Watkins v. Brown

• Decision Date: 07 September 1994
• Docket Number: No. CA,CA
• Citation: 97 Ohio App.3d 160,646 N.E.2d 485
• Parties: WATKINS et al., Appellees, v. BROWN et al., Appellees; Cincinnati Insurance Company, Appellant. * 14254.
• Court: Ohio Court of Appeals

Page 160

97 Ohio App.3d 160

646 N.E.2d 485

WATKINS et al., Appellees, v. BROWN et al., Appellees;

Cincinnati Insurance Company, Appellant. ^*

No. CA 14254.

Court of Appeals of Ohio, Second District, Montgomery County.

Decided Sept. 7, 1994.

David P. Hecht, Dayton, for plaintiffs-appellees.

Ellen Weprin, Dayton, for defendants-appellees.

Brian McNair, Dayton, for defendant-appellant.

FREDERICK N. YOUNG, Judge.

Cincinnati Insurance Company ("CIC") appeals from a declaratory judgment finding that the business exclusion provision of the homeowner's insurance policy Thelma Brown had with it did not apply to baby-sitting services conducted in her home. After carefully reviewing the homeowner's policy, we conclude that Brown's baby-sitting of Danielle Watkins was a business as contemplated in the business exclusion provision, and reverse the judgment of the trial court.

The Watkinses are both employed with Dayton City Schools. They approached Brown, a longtime friend of the family, to baby-sit their infant daughter Danielle when they returned to work for the 1991-1992 school year. The parties negotiated a fee of $40 per week to compensate Brown for her time and trouble, and the Watkinses promised to bring all of the food, formula, diapers, toys, and other supplies Danielle would need every day. Brown agreed to this arrangement. She began baby-sitting Danielle in August 1991, according to a regular schedule, usually from 9:00 or 12:00 to about 4:00 p.m. weekdays. Brown's duties involved feeding Danielle two or three times a day, changing her diaper about four times a day, supervising her play, and otherwise responding to her needs. This routine continued from August 1991 through part of February 1992.

Prior to this time, Brown had been employed as an assistant housekeeper in a nursing home. She quit working there when she had her own child, but planned to return as soon as her own son was old enough to go to day care. She testified that she did not consider baby-sitting her career, and was not tempted to make it her career, but it was something she was willing to do for her friend until she could return to work at the nursing home.

On February 5, 1992, Brown broke Danielle's leg in several places while changing her diaper. The Watkinses sued Brown and CIC, Brown's insurance carrier. CIC brought a cross-claim against Brown, seeking a declaration that her homeowner's policy did not provide coverage for Danielle's injuries. CIC relies upon a business exclusion provision that states that damages arising from activities connected with the insured's business are excluded from the liability coverage otherwise provided in the policy.

After a hearing on the declaratory judgment matter, the court determined that the business exclusion provision of Brown's insurance policy did not apply to her baby-sitting services, finding that Brown "agreed to the baby-sitting arrangement as a favor to her friend and not out of a desire to make a profit. Under these facts, it is difficult to conceive of Mrs. Brown as being in the 'business' of baby-sitting." The court also relied on Am. Financial Corp. v. Fireman's Fund Ins. Co. (1968), 15 Ohio St.2d 171, 174, 44 O.O.2d 147, 148, 239 N.E.2d 33, 35, for the proposition that "[e]xclusion[s] * * * must be clear and exact in order to be given effect." Applying this rule to the business exclusion as it appeared in the contract, the court concluded, "given the absence of any specific policy language excluding child care activities * * * this court finds the business exclusion provision of the policy to be inapplicable."

This appeal followed. In the sole assignment of error, CIC contends:

"The trial court erred to the prejudice of the defendant-appellant, the Cincinnati Insurance Company, by holding that the 'business' exclusion in the homeowner's policy was overly broad and did not apply to the day care service provided by the defendant-appellee, Thelma Brown."

CIC apparently concedes that Brown has met her burden of demonstrating that the general provisions of the policy should provide her coverage for any liability arising from Danielle's injuries, but CIC contends, on appeal, that it has met its burden of showing that the business exclusion provision applies. It does not contest the trial court's findings of fact, but argues that the court erred as a matter of law in holding that the term "business," as used in the policy, was ambiguous and did not clearly embrace Brown's baby-sitting.

The construction of an insurance contract, like that of any other contract, is a matter of law. Canady v. Cent. Trust Benefits Mut. Ins. Co. (1991), 71 Ohio App.3d 363, 366, 594 N.E.2d 37, 38-39. Courts are required to interpret the contract in such a way as to give effect to the intention of the parties at the time the agreement was entered into, as evidenced by the provisions of the contract. Id. at 367, 594 N.E.2d at 39; Progressive Specialty Ins. Co. v. Easton 1990), 66 Ohio App.3d 177, 583 N.E.2d 1064. Contract terms are to be given their "natural and usual" meaning if they are not defined in the policy, unless it is clear from the policy that the parties intended to use some specialized or technical definition. Gomolka v. State Auto. Mut. Ins. Co. (1982), 70 Ohio St.2d 166, 172-173, 24 O.O.3d 274, 278-279, 436 N.E.2d 1347, 1351-1352. When a contract term is defined in the policy, that definition controls what the term means. Woods v. Nationwide Mut. Ins. Co. (1978), 295 N.C. 500, 505, 246 S.E.2d 773, 777; Filip v. N. River Ins. Co. (1990), 201 Ill.App.3d 351, 352, 147 Ill.Dec. 17, 18, 559 N.E.2d 17, 18.

Because it is the insurance carrier that typically drafts the policy, where policy language is ambiguous, that language is to be construed in the way that is most favorable to the insured. Am. Financial Corp. v. Fireman's Fund Ins. Co., 15 Ohio St.2d at 173, 44 O.O.2d at 148, 239 N.E.2d at 35. This general principle applies with even greater force to language that purports to limit or to qualify coverage. Id.; Cincinnati Ins. Co. v. Mosely (1974), 41 Ohio App.2d 113, 116, 70 O.O.2d 127, 128, 322 N.E.2d 693, 696; Thomas J. Lipton, Inc. v. Liberty Mut. Ins. Co. (1974), 34 N.Y.2d 356, 361, 357 N.Y.S.2d 705, 708, 314 N.E.2d 37, 39. If an exclusionary clause will reasonably admit of an interpretation that would preserve coverage for the insured, then as a matter of law, a court is bound to adopt the construction that favors coverage. Lester v. State Farm Mut. Auto. Ins. Co. (1989), 64 Ohio App.3d 52, 54, 580 N.E.2d 793, 795. See King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208, 211, 519 N.E.2d 1380, 1383; Bates v. John Hancock Mut. Life Ins. Co. (1978), 6 Mass.App.Ct. 823, 824, 370 N.E.2d 1386, 1387-1388; Gulf Ins. Co. v. Parker Products, Inc. (Tex.1973), 498 S.W.2d 676, 679. However, if an exclusionary clause has only one reasonable interpretation, a court is bound to enforce the provision accordingly. See Progressive Specialty Ins. Co. v. Easton, 66 Ohio App.3d at 180, 583 N.E.2d at 1066-1067.

Brown's homeowner's policy provides liability coverage for "the damages [arising from bodily injury, personal injury, or property damage] for which the insured is legally liable." Excluded from this coverage are damages "arising out of any activities of any...