Salzi v. Virginia Farm Bureau Mut. Ins. Co., Record No. 010438.

• Decision Date: 11 January 2002
• Docket Number: Record No. 010438.
• Citation: 263 Va. 52,556 S.E.2d 758
• Parties: Victor H. SALZI, et al. v. VIRGINIA FARM BUREAU MUTUAL INSURANCE COMPANY.
• Court: Virginia Supreme Court

556 S.E.2d 758

263 Va. 52

Victor H. SALZI, et al. v. VIRGINIA FARM BUREAU MUTUAL INSURANCE COMPANY.

Record No. 010438.

Supreme Court of Virginia.

January 11, 2002.

James R. Kearney (Miller, Miller, Kearney & Geschickter, on brief), Fairfax, for appellants.

John D. Eure (Robert S. Ballou; Johnson, Ayers & Matthews, on brief), Roanoke, for appellee.

Present: All the Justices.

Opinion by Justice LEROY R. HASSELL, SR.

In this appeal, we consider whether a provision in an insurance contract is ambiguous and, therefore, unenforceable.

Victor H. and Lorraine Salzi filed their amended motion for judgment against Virginia Farm Bureau Mutual Insurance Company (Virginia Farm Bureau). They alleged that Virginia Farm Bureau breached its insurance contract by failing to indemnify them for damages sustained to a barn as a result of a hurricane. The parties entered into a stipulation of facts, and the litigants submitted the matter to the circuit court for summary judgment on the issue whether a business use exclusion in the contract absolved Virginia Farm Bureau of any obligation to pay the stipulated damages. The circuit court held that the exclusion was clear and unambiguous and that Virginia Farm Bureau had no duty to indemnify the Salzis for their loss. The circuit court entered a final judgment, and the Salzis appeal.

Victor H. and Lorraine Salzi were the named insureds under a homeowners insurance policy issued by Virginia Farm Bureau. The property insured included a barn that had an actual cash value in excess of $16,120.

On September 15, 1996, the barn collapsed. "At the time of the Moss, the barn contained between 1,500 and 3,000 bales of hay, which measured approximately 2' x 4' each." James Renneth Marston owned the hay that was stored in the barn. Marston operates a tobacco farm "with a profit motive in Charlotte County." Marston raised tobacco "over more than 115 acres in Charlotte, Appomattox and Campbell Counties." He raised the hay stored in the Salzis' barn "as part of his normal crop rotation in his tobacco farming operation." Marston did not have sufficient space on his own farm to store the hay, and he "asked for and received permission from Victor Salzi to store hay in the barn." Marston had "free access to the barn." Marston did not need permission from the Salzis when he wanted access to the barn.

Marston had not used the Salzis' barn in the past. Marston did not rent the barn from the Salzis, nor had he discussed rental terms with them. "Marston thanked Salzi for allowing him to use the barn, and gave Salzi $100 as a neighborly gesture." Marston had intended to sell the hay stored in the barn to a buyer, but the buyer no longer desired to purchase the hay after it was damaged in the hurricane that caused the barn to collapse. The Salzis filed a claim with Virginia Farm Bureau for damages to the barn.

Virginia Farm Bureau denied the claim on the basis that the barn was used "for business" at the time of the loss. Virginia Farm Bureau's insurance contract that had been issued to the Salzis contained the following pertinent provisions:

"The following definitions apply to this policy.

. . . .

"Business means a trade, profession, or other occupation including farming, all whether full or part time, or the rental of any property to others. (However, business does not include the occasional rental, for residential purposes, of the portion of the insured premises normally occupied exclusively by your household.)

. . . .

"PRINCIPAL PROPERTY COVERAES

. . . .

"Coverage B—Related Private Structures on the Premises—This policy covers related private structures on the insured premises which are not attached to your residence. (Structures connected to the residence by only a fence, utility line or similar connection are considered to be related private structures.).

"Coverage B does not cover:

"1. structures used for business."

The Salzis argue that the definition of the word "business" in the insurance contract is vague, ambiguous, and susceptible to two reasonable interpretations. The Salzis contend that the language in the policy "speaks in specific terms of the insured's activity, use or ownership, not that of a third party. The business use exclusion applies ... to Salzi's business, not Marston's temporary, one time use of the barn to store hay." Continuing, the Salzis argue that even though Virginia Farm Bureau "is clearly attempting to limit its liability by excluding coverage for the commercial use of the barn ... the limitation applies to the insured's business use of the structure, for the insured's trade, or the insured's profession, or the insured's other occupation or the insured's rental to others. The use of the word 'others' in the sentence limits the applicability of the exclusion to the insureds." The Salzis contend that the policy's definition of business could mean one of two things: (i) the business exclusion only applies if the Salzis use the barn in their trade, profession, or occupation, or (ii) the exclusion applies if the Salzis and Marston used the barn in their trades, professions, or occupations. We disagree with the Salzis.

The principles of contract interpretation that guide our resolution of this appeal are well established. "Reasonable policy exclusions not in conflict with statute[s] will be enforced; to be effective, the exclusionary language must clearly and unambiguously bring the particular act or omission within its scope."...