Vandenberg v. Continental Insurance

Plaintiff-Appellant, Jamie Vandenberg,

v. Company, Defendant- The Continental Insurance Third-Party Plaintiff-Respondent, Stephanie Riehl, Riehl and L. Defendants- Leonard Co-Appellants, Inc. and Services, Financial Dumke Insurance Third-Party Defendants-Co-Appellants. Fritz, C. Curt Supreme Court 3, July argument April Oral 2001. Decided No. 99-3193. 2001 WI (Also 876.) reported in 628 N.W.2d by plaintiff-appellant there were briefs For Sigman, Christopher Stack, Janssen, H. Evenson and argument Wenning, Appleton, Pitz, and oral Sewall & Christopher by H. Evenson. defendants-co-appellants there were briefs

For the (in appeals) by and Keith W. Kostecke the court of Sharratt, Beisenstein, Menn, Nelson, Ltd.., & Teetaert Appleton. defendants-co-appellants third-party

For (in appeals) by A. Bruce were briefs court of there Appleton, Group, LLC, oral Law and Olson and Olson by argument A. Bruce Olson. defendant-third-party plaintiff-respon-

For the by Magnuson, Q. Daniel dent there was a brief Eric J. Egan Unger Rider, Bennett, & Poretti, and Jeanne A. argument Minneapolis, Arundel, oral LLP, and Unger. A. Jeanne ABRAHAMSON, JUS- 1. SHIRLEY S. CHIEF appeal judgment This from a

TICE. is a review an County, Outagamie R. Dee of the Circuit Court Dyer, Judge. appeal this Circuit Court The is before pursu- appeals on certification from the court court (Rule) (1999-2000). § to Wis. Stat. 809.61 ant Vandenberg, ¶2. in a Infant Justin while by Stephanie operated Riehl, suffocated care center Vandenberg, plaintiff, Jamie Justin's death. Stephanie L. Riehl mother, sued Leonard Riehl and insurer, The Continental Insurance Com- and their negligent supervision alleging Stephanie pany, Riehl's five-year-old allegedly child, control of her who (1) presented: are Justin. issues caused harm to Two allegedly negligent supervi- provider's Does providing her own child while sion and control of fall, care services for other children as a matter law, of pursuits" exception within the to "usual non-business pursuits" to the "business exclusion in a renter's insur- (2) policy? ance Are there material issues fact from a which trier fact could conclude that the Riehls were pol- entitled to reformation of their renter's insurance icy coverage? to include granted summary judg-

¶ 3. The circuit court holding Insurance, ment to Continental that the Riehls coverage not were entitled to insurance for death of Vandenberg Justin and that the Riehls were not enti- tled to reformation of their renter's insurance include for their care business. part summary judg- ¶ 4. We reverse that of the inment favor of Continental Insurance that the Riehls not were entitled to insurance death of Vandenberg. grant Justin We direct the circuit court to plaintiff declaratory judgment, the cluding s motion for con- supervision Riehls' and control of their pursuits" son falls within the "usual to non-business pursuits" to the "business exclusion policy. Additionally, part

¶ 5. we reverse that of the judgment granting summary judg- of the circuit court ment to Continental Insurance that the Riehls are not pol- entitled to reformation of their renter's insurance icy Accordingly, to cover their home care business. we remand the cause to the circuit court for further proceedings opinion.1 this inconsistent with Company third-party Continental Insurance filed against Services, Inc., claim Dumke Insurance and Financial an Fritz, agency, employee, alleging and its Curtis C. negligent completing application that Fritz was Riehls1 failing comply for renter's insurance or in with Continental instructions, particular, Insurance's or both. Continental

I—I a circuit court's An court reviews appellate 6.¶ cir- of the summary independently of judgment grant v. Lambrecht analysis. from its court, benefiting cuit rejected appli- alleges it would have the Riehls' Insurance that liability coverage if had known that the Riehls wanted cation it day operation. Continental Insurance for their home care Services, if requests indemnification from Dumke Insurance coverage required provide to to Continental Insurance is Stephanie negligent Riehl's plaintiffs claim for Riehls for the supervision and of her own child. control against Dumke Insurance Ser-

