486 S.W.3d 211
Ark. Ct. App.2016Background
- On March 11, 2011, Ronnie Wardlaw (a tenant who lived on India Bishop’s property) burned grass in a ditch on Bishop’s 175-acre parcel; the fire spread and destroyed commercial buildings on neighboring property and Bishop’s rented commercial building.
- Bishop held a homeowner’s policy from Farm Bureau listing her residence (310 Lavender Lane) on the declarations page; the policy’s personal-liability coverage referenced the “residence premises” and included “vacant land, not to exceed five acres.”
- Hardin and Guthrey sued Bishop and Wardlaw for negligence; Farm Bureau filed a declaratory-judgment action seeking a ruling that it owed no duty to defend or indemnify because the incident occurred off the covered premises or was excluded as a “business pursuit.”
- Farm Bureau moved for summary judgment; the circuit court granted it, finding no duty to defend or indemnify Bishop or Wardlaw. Bishop appealed.
- The parties agreed on the operative facts (who started the fire, where, and that Wardlaw was a tenant); the dispute centered on contract interpretation—whether the policy covered the loss and whether exclusions applied.
Issues
| Issue | Bishop's Argument | Farm Bureau's Argument | Held |
|---|---|---|---|
| Whether the policy’s personal-liability coverage applied given the five-acre/residence-premises language | The coverage is transitory and ambiguous; the five-acre limit is undefined and should be construed for the insured | The fire originated outside the insured "residence premises" and thus outside coverage | Court: The term "residential premises"/five-acre measurement is ambiguous; ambiguity must be resolved for the insured — summary judgment for insurer on this ground was erroneous |
| Whether the "business pursuits" exclusion bars coverage | The exclusion is ambiguous; Bishop’s landlord-tenant relationship and Wardlaw’s mowing/burning are not clearly a "business pursuit" | The loss arose from a business pursuit (rental/land management) and is excluded | Court: "Business pursuits" (and "business"/"pursuit") are undefined and ambiguous here; exclusion cannot be applied as a matter of law |
| Whether summary judgment was appropriate despite undisputed facts | There are open questions of contract interpretation (ambiguities) that favor Bishop | The undisputed facts foreclose coverage and justify summary judgment | Court: No genuine factual dispute, but legal ambiguities preclude granting judgment for insurer; summary judgment for Farm Bureau reversed and remanded |
| Whether insurer owed duty to defend/indemnify as a matter of law | Ambiguities require construing policy for insured; duty may exist | No duty because incident off-premises or excluded | Court: Circuit court erred in finding no duty; reversed and remanded for further proceedings consistent with this opinion |
Key Cases Cited
- Harrisburg Sch. Dist. No. 6 v. Neal, 381 S.W.3d 811 (Ark. 2011) (summary-judgment standard and burden on movant)
- Campbell v. Asbury Auto., Inc., 381 S.W.3d 21 (Ark. 2011) (appellate review of summary judgment; view evidence for nonmoving party)
- Cent. Okla. Pipeline, Inc. v. Hawk Field Servs., LLC, 400 S.W.3d 701 (Ark. 2012) (review includes affidavits and documents beyond pleadings)
- Zulpo v. Farm Bureau Mut. Ins. Co. of Ark., 255 S.W.3d 494 (Ark. Ct. App. 2007) (definition and construing of ambiguous policy language)
- Norris v. State Farm Fire & Cas. Co., 16 S.W.3d 242 (Ark. 2000) (ambiguities in insurance policies construed for insured)
- McGrew v. Farm Bureau Mut. Ins. Co. of Ark., 268 S.W.3d 890 (Ark. 2007) (exclusionary endorsements must be clear and unambiguous)