to the excepting clause, the policy must be read to extend coverage to certain acts or omissions which are not, by their very nature, tainted by being associated with an insured’s business pursuits, but which, nevertheless, with respect to the insured’s potential liabiity arising therefrom, may have been causally related to such business pursuits.” 280 F Supp at 64.

The court characterized the insured’s coffee-making activity as one not connected with baby care. Because the “particular activity which allegedly proximately caused,” 280 F’Supp at 65, the baby’s injuries was incident to the non-business pursuit of preparing coffee, the court held the act not to be subject to the policy exclusion.

Although we question the reasoning of the court in Tilley, because it ignores the failure of the insured to supervise the child, that case differs from the case at bar in that Tilley was actively engaged in a non-business activity that the court said was the cause of injury. That view of Tilley was expressed by the court in Stanley v. American Fire & Casualty Co., 361 So 2d 1030 (Ala 1978), a factually similar case. That court, after questioning the reasoning in Tilley, concluded that the “activity” referred to in the exception to the exclusion was the failure properly to supervise a young child. Because supervising children on a regular basis for compensation is ordinarily a business pursuit, the court held that the business exclusion was applicable.

We agree with Stanley and disagree with Tilley. The fact that the instrumentality that inflicted the injury was not used in the business activity of baby-sitting has nothing to do with the question whether the injury arose out of the business pursuit of baby-sitting if the cause of the injury was the negligence of the insured in failing adequately to supervise the child or in failing to maintain the baby-sitting premises in a safe condition.

Although it is true that any ambiguity in an insurance policy is resolved in favor of the insured, we find none here. The fact that courts in different states have reached different results in construing similar policy language does not create an ambiguity, at least when we are not persuaded by the reasoning of the decision that would suggest an ambiguity.

Affirmed.

1 In a per curiam opinion, the Seventh Circuit agreed that there was no exclusion from coverage under the policy on the basis of the District Court’s opinion. 280 F Supp at 60.