Opinion ID: 1618299
Heading Depth: 2
Heading Rank: 2

Heading: Farmers' Business Pursuits Exclusion Is Ambiguous

Text: This Court found Mr. Smith personally liable to Mr. Burns because his conduct constituted an affirmatively negligent act by creating an additional danger beyond that normally faced in his job-specific environment. Burns, 214 S.W.3d at 340. The Farmers policy at issue provides personal liability coverage and would apply here unless the policy's business pursuits exclusion is also applicable. The latter states: This policy does not apply: Under Coverage GPersonal Liability and Coverage IIMedical Payment to Others: . . . . d. To bodily injury or property damages arising out of business pursuits of any insured except activities therein which are ordinarily incident to non-business pursuits or farming; ... While the term business pursuits is not defined in the policy, the word business specifically is defined to mean two types of business activities: (1) A trade, profession or occupation, excluding farming, and the use of any premises or portion of residence premises for any such purposes; and (2) the rental or holding for rental of the whole or any portion of the premises by an Insured. (emphasis added). Farmers agrees that the injury to Mr. Burns did not arise out of the second type of business activity listed, that is, (2) the rental or holding for rental of the whole or any portion of the premises of the Insured. But, Farmers claims, the injury did arise out of pursuit of (1) a trade, profession or occupation, excluding farming, and the use of any premises or portion of residence premises for any such purpose and, therefore, is excluded from coverage. This Court disagrees. The policy expressly states the Farm Premises designated herein are the only premises which the named Insured ... owns, rents, or operates as a farm or maintains as a residence, other than business property. It is also undisputed that the injury occurred on property belonging to Kennon Ready-Mix rather than on a premises belonging to Mr. Smith. Therefore, if the exclusionary language in clause (1) is read to require both an injury arising out of a trade, occupation or business and the use of the insured's premises, the exclusion by its own terms does not apply. But, citing WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY, UNABRIDGED, MERRIAM WEBSTER (1993), Farmers argues that the word and sometimes means or in context. It then argues that if the word and between the first and second portions of clause (1) is construed to mean or rather than and, then clause (1) can be interpreted as if it set out two entirely separate exclusions. The first, Farmers argues, applies to injuries arising out of a trade, profession or occupation of the insured, and the second, it argues, is a separate exclusion that applies when the injury arises out of the use of any premises or portion of residence premises for such purposes. Therefore, even though the injury did not arise out of use of the premises, it still would come within the meaning of the first portion of clause (1)'s definition of business and, therefore, within the business pursuits exclusion. There are at least two fundamental syntactic problems with Farmers' argument. First, in drafting the policy, Farmers chose to number the types of pursuits that would come within the term business as used in the policy, and it gave them the numbers (1) and (2), not (1), (2) and (3). Yet to accept Farmers' argument that and really means or would require the Court, in effect, to add the number (3) to the definition and read it as if it set out three rather than two types of excluded businesses. [2] The argument is inconsistent with the very language of the definition itself. It is well-settled that this Court will not add language to a policy. Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 691 (Mo. banc 2009). Accord, Henderson v. Mass. Bonding & Ins. Co., 337 Mo. 1, 84 S.W.2d 922, 924-925 (Mo.1935); Capitol Indem. Corp. v. Callis, 963 S.W.2d 247, 249 (Mo.App.1997). Second, the definition of business simply does not use the word or. It uses the word and. The first meaning of and in the cited dictionary, and others, is not or but along with or together with or words of comparable meaning. See, e.g., WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY, UNABRIDGED, MERRIAM WEBSTER 80 (1993); BLACK'S LAW DICTIONARY 86 (6th ed. 1991); WEBSTER'S NEW WORLD COLLEGE DICTIONARY, MERRIAM WEBSTER 51 (3d ed. 1996). Accordingly, the use of the conjunctive and requires both the first portion of clause (1)a trade, occupation or businessalong with or together with the second portion of clause (1)the use of the insured's premises for that purpose. This dictionary-directed interpretation permits the word and to fulfill its common role as a logical connective needing all operands. While Farmers may be correct that, in particular fact situations, courts have found that and can mean as well as, in addition to and also, [3] and that such meanings are the equivalent of or, such holdings do not support Farmers' contention that this Court should find that and unambiguously means or in this policy. At best, accepting Farmers' argument would mean only that the use of the word and can be ambiguousfor, while and can mean or, most commonly and means simply and. It is well-settled that any such ambiguity must be construed against the insurer. Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d 208, 210 (Mo. banc 1992). This is in keeping with Missouri's policy not to use `technical, philosophical, or scientific meanings of the terms, nor a restricted meaning acquired in legal usage.' McCormack Baron Mgmt. Servs., Inc. v. Am. Guar. & Liab. Ins. Co., 989 S.W.2d 168, 171 (Mo. banc 1999) (internal citations omitted). Rather, the Court uses an objective standard, applying the meaning `which would be attached by an ordinary person of average understanding if purchasing insurance.' Id.; see also Seeck, 212 S.W.3d at 132. Farmers argues this Court should abandon its settled objective approach and instead adopt a standard under which a court must look at extrinsic evidence such as affidavits [4] and try to determine the parties' subjective intent before it may resolve ambiguities in favor of the insured. In support, it cites to Missouri cases construing non-insurance contracts and to cases from a small minority of jurisdictions that it says have chosen to use such a subjective standard. To adopt Farmers' argument would be inconsistent with the principle long followed by this Court: [A]n insurance policy, being a contract designated to furnish protection, will, if reasonably possible, be construed so as to accomplish that object and not to defeat it. Hence, if the terms are susceptible of two possible interpretations and there is room for construction, provisions limiting, cutting down, or avoiding liability on the coverage made in the policy are construed most strongly against the insurer. Farm Bureau Town and Country Ins. Co. of Mo. v. Schmidt, 751 S.W.2d 375, 376 (Mo. banc 1988) quoting, Varble v. Stanley, 306 S.W.2d 662, 664-665 (Mo.App.1957); Martin, 996 S.W.2d at 508 (Mo. banc 1999); see also Seeck, 212 S.W.3d at 132. Missouri adopted this approach in reliance on the sound reasoning of Judge Learned Hand: [T]he canon contra proferentem is more rigorously applied in insurance than in other contracts, in recognition of the difference between the parties in their acquaintance with the subject matter.... insurers who seek to impose upon words of common speech an esoteric significance intelligible only to their craft, must bear the burden of any resulting confusion. Gaunt v. John Hancock Mut. Life Ins. Co., 160 F.2d 599, 602 (2d Cir.1947) (Hand, J.), followed in Krombach, 827 S.W.2d at 211 (Mo. banc 1992). Further, as the drafter, the insurer is in the better position to remove ambiguity from the contract. Krombach, 827 S.W.2d at 211. When there is an ambiguity, insureds are entitled to a resolution of that ambiguity consistent with their objective and reasonable expectations as to what coverage would be provided. Niswonger v. Farm Bureau Town & Country Ins. Co. of Mo., 992 S.W.2d 308, 317 (Mo.App.1999) (emphasis added). [5] A court, therefore, will not resort to extrinsic evidence [offered] to demonstrate their positions of coverage and non[-]coverage. Since the language used is uncertain, the well[-]established rule applies that it will be construed against the insurer. Boling v. State Farm Mut. Auto. Ins. Co., 466 S.W.2d 696, 699 (Mo.1971). Rather: If a contract promises something at one point and takes it away at another, there is an ambiguity. Such an ambiguity is patent, rather than latent, and may be resolved within the four corners rather than by means of extrinsic aids. Because the ambiguity is in an insurance contract it is to be resolved in favor of the insured and against the insurer. Lutsky v. Blue Cross Hosp. Serv., Inc., of Mo., 695 S.W.2d 870, 875 (Mo. banc 1985). As stated above, this means a court will objectively look to [t]he ordinary meaning of a term ... the meaning that the average layperson would reasonably understand. Seeck, 212 S.W.3d at 132. Accord, Martin, 996 S.W.2d at 508. [6] Finally, Farmers argues this Court's interpretation reaches absurd results as it means the policy covers bodily injury that occurs off Mr. Smith's premises but not bodily injury that occurs on his premises, even though the latter is where Mr. Smith did most of his workthat is, on his farm. But that is the policy Farmers chose to sell to Mr. Smith. Had Farmers intended to sell a policy containing an exclusion that applied to all trades, occupations or businesses without regard to where they were conducted, it could have used the policy language construed in Dieckman v. Moran, which stated it excluded business pursuits, and its definitions section stated `Business' includes trade, profession or occupation. 414 S.W.2d 320, 321 (Mo. banc 1967). This Court held that this language was not ambiguous and that all business pursuits (other than those covered by another provision) were excluded from coverage. Id. at 321-322. Here, however, Farmers chose to qualify the Dieckman exclusion by adding the additional requirement ... and the use of any premises or portion of residence premises for any such purposes. Farmers would have this Court ignore the added clause or treat it as a separate exclusion. If that was what Farmers intended, then it should have written the policy so. This Court must give to the added clause the meaning that a reasonable layperson would give it, and it does so here by interpreting the word and to mean that the conduct must be both a trade occupation or business and on the premises. Moreover, although Farmers would be bound by the language it chose even if it later decided that its reasonable meaning was not to its liking, there is nothing absurd about so limiting the business-pursuits exclusion. There are logical reasons why an insured may wish to have a policy that covers the occasional business pursuit that is not conducted on the premises and that otherwise might not be covered by a business policy or workers' compensation. Clearly Farmers did not find it absurd to offer such coverage and accept Mr. Smith's premiums for it. [7] This Court applies the policy as written.