US Fidelity & Guar. Co. v. Heltsley

• Decision Date: 30 March 1990
• Docket Number: No. 89-1346-K.,89-1346-K.
• Citation: 733 F. Supp. 1418
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff, v. Fred J. HELTSLEY; Jennie Lynn Heltsley; Joseph Benson, a Minor, By and Through His Natural Parents, Robert Benson and Pamela Benson; Robert Benson; and Pamela Benson, Defendants.
• Court: U.S. District Court — District of Kansas

733 F. Supp. 1418

UNITED STATES FIDELITY & GUARANTY COMPANY, Plaintiff, v. Fred J. HELTSLEY; Jennie Lynn Heltsley; Joseph Benson, a Minor, By and Through His Natural Parents, Robert Benson and Pamela Benson; Robert Benson; and Pamela Benson, Defendants.

No. 89-1346-K.

United States District Court, D. Kansas.

March 30, 1990.

Larry A. Withers, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, Kan., for plaintiff.

Gerald W. Scott, Wichita, Kan., for Joseph, Robert and Pamela Benson.

Arthur H. Davis, Wichita, Kan., for Fred J. and Jennie Lynn Heltsley.

MEMORANDUM AND ORDER

PATRICK F. KELLY, District Judge.

This matter is currently before the court on the motion for summary judgment of United States Fidelity & Guaranty Company. A hearing on USF & G's motion was held on March 26, 1990. Consistent with the views of the court expressed at the hearing on the present matter, and for the reasons stated herein, the plaintiff's motion for summary judgment is granted.

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir.1988). The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir.1985). The moving party need not disprove plaintiff's claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir.1987).

In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. "In the language of the Rule, the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (quoting Fed.R. Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The following facts may be taken as established for purposes of resolving the present motion. In October, 1986, Jennie Heltsley agreed with Pamela Benson to care for Benson's infant son Joseph during the day on weekdays while Benson was at work. Joseph had been born on September 10, 1986, and was about six weeks old when Heltsley began taking care of him in her home. Benson paid Heltsley $40.00 per week to take care of Joseph, the payments being made every Friday.

In November, 1986, Heltsley entered into an agreement with the mother of six-year-old Sabrina Modlin to take care of Sabrina in the Heltsley home. Heltsley agreed to care for Sabrina in the mornings during the week and take her to school every day. The parties to the agreement understood that if conditions warranted or if Heltsley felt like it, she would drive Sabrina to school in her car. Sabrina's mother agreed to pay Heltsley $20.00 per week, which was made through $40.00 payments every other Friday.

On March 18, 1987, Heltsley was caring for Joseph and Sabrina in her home, in accordance with these agreements, when she began to prepare to take Sabrina to school. She placed Joseph in a baby carrier and put him on the floor behind the front passenger seat of her car. She returned to the house to get her purse and bottle and lock the door. Sabrina and Heltsley's own four-year-old daughter Tessi were in the front seat of the car. Heltsley came back to the car, got in, closed the door, and drove to Sabrina's school.

The accident occurred when Tessi, either while getting into the car or while moving from the back seat to the front seat where she typically rode, slipped and fell on Joseph's head. Heltsley has testified that the sole purpose for Joey, Sabrina, and Tessi to be in the car was to allow Heltsley to take Sabrina to school.

Joseph, by and through his parents, has brought an action against Heltsley in state court. In the pretrial order entered in the state action, the plaintiffs therein assert that Heltsley was negligent in

1. Failing to use appropriate car seats when placing children of tender years in an automobile.

2. Failing to maintain control over children in her care, custody, and control.

3. Failing to use proper supervision and care over children in her control.

4. Failing to use seat belts and other appropriate restraints for children not in car seats.

5. Placing an infant on the floor board of an automobile without appropriate protection to prevent another child or other object from falling off the car seat and striking said infant.

Pursuant to a disclaimer of coverage and reservation of rights, plaintiff USF & G has undertaken the defense of Heltsley in the state litigation.

Two exclusions to coverage under the Heltsley homeowner policy are potentially relevant here. Under Paragraph 1.b., coverage is not provided for personal injuries or property damage

b. arising out of business pursuits of an insured or the rental or holding for rental of any part of any premises by an insured.

This exclusion does not apply to:

(1) activities which are usual to non-business pursuits; ...

The policy defines business as including a "trade, profession or occupation."

The second exclusion relates to the use of motor vehicles. Paragraph 1.e. excludes coverage for injuries or damage

e. arising out of

(1) the ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including trailers, owned or operated by or rented or loaned to an insured;

(2) the entrustment by an insured of a motor vehicle or any other motorized land conveyance to any person; ...

The policy also contains Endorsement HO-322, which defines home day care as a business pursuit within the meaning of the exclusions portion of the policy. Under this endorsement, which is entitled "NO SECTION II—LIABILITY COVERAGES FOR HOME DAY CARE BUSINESS," the policy provides:

If an insured regularly provides home day care services to a person or persons other than insureds and receives monetary or other compensation for such services, that enterprise is a business pursuit. Mutual exchange of home day care services, however, is not considered compensation. The rendering of home day care services by an insured to a relative of an insured is not considered a business pursuit.

The exclusion of business activities from liability coverage under the base policy is also modified by Endorsement PL/H 8408, entitled "HOMEOWNERS EXTENDED PROTECTION ENDORSEMENT," which provides in part:

SECTION II COVERAGES

....

2. Business Activities of Minors. Your Personal Liability (Coverage E) and Medical Payments to Others (Coverage F) coverages are extended to cover the normal business activities of minors. This includes such part-time activities as newspaper delivery, baby sitting, caddying and lawn care.

(This amends Section II—Exclusions— 1.b.)

The defendants in the present action contend that the business exclusion does not apply, and the injuries to Joseph are covered under the homeowner's policy issued by plaintiff USF & G. The essence of the arguments advanced by both the Heltsleys and the Bensons is that coverage exists since Jennie Heltsley was involved merely in "babysitting" rather than "day care." This argument, however, must be rejected for three reasons. First, it is inconsistent with the insurance agreement entered into between USF & G and the Heltsleys. Second, it has been rejected in the current trend of decisions addressing the issue. Third, it is not supportable under Kansas law.

The insurance agreement bars coverage for personal injury arising from the business activities of the insured. The policy defines a business as a trade, profession, or occupation. A business activity, under a policy using similar language, has been interpreted to require both continuity and a profit element. "As to the first, there must be a customary engagement or a state occupation; as to the latter, there must be shown to be such activity as a means of livelihood, gainful employment, procuring subsistence or profit, commercial transactions or engagements." Krings v. Safeco Ins. Co. of America, 6 Kan.App.2d 391, Syl. ¶ 5, 628 P.2d 1071 (1981).

In the present case, the child was injured while Jennie Heltsley was engaged in a business activity. The engagement between Heltsley and Joseph's mother to supply child care services was continuous. The time of the child care services was neither irregular nor of limited duration. Heltsley took care of Joseph on a daily basis over the course of several months. Both the supply of child care services and the payment for those services were made regularly.

The suggestion by the defendants in the present action that Heltsley's actions were simply "babysitting" must be rejected as contrary to the plain language of the insurance agreement. As discussed above, Heltsley's...