The Riehls cross-claimed Fritz, negligent completing in alleging that Fritz was vices and request did not application. Although the Riehls the Riehls' liability they that operation, for the care contend wanted care Fritz have asked whether the Riehls should through prior policy issued Dumke Insurance since liability operation. coverage for Services included failing allege negligence acquire Fritz's to The Riehls of appropriate insurance entitles them to reformation Continen- alternative, or, tal in the to indemnification Insurance's from Dumke Insurance Services. opposing for Continental Insurance's motion its brief if Services

summary judgment, Dumke Insurance asserted summary judgment granted to Continental the circuit court reformation, Ser- of Dumke Insurance Insurance on issue summary judgment be entitled on both vices would third-party claim and the Riehls' cross- Continental Insurance's claim. motion granted

The court Continental Insurance's circuit summary judgment denied Dumke for on reformation but summary dismissing judgment for Insurance Services' motion it, subsequent against well as its motion for recon- all claims as petitioned of Dumke Insurance Services court sideration. of judgment. this court appeals appeal leave non-final petition. Accord- appeals Dumke Insurance Services' denied Kaczmarczyk, ¶25, Estate WI 241 Wis. 2d Summary judgment properly 804, 623 N.W.2d 751. granted disputed when there are no issues material moving party judgment fact is entitled to as a Lambrecht, ¶ 24. matter of law. 2001 WI 25 at II purposes ¶ 7. turn to We the first issue. For ofthe summary judgment relating motion for to the renter's policy coverage, dispute. the facts are not Stephanie providing On 16,1997, December Riehl was paid day care in her children, home for three one eight-month-old Vandenberg. whom was Justin She simultaneously caring was for her three children, own including five-year-old Jason. Stephanie

¶ 8. afternoon, Sometime in the Riehl brought upstairs nap. Justin to her bedroom for She placed secured Justin in a child seat and the seat on the Stephanie caring floor of the bedroom. While Riehl was remaining for the downstairs, children her son Jason upstairs went her to bedroom to watch television. ingly, aspect court; this of the cause is not before this it is before the circuit court.

However, the circuit court's denial of Dumke Insurance summary judgment Services' motion for is relevant to Dumke arguments regarding Insurance Services' reformation. Dumke Insurance Services contends that the circuit court could not summary judgment have denied its motion for unless it found that there a disputed was issue of material fact as to whether requested day the coverage. Riehls had care Dumke Insurance Services further contends that if there is factual issue as to requested day coverage, whether the Riehls the circuit granting court erred in Continental Insurance's motion for sum- mary judgment the on issue of reformation. We discuss the opinion. part reformation issue in III this attempt pillows placed in an over Justin Jason several waking Stephanie returned Riehl avoid him.2 When to he had Justin, she discovered that to on check suffocated. Vandenberg, mother, filed Justin's 9. Jamie alleging negligent super- against Riehls, both

suit negligent supervision of their own vision of Justin and Company, had Insurance which son. The Continental policy Riehls, to the was renter's insurance issued a aas defendant. also named plaintiff, Vandenberg, for moved 10. Jamie judgment against declaratory that claim the Riehls her negligent supervision their son was cov- for the own under the ered the Continental Insurance exception pursuits" to the "usual non-business "busi- to pursuits" ness Continental Insurance moved exclusion. dismissing summary judgment itself from the plaintiffs alleging law, as a matter of action pur- against the Riehls fell within the "business claims did not fall suits" exclusion to the insurance but pursuits" exception "usual to non-business within the to exclusion. granted

¶ 11. The circuit court Continental summary judgment, dismissing Insurance's motion for action, from the and denied the Continental Insurance declaratory judgment. plaintiffs The circuit motion for pur- to court concluded that "usual non-business pursuits" exclusion suits" "business plaintiffs apply did claim because Riehls' supervising pursuit usual of their own non-business day son was tainted their home care business. (1999-2000) "[i]t states that Stat. 891.44 § 2Wisconsin conclusively an minor who has presumed shall that infant be being incapable guilty of age of 7 shall be of reached contributory negligence any negligence or of whatsoever." plaintiff appealed

¶ 12. The and the Riehls from summary judgment the circuit court's in favor of Conti- nental Insurance. plaintiffs

¶ 13. To determine whether the claim pursuits" excep- falls into the "usual to non-business pursuits" tion to the "business exclusion the renter's policy, begin by looking policy insurance language. we at the policy ¶ 14. The renter's insurance excludes pursuits" liability coverage, excepts "business from but pursuits" from "business those activities that are pursuits." "usual to non-business Thus the bodily injury arising pur- insures for of out business long bodily injury suits so as the arises out of activities pursuits. that are usual to non-business The exclusion exception provisions in the read as follows: I. Personal Liability Expense and Medical do not apply bodily injury damage: or property j. Arising you out any or person. covered This exclusion does not apply to: (1) which Activities are usual to pur- non-business suits. ... policy language defining

