American Family Ins. Co. v. Dewald, s. 78-1858
| Decision Date | 02 May 1979 |
| Docket Number | Nos. 78-1858,78-1880,s. 78-1858 |
| Parties | AMERICAN FAMILY INSURANCE COMPANY, Appellee, v. Vaughn M. DEWALD and Robin R. Dewald, Delano Paczkowski and Candice Paczkowski, personally and as personal representatives of the Estate of Renee Paczkowski, Appellants. AMERICAN FAMILY INSURANCE COMPANY, Appellee, v. Vaughn M. DEWALD and Robin R. Dewald, Delano Paczkowski and Candice Paczkowski, personally and as personal representatives of the Estate of Renee Paczkowski, Appellants. |
| Court | U.S. Court of Appeals — Eighth Circuit |
James R. Jungroth (on brief), Mackenzie & Jungroth, Jamestown, N. D., for appellants.
Russell G. Nerison (on brief), Hjellum, Weiss, Nerison, Jukkala & Vinje, Jamestown, N. D., for appellee.
Before STEPHENSON and HENLEY, Circuit Judges, and MEREDITH, Chief District Judge. *
This case arises from the tragic death of nine-month old Renee Paczkowski, the daughter of appellants Delano and Candice Paczkowski. Renee died as a result of being scalded in a bathtub in the home of appellants Vaughn and Robin Dewald. At the time of her fatal injury, Renee was being cared for by Mrs. Dewald under a babysitting arrangement with the Paczkowskis. The Paczkowskis filed suit in North Dakota state court against Robin Dewald for wrongful death and, as the personal representatives of Renee's estate, for personal injury. Thereafter, American Family Life Insurance Company (American Family) filed this declaratory judgment action in federal court and named the Dewalds and Paczkowskis as defendants. The action sought a declaration of American Family's rights and liabilities in relation to Renee's death under the provisions of a homeowner's insurance policy that it had issued to the Dewalds. After a bench trial, the district court 1 held that Mrs. Dewald's babysitting activity was not covered by the policy. From this order, the Dewalds and Paczkowskis filed this timely appeal. We affirm.
The facts pertinent to this appeal may be briefly stated as follows. At the time of Renee's fatal injury on May 13, 1977, American Family had in force a homeowner's insurance policy taken out by Mr. Dewald. 2 Under Section II of the policy, Mr. Dewald was provided comprehensive personal liability coverage for bodily injury and property damage for up to $100,000 for each occurrence. The policy's liability coverage language provided:
The company shall pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, to which this insurance applies, caused by an occurrence. The company shall have the right and duty, at its own expense, to defend with counsel of its choice any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, but may make such investigation and settlement of any claim or suit as it deems expedient.
The policy also contained a number of exclusions to this general liability language. The exclusion at issue in this case provided:
This section (section II) does not apply:
a. to any business pursuits of an insured, except activities therein which are ordinarily incident to non-business pursuits, . . ..
At trial, American Family took the position that the "business pursuits" exclusion applied to Mrs. Dewald's babysitting. In support of its argument, American Family called as a witness David Glaspell, who was the American Family agent who wrote the Dewald's homeowner's policy. 3 Glaspell testified that while he was discussing the homeowner's policy with the Dewalds, he learned that Mrs. Dewald did some babysitting. He informed the Dewalds that the homeowner's policy, as written, would not cover injuries to children being cared for by Mrs. Dewald. He offered to include in the policy a child care provision which would cover such injuries and which would cost an additional ten or twelve dollars a year in premiums. The Dewalds declined to accept this additional coverage because they believed that any injury would be minor and could be dealt with informally. Glaspell further testified that shortly after Renee's fatal accident, Mrs. Dewald called him and said, "I don't think you can help, us," or words to that effect.
Robin Dewald testified that she had cared for Renee and another child of the Paczkowskis since September, 1976. She testified that she was paid a dollar an hour for babysitting, but that her primary motivation for babysitting was her love of children. She said that the babysitting arrangement with the Paczkowskis was informal and that the hours she cared for the Paczkowski children varied considerably from week to week.
Neither Robin Dewald nor her husband contradicted Glaspell's testimony about their discussion of the policy's coverage of babysitting-related injuries; instead, both testified that they could not recall the details of their discussion with Glaspell.
In a memorandum opinion, the district court gave two alternative reasons for holding that Mrs. Dewald's babysitting was a "business pursuit." First, the court held that the language of the exclusion was clear and unambiguous and that because Mrs. Dewald babysat for compensation on a reasonably continuous basis she was engaged in a business pursuit. Furthermore, the court held that the activity giving rise to the fatal injury I. e., bathing Renee, was not "ordinarily incident to non-business pursuits." Second, assuming that the "business pursuits" exclusion was ambiguous, the court stated that North Dakota law requires a court to interpret the terms of a contract so as to give effect to the reasonable expectations of the parties to the contract. Applying this so-called Doctrine of Reasonable Expectations, the court found that Glaspell's discussion with the Dewalds clearly apprised them that babysitting-related injuries were not covered and thus they could not have reasonably expected that the insurance policy would cover Renee's injury.
On this appeal, appellants...
To continue reading
Request your trial
-
State Farm Fire & Cas. Co. v. Moore
...insured babysitter are not covered as the activity is not ordinarily incident to non-business pursuits. See American Family Insurance Company v. Dewald (8th Cir. 1979), 597 F.2d 1148. To determine if a specific activity falls within the exception, the courts look to several factors. If an a......
-
Schell v. OXY USA Inc.
...cases depends upon state law, and this holds true in declaratory judgment actions." (citation omitted)); Am. Family Ins. Co. v. Dewald, 597 F.2d 1148, 1151 (8th Cir.1979) ("[A]ttorney's fees may be awarded under 28 U.S.C. [§ ] 2202 where such an award is authorized by applicable state law f......
-
Schell v. Oxy USA Inc.
...cases depends upon state law, and this holds true in declaratory judgment actions." (citation omitted))); Am. Family Ins. Co. v. Dewald, 597 F.2d 1148, 1151 (8th Cir.1979) ( "[A]ttorney's fees may be awarded under 28 U.S.C. [§ ] 2202 where such an award is authorized by applicable state law......
-
Farmers Union Mut. Ins. Co. v. Decker, 20040371.
...N.W.2d 323, 326 (N.D.1993); Prince v. Universal Underwriters Ins. Co., 143 N.W.2d 708, 717 (N.D.1966); see also Am. Family Ins. Co. v. Dewald, 597 F.2d 1148, 1151 (8th Cir.1979). Although the duty to defend is broader than the duty to indemnify under an insurance policy, the duty to defend ......