Economy Fire & Cas. Co. v. Bassett

• Decision Date: 10 June 1988
• Docket Number: No. 5-87-0209,5-87-0209
• Citation: 170 Ill.App.3d 765,121 Ill.Dec. 481,525 N.E.2d 539
• Parties: , 121 Ill.Dec. 481 ECONOMY FIRE & CASUALTY COMPANY, a Corporation, Plaintiff-Appellee, v. Sherry BASSETT, Defendant, Third Party Plaintiff-Appellant (Patricia Mills, Defendant; Dylan Lee Jones, a minor, by his guardian ad litem, Doug Dorris, Defendant, Third Party Plaintiff-Appellant; Connie Gott, Robylee Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency, a partnership, Third Party Defendants-Appellees).
• Court: United States Appellate Court of Illinois

Page 539

525 N.E.2d 539

170 Ill.App.3d 765, 121 Ill.Dec. 481

ECONOMY FIRE & CASUALTY COMPANY, a Corporation, Plaintiff-Appellee, v. Sherry BASSETT, Defendant, Third Party Plaintiff-Appellant (Patricia Mills, Defendant; Dylan Lee Jones, a minor, by his guardian ad litem, Doug Dorris, Defendant, Third Party Plaintiff-Appellant; Connie Gott, Robylee Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency, a partnership Third Party Defendants-Appellees).

No. 5-87-0209.

Appellate Court of Illinois Fifth District.

June 10, 1988.

Harris, Lambert and Wilson by Douglas N. Dorris, Marion, for Dylan Lee Jones, a Minor.

Bleyer and Bleyer, Marion, for third party defendants-appellees Connie Gott, Robylee Gott and Bruce Burnett, d/b/a Burnett Ins. Agency, A Partnership.

Gosnell, Benecki, Borden & Enloe, Ltd. by Douglas A. Enloe and Robert M. Hopkins, Lawrenceville, for plaintiff-appellee, Economy Fire & Cas. Co., A Corp.

Presiding Justice HARRISON delivered the opinion of the court:

Dylan Lee Jones, a minor, through his guardian ad litem, Doug Dorris, appeals from a judgment of the circuit court of White County which (1) declared that Economy Fire & Casualty Company was not obligated to provide coverage to Sherry Bassett under her homeowner's policy for liability arising from an accident at Bassett's home in which Dylan was injured, and (2) held that Connie Gott, Robylee Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency, were not liable for failing to procure insurance which would have covered that accident. For the reasons which follow, we affirm in part, reverse in part, and remand.

The record established that Sherry Bassett operated a licensed day care facility at her home at Rural Route 1, Sunnybrook Meadows, Carmi, Illinois. At the time of the incident giving rise to this litigation, Bassett had provided babysitting services in her home for approximately nine years. She received compensation for these services. On any given day, she would have up to eight children in her care.

Among the children for whom Bassett was being paid to babysit was three-year-old Dylan Jones. On October 16, 1981, Dylan was at Bassett's home, along with Mandy Sparrow, Carla and Dusty Pritchard, Devon and Deon Erkman, and Jamie and Kathy Mills. At approximately 4:30 p.m., Patricia Mills drove into Bassett's driveway to pick up Jamie and Kathy, her children. As Mills backed out to leave, her automobile struck and injured Dylan.

Dylan's parents brought a personal injury action on his behalf against both Mills and Bassett. Bassett held a homeowner's insurance policy from Economy Fire & Casualty Company, which she had purchased through Connie and Robylee Gott at the Burnett Insurance Agency. Bassett notified Economy of the lawsuit, and it provided her with legal representation under a reservation of rights. At the same time, it filed the action sub judice against Bassett, Mills, and Dylan seeking a declaratory judgment that its policy with Bassett did not cover Dylan's accident. The basis for Economy's claim was an exclusion in the policy which provided:

"1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage:

* * *

* * *

b. arising out of business pursuits of any Insured * * *.

* * *

* * *

This exclusion does not apply to:

(1) activities which are ordinarily incident to non-business pursuits * * *."

Dylan, through his guardian ad litem, Doug Dorris, and Sherry Bassett each then brought a third-party action against Connie Gott, Robylee Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency alleging that the Gotts and Burnett had failed to exercise reasonable skill, care, and diligence in procuring insurance for Bassett which would cover her residence and the babysitting business she conducted there and, in the alternative, that they had breached an oral contract to obtain such insurance for her.

Following a bench trial, judgment was entered in favor of Economy on its complaint against Bassett, Mills, and Dylan, and in favor of the Gotts and Burnett on the third-party claims of Bassett and Dylan. In entering this judgment, the circuit court expressly found, inter alia:

(1) that the policy issued by Economy to Bassett did not cover the accident on October 16, 1981, in which Dylan was injured because that accident, and the resulting damages, "arose from the business pursuits of Sherry Bassett, and not activities which are ordinarily incident to non-business pursuits;"

(2) that Robylee Gott, Connie Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency, did not serve as agents of Economy in procuring that policy, and Economy was therefore not bound by any acts or omissions which these parties are claimed to have committed; and

(3) that Robylee Gott, Connie Gott, and Bruce Burnett, d/b/a Burnett Insurance Agency, neither breached any contract, nor acted negligently in procuring insurance for Bassett.

