DARRYL L CASTILLO JR V CAPITOL INDEMNITY CORP
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STATE OF MICHIGAN
COURT OF APPEALS
DARRYL L. CASTILLO, JR., Personal
Representative of the Estate of VINCENT DARIO
CASTILLO,
UNPUBLISHED
December 6, 2005
Plaintiff-Appellant,
v
TERESA WIMPEE and KENNETH WIMPEE,
d/b/a HANDPRINTS,
No. 255605
Ottawa Circuit Court
LC No. 02-043346-CK
Plaintiffs,
and
CAPITOL
INDEMNITY
CORPORATION,
CITIZENS INSURANCE COMPANY OF
AMERICA, and BERENDS-HENDRICKS STUIT
INSURANCE AGENCY, INC,
Defendant-Appellees,
and
J.M. WILSON CORPORATION,
Defendant.
Before: Bandstra, P.J., and Neff and Markey, JJ.
PER CURIAM.
This case involves the tragic drowning of a young child. Plaintiff, as third-party assignee
of the insureds, filed the instant action seeking a declaration of coverage and recovery for breach
of contract. Plaintiff is the personal representative of his deceased, twenty-month-old son who
drowned in the swimming pool of his day care provider, the insureds. Plaintiff appeals as of
right the grant of summary disposition to defendants Citizens Insurance and Capitol Indemnity.
We affirm.
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I
This Court reviews rulings on motions for summary disposition de novo. Smith v Globe
Life Ins Co, 460 Mich 446, 454; 597 NW2d 28 (1999). Additionally, issues involving
interpretation of insurance contracts are reviewed de novo. Allstate Ins Co v McCarn, 471 Mich
283, 288; 683 NW2d 656 (2004).
A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency
of a claim. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). Summary
disposition of all or part of a claim or defense may be granted when “[e]xcept as to the amount of
damages, there is no genuine issue as to any material fact, and the moving party is entitled to
judgment or partial judgment as a matter of law.” MCR 2.116(C)(10). A party facing a motion
for summary disposition brought under MCR 2.116(C)(10) is required to present evidentiary
proofs creating a genuine issue of material fact for trial. Smith, supra at 455-456 n 2. The
existence of a disputed fact must be established by admissible evidence. Veenstra v Washtenaw
Country Club, 466 Mich 155, 163; 645 NW2d 643 (2002).
Generally, exclusionary clauses in insurance policies are construed against the insurer,
but clear exclusions must be given effect. Pacific Employers Ins Co v Michigan Mut Ins Co, 452
Mich 218, 224; 549 NW2d 872 (1996). An insured bears the burden of proving coverage;
however, it is the insurer that must prove that an exclusion to coverage is applicable. Heniser v
Frankenmuth Mut Ins, 449 Mich 155, 161 n 6; 534 NW2d 502 (1995).
II
The insureds’ homeowners’ policy issued by defendant Citizens Insurance contained a
“business pursuits” exclusion which provided:
Coverage E – Personal Liability and Coverage F – Medical Payments to Others
do not apply to “bodily injury” or “property damage”:
***
b. arising out of or in connection with a “business” engaged in by an “insured.”
This exclusion applies but is not limited to an act or omission, regardless of its
nature or circumstances, involving a service or duty rendered, promised, owed, or
implied to be provided because of the nature of the “business.”
The exclusion also provided for a “non-business” exception:
However, this exclusion does not apply to incidental “business” activities
ordinarily undertaken by minors or activities which are ordinarily incidental to
non-“business” pursuits.
Plaintiff argues that the “business pursuits” exclusion is inapplicable in this case.
Michigan law provides for a two-pronged “business pursuits” test that looks to continuity and the
profit motive. Frankenmuth Mut Ins Co v Kompus, 135 Mich App 667, 674; 354 NW2d 303
(1984). The insured must have a customary engagement or a stated occupation, and that activity
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must be shown to be a “means of livelihood, gainful employment, means of earning a living,
procuring subsistence or profit, commercial transactions or engagements.” Id. at 674-675
(citations omitted). Applying that test, the day care business of the insureds was continuous and
for profit and therefore meets both prongs of the test.
Plaintiff contends, however, that the exclusion does not apply here because the status of
the decedent changed from that of an invitee to a licensee. Plaintiff maintains that once the
decedent climbed from his crib and left the designated day care area, his status changed to that of
a social guest, and his drowning therefore did not arise out of a business pursuit. We disagree.
The status of the decedent, while pertinent to a premises liability action, is inapplicable here. His
status does not affect the inquiry of the two-pronged “business pursuits” test.
Similarly, whether the decedent’s status changed to a social guest because the insured
caregiver received compensation for his care only until the end of his mother’s work day is
irrelevant to the inquiry.1 Additionally, this argument essentially has been previously been
rejected by this Court. Kompus, supra at 676-677; State Mut Ins Co v Russell, 185 Mich App
521, 529-530; 462 NW2d 785 (1990).
