McCloskey v. Republic Insurance

POLLITT, Judge. Michelle Ann Vermillion, the 15-month-old daughter of appellant, Linda McCloskey, was fatally injured while in the care of Edna Marie Sandrus. Ms. McCloskey filed a wrongful death action against Ms. Sandrus, alleging that the child’s death was caused by the negligence of Ms. Sandrus in failing to discharge her duties “as a paid babysitter for Michelle Ann Vermillion in a prudent and reasonable manner.” At the time of the occurrence, Ms. Sandrus was insured under a policy of homeowner’s insurance issued by appellee, Republic Insurance Company, which provided coverage for liability for damages due to bodily injury. Under Section II — Exclusions, the policy provided: ²¹ 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 business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured. This exclusion does not apply to: (1) activities which are ordinarily incident to non-business pursuits____ Declarations in the policy stated that “no business pursuits are conducted on the. residence premises.” Under the heading of “DEFINITIONS” appears, “ ‘business’ includes trade, profession or occupation.” In response to Sandrus’ request for a defense and indemnification in the tort case, Republic filed a declaratory judgment action seeking a declaration that the occurrence arose out of a business pursuit, and, therefore, that Republic had no obligation either to defend Sandrus in the tort action or to indemnify her for any judgment obtained therein. McCloskey’s motion to intervene in the declaratory judgment action was granted. Pursuant to an agreed “Statement of Material Facts Not In Dispute,” cross-motions of McCloskey and Republic for summary judgment were submitted to the court.

The Circuit Court for Prince George’s County (Casula, J.) granted the motion of Republic, and McCloskey appealed, presenting two questions for our review. I. Whether the trial court erred in construing Republic Insurance Company’s policy so as to deny coverage for the alleged tortious conduct of its insured, where the facts established that the “business pursuits” exclusion, relied upon by Republic, does not apply?

II

Whether the trial court erred in granting summary judgment in favor of Republic Insurance Company, ²² where a dispute of fact exists regarding the specific tortious conduct in question? We shall affirm the judgment of the circuit court. Facts We glean from the “Statement of Material Facts Not In Dispute” that in April of 1985, Ms. Sandrus was providing child care services at the insured premises for seven children, none of whom were neighbors and only one of whom was related to her by blood or marriage. Three of the seven children — Michelle Vermillion, Michelle Standish and Lyndon Coleman — were under two years of age, as was one of Ms. Sandrus’ own children, Joey. 1 The other four children ranged in age from 33 months to 9 years.

All seven were cared for from Monday through Friday. The five who were 4 years old or younger were cared for all day, and the older two (aged 6 and 9) for two to three hours after school. For these services, Ms. Sandrus received weekly compensation of from $25 to $40 per child, her total weekly compensation being $195. Michelle Vermillion was fatally injured during the early afternoon hours of 4 April 1985, while at" the Sandrus residence.

The precise circumstances surrounding those fatal injuries is in dispute between the parties in the pending tort case. 2 The gravamen of that action, however, is an alleged negligent failure on the part of Ms. Sandrus properly to supervise and care for appellant’s decedent. Further facts will be furnished where necessary. ²³ I Appellant contends the term “business pursuits” is “ ‘general’ and reasonably subject to two interpretations,” and concludes that any ambiguity should be resolved “against the drafter of the policy and in favor of coverage.” She maintains that “[h]ome day care could have been specifically excluded” from the policy but was not; consequently, the exclusion should be “construed most strongly against the insurer and in favor of coverage.” Maryland consistently has rejected the rule that an insurance policy always must be construed most strongly against the insurer. Truck Ins. Exch. v. Marks Rentals, 288 Md. 428 , 418 A.2d 1187 (1980); Gov’t Employees Insur. v. DeJames, 256 Md. 717 , 261 A.2d 747 (1970); Pedersen v. Republic Ins.

Co., 72 Md.App. 661 , 532 A.2d 183 (1987). Nevertheless, it is a sound principle of contract construction that where one party is responsible for the drafting of an instrument, absent evidence indicating the intention of the parties, any ambiguity will be resolved against that party, [emphasis added] Truck Ins. Exch., supra, 288 Md. at 435 , 418 A.2d at 1191 . Appellant asserts that the exclusionary language in the policy, and the exception thereto, “has been criticized by almost every Court that has had an occasion to review it, and with good reason.

It is a model of muddled writing.” She posits, therefore, that it must be ambiguous. We disagree. It is true, as we shall see, that the same language has been interpreted in various ways by different courts, but such disagreement does not necessarily suggest ambiguity. See Pedersen, supra.

