AMCO Ins. Co. v. Beck

• Citation: 261 Kan. 266,929 P.2d 162
• Decision Date: 20 December 1996
• Docket Number: No. 76290,76290
• Parties: AMCO INSURANCE COMPANY, Appellant, v. Gerald BECK and Christa Beck, husband and wife; and Teri Beck, a minor; Defendants, and John Moran and Susan Moran, husband and wife; and Courtney Moran, a minor, Appellees.
• Court: United States State Supreme Court of Kansas

Page 162

929 P.2d 162

261 Kan. 266

AMCO INSURANCE COMPANY, Appellant, v. Gerald BECK and Christa Beck, husband and wife; and Teri

Beck, a minor; Defendants, and John Moran and

Susan Moran, husband and wife; and

Courtney Moran, a minor, Appellees.

No. 76290.

Supreme Court of Kansas.

Dec. 20, 1996.

Syllabus by the Court

1. The language of a policy of insurance, like any other contract, must, if possible, be construed in such a manner as to give effect to the intention of the parties.

2. A business pursuit which falls within a business exclusion in an insurance policy consists of two elements: continuity and profit motive. As to the first, there must be a customary engagement or a stated occupation; as to the latter, there must be shown to be such activity as a means of livelihood, gainful employment, means of earning a living, procuring subsistence or profit, commercial transactions, or engagements.

Paula J. Wright, of Clark, Mize & Linville, Chartered, Salina, argued the cause, and was on the briefs, for appellant.

Richard A. Boeckman, of Keenan & Boeckman Law Firm, P.A., Great Bend, argued the cause, and Martin J. Keenan, of the same firm, was with him, on the brief, for appellees.

ABBOTT, Justice:

The trial court held that the business exclusion in the insureds' homeowner's policy did not preclude liability coverage concerning a claim made against the insureds arising out of the insureds' teenage daughter's babysitting activities. We agree.

AMCO Insurance Company sold Gerald and Christa Beck a homeowner's insurance policy which included liability coverage for the Beck family, including the Becks' 15-year-old daughter, Teri Beck. While Teri was babysitting John and Susan Moran's two children, one of the children, Courtney Moran, suffered burns over her head, body, and extremities.

The Morans brought suit against Teri Beck on behalf of their daughter, Courtney. AMCO filed a declaratory judgment action against Gerald, Christa, and Teri Beck, as well as John, Susan, and Courtney Moran, asking the trial court to determine whether the homeowner's policy provided coverage for the suit filed against Teri Beck. The trial court found that the policy's business exclusion did not preclude coverage, and AMCO appealed.

This case was originally before this court in AMCO Ins. Co. v. Beck, 258 Kan. 726, 907 P.2d 137 (1995). However, while the business exclusion question had been decided, there were still some issues regarding coverage which had not yet been decided. Thus, we held the order appealed from was not a final order and dismissed the appeal for lack of jurisdiction. AMCO subsequently abandoned the remaining issues and consented to entry of a final judgment on the business exclusion issue. AMCO appealed again to the Kansas Court of Appeals, and the case was transferred to this court pursuant to K.S.A. 20-3018(c).

The sole issue before this court is whether the policy's business exclusion precluded coverage for a suit filed against Teri Beck by the Morans to recover damages for Courtney's injuries.

The parties filed a stipulation of facts, which provides:

"1. AMCO Insurance Company insures defendants Gerald J. Beck and his wife, Christa Beck, under homeowners policy of insurance, policy No. HA 4612140-0, with a policy period from 10/08/92 to 10/08/93 (insurance policy)....

"2. Defendants Gerald J. Beck and his wife, Christa, have a fifteen year old daughter, defendant Teri Beck, who resides with them at their household in Claflin, Kansas, and is therefore an insured under the AMCO policy of insurance.

"3. During the months of June, July and August, defendant Teri Beck was employed by defendants John and Susan Moran, of Rural Route, Bushton, Kansas, to babysit the two Moran children at the Moran residence.

"4. The defendant Moran family and the defendant Beck family are not related.

"5. Defendants John and Susan Moran employed defendant Teri Beck to babysit Tyler Moran, age 5, and defendant Courtney Moran, 30 months, on Monday, Wednesday and every other Friday, or as needed. Defendant John Moran works in the oil field and because of the weather, there would be days when defendant Teri Beck was not needed because defendant John Moran was not able to work.

"6. Defendant Susan Moran would pick defendant Teri Beck up in the morning at approximately 7:10 a.m. and take defendant Teri Beck to the Moran residence near Bushton, Kansas. Defendant Teri Beck's working hours were 7:20 a.m. to 5:30 p.m. Monday, Wednesday and every other Friday.