III
Plaintiff argues that even if the “business pursuits” exclusion applies to the insured wife,
it does not apply to her husband, also an insured on the policy. We disagree. An exclusion that
precludes coverage for “an insured” “excludes coverage to all insureds on the basis of the
conduct of any insured.” Vanguard Ins Co v McKinney, 184 Mich App 799, 809; 459 NW2d
316 (1990).
IV
Plaintiff further argues that even if the exclusion is applicable to preclude coverage, the
exception applies to provide coverage. We disagree. While defendant argues on appeal that it is
a failure to supervise that is the immediate act causing injury and, as such, that act would clearly
be “arising out of” or “in connection with” the business pursuit of the day care, plaintiff argues
the immediate act causing injury was the failure to repair a broken door latch that allowed the
child to get into the yard where the pool was. Even accepting plaintiff’s argument that the
immediate act causing injury is the failure to repair the broken latch, his argument for coverage
is without merit.
The insured day care owner testified that she put the latch on the door leading from the
day care area to the backyard pool because she “didn’t want kids to get out there.” She also
stated that the latch was installed up high so that “kids couldn’t reach it.” We therefore conclude
that the only evidence on the matter establishes that the latch and failure to repair it are directly
connected to the day care business and are not incidental to a “non-business” pursuit. In light of
1
The mother’s workday ended at approximately 2:55 p.m., and the decedent was found in the
pool at approximately 3:05 p.m.
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the above, we conclude that the trial court properly granted summary disposition to defendant
Citizens Insurance.
V
Plaintiff’s next issue on appeal is whether the water activities exclusion of the insureds’
commercial general liability (CGL) policy precluded coverage in the underlying case. That
exclusion provides:
This insurance does not apply to any claim or suit for bodily injury, property
damage or medical payments arising out of the use, ownership or maintenance of
any swimming pool, wading pool or other artificial body of water, or any natural
body of water, located on or adjacent to the property of any insured.
Plaintiff first argues that a question of fact exists whether the water activities exclusion
was ever communicated to the insureds or was a part of the policy that existed between Capitol
Indemnity and the insureds, and therefore summary disposition was improper. We disagree.
Plaintiff has failed to present admissible evidence that creates an issue of material fact.
Plaintiff’s argument is merely that the exclusion may not have been communicated to the
insured, i.e., or that it is “plausible” that it was not. Speculation and conjecture are insufficient to
survive a motion for summary disposition. Ghaffari v Turner Construction Co (On Remand),
___ Mich App ___; ___ NW2d ___ (Docket No. 240025, issued 10/20/05) slip op p 5; Detroit v
GMC, 233 Mich App 132, 139; 592 NW2d 732 (1998).
Although the insured testified that she was unaware of the exclusion, she also stated that
she did not read the policy. The policy attached to the complaint contains the exclusion, but
plaintiff asserted that that copy of the policy came from the insurance agent because the insured
did not have her copy. Because the insured did not read her policy when she received it, her
testimony offers no support for the argument that she did not receive the exclusion with her
policy.
Plaintiff’s reliance on the testimony of the insurance agency representative, Linda Sharp,
is equally inconclusive. Plaintiff’s attorney questioned Sharp during her deposition about a
water activities endorsement, but apparently intermittently incorrectly referred to the
endorsement as the “exclusion.” Plaintiff cites Sharp’s testimony related to the endorsement as
supportive concerning the possible omission of the exclusion. This supposition does not create a
genuine issue of fact.
V
Plaintiff also contends that even if the “Water Activities” exclusion is part of the policy,
it is not clear that the exclusion precludes coverage for this accidental drowning. Plaintiff asserts
that the exclusion is ambiguous because the title of the exclusion, “Water Activities,” connotes
recreational use or water activity related to a particular body of water other than pools; however,
the text precludes liability for mere ownership of a swimming pool. Plaintiff asserts that this
ambiguity must be construed against the insurer to maximize coverage. We disagree.
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This Court recently held that a section’s title, compared to the substantive language
within, can create an ambiguity. Scott v Farmers Ins Exchange, 266 Mich App 557, 562; 702
NW2d 681 (2005). However, we find plaintiff’s argument based on the ambiguity in the title
here unpersuasive. The exclusion is clear concerning water activities, including swimming pool
liability.
VI
We likewise find plaintiff’s remaining arguments unavailing. To the extent that plaintiff
argues that defendants had a duty to defend, this issue was not set forth in the statement of
questions presented and therefore is not properly presented for review. Caldwell v Chapman,
240 Mich App 124, 132; 610 NW2d 264 (2000). In any event, there is no independent duty to
defend if coverage is expressly excluded. Meridan Mut Ins Co v Hunt, 168 Mich App 672, 677;
425 NW2d 111 (1988).
Affirmed.
/s/ Richard A. Bandstra
/s/ Janet T. Neff
/s/ Jane E. Markey
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