Luneau v. Peerless Insurance Co.

Luneau v. Peerless Insurance Co. (98-238); 170 Vt. 442; 750 A.2d 1031

[Opinion Filed 24-Mar-2000]
[Motion for Reargument Denied 14-Apr-2000]


  NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
  40 as well as formal  revision before publication in the Vermont Reports. 
  Readers are requested to notify the Reporter  of Decisions, Vermont Supreme
  Court, 109 State Street, Montpelier, Vermont 05609-0801 of  any errors in
  order that corrections may be made before this opinion goes to press.


                                 No. 98-238


Judy Luneau	                                 Supreme Court

     v.	                                         On Appeal from
    	                                         Franklin Superior Court
Peerless Insurance Co., DLD Insurance	
LTD., d/b/a Landry Insurance and Mark	         April Term, 1999
Landry and Pamela Landry


David A. Jenkins, J.

A. Gregory Rainville of Rainville & Associates, P.C., and Michael Rose, St. 
  Albans, for Plaintiff-Appellant.

Douglas Le Brun of Dinse, Knapp & McAndrew, P.C., Burlington, for 
  Defendant-Appellee.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       JOHNSON, J.   Plaintiff Judy Luneau appeals a verdict of the superior
  court holding that  defendant Peerless Insurance Company did not have a
  duty to indemnify policy holder Robert  Wagner for his liability in
  negligently injuring plaintiff.   We affirm. 

       The trial court found the following facts.  Wagner had a homeowner's
  insurance policy  issued by defendant that included personal liability
  coverage.  The policy included a business  pursuits exclusion clause that
  read:  


     Coverage E -- Personal liability and Coverage F -- Medical Payments 
     to Others do not apply to "bodily injury". . . [a]rising out of 
     "business" pursuits of an "insured."  

 

  This exclusion does not apply to activities which are usual to
  non-"business" pursuits. 

       On September 4, 1994, Wagner was employed as a disc jockey at a
  wedding reception at the  Champlain Country Club in Swanton, Vermont.  He
  was paid $300.00 for the service.  At the time,  Wagner was regularly
  employed with Green Mountain Coffee Roasters.  For a number of years, 
  however, he had been conducting his disc jockey business on the side.  He
  had printed cards using  the business name "Music Unlimited."  On his tax
  returns, he had declared income from his disc  jockey activities, including
  $7,175.00 for 1992, $6,000.00 for 1993 and $5,000.00 for 1994, and had 
  deducted related expenses as business expenses.

       On the day of the reception, Wagner set up his own equipment, stacking
  his loudspeakers  next to the dance floor.  During the reception he drank
  several alcoholic beverages.  At one point he  became involved in a scuffle
  with an obstreperous and intoxicated guest who was upset because  Wagner
  had forgotten to play a song he had requested.

       During the scuffle, one of Wagner's speakers became dislodged and
  struck plaintiff in the  head, knocking her to the floor and causing
  bleeding, bruising, swelling and a concussion.  After the  incident,
  plaintiff suffered from neck, back and shoulder pain.  She incurred medical
  expenses and  also lost approximately $5,600.00 in wages for the work she
  missed due to her injuries.

       On February 9, 1995, plaintiff filed a complaint against Wagner
  alleging that, while Wagner  had been "employed as a disc jockey" during
  the September 4th reception, he had been negligent  (1) in "the placement,
  use and supervision of the stereo equipment," and (2) in his "physical 
  conduct," resulting in injury to the plaintiff.  Plaintiff and Wagner
  subsequently stipulated to a  judgment that Wagner was liable to plaintiff
  in the amount of $60,000.00, which the court entered. 
 
 

  As part of the settlement, Wagner assigned any claim to plaintiff he might
  have against  defendant arising out of the matter.

       On February 7, 1997, plaintiff filed a complaint against defendant
  seeking indemnification  for the judgment.  Defendant filed a motion for
  summary judgment, arguing that the injury was  excluded by the policy as a
  matter of law.  The court denied the motion, held a bench trial and  
  issued a decision in favor of defendant.  It determined that Wagner had
  been negligent both in his  placement of the speakers and in becoming
  involved in the shoving match, and that each act of  negligence was a
  proximate cause of plaintiff's injuries.  The court denied coverage,
  however, based  on its conclusion that both acts of negligence fell within
  the business pursuits exclusion of Wagner's  policy.  The court stated that
  the issue was a question of fact.  Because Wagner had been employed  as a
  disc jockey for profit at the time, had engaged in the business of disc
  jockeying for several years,  and had admitted to others that he needed
  additional insurance to cover any liability related to the  business, the
  court concluded that both the placement of the loudspeakers and the shoving
  match  were "entirely related to his business pursuit at that time."

       On appeal, plaintiff argues (1) that the exception for activities
  usual to non-business pursuits  applies, and (2) that the doctrine of
  concurrent causation should apply so as to provide coverage for  her
  injuries despite the existence of an excluded risk. (FN1) 

 

                                     I.