"7. Defendant Teri Beck's duties were to watch the children, take care of their needs, prepare their meals, entertain them, and perform light housekeeping duties such as doing dishes and straightening up the house. When she was first hired, the issue of bath was not specifically addressed. Defendant Teri took it upon herself to bathe the children occasionally.

"8. On July 9, 1993 before defendant Susan Moran went to work, she asked defendant Teri Beck not to bathe the children, because she, Susan, bathed the children every night and there seemed no need to bathe the children twice a day. However, at defendant Teri Beck's discretion, she could bathe the children, if necessary.

"9. Defendant Teri Beck was paid $2.00 per hour and defendants John and Susan Moran would pay her an additional $2.00 to $5.00 more a week for any extra housekeeping that defendant Teri had performed.

"10. On July 9, 1993, at approximately 10:00 a.m., defendant Teri Beck had fed the children, done the dishes and was preparing to give them baths.

"11. Defendant Teri Beck took defendant Courtney Moran, the 30 month old child, to the bathroom, undressed her, set her in the bathtub and turned on the water.

"12. Defendant Teri Beck then left defendant Courtney Moran in the bathtub with the water running.

"13. When Defendant Teri Beck returned to the bathroom, she took a cup of water from the tub and poured it over the head of defendant Courtney Moran. Defendant Teri Beck claims she did this two times.

"14. At some point in time during the bathing process, defendant Teri Beck reached down into the tub, felt the water to be very hot and immediately removed defendant Courtney from the bathtub.

"15. At approximately 2:30 p.m., defendant Teri Beck noticed that defendant Courtney was developing blisters on her body. When defendant Susan Moran came home at 4:00 p.m., she immediately rushed defendant Courtney to a local doctor in Ellinwood, Kansas, who in turn had the child taken by ambulance to St. Francis Hospital Burn Unit in Wichita where defendant Courtney Moran remained hospitalized until July 27, 1993.

"16. Defendant Courtney Moran suffered second and third degree burns over her feet, legs, buttocks, back and forehead. No skin grafting has been performed yet, but there is a possibility that skin grafting will have to be performed in the future. There is also a possibility that defendant Courtney may need scalp stretching to cover hair loss, but the doctors have told the defendant John and Susan Moran that issue will not be decided until the child is a teenager."

Based on these stipulated facts, the trial court found that Teri Beck's babysitting services did not constitute a business and that the insurance policy's business exclusion did not apply and could not preclude coverage of the Becks' claim against AMCO. AMCO challenges this ruling.

This case calls for the interpretation of an insurance policy. Insurance policies are considered contracts. Levier v. Koppenheffer, 19 Kan.App.2d 971, 976, 879 P.2d 40, rev. denied 255 Kan. 1002 (1994). The interpretation and construction of a contract is a question of law. A trial court's interpretation of a contract may be reviewed by this court with an unlimited de novo standard of review. Harris v. Richards, 254 Kan. 549, 552, 867 P.2d 325 (1994); Spivey v. Safeco Ins. Co., 254 Kan. 237, 240, 865 P.2d 182 (1993). However, "[t]he language of a policy of insurance, like any other contract, must, if possible, be construed in such manner as to give effect to the intention of the parties." Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 693, 840 P.2d 456 (1992).

The homeowner's insurance policy at issue insured defendants Gerald and Christa Beck and any person under the age of 21 in the care of the Becks. Thus, Teri Beck was insured by the policy. Under the exclusions section, the policy stated that coverage did not apply to bodily injury "arising out of business pursuits of an insured," unless the activity causing the injury was usual to nonbusiness pursuits. This exclusion was amended in a 1987 endorsement to state that liability insurance coverage did not apply to bodily injury "arising out of or in connection with a business engaged in by an insured. This exclusion applie[d] but [was] not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed or implied to be provided because of the nature of the business." The insurance policy defined "business" as including a "trade, profession or occupation." The policy also contained an exclusion which specifically applied to babysitting services performed in one's own home. Since Teri Beck's babysitting services occurred in the Moran home, not her own home, this exclusion does not apply. Thus, the question is whether Teri Beck's babysitting activities fell within the business exclusion as a trade, profession, or occupation so that coverage of the Becks' claim is precluded.

The Kansas Court of Appeals has previously decided two cases dealing with this issue. Krings v. Safeco Ins. Co. of America, 6 Kan.App.2d 391, 628 P.2d 1071 (1981), discusses a "business pursuits" exclusion in general, while Susnik v. Western Indemnity Co., 14 Kan.App.2d 421, 795 P.2d 71, rev. denied 245 Kan. 788 (1989), deals specifically with whether a "business pursuits" exclusion applies to babysitting services.

In Krings, 6 Kan.App.2d 391, 628 P.2d 1071, ...