Thoele v. Aetna Cas. & Sur.

• Decision Date: 28 October 1994
• Docket Number: No. 93-4068,93-4068
• Citation: 39 F.3d 724
• Parties: Calvin THOELE, Plaintiff, v. AETNA CASUALTY & SURETY, Defendant-Counterdefendant-Appellee, v. Michael and Elvera KANAK, individually and as husband and wife and as parents and natural guardians of Angela Kanak, a minor, Counterplaintiffs-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 724

39 F.3d 724

Calvin THOELE, Plaintiff, v. AETNA CASUALTY & SURETY, Defendant-Counterdefendant-Appellee, v. Michael and Elvera KANAK, individually and as husband and wife and as parents and natural guardians of

Angela Kanak, a minor,

Counterplaintiffs-Appellants.

No. 93-4068.

United States Court of Appeals Seventh Circuit.

Argued May 11, 1994.

Decided Oct. 28, 1994.

Ray Freeark, Jeffery A. Cain (argued), Randy Wuller, Freeark, Harvey, Mendillo, Dennis, Wuller & Buser, Belleville, IL, for plaintiffs-appellants.

D. Kendall Griffith, Kristin E. Hutson (argued), Hinshaw & Culbertson, Chicago, IL, Dawn A. Sallerson, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Eugine C. Menges, St. Clair County Atty., Belleville, IL, for defendant-appellee.

Before POSNER, Chief Judge, and CUDAHY and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Calvin Thoele administered emergency care to a choking child left in his wife Sharon's care. The child's parents sued Mr. Thoele for permanent injuries she allegedly sustained as the result of his efforts. Mr. Thoele in turn brought this suit seeking a declaration that these injuries fell within the coverage of his homeowner's insurance policy. The district court concluded that the child's injuries arose from the business pursuits of Mrs. Thoele and were thus not covered by the homeowner's policy. We agree and affirm.

I. BACKGROUND

In 1978 or 1979, Sharon Thoele decided to establish a babysitting service at the Thoeles' home in Cahokia, Illinois. She obtained the requisite license from the state, purchased a playpen, swings, porta-cribs, and a variety of other equipment, and established a separate bank account for her earnings. Her husband was largely uninvolved in her work, although he might keep an eye on children playing in their yard if he happened to be outside with them.

On March 4, 1986, Mrs. Thoele was caring for six children, including Angela Kanak. At some point, under circumstances that the record does not make clear, Angela began choking and gasping. Mr. Thoele attempted mouth to mouth resuscitation and heart massage. Although Angela survived the incident, she was left with permanent disabling injuries. Angela's parents, Michael and Elvera Kanak, subsequently brought suit against the Thoeles in state court, alleging that Sharon Thoele had been negligent in caring for Angela and that Calvin Thoele had negligently administered cardio-pulmonary resuscitation ("CPR").

Mr. Thoele subsequently filed this action in Illinois state court against Aetna Casualty & Surety ("Aetna"), which had issued a homeowner's insurance policy to the Thoeles that was in effect at the time of Angela's injury. Mr. Thoele sought a declaration that the policy covered his alleged negligence and that Aetna had a duty to defend and indemnify him. He invoked the following provision in the policy:

COVERAGE E--PERSONAL LIABILITY

If a claim is made or suit is brought against any insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, even if the claim or suit is false, we will:

a. Pay up to our limit of liability for the damages for which the insured is legally liable; and

b. Provide a defense at our expense by counsel of our choice. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.

R. 18, Ex. A at 13. Aetna removed the suit to federal court, where it contended that the following exclusion applied:

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

a. which is expected or intended by the insured;

b. arising out of business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured.

NOTE: The furnishing of home day care services for

(1) a fee; or

(2) other compensation

by the insured and the rendering of such services two or more days per week for a period of two or more hours per day constitutes one type of many different business pursuits.

This exclusion does not apply to:

(1) activities which are ordinarily incident to non-business pursuits;

....

R. 18, Ex. A at 14. At Aetna's request, Michael and Elvera Kanak were named as additional plaintiffs in the suit, given their obvious interest in the coverage of the Thoeles' insurance policy. R. 11. See Reagor v. Travelers Ins. Co., 92 Ill.App.3d 99, 47 Ill.Dec. 507, 509-10, 415 N.E.2d 512, 514-15 (1980) ("where an insurer brings a declaratory judgment action to determine coverage of a claim against its insured, the injured person is a necessary party to the suit"). All parties consented to final disposition by the Magistrate Judge.

