Opinion
No. 99-3193.
Filed: September 12, 2000.
Before Cane, C.J., Hoover, P.J., and Peterson, J.
We certify this appeal to the Wisconsin Supreme Court to determine whether a daycare provider's allegedly negligent supervision and control of her own child while providing daycare for other children falls within the "usual to non-business pursuits" exception to the "business pursuits" exclusion in a renter's insurance policy.
Stephanie Riehl provided daycare for three children in addition to caring for her own three children. Her five-year-old son placed pillows over and suffocated a sleeping infant for whom she was providing daycare. The baby's mother brought this action against Riehl and her insurer alleging, in part, that Riehl negligently supervised and controlled her own son.
Riehl was insured under a renter's insurance policy with Continental Insurance. The policy provides liability coverage with a "business pursuits" exclusion that states:
I. Personal Liability and Medical Expense do not apply to bodily injury or property damage:
j. Arising out of business pursuits of you or any covered person. This exclusion does not apply to:
(a) Activities which are usual to non-business pursuits
. . .
The trial court concluded that Riehl's alleged negligence was not covered under the policy. It acknowledged that taking care of her son was normally a non-business activity. It reasoned, however, that because Riehl opened her home to business, the business "tainted" the personal activity of watching her child and turned it into a business activity. The plaintiff, Riehl, and the third-party defendants appeal that decision.
Another issue presented to the trial court and argued on appeal is whether the trial court properly granted summary judgment denying reformation of the policy.
Other jurisdictions have construed the non-business pursuits exception with inconsistent results. See, e.g., Gulf Ins. Co. v. Tilley , 280 F. Supp. 60 (N. Ind.), aff'd, 393 F.2d 119 (7th Cir. 1968); Gallo v. Grosnenor , 175 A.D.2d 454, 572 N.Y.S.2d 506 (1991); Allstate Ins. Co. v. Mathis , 706 N.E.2d 893 (Ill.App.Ct. 1999); Susnik v. Western Indemn. Co. , 795 P.2d 71 (Kan.Ct.App. 1989); Safeco Ins. Co. v. Howard , 782 S.W.2d 658 (Mo.Ct.App. 1989); Robinson v. Utica Mutual Ins. Co. , 585 S.W.2d 593 (Tenn. 1979); Floyd v. Northern Neck Ins. Co. , 427 S.E.2d 193 (Va. 1993). Many of the cases defining the split of authority are collected at Annot. 48 A.L.R. 3rd 1096 (1973); see also David J. Marchitelli, Annotation, Construction and Application of "Business Pursuits" Exclusion Provision in General Liability Policy, 35 A.L.R. 5th 375 (1996). The policy language is particularly difficult to apply to a childcare business because most of the business activities are indistinguishable from non-business activities.
The non-business pursuits exception was addressed in three Wisconsin cases. In Bartel v. Carey , 127 Wis.2d 310, 379 N.W.2d 864 (Ct.App. 1985), the court considered the exception in the context of a traffic accident in which a band's equipment trailer detached from the van and struck a car, killing an occupant. In Bartel , the court concluded that, while hitching a trailer and traveling were activities common to every day life, they must be examined in the immediate context of the activity from which the claim arises. Because the van and trailer were being used for business purposes, that use "tainted" any subjective non-business character the activities might have had. "To hold otherwise would implicate two unreasonable results: robbing the exception of effect and expanding coverage to risks not contemplated under the policy." See id. at 318.
In Ruff v. Graziano , 220 Wis.2d 513, 583 N.W.2d 185 (Ct.App. 1998), the only Wisconsin case that considers the non-business pursuits exception in a childcare context, the court held that the business exclusion provision precluded coverage for a daycare provider who took the children to the beach where one drowned. The court applied the definition of "business pursuits" from Bertler v. Employers Insurance , 86 Wis.2d 13, 21-22, 271 N.W.2d 603 (1978), and concluded that because the daycare provider was customarily engaged in that occupation and earned her living from it, taking the children to the beach constituted a business pursuit. The non-business pursuits exception did not apply because the trip to the beach had to be considered in the context of the daycare business.