Post-trial motions filed by Bassett and Dylan were denied, and Dylan alone now appeals. As grounds for his appeal, Dylan argues that the circuit court erred in finding that the exclusionary clause of the policy issued by Economy to Bassett precluded coverage for Dylan's injuries. Dylan does not dispute that Bassett's babysitting, performed as it was on a regular basis and for compensation, constituted a "business pursuit" within the meaning of that clause. (See State Farm Fire & Casualty Company v. Moore (1981), 103 Ill.App.3d 250, 252, 58 Ill.Dec. 609, 430 N.E.2d 641, 643.) Rather, the thrust of his contention is that the exception to the "business pursuit" exclusion for "activities which are ordinarily incident to non-business pursuits" is ambiguous and therefore must be strongly construed against Economy to provide coverage in this case.

Where, as here, an exclusionary clause in an insurance policy is relied upon to deny coverage, its applicability must be clear and free from doubt. (American States Insurance Company v. Action Fire Equipment, Inc. (1987), 157 Ill.App.3d 34, 42, 109 Ill.Dec. 258, 263, 509 N.E.2d 1097, 1102.) The burden of showing that a claim falls within the exclusion rests with the insurer, because there is a presumption that the insured intended to obtain coverage and that the insurer, as drafter of the policy, would have stated any such exclusion clearly and specifically. (157 Ill.App.3d 34, 42, 109 Ill.Dec. 258, 263, 509 N.E.2d 1097, 1102.) Similarly, where there is an ambiguity in the insurance policy, all exclusions, conditions, or provisions which tend to limit or defeat liability should be construed most favorably to the insured. Marathon Plastics, Inc. v. International Insurance Company (1987), 161 Ill.App.3d 452, 464, 112 Ill.Dec. 816, 823, 514 N.E.2d 479, 486.

A provision in an insurance policy is deemed ambiguous if it is subject to more than one reasonable interpretation. (161 Ill.App.3d 452, 464, 514 N.E.2d 479, 486.) Nevertheless, courts will not create an ambiguity where none exists. (State Farm Fire & Casualty Company v. Moore (1981), 103 Ill.App.3d 250, 255, 58 Ill.Dec. 609, 614, 430 N.E.2d 641, 646.) In determining if an ambiguity exists, the provision in question must be read in its factual context, not in isolation. Strzelczyk v. State Farm Mutual Automobile Insurance Company (1985), 138 Ill.App.3d 346, 350, 93 Ill.Dec. 20, 23, 485 N.E.2d 1230, 1233, aff'd, 113 Ill.2d 327, 100 Ill.Dec. 808, 497 N.E.2d 1170.

Provisions virtually identical to the exclusionary clause at issue here have been construed in the context of babysitting by a variety of jurisdictions. As demonstrated by the exhaustive discussion in State Farm Fire & Casualty Company v. Moore (1981), 103 Ill.App.3d 250, 253-56, 58 Ill.Dec. 609, 612-15, 430 N.E.2d 641, 644-47, some courts have held the provision to be unclear and ambiguous, while others have declared it to be unambiguous. In Moore itself, the provision was found to be ambiguous as applied to a situation where a young child for whom the insured was babysitting pulled a pan of boiling water onto himself. The insured was going to use the boiling water to make lunch for herself, her own children, and two children who were in her care, including the injured child. The insured was compensated for her babysitting services and provided lunch every day for those children as part of her services, but would have prepared lunch for herself and her children even if she had not been babysitting.

In analyzing whether the child's injuries arose from an activity not "ordinarily incident to non-business pursuits," the court in Moore held that the particular activity which proximately caused the injury must be examined to determine if that activity is one ordinarily associated with a babysitter's function. (103 Ill.App.3d 250, 254, 58 Ill.Dec. 609, 613, 430 N.E.2d 641, 645.) According to the court,

"Child care for compensation is not ordinarily incident to the conduct of a household, and contemplates the exercise of due care to protect the child from household activities and conditions. [Citation.] Injuries resulting from failure to properly supervise a child the insured is paid to care for therefore are not covered by the policy. [Citation.]" 103 Ill.App.3d 250, 255, 58 Ill.Dec. 609, 613, 430 N.E.2d 641, 645.

The majority nevertheless concluded that because the insured was preparing lunch for herself and her own children as well as for the children for whom she babysat, and because preparation of lunch is ordinarily incident to a non-business pursuit, the insured was covered under the exception to the exclusion for business pursuits.

In this case, the circumstances are quite different. Here, Dylan was injured by a parent who had come to pick up other children for whom the insured was being paid to babysit. The accident happened as that parent was backing out of the insured's driveway. The insured did, of course, allow even non-business visitors to use her driveway. At the same time, however,...