Robinson v. Utica Mut. Ins. Co.

• Decision Date: 20 August 1979
• Citation: 585 S.W.2d 593
• Parties: Ronald Henry ROBINSON, Petitioner-Defendant, v. UTICA MUTUAL INSURANCE COMPANY, Respondent-Plaintiff. 585 S.W.2d 593
• Court: Tennessee Supreme Court

Page 593

585 S.W.2d 593

Ronald Henry ROBINSON, Petitioner-Defendant, v. UTICA MUTUAL INSURANCE COMPANY, Respondent-Plaintiff.

585 S.W.2d 593

Supreme Court of Tennessee.

Aug. 20, 1979.

H. Fred Ford, Steve C. Norris, Nashville, for petitioner-defendant.

James M. Doran, Jr., Terry L. Hill, Nashville, for respondent-plaintiff.

OPINION

HARBISON, Justice.

In this action a homeowner's insurance carrier sought a declaratory judgment to determine whether its policy afforded coverage and required defense of a tort action filed against the insureds. ¹ The insurer denied coverage, relying upon an exclusion in the policy. The Chancellor held that there was coverage. In a divided decision, the Court of Appeals reversed.

All parties moved for summary judgment after depositions of the insured, Sherman Cherry and Harriet Cherry, were filed. Neither party contends that there is any dispute as to material fact. Although the insurer mentions the credibility of Mrs Cherry and refers to prior contradictory statements given by her, it did not seek a trial but has pursued its claim for summary judgment throughout the litigation. Issues of credibility and weight of evidence address themselves to the trial of contested facts, not to summary judgment.

The tort claim against the insureds arose out of an accident which occurred in their home on June 17, 1975. In the accident their infant grandchild received fatal injuries. The grandparents were keeping the infant and another young grandchild for a few hours to accommodate their married daughter, as they frequently did. In addition, their two sons, aged seventeen and twenty, were at home. Also there on the occasion of the injury was a nine or ten-year-old child, Bobby Norris, who was being cared for by Mrs. Cherry under a babysitting arrangement with his parents. Bobby was alleged to be mentally retarded. The injury to the insureds' grandchild occurred when Bobby picked up the baby and then in some manner dropped her or allowed her to fall from the carrier in which she had been lying.

The facts surrounding the accident are very briefly mentioned in the depositions. The only description was given by Mrs. Cherry, as follows:

"I was back well, I was laying on the bed next to her, and had got up to go to the kitchen to start my supper. And I heard her kind of gurgle, or something, and I ran in there, and that's when I found her."

The complaint in the tort action alleged that on the previous day, when Mrs. Cherry had been caring for both children, Bobby Norris had picked up the baby. It alleged that on the day of the accident when Mrs. Cherry left Bobby alone in the room with the infant, the baby began crying, and Bobby injured the child in an effort to quiet her.

The complaint alleged negligence, primarily against Mrs. Cherry, in leaving the two children together and unattended while she went elsewhere in the house. It alleged that on the same date Mrs. Cherry was caring for two other children of other persons. In her deposition, however, Mrs. Cherry denied this. She testified that Bobby was the only child other than her family members for whom she furnished care on that day.

In their depositions, Mr. and Mrs. Cherry admitted that Mrs. Cherry for several years had engaged in providing daily babysitting and childcare services for a few children. Mrs. Cherry testified that she never cared for more than "about four" children. Apparently in a prior statement to the insurer she had stated that the Norris child was the only one for whom she was babysitting on a regular basis. In her deposition she admitted that this was incorrect and that she cared for additional children, "but not all the time." She said she kept some of the other children three or four days a week but was not keeping them "on a regular basis." Her husband said that he assumed that she kept as many as "two, three children." ²

Mrs. Cherry stated that on one occasion, about a year prior to the accident, she had run one newspaper advertisement offering childcare services. Her husband said that she kept pre-school children during part of the year and that during the summer, after school was out, she took older children. She had begun caring for the Norris child during 1974 as a result of her advertisement. She charged thirteen dollars per week for care for five days, which included lunch for each child. When children were left with her on a daily, rather than a weekly, basis, she charged four dollars per day. She had no records of the dates on which she kept children, had no written contracts or formal business organization, and named only one other person, a fellow church member, for whom she kept children. She said that sometimes she would keep "some" of the three children of that individual. At the time of her deposition she was regularly keeping one child in the afternoon after school and a very young child all day.