       Upon reviewing a verdict from the bench, this Court will not set aside
  the trial court's  factual  findings unless they are clearly erroneous. 
  See V.R.C.P. 52(a)(2).  Those finding are viewed in a  light most favorable
  to the prevailing party.  See Mullin v. Phelps, 162 Vt. 250, 260, 647 A.2d 714,  720 (1994).  Conclusions of law, however, will be upheld only when
  the trial court has applied the  correct legal standard and the conclusions
  are reasonably supported by the factual findings.  See  Schnabel v. Nordic
  Toyota, Inc., 168 Vt. 354,357, 721 A.2d 114, 118 (1998).  

                                     A.

       As a preliminary matter, the parties dispute the degree of deference
  that this Court should  give the trial court's decision that the scuffle
  was entirely related to Wagner's business pursuits.   Defendant claims that
  this is a finding of fact, to which the clearly erroneous standard applies.  
  Plaintiff, on the other hand, claims that it is really a conclusion of law,
  to which this court owes no  deference. 

       The court's opinion is not separated into findings of fact and
  conclusions of law, but states  that whether or not a particular activity
  falls within the business pursuits exclusion is a question of  fact to be
  decided on a case-by-case basis.  However, the conclusion that Wagner's
  conduct falls  within the business pursuits exclusion requires both a
  factual determination as to the precise nature  of Wagner's conduct and a
  legal determination as to whether the language of the business pursuits 
  exclusion describes that conduct.  As such, it is a mixed question of fact
  and law, permitting de novo  review of the legal determination involved.
  (FN2)

 

                                     B.


       We turn now to the interpretation of the business pursuits exclusion
  clause of Wagner's  insurance policy.  An insurance policy is a contract to
  indemnify.  See Moultroup v. Gorham, 113  Vt. 317, 320, 34 A.2d 96, 98
  (1943).  The interpretation of a contract is a question of law unless the 
  meaning of the contract is ambiguous.  See Housing Vermont v. Goldsmith &
  Morris, 165 Vt. 428,  430, 685 A.2d 1086, 1088 (1996).  Any ambiguity in an
  insurance policy is resolved in favor of  coverage.  See Coop. Fire Ins.
  Ass'n. v. Bizon, 166 Vt. 326, 333, 693 A.2d 722, 727 (1997). 

       The business pursuits exclusion in the policy provides:

     Coverage E -- Personal liability and Coverage F -- Medical Payments 
     to Others do not apply to "bodily injury". . . [a]rising out of 
     "business" pursuits of an "insured."  

       This exclusion does not apply to activities which are usual to
  non-"business" pursuits. 

       The trial court found that the negligent conduct arose out of Wagner's
  business pursuit and therefore  concluded that defendant was not obligated
  to indemnify plaintiffs.

       As noted above, Wagner was paid $300 for his services on the night of
  September 4; he used  business cards for "Music Unlimited"; and he declared
  income from his disc jockey work on his tax  returns.  Wagner was plainly
  engaged in the business of being a disc jockey at the wedding.  Judy 
  Luneau was injured by one of his speakers, which the court found had been
  negligently stacked.  All  of these facts indicate that Wagner's activities
  fall into the business-pursuits exclusion.  We must  therefore, decide
  whether Wagner's activities at the wedding were "usual to non-business
  pursuits."

 

                                     C.

       The distinction between the business pursuits exclusion and the
  exception for activities usual  to non-business pursuits is best addressed
  in the cases in which the tortfeasor is a day-care provider.  The early
  leading case finding coverage is Gulf Ins. Co. v. Tilley, 280 F. Supp. 60
  (N.D. Ind. 1967),  aff'd, 393 F.2d 119 (7th Cir. 1968), a case cited in
  Vermont Mutual Ins. Co. v. Gambell, 166 Vt. 595,  596, 689 A.2d 453, 454
  (1997) (mem.).  In Tilley, the plaintiff, a child, was injured when she
  pulled  a coffee pot down on herself, and she sued the home day-care
  provider, who had used the pot to  prepare coffee for herself and a friend. 
  Defendant's homeowner's insurance carrier denied coverage  under the
  business pursuits exclusion, but the court found the case fit within the
  exception for  activities that are usual to non-business pursuits.  The
  court reasoned that "preparation of hot coffee  is an activity that is not
  ordinarily associated with a babysitter's functions."  Tilley, 280 F. Supp.  at  65.

       Most later cases involving day-care providers have rejected the
  analysis of Tilley.  The  leading case is Stanley v. American Fire & Cas.
  Co., 361 So. 2d 1030 (Ala. 1978), in which the child  was injured when she
  fell into the day-care home's fireplace while the provider was preparing
  lunch  for herself, her child and other children in day care.  In reaching
  its conclusion that the case fell  within the business pursuits exclusion
  of the homeowner policy, but not within the exception for activities that
  are usual to non-business pursuits, the Court rejected the Tilley analysis:

     In Tilley, the exclusionary clause was held inoperative where baby 
     care was furnished for consideration, and the baby sustained burns 
     when she overturned a coffee percolator.  The district trial court 
     assumed that the child care was a business pursuit, but characterized 
     insured's coffee brewing for herself and a guest as an activity not 
     connected with baby care, thus ordinarily incident to non-business 
     pursuits.  This analysis is questionable.  The baby was burned