VT Mutual Insurance. Co. v. Gambell

VT Mutual Insurance Co. v. Gambell  (96-060); 166 Vt. 595; 689 A.2d 453

[Filed 2-Jan-1997]


                               ENTRY ORDER

                      SUPREME COURT DOCKET NO. 96-060

                            NOVEMBER TERM, 1996


Vermont Mutual Insurance Company       }     APPEALED FROM:
                                       }
                                       }
     v.                                }     Washington Superior Court
                                       }
Cynthia B. Gambell, Gerard J. Allison, }
and Mary L. Sleeman                    }     DOCKET NO. 685-11-94Wncv


       In the above-entitled cause, the Clerk will enter:


       Plaintiff Vermont Mutual Insurance Company appeals from an order
  declaring that it is obligated to provide insurance coverage to defendants
  Gambell and Allison under a homeowners policy issued to them by Vermont
  Mutual.  We affirm.

       Defendant Gambell operates a pet-sitting business at a house that she
  owns jointly with defendant Allison.  In response to advertisements for the
  business, defendant Sleeman brought her dog to the home to be boarded while
  she went on vacation.  Sleeman parked her vehicle in the driveway that
  served both the house where Gambell and Allison resided and the kennel,
  which consisted of part of the basement and a fenced area behind the house. 
  After exiting the vehicle with her dog, Sleeman began to walk toward the
  house on the driveway.  She alleges in her complaint against Gambell and
  Allison that three unleashed dogs ran toward her, jumped on her, and caused
  her to slip and fall on the icy driveway.1

       Gambell and Allison sought a defense from Vermont Mutual under their
  homeowners policy, which provides liability coverage for bodily injury
  caused by an occurrence.  The policy excludes coverage for personal
  liability "arising out of business pursuits of an insured," but further
  provides that "[t]his exclusion does not apply to . . . activities which
  are usual to non-business pursuits."  Vermont Mutual brought this
  declaratory judgment action to determine the rights and liabilities of the
  parties under the policy.  The trial court denied the insurance company's
  motion for summary judgment and granted summary judgment to defendants
  pursuant to V.R.C.P. 56(c).  It declared that the policy provides coverage
  and that Vermont Mutual is obligated to defend and indemnify Gambell and
  Allison in the suit brought by Sleeman.

       On appeal, Vermont Mutual argues that the trial court erred in
  concluding that the exception to the exclusion refers to the activities of
  the claimant rather than the activities of the insured.  In its conclusions
  delivered orally following argument on the insurance company's motion, the
  trial court stated that "the activity in this case is the walking upon a
  driveway that leads to a residence which has a kennel adjunct business
  operation."  We agree with Vermont Mutual that the activity referred to in
  the exception is the activity of the insured.  The exclusion

 

  is for liability "arising out of business pursuits of an insured."  The
  exception to this exclusion is for "activities which are usual to
  non-business pursuits" and clearly has reference to activities of the
  insured.  See Velleman v. Continental Ins. Co., 616 N.Y.S.2d 146, 149 (N.Y.
  Sup. Ct. 1994) (real focus is not on injured party's activities, but on
  activities of insured).

       The analysis does not end there, however.  The question that must be
  answered is whether the activities of the insured are usual to his or her
  nonbusiness pursuits.  The activities of the insured that must be examined
  are those that proximately caused the injury.  Insurance Co. of Ill. v.
  Markogiannakis, 544 N.E.2d 1082, 1090 (Ill. App. Ct. 1989) (in interpreting
  exception, court must look at activity that caused injury); see also
  Economy Fire & Casualty Co. v. Bassett, 525 N.E.2d 539, 542 (Ill. App. Ct.
  1988) (in analyzing whether injury arose from activity not ordinarily
  incident to nonbusiness pursuit, court must examine particular activity
  that caused injury).  For an activity to be a business pursuit, it must be
  an act that is solely referable to the conduct of the business and one that
  the insured would not normally pursue but for the business.  Farmers Ins.
  Exch. v. Sipple, 255 N.W.2d 373, 375 (Minn. 1977).  The relationship
  between the exclusion and exception was set forth in Gulf Ins. Co. v.
  Tilley:

     The entire paragraph [the exclusionary clause] . . . may fairly be
     read as saying that . . . 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.

  280 F. Supp. 60, 64 (N.D. Ind. 1967) (citation omitted), aff'd, 393 F.2d 119 (7th Cir. 1968); see also State Farm Fire & Casualty Co. v. Moore, 430 N.E.2d 641, 645 (Ill. App. Ct. 1981) (policy provides coverage for "acts,
  which by their nature, are not associated with the insured's business
  pursuits, but which are causally related to business activities").

       The acts or omissions alleged to have caused Sleeman's injuries were
  the failure to maintain the driveway in a safe condition and the failure to
  prevent dogs from roaming the premises.  These omissions can hardly be said
  to contribute to or further the interest of the insured's business.  While
  the omissions are connected in a causal manner with the kennel operation,
  they are not directly related to that business.  We therefore conclude that
  the exception to the exclusion applies and coverage is afforded under the
  policy.

 


       Judgment affirmed.





     BY THE COURT:



     _______________________________________
     Frederic W. Allen, Chief Justice

     _______________________________________
     Ernest W. Gibson III, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice

     _______________________________________
     Denise R. Johnson, Associate Justice

     _______________________________________
     Marilyn S. Skoglund, District Judge
     Specially Assigned





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                                  Footnotes


FN1.  It is not claimed that the dogs belonged to defendants Gambell
  and Allison or that they were being boarded by or were otherwise connected
  with the kennel operation.