¶ 15. The "business" explicitly states that a home care business is con- pursuit. a sidered business The concluded, circuit court parties agree, opera- and the Riehls' pursuit." tion was "business legal dispute ¶ issue is whether Ste- phanie five-year-old Riehl's care her own child while operating activity an home care business is pursuits" excepted is "usual to from the non-business pursuits" policy. of the "business exclusion plaintiff ¶ non- The asserts that the "usual to 17. applies exception parents pursuits" because business supervising caring continually engaged in and for are supervising plaintiff The concludes that their children. ordinarily part caring of one's child is not and own but is an to the care business or related home activity pursuits. usual to non-business Continental Insurance asserts contrast, 18. language interpretation of the that the correct requires case-by-case analysis the immediate con- of a activity giving of rise to the claim. Continental text regu- Stephanie argues Riehl Insurance that because larly supervised cared for her own son while and simultaneously providing services as a busi- activity caring ness, of for her own son was usual pursuit within the "usual to non- her business and not exception. pursuits” business appeals' The certification memo- court of appeals of randum discusses three court cases pursuits exception. have addressed non-business appeals addressed the The court of first non-business Carey, pursuits exception v. 127 Wis. 2d in Bartel (Ct. 1985), App. in the insured which N.W.2d a trailer to a van was a band member who had hitched preparation The later for travel to a concert. trailer killing occupant. vehicle, The struck an detached and hitching appeals and court of determined that trailer everyday traveling life were activities common to but they context must be examined the immediate activity claim arose. Because the of the from which purposes, being used and trailer were for business van use the otherwise usual non- that business "tainted" activity hitching "To a trailer to a vehicle. implicate two unreasonable hold otherwise would robbing expanding results: effect contemplated policy."3 to risks not under the appeals court concluded that the did claim pursuits exception fall within the non-business and pursuits" denied under the "business exclusion. appeals Bartel, 20. After the court of decided (Ct. Graziano, Wis. 513, 220 2d 583 185 N.W.2d

Ruff v. 1998), App. pursuits excep in the which non-business day tion in the of arose context a care In Ruff, business. day provider a child under the care of the care drowned during appeals a visit to the beach. court The of fol reasoning although lowed the of Bartel and held that trip may ordinarily the beach be to incident non- pursuits, business its when viewed in immediate con trip directly text the beach in that case was related day appeals the care The business. court of concluded provision precluded that the business exclusion cover age provider for a care who took the children to the beach a child where drowned. It found that the non- pursuits exception apply business did not because the trip to the beach to be had considered in the context appeals the The business. court of determined trip part that the was of the care business and did pursuits exception.4 not fall within the non-business appeals ¶ 21. The third case cited the court of parties which on the have focused is v. Rufener Casualty State Fire Co., Farm & 221 Wis. 2d 585 (Ct. 1998). App. N.W.2d 696 the court of Rufener appeals held that insurance existed under the pursuits exception non-business was when victim injured equipment helping while install 3 310, 318, Carey, Bartel 127 See v. Wis. 2d 379 864 N.W.2d 1985). (Ct. App. Graziano, 513, 524-25, 583 220 Wis. N.W.2d See 2d Ruff v. 1998). (Ct. App. part-time garage for in the insured's insured's use rejected snowplowing court business. Rufener approach. analysis The court of Bartel "tainted" appeals instead non-business concluded illusory, pursuits to more than be occur as result must cover some incidents arise out of the insured's business activities that pursuit.5 applied principles two to deter- 22. Rufener exception to the

