Opinion ID: 2400598
Heading Depth: 1
Heading Rank: 4

Heading: The Business-Pursuits Exclusion

Text: It is not made clear in the trial court decision why, having found no occurrence under the contract language, the court went on to consider the applicability of the policy's business-pursuits exclusion or the exclusion for injuries caused by a violation of a penal law. Nevertheless, as explained below, we affirm the court's decision that the business-pursuits exclusion relieves Northern Security of any obligation under the contract to defend against the Dubes' complaint, notwithstanding our remand for determination of whether there has been an occurrence. The affirmance on this point will limit the issues to be considered on remand. Count I of the Dubes' complaint alleged that Rose and Steven Perron had, and breached, a duty of care to protect Timothy and Lindsay from harm, and Count II alleged that they had, and breached, a duty to exercise reasonable care in supervising their son to ensure that he did not harm Timothy and Lindsay. Northern Security argues that the policy exclusion for injuries arising out of the insured's business pursuits precludes coverage. Section II of the policy, the exclusions section, states, in pertinent part: 1. Coverage E  Personal Liability and Coverage F  Medical Payments to Others do not apply to bodily injury or property damage: .... b. arising out of or in connection with a business engaged in by an insured. This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the business. This exclusion does not apply to: (1) activities which are usual to non-business pursuits . . . . The policy also explicitly provides that the home day care enterprise is considered a business pursuit. At the time they were allegedly injured, Timothy and Lindsay were at the Perrons' house for day care purposes. Thus, their claim for damages arose out of the insured's day care business, and the business-pursuits exclusion applies. The Dubes contend that, if the business-pursuits exclusion applies, the exception, for activities which are usual to non-business pursuits, applies as well, as supervision of one's own children is an activity usual to nonbusiness pursuits. Therefore, according to the Dubes, the policy provides coverage for Count II. We disagree. We had occasion recently to decide another case where the business pursuits exclusion in a homeowner's policy controlled. In Luneau v. Peerless Insurance Co., 170 Vt. 442, 750 A.2d 1031 (2000), the insured, who was employed as a disc jockey at a wedding reception, became involved in a fight with a wedding guest and, as a result, a speaker fell and struck the plaintiff, a bystander. The resulting lawsuit alleged that the disc jockey was negligent in his placement of the speaker and fighting with the guest. The insurer sought summary judgment, arguing that the injury was excluded from the policy as a matter of law. We held that the business-pursuits exclusion applied, and that the exception to the exclusion did not, because the relevant activity was not the fight or the knocking over of the speaker; rather, it was the disc jockey's failure to create a safe space for his customers. See id. at 449, 750 A.2d at 1036. In Luneau we adopted the analysis articulated in Stanley v. American Fire & Casualty Co., 361 So.2d 1030 (Ala.1978). Id., There, a child attending a day care fell into a fireplace and suffered injuries while the day care provider was making lunch for herself, her own child, and the children attending the day care. The Stanley court held that the business-pursuits exclusion applied, but the exception did not apply. According to the court, for purposes of analyzing the exception, the relevant activity was not preparing lunch, but rather, the day care provider's failure to supervise. Because the day care provider's failure to supervise was not an activity usual to non-business pursuits, the exception to the exclusion did not apply. See Stanley, 361 So.2d at 1032. Thus, while parents generally have a responsibility to supervise their children regardless of whether they are operating a day care, here the Perrons allowed their son to interact with the children attending the day care. The Perrons' duty to supervise their own children was encompassed within their duty to ensure the safety of Timothy and Lindsay Dube. See Safeco Ins. Co. v. Howard, 782 S.W.2d 658, 659-60 (Mo.Ct.App.1989) (day care provider's failure to supervise her own son, who sexually molested children attending the day care, was not ordinarily incident to non-business pursuits, and therefore coverage was denied); American Family Mut. Ins. Co. v. Moore, 912 S.W.2d 531, 535-36 (Mo. Ct.App.1995) (Owning or harboring a dog may be an activity usually incident to a non-business pursuit, but the policy exception focuses on the activity which caused the injury. The dog was kept in the home while childcare services were being performed. The introduction of the dog with vicious propensities into the baby-sitting environment and in close proximity to small children, who were on the premises pursuant to a business pursuit, cannot be said to be an activity incident to a non-business pursuit.). As we stated in Luneau: The business of child care contemplates the exercising of due care to safeguard a child of tender years from household conditions and activities; and, any activity of the insured in this regard from which injury results cannot logically be called an activity ordinarily incidental to a non-business pursuit. Luneau, 170 Vt. at 447, 750 A.2d at 1034-35 (quoting Stanley, 361 So.2d at 1032). See also Moncivais v. Farm Bureau Mut. Ins. Co., 430 N.W.2d 438, 442 (Iowa 1988) (Maintaining proper supervision and a safe environment for children are basic elements of a child day care operation.); Farmeres Ins. Co. of Ariz. v. Wiechnick, 166 Ariz. 266, 801 P.2d 501, 504 (1990) ([M]aintaining proper supervision and a safe environment for children is the most basic element of a babysitter's job.). Therefore, with regard to Count II, the business-pursuits exclusion, but not the exception, applies. Because all of the allegations in the Dube complaint arise from the Perrons' provision of home day care services, and because the policy does not cover bodily injury arising out of a home day care enterprise, Northern Security is not obligated to defend or indemnify the Perrons against the claims of the Dubes. See National Union Fire Ins. Co., 163 Vt. at 127, 655 A.2d at 721 (where there is no duty to indemnify, there is no duty to defend).