At the conclusion of discovery, the Kanaks and Aetna filed cross-motions for summary judgment as to whether the "business pursuits" exclusion in the Thoeles' insurance policy applied to the Kanaks' claim against Calvin Thoele. The district court determined that Sharon Thoele's babysitting constituted a "business pursuit" within the meaning of the policy. Although Calvin Thoele ostensibly was not involved in Sharon Thoele's business, the court reasoned that by virtue of the policy's reference to injuries "arising out of business pursuits of any insured," the exclusion applied to him as well. Finally, the court rejected the Kanaks' contention that Mr. Thoele's rendering of CPR to Angela was exempted from the business pursuits exclusion as an "activity which is ordinarily incident to a non-business pursuit." The court recognized that administering CPR per se is not an activity normally associated with babysitting. Yet, the court noted, rendering first aid to an injured child is unquestionably within the duties of a babysitter. The court thus concluded that Calvin Thoele's efforts to render emergency assistance would not satisfy the exception to the business pursuits exclusion. R. 47. After their motion to reconsider was denied, the Kanaks appealed.

II. ANALYSIS

Our review of the district court's summary judgment ruling is de novo. Cuddington v. Northern Indiana Pub. Serv. Co., 33 F.3d 813, 815 (7th Cir.1994). Sitting in diversity, we apply the law of Illinois, attempting to predict how the Illinois Supreme Court would decide the issues presented here. Equitable Life Assurance Society of the U.S. v. Bell, 27 F.3d 1274, 1277 (7th Cir.1994). Our focus, of course, is on the business pursuits exclusion of the policy and the exception thereto for activities ordinarily incident to non-business pursuits. As we do when interpreting any insurance policy, we strive to effectuate the parties' intent as expressed in the contract, attributing to the unambiguous words of the policy their plain and ordinary meaning. Playboy Enterprises, Inc. v. St. Paul Fire & Marine Ins. Co., 769 F.2d 425, 427-28 (7th Cir.1985); Badger Mut. Ins. Co. v. Ostry, 264 Ill.App.3d 303, 201 Ill.Dec. 524, 527, 636 N.E.2d 956, 959 (1994).

We have no doubt that Angela's injuries arose from the business pursuits of an insured, namely Sharon Thoele. "A business pursuit is a continuous or regular activity, done for the purpose of returning a profit. This is true even of part-time or supplemental income activities." Ostry, 201 Ill.Dec. at 527, 636 N.E.2d at 959 (citing State Farm Fire & Casualty Co. v. Moore, 103 Ill.App.3d 250, 58 Ill.Dec. 609, 611, 430 N.E.2d 641, 643 (1981)); see also Insurance Co. of Illinois v. Markogiannakis, 188 Ill.App.3d 643, 136 Ill.Dec. 307, 315, 544 N.E.2d 1082, 1090 (1989). Illinois courts accordingly have recognized that babysitting regularly performed for compensation qualifies as a business pursuit. Economy Fire & Casualty Co. v. Bassett, 170 Ill.App.3d 765, 121 Ill.Dec. 481, 484, 525 N.E.2d 539, 542 (1988); Moore, 58 Ill.Dec. at 611-12, 430 N.E.2d at 643-44; see also Rocky Mountain Casualty Co. v. St. Martin, 60 Wash.App. 5, 802 P.2d 144, 145-46 (1990) (discussing the issue at length and collecting cases); Gulf Ins. Co. v. Tilley, 280 F.Supp. 60, 63 (N.D.Ind.1967) (Eschbach, J.), aff'd, 393 F.2d 119 (7th Cir.1968). Indeed, the policy at issue here eliminates any question in that regard. Although it defines "business" generally to mean a "trade, profession or occupation" (R. 18, Ex. A at 1), the business pursuits exclusion itself cites as an example of such a pursuit "[t]he furnishing of home day care services for (1) a fee or (2) other compensation by the insured and the rendering of such services two or more days per week for a period of two or more hours per day" (Id. Ex. A at 14). Sharon Thoele's babysitting clearly falls within the scope of both this example and the notion of a business pursuit generally. She babysat for a number of children (six on the date Angela was injured), did so throughout the day six days a week, was required by the state to obtain a license for that purpose, invested in equipment for the venture, and maintained a separate bank account for the income she earned. Thus, the Kanaks do not really dispute that Mrs. Thoele's babysitting constituted a "business pursuit" within the meaning of the policy exclusion or that Angela's injury arose from that pursuit.

Nonetheless, the Kanaks argue that any injury Calvin Thoele may have caused Angela did not arise from his business pursuit, as he played no role in Sharon Thoele's business and did not act as its employee in attempting to aid Angela. If the exclusion merely applied to the business pursuits of "the insured," the Kanaks might have a point. But the exclusion instead applies to injuries arising out of the business pursuits of "any insured." The district court was quite right to conclude that the choice of the word "any" broadened the exclusion to include injuries triggered by one insured in connection with the business pursuit of another. See Sales v. State Farm Fire & Casualty Co., 849 F.2d 1383,...