mine whether a claim falls within the appeals court First, exclusion. giving injury activity to the is not stated that the rise activity rather, is examined isolation; examined in appeals in its context. The court of held immediate giving of the rise to that the context activities Rufener injury equipment the installation of the for was an business, that the installation not insured's but was ordinary part a business because it was insured's addition, In the installation one-time occurrence.6 separate place separate time occurred in a and at activity. income-producing from the insured's appeals ¶ Second, that a 23. the court stated objective to to determine court must look factors activity injury giving rise ordi- whether the to was narily part of or related to the insured's business.7 objective appeals in court of examined such Rufener frequency activity to the factors as the relation place pursuit and in time and to business its closeness income-producing activity. the actual 5 operates coverage to activi exception "The to restore some admittedly out of' ties 'arise the insured's business Co., Fire v. State Farm & Cas. 221 2d pursuits." Wis. Rufener (Ct. 1998). 511, 500, App. N.W.2d 696 585 6 Rufener, See 221 2d at 510. Wis. 7 Rufener, See 2d at 509-10. Wis. outset, 24. At the we note three to limitations applying or Bartel, First, to this Ruff, case. Rufener upon policy each of these cases rests review of lan- guage although somewhat, differs that. substantially, language from the of Continental Insur- policy. ance's Both and Bartel reviewed a non- Rufener pursuits exception pursuits business business coverage exclusion that restored for activities "ordina- rily pursuits." incident to non-business Ruff, exception court reviewed an that restored conjunction pursuits "in activities with business which ordinarily are considered non-business in nature." Here, the in Continental Insurance's renter's policy restores for activities "usual to non- pursuits." One has commentator noted that involving decisions the business exclusion precise wording often turn on the of the lan- guage.8 Bartel, result, As a the fact that Ruff, precise policy language did not address the at Rufener applicability issue their here limits to this case.9 Second, 25. a renter's protect personal intended an insured "within the sphere policyholder's of the life. . . ."10The present special difficulty ensuring business cases See Lawrence The Business Pursuits Exclusion Frazier, A. Liability in Personal Insurance Policies: What the Courts Have It, Done with 1970 Ins. L. J. 9 See Lawrence A. The Business Pursuits Exclusion Frazier, Liability in Personal the Insurance Policies: What Courts Have It, ("[N]ot Done with 519, Ins. all L. J. 534 clauses have extremely therefore, important, [is] been worded the same. It to policy closely...."). examine the Bartel, (citing 2d

10See 127 Wis. at 317 Lawrence A. Fra Revisited, The Business Pursuits Exclusion zier, 1977 Ins. L. J. 89). pursuits" of that "usual to non-business the personal sphere protects the the insured's day operation of home care business because the part many same activities that are of includes of the sphere policyholder's personal the life. the of although appeals ¶ of Third, the three court 26. immediate that a court should consider the cases state activity they provide question, in no context of the inquiry. guiding principle fact-specific can for this We from cases that would allow discern no clear rule these particular the facts a court to determine whether under activity any given the of case an falls within non-busi- objective pursuits exception. ness The factor Rufener in, may helpful it situations, but can- test be some fact governing present principle in the case. The not be a difficulty applying parties' in in the evident Rufener arguments this court. before plaintiff The and Continental Insurance 27. analysis applied agree the should be that Rufener they disagree application case, this the but whether plaintiff favors the or Continental Insurance. Rufener application plaintiff The asserts that to this case results under Rufener day policy. plaintiff urges The that a home by provider's care of her son is motivated care own necessary production opera- of income or the or ordinarily tion part care and is not of the home business. of or related to home care although According plaintiff, the accident here during operation business, of the occurred Stephanie supervision of her child was an Riehl's own ordinarily activity that is non-business nature. recognition plaintiff relies court's on Rufener under non-business activities exception fall very degree have some will their nature pursuit.11 plaintiff with involvement a business urges ordinarily the court to look at what occurs day namely business, care outside the mother's care son, of her to determine whether an incident is covered pursuits" exception. under the "usual to non-business argues contrast, Continental Insurance ordinarily that at a court should look what occurs day meaning within care business to determine the of pursuits" exception. the "usual to non-business Accord- ing clearly Insurance, to Continental Rufener coverage Stephanie forecloses in this case because supervision Riehl's of her in son was undertaken day context her care business. Continental Insur- urges Stephanie supervision ance that Riehl's of her ordinarily part son was of her care business: Her facility care her son occurred at her care and providing day occurred while she was care. The why care how, when, business determined she was supervising According her son. to Continental Insur- ance, the claim out arose of activities that occurred in place during Riehl's business hours and directly involved the business clients. Continental argues Insurance further that child would not have died had he not been Riehl's care at time and requiring coverage that case creates this every day provider, insurance ing defeat- the business exclusion that excludes income-producing for hazards associated with activities. urges glean

