Am. Family Ins. v. Phillips
100 N.E.3d 947
| Ohio Ct. App. | 2017Background
- Jake Phillips (an insured under his father Jim’s American Family farm/ranch policy) agreed to demolish Walter Apling’s barn for ~$3,000; Jake regularly performed such work and used his father’s equipment.
- Jake dug and ignited a burn pit, left after the fire appeared out, but the fire later re-ignited and spread to Apling’s granary, home, and garage; experts attributed the spread to Jake’s failure to properly extinguish the fire.
- Apling’s insurers (Woodville and Erie) paid insured losses totaling $313,553.55 and obtained a consent judgment against the Phillips defendants in a separate action.
- American Family defended the Phillips defendants under reservation of rights, then sued for declaratory judgment asserting (1) late notice under the policy and (2) a business-pursuit exclusion that precluded coverage.
- The trial court denied summary judgment to Woodville and Erie but granted summary judgment to American Family based on the business-pursuit exclusion; appellants appealed.
Issues
| Issue | Plaintiff's Argument (American Family) | Defendant's Argument (Woodville/Phillips/Erie) | Held |
|---|---|---|---|
| Whether the barn demolition was a “business pursuit” under the policy exclusion | Jake’s work was part of his customary trade and was taken with a profit motive (continuity + profit motive) | The job was a neighborly favor, not profit-motivated or part of Phillips Excavating’s business | Yes — business pursuit exclusion applies; activity was customary trade with profit intent |
| Whether the “activities normally considered non-business” exception applies | N/A (American Family argued exclusion applied) | Negligent acts like failing to extinguish the fire are non-business and thus excepted | No — properly controlling/extinguishing the fire was part of the demolition business, so exception doesn’t apply |
| Whether late notice barred coverage (prompt-notice breach) | American Family asserted late notice relieved duty to defend/indemnify | Phillips contended notice was untimely but argued other coverage issues | Trial court found no prejudice from late notice; decision turned on business exclusion (no coverage) |
| Whether trial court erred by denying/ignoring certain summary judgment motions | N/A | Appellants argued trial court wrongly denied Woodville/Erie and failed to rule on Phillips defendants’ motion | No error — denial of Woodville/Erie motions proper given exclusion; no motion from Phillips existed to be ruled on |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (appellate standard for de novo review of summary judgment)
- Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64 (summary judgment standards)
- Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd., 64 Ohio St.3d 657 (policy language interpretation; unambiguous terms construed as written)
- Westfield Ins. Co. v. Hunter, 128 Ohio St.3d 540 (coverage exclusions strictly construed against insurer but court will not rewrite clear intent)
- Watkins v. Brown, 97 Ohio App.3d 160 (profit motive may exist even if actual profit is not realized)
- State Auto. Mut. Ins. Co. v. Dolosich, 135 Ohio App.3d 601 (activity can be a business pursuit despite minimal or no net profit)