The intention of the parties must be ascertained if reasonably possible from the policy as a whole and words are to be given their customary and normal meaning. Pedersen, supra. Applying this test, we perceive no ambiguity in the terms of the subject policy. In Zurich Insur.

Co. v. Friedlander, 261 Md. 612 , 276 A.2d 658 (1971), Chief Judge Hammond for the Court dis ²⁴ cussed the meaning of the words “business pursuit” in the context of an exclusionary clause. There a “Credit Card and Depositors Forgery Coverage Endorsement” given in a homeowner’s policy was at issue. The coverage provided by the endorsement was limited by a clause which excluded any loss arising out of the issuance of any checks, the acceptance of any counterfeit money or the misappropriation of any credit card in the course of the prosecution of the business, occupational or commercial pursuits of the Insured____ Zurich Insur. Co., supra, 261 Md. at 613-14 , 276 A.2d at 658 .

The Court’s decision involved whether the forged checks occasioning the loss were drawn in the prosecution of the business, occupational or commercial pursuit of the insured. The court stated: The broad definition of “business” is ... “That which occupies the time, attention and labor of men for the purpose of a livelihood or profit.” Zurich Insur. Co., supra 261 Md. at 616 , 276 A.2d at 660 (quoting Flint v. Stone Tracy Co., 220 U.S. 107, 171 , 31 S.Ct. 342, 357 , 55 L.Ed. 389 (1911)). The Court found, based on this definition, that anyone who spent enough time and attention with investing could be said to be in the “business” of investing.

The Court continued, however: [T]his broad meaning of the word business is not the meaning the word ordinarily and customarily conveys. The ordinary and customary meaning is ... “commercial or mercantile activity customarily engaged in as a means of livelihood” or two definitions given by Funk and Wag-nail’s New Standard Dictionary of the English Language: “1. A pursuit or occupation that employs or requires energy, time or thought; trade, profession, calling. 2. Any occupation connected with the operations and details of trade or industry,” or, one given by Black’s Law Dictionary (3rd ed.): “ ‘Business’ is often synonymous with calling, occupation or trade.” [emphasis added] ²⁵ Zurich Insur.

Co., supra 261 Md. at 616 , 276 A.2d at 660 . The Court held that the mere ownership of investments does not constitute a business, but, if one actively manages or operates, or participates in the management or operation, then one may be engaged in a business. From the undisputed facts in this case, giving the words of the policy their customary and normal meaning, we have no difficulty in holding that the day care service operated by Ms. Sandrus was a “business pursuit.” As we have noted previously (n. 1) Ms. Sandrus was not registered with the Department of Human Services as a family day care home. McCloskey posits, therefore, that “if a State regulatory scheme requires registration and/or licensing as a prerequisite to doing ‘business’ in a given field, the absence of such an official imprimatur should be considered in determining whether the endeavor should be recognized as a business.” Such convoluted reasoning is not persuasive.

It is the same as asserting that an unlicensed operator of a motor vehicle could not be convicted of operating a vehicle without a license because the absence of a license means he is not operating the vehicle. The argument is absurd. 3 Sandrus was actively engaged in an occupational pursuit requiring the devotion of her energy, time and thought, and for which she received compensation. Unquestionably, it ²⁶ was a “business pursuit” as defined by the Court of Appeals in Zurich Insur. Co., supra.

Appellant argues, however, that the exception to the exclusion is applicable. This exception provides that the “business pursuit” exclusion does not apply to “activities which are ordinarily incident to nonbusiness pursuits.” McCloskey contends that “activities which might be construed as having 'arisen out of business pursuits’ will nonetheless qualify for coverage if they are ‘ordinarily incident to nonbusiness pursuits.’ ” Appellant argues: Edna Sandrus’ babysitting was an activity which was ordinarily incident to the nonbusiness pursuit of running her household and caring for her own children. She was a housewife who while she cooked, cleaned, and did laundry, looked after her own children and at the same time looked after the children of neighbors and relatives. She did not devote her whole time and attention to the children she baby-sat, as she would have done if she were running a nursery school or day care center.

She did not set aside a separate portion of her house for the exclusive use of the children she baby-sat. They, like her own children, played about the house while she went about her noncommercial routine of caring for her home and entertained her friends. She did all the same things for the children she baby-sat as she did for her own children. 4 Conversely, Republic asserts that the activity upon which the claim is based, i.e., the “alleged negligent failure on the part of Ms. Sandrus to properly supervise and care for Plaintiff’s decedent,” was the “same activity that constitutes the business pursuit.” Therefore, “the exception to the exclusion, as to activities 'ordinarily incident to non-business pursuits,’ ” should be inapplicable. ²⁷ Both