¶ 30. us Continental Insurance guiding activity principle from that an Rufener regularly setting occurs within the business cannot fall exception. pursuits" within the "usual to non-business Rufener, See 221 Wis. 2d at 511. argues accepts if the court Continental Insurance pursuits argument, plaintiffs the non-business the exception rule and would defeat swallow the would pursuits purpose is to exclusion, which of the business regular coverage for hazards associated exclude income-producing with Insurance activities. Continental proper strikes balance asserts that Rufener pursuits" the non- exclusion and between "business looking pursuits exception by at the risks business usually According to with the business. are associated Insurance, a associated Continental risk with provider's that the own child care business is injure care is one of the children whom would being provided. disagree Insurance's 31. with Continental We

argument First, Insur- reasons. Continental for two misplaced. is ance's reliance on Rufener Rufener inapposite. The court in considered a business Rufener activity occurrence, a one-time the installa- that was special equipment garage. The in the insured's tion wholly analysis applicable is not to the facts Rufener activity case, in we consider an of this which regularly outside the occurs both inside and business. particular, did not to con- court need Rufener impact would if the installation that sider what the be ordinarily injury part as of busi- caused occurred ness non-business activities. position Second, Insurance's Continental pur-

requires us to read the "usual to non-business exception limited those activities that not suits" only as to (that setting regularly occur outside the business pursuits") but do not is, "usual to non-business also setting. regularly Thus, Con- occur within business position requires to tinental Insurance's the court pursuits exception so in the non-business insert words exception except pur- that the would from business suits exclusion activities that are "usual non- pursuits pursuits." and unusual to business decline to We rewrite the insurance in this manner. approach

¶ 33. Continental Insurance's risks making pursuits" exception the "usual to non-business illusory, superflu- to the business exclusion appeals explained ous, and without effect. court meaning: excep- that the has "The Rufener operates tion to restore to some activities that admittedly pur- 'arise out the insured's business Therefore, suits."12 must be extended arising though liabilities from an or act omission "even the act or omission connected in some manner with "13 pursuits,' the insured's 'business if the act or omis- activity sion is in also connected some manner with an ordinarily not associated with the insured's business pursuits. interpret

¶ 34. must We the "usual to non-busi- pursuits" exception provide meaningful ness exception. under this ¶ 35. We turn for from assistance to cases other jurisdictions interpreting pursuits the non-business to the exclusion. Cases involving day providers sup- care can found in be both Rufener,

12See 500 Wis. 2d at 511. Floyd Co., 193, 13See v. Northern Neck Ins. 427 S.E.2d 196 (Va. 1993). Co., Myrtil F.Supp. See also v. Ins. 510 Fire Hartford (E.D. 1198, 1202 1981); Moore, Pa. Farm Cas. 430 State & Co. v. 1981). (Ill. App. 645 N.E.2d Ct.

819 Insurance's to Continental and in opposition of14 port court of courts, our own including Several position.15 commentary recognized have least one and at appeals, 16 From contradictory. and cases are varied jurisdictions from other case law review of the our own 14 (Ill. Mathis, 893 See, 706 N.E.2d e.g., Ins. Co. v. Allstate 1999) (no care under insured's coverage where child App. Ct. child); Economy Fire & Cas. Co. fell on suffocated after blankets (no 1988) (Ill. coverage where App. Basse, Ct. 525 N.E.2d 539 v. by parent by day a vehicle driven care was struck one child care); v. Western day in the Susnik up another child picking 1989) (no (Kan. cover Inc., App. 71 Ct. Indemnity 795 P.2d Co. child); injured by another child was age where a cared-for Safeco 1989) (no (Mo. Howard, App. Ct. 782 S.W.2d 658 Co. v. Ins. sexually provider's son abused care where care). under her children (N.Y. Grosvenor, App.

15See, N.Y.S.2d 506 e.g., Gallo v. 572 1991) sexually provider's care own son (coverage where Div. Co., care); v. Utica Mut. Ins. child in her Robinson assaulted a 1979) (Tenn. child (coverage existed where a 585 S.W.2d injured the insured's part of business being cared for as a (coverage provided when Floyd, grandchild); 427 S.E.2d by day driven injured lawn mower care was child child). provider's 1981) (E.D.

