Safeco Ins. Co. v. Hale

• Decision Date: 28 February 1983
• Citation: 189 Cal.Rptr. 463,140 Cal.App.3d 347
• Court: California Court of Appeals Court of Appeals
• Parties: SAFECO INSURANCE COMPANY OF AMERICA, a corporation, Plaintiff and Appellant, v. Sue Sally HALE, et al., Defendants and Respondents. A011789. Civ. 49113.

Page 463

189 Cal.Rptr. 463

140 Cal.App.3d 347

SAFECO INSURANCE COMPANY OF AMERICA, a corporation, Plaintiff and Appellant, v. Sue Sally HALE, et al., Defendants and Respondents.

A011789.

Civ. 49113.

Court of Appeal, First District, Division 4, California.

Feb. 28, 1983.

Hearing Denied May 19, 1983.

James D. Biernat, Law Offices of Richard B. Barrett, Burlingame, for plaintiff and appellant.

Harray & Rosecrans, Monterey, Thon & Matz, Los Angeles, for defendants and respondents.

POCHE, Associate Justice.

Safeco Insurance Company appeals from a declaratory judgment determining that it is obligated under the comprehensive personal liability provisions of a homeowner's policy it issued to Alex and Sue Sally Hale to defend them in a lawsuit brought by Leanne Eberle for injuries sustained when a car collided with a horse which had wandered from the care of the Hales.

The judgment is affirmed.

Facts

Safeco issued a homeowner's insurance policy to Alex and Sue Sally Hale. The dispute concerns Safeco's obligation to defend the Hales in an action by a third person, Leanne Eberle, to recover for personal injuries arising from an automobile accident on Saturday, September 2, 1978. ¹

Sue Sally Hale operated the Carmel Valley Riding and Polo Center (Center), a business which boarded horses and gave horseback riding lessons and clinics. The Center was located approximately five miles away from her private residence where she also had facilities for stabling horses. Normally she kept about four horses there for her children's use.

In June or July, Sue Sally agreed to take care of "Boots", a horse owned by a friend, Penny Roaseau. Penny allowed Sue Sally's children to ride Boots and she provided all supplies for it. Sue Sally did not receive any compensation from Penny, nor was Boots used at the Center for business purposes. Boots was kept primarily at the residence.

On the Thursday before the accident, Sue Sally took Boots and the other horses from her residence to the Center for the horses' protection, because she and her family were to be away for a three-day polo match. On the night of the accident, Boots and another horse got out of the corral. Boots wandered two miles from the Center onto a county highway and was involved in a multi-car collision in which Leanne Eberle suffered personal injuries, including brain damage. Eberle thereafter commenced a personal injury action in Monterey County against the Hales and others.

Safeco then brought this declaratory relief action seeking a determination of its nonliability under the homeowner's policy it issued to the Hales. Safeco contended that two exclusions applied to preclude coverage. These exclusions are set forth in the margin. ² Safeco did not otherwise challenge the applicability of the policy. ³

In its memorandum of intended decision ⁴ the court found that neither exclusion applied and that therefore the homeowner's policy obligated Safeco to defend the Hales in Eberle's lawsuit.

Discussion

The proper standard of review.

Since no extrinsic evidence was introduced below to aid the trial court in interpreting the terms of the insurance policy, this court must make an independent determination of the meaning of the policy's terms. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839.) Nevertheless, this court is bound by the trial court's factual findings on the underlying circumstances of the incident in question insofar as they are supported by substantial evidence. All factual conflicts must be resolved in favor of the judgment, and all reasonable inferences must be drawn in support thereof. (Munoz v. Olin (1979) 24 Cal.3d 629, 635-636, 156 Cal.Rptr. 727, 596 P.2d 1143; Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 60, 148 Cal.Rptr. 596, 583 P.2d 121; Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925, 101 Cal.Rptr. 568, 496 P.2d 480.)

The trial court did not err in finding that neither exclusion applied.

In analyzing the extent of either exclusion, this court is bound by the established rules for interpreting insurance policies: "Any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer. If semantically permissible, the contract will be given such construction as will fairly achieve its manifest object of securing indemnity to the insured for the losses to which the insurance relates. Any reasonable doubt as to uncertain language will be resolved against the insurer whether that doubt relates to the peril insured against or other relevant matters. [Citation.] The policy should be read as a layman would read it and not as it might be analyzed by an attorney or an insurance expert. [Citation.] An exclusionary clause must be conspicuous, plain and clear [citation] and must be construed strictly against the insurer and liberally in favor of the insured [citations]." (Crane v. State Farm Fire & Cas. Co. (1971) 5 Cal.3d 112, 115-116, 95 Cal.Rptr. 513, 485 P.2d 1129.)

One of the two bases upon which Safeco seeks a declaration of nonliability is the provision excluding coverage "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; ..."

Relevant to this issue, the trial court found that Boots was originally stabled at the Hales' residence premises as a favor to Penny Roaseau; that Boots was used neither in the business operation or activities of the Hales; that Penny did not pay a fee in exchange for the Hales' care of Boots. These facts, amply supported by the record lead to one conclusion: the injury arose out of a nonbusiness pursuit. Accordingly, the business pursuits exclusion does not apply.

Safeco also finds applicable the exclusion "to bodily injury or property damage arising out of any premises, other than an insured premises, owned ... or controlled by ... insured ...." Since it is undisputed that the Center fits the definition of being "other than an insured premises" the sole question is whether Leanne Eberle's injury was one "arising out of" the Center's premises, the place from which Boots began her escape.

No California case has interpreted the words "arising out of" in a similar situation. Missouri has.

In Lititz Mut. Ins. Co. v. Branch (Mo.Ct.App.1977) 561 S.W.2d 371, the problem was Baron, an eight-year-old Weimaraner owned by the Kables. Baron first got in trouble while at the Kable residence when he bit a neighbor boy. Shortly thereafter Baron was taken to the premises of the Kable Dairy Company. Less than a month later while tethered there he bit Amy Branch. Mr. Kable had Baron destroyed. Amy sued the Kables. The Lititz Mutual Insurance Company which had issued a homeowner's insurance policy to the Kables filed for declaratory relief. Like Safeco in the case at hand, it claimed that the bodily injury arose out of premises (the Dairy) other than the insured premises (the residence) controlled by the insured.

Initially, the Missouri Court of Appeals engaged in a definitional analysis, found no cases interpreting " 'arising out of' " in similar fact situations, but in other contexts found that term to mean "originating from, or having its origin in, or growing out of, or flowing from." (At p. 373.)

Next the court examined "premises": "It is apparent that 'premises' in common parlance and in the policy itself contemplates the land and more or less permanently affixed structures contained thereon. It does not contemplate easily movable property which may be located on the property at a given time or even on a regular or permanent basis. A dog, whether permanently kenneled or tethered on the property, is not a part of the premises. [p] It cannot therefore be said that a dog bite arises out of--originates from, grows out of, or flows from--the premises. That it occurs upon the premises does not establish a causal connection between the bite and the premises. We find that the language used does not contemplate that the exclusion applies to liability arising from a dog bite occurring on the [insured's business premises]. [Citation.]" (At p. 373, emphasis added.)

We agree that an animal--whether dog or horse--is not within the fair connotation of the word "premises" so that when the animal is taken from one "premises" to another "premises" and there bites a child the injury to the child cannot be said to be ...