In Rufener v. State Farm Fire Cas. Co. , 221 Wis.2d 500, 585 N.W.2d 696 (Ct.App. 1998), the court of appeals concluded that the policy provided coverage when a man was injured while helping a friend install a hoist in his garage that would facilitate removal and reattachment of a salter/sander on a pickup truck the owner used in his part-time snowplowing business. In lieu of examining the activity for the "taint" of business pursuits, the court examined other factors such as the frequency of the activity in relation to the business pursuit and its closeness in time and place to the actual income-producing activity. We concluded that installation of the hoist was not an ordinary part of the business and was sufficiently separated in place and time from the income-producing activity that it should not be considered an activity that arises out of the insured's business pursuits. The court rejected the insurer's argument that the hoist had a predominantly business purpose, noting that the exception to the exclusion is only considered when there is a business pursuit, and broadly considering the business context would rob the exception of all effect. See id. at 511.
The appellants in this appeal focus on the nature of the claim against Riehl. It is a claim of negligent supervision and control of her own child based on the child's negligent act. They assert that Riehl's duty to supervise her child is not a duty that arises out of her business as a daycare provider. Taking care of one's child is normally a non-business activity. They argue that the trial court incorrectly concluded that the childcare business tainted the personal activity of watching her child, noting that, by their very nature, business activities that fall under the exception will have some degree of involvement with a business pursuit. See Rufener, 221 Wis.2d at 511. The non-business pursuits exception would provide only illusory coverage if one focuses on only the connection to the business. They argue that the immediate context of the injury causing activity, negligent supervision and control of her own son, was not closely connected to Riehl's duties as a daycare provider, and the negligence did not arise out of her business duties. It is merely a coincidence that her negligent failure to supervise her child resulted in an injury at her place of business.
Riehl concedes that she has no coverage for the claim that she negligently supervised the deceased infant.
Continental argues that the business pursuits exclusion applies because the infant's death "arises out of" Riehl's business pursuits. The child would not have died had he not been in Riehl's care at that time. Continental notes that Wisconsin decisions have not focused on the activity giving rise to the claim to determine whether the exception applies. We focus on the context in which the claim arose. The claim arises out of activities that occurred in Riehl's place of business during business hours directly involving her business clientele. Continental argues that finding insurance coverage in this case would create insurance coverage for every daycare provider, defeating the whole purpose of the business pursuits exclusion, which is to exclude coverage for hazards associated with regular income-producing activities.
In light of the divergent opinions of other jurisdictions, the lack of guiding Wisconsin precedent, the difficulty applying the standard insurance policy language to childcare businesses and the prevalence of in-home daycare businesses, we believe it is appropriate for the Wisconsin Supreme Court to review the "business pursuits" exclusion and the "usual to non-business pursuits" exception as they apply to in-home childcare businesses. Previous decisions have not applied the same focus, sometimes relying on the theory of "tainted" non-business pursuits and other times focusing on whether the activity is directly related to the income-producing business. Because none of the Wisconsin cases involved negligent supervision of one's own child, the appellants' theory that we should focus on the activity giving rise to the claim (the insured's negligent supervision and control of her child or the child's negligence) has not been presented in any other Wisconsin case. Therefore, we certify this appeal to the Wisconsin Supreme Court to reconcile the approaches taken in this court's earlier decisions and to consider whether approaches taken by other jurisdictions should be adopted.
cc:
Keith W. Kostecke Menn Nelson Sharratt Teetaert Beisenstein P.O. Box 785 Appleton, WI 54912-0785
Jeanne A. Unger Unger, Rider, Egan Arundel 333 S. 7th St., #2000 Minneapolis, MN 55402
Bruce A. Olson Olson Law Group, LLC 1650 Tri Park Way, Suite C Appleton, WI 54914
Russell M. Ware O'Hagan, Smith Amundsen, LLC 4811 S. 76th Street, Suite 306 Greenfield, WI 53220
Eric J. Magnuson Rider, Bennett, Egan Arundel, LLP 333 South Seventh St., Suite 2000 Minneapolis, MN 55402
Robert D. Ebbe Olson Law Group, LLC 1650 Tri Park Way, Suite C Appleton, WI 54914
Christopher H. Evenson Sigman, Janssen, Stack, Wenning, Sewall P 303 S. Memorial Drive Appleton, WI 54911-5925
Joseph J. Beisenstein Menn Nelson Sharratt Teetaert Beisenstein P.O. Box 785 Appleton, WI 54912-0785