The insurance carrier filed a specimen of the policy held by Mr. and Mrs. Cherry. It appears to be a standard form. In addition to providing fire and comprehensive insurance coverage on their home, the policy provided medical benefits and liability insurance for personal injury and property damage. Although there are several exclusions from coverage, in this case the company relies entirely upon the following clause, providing that the policy does not apply:

"d. to bodily injury or property damage arising out of business pursuits of any Insured except activities therein which are ordinarily incident to non-business pursuits;"

In the general conditions of the policy there are several definitions applicable to all of the coverages. Among these is the following:

"d. 'business' means

(1) a trade, profession or occupation, including farming, and the use of any premises or portion of residence premises for any such purpose . . . ."

Excluded from the definition of "business" is the rental of portions of the residence "unless for the accommodation of three or more roomers or boarders." It would appear, therefore, that the keeping of one or two "roomers or boarders" would not fall within the definition of a "business" and thus might not be a "business pursuit" under the exclusion involved here. Neither the insureds nor the third-party claimant insist that Mrs. Cherry regularly kept fewer than three children, however, and they seemingly concede that her caring for Bobby Norris constituted a "business pursuit" even though he was her only "customer" on the day of the accident.

There is little information in the record as to the underwriting involved. The insurer insists that the policy was issued at a lower premium than would otherwise be charged because of the exclusion relied upon. There is no proof in this regard, however, nor any other testimony from the underwriting agent. Mr. Cherry testified that he had had homeowner's insurance for twenty-three years, but not always with the same agent or company. Only once did he ever recall an insurance agent visiting his home, and he said there had never been any discussion between him and the insurer regarding the policy provisions or exclusions. He thought that his wife had been providing child care for some five or six years before the accident but could not recall whether she was doing so when the underwriter visited the premises. It is therefore not possible to dispose of this case upon a factual determination as to the intent of the parties, waiver or estoppel. In the recent case of American Family Insurance Co. v. Dewald, 597 F.2d 1148 (8th Cir. 1979) coverage under a similar policy was denied because the insurance agent informed the insured that the policy would not cover injuries to children being kept in the home by the wife. He offered such coverage for an additional premium. The appellate court held as a factual matter that no coverage was expected or anticipated and found it unnecessary to decide whether the insured's activities constituted a "business pursuit" within the language of the exclusion.

Assuming, as we must on this record, that Mrs. Cherry was engaged in such a pursuit, it must be determined whether the exclusion is applicable to the facts presented or whether the "exception" to that exclusion provides coverage.

The language of this exclusion has been the subject of many cases throughout the United States. These have arisen in many different contexts, and divergent results have been reached. See generally Annot., 48 A.L.R.3d 1096 (1973). A number of courts have found the language of the exclusion, and the exception contained therein, to be ambiguous. Others have held to the contrary on specific facts. Nearly all of the courts have found the language difficult of interpretation and application. As stated by the Alabama Supreme Court in the recent case of Stanley v. American Fire & Casualty Co., 361 So.2d 1030, 1032 (Ala.1978):

"The provision does not lend itself to clarity, resulting in a split of opinion over whether it is ambiguous, with the consensus being that it is poorly worded."

While the Michigan Court of Appeals concluded that the clause was not ambiguous, it found it difficult to apply and stated that its application was "resolvable only in specific factual contexts." State Mutual Cyclone Insurance Co. v. Abbott, 52 Mich.App. 103, 216 N.W.2d 606, 608 (1974).

The exclusion was considered by the Court of Appeals of this state in Cincinnati Insurance Co. v. Shelby Mutual Insurance Co., 542 S.W.2d 822 (Tenn.App.1975). There, it was held that when the insured, who operated a business involving the sale of animals and pet supplies, kept a pregnant lioness at home, he was engaged in a "business pursuit" within the meaning of the exclusion. A child was injured by the lioness, and her claim against the insured was held not to be covered by the policy, despite a contention that the exception contained within the exclusion was applicable. Construing that exception, involving activities "ordinarily incident to a non-business...