16See, Pa. Myrtil, F.Supp. at 1202 e.g., fact, clause this ("Obviously, matter is not free of doubt. [N]early litigation.... all of subject of considerable has been interpretation language difficult the courts have found ("Other jurisdic Floyd, 427 at 195-96 S.E.2d application."); language or similar however, interpreted the same tions, have analyses."); Rufener, 221 using care context various in a child ("The pursuits exclu exception to the business 507 Wis. 2d at many jurisdictions with heavily litigated in has been sion Bartel, reconciled."); 127 fully varying that cannot be results this case has construed ("Though no Wisconsin Wis. 2d at 316 However, dealt with elsewhere. exception, problem the has been results...."). uniform have not reached courts 820 attempts per- law, and the various to reconcile case we approaches at least ceive five courts have used to question exception resolve the of when to the busi- although pursuits applies, many ness exclusion cases explicitly methodology.17 have stated their relating aFor collection of cases child and the busi pursuits ness exclusion and non-business Marchitelli, Annot., exception, see J. David and Construction Application "Business Pursuits" Exclusion Provision in Gen of (1996). Liability Policy, eral 35 A.L.R.5th 70-83 §§ See, approaches. Courts have described e.g., other State Farm, (examining occurring at N.E.2d 644-45 cases in a finding care context and of at consideration least three (1) activity is purpose factors: whether conducted for the of (2) furthering business; activity the insured's whether the (3) gave rise to the place business; claim occurred at the of and engaging whether the insured is in a dual purpose); Floyd, 427 (reviewing S.E.2d at exception 195-96 the child care (1) finding approaches: specific context and three on a focus (2) caretaker; activity of the on proper a focus whether lack of supervision directly in a child home care context to the related (3) caring children; of language business and a focus on the exception it characterizing ambiguous). and as appeals approaches The court of has also examined from jurisdictions reaching other without a conclusion on via- their bility. Bartel, See 2d (explaining 127 Wis. at 316 three (1) approaches jurisdictions: from applies other way business; activities that are in no related to the insured's (2) exception applies to activities associated with the insured's typically engaged part personal life; business that are in as (3) exception ambiguous against and and must be construed insurer). activity giving

Numerous cases focus on the to the rise particular claim to determine whether the acts or omissions may though the insured as be characterized non-business even they causally were related to occurred the course of pursuits. guidance provide These do not in decid- cases inquire approach the is to whether 36. One injury activity giving to or fur- contributes rise to the activity does If the of the business. thers the interests activity non-business the "usual to not, falls within the pursuits" that is it is not conduct because solely to the business.18 attributable approach focuses on the nature A37. second Coverage allegedly duty breached.19 that was duty exists when under the insurance ordinarily activity incident to question ing whether they pursuits reach because or usual to non-business business See, Susnik, analysis. any e.g., 795 P.2d with little if conclusions (no by injured another a cared-for child was 71 where child); caring for the the insured's business was child because (no provider's Safeco, 782 S.W.2d 658 where cared for because her fail- sexually abused the children she son ordinarily incident to her supervise her own son was ure to business). relating to child care and the busi- a collection of cases

For pursuits exclusion and the non-business ness Marchitelli, Annot., Construction and exception, see David J. Exclusion Provision in Gen- Application "Business Pursuits" (1996). 375, Liability Policy, 70-83 35 A.L.R.5th §§ eral Gambell, Ins. Co. v. 689 A.2d 453 e.g., Vermont Mut. See, 1997) (Vt. by dogs, not owned or (coverage existed when three insured, slip and fall in a customer to cared for caused driveway in safe condition driveway failure to maintain because roaming property were not prevent dogs from and failure to business; pet-sitting that contributed to the insured's duties the interest of contribute to or further acts or omissions did not business). adopting approach, this see of cases For collection Marchitelli, Annot., Application Construction David J. Liability in General Exclusion Provision "Business Pursuits" (1996). 70-74 Policy, 35 A.L.R.5th §§ was breached exists aside from the activity.20 Coverage under the insurance does not exist policy the when that was duty breached is incident to the business if pursuit. Thus the fail- theory liability is ure care the child to the entrusted care day in day the care provider situation, then the claim is not covered under the policy.21 insurance 38. A third is approach to ask whether the

¶ activity giving rise to the claim is directly related to or separate and from the apart pursuit. business If the is activity and separate apart from the pur- business 22 claim suit, a is covered by the Thus a policy. held to cover a child in day care a lawn injured by mower, because mowing the lawn is an not activity 23 day associated with care. 39. A fourth is to construe "usual approach the pursuits" to non-business very narrowly in favor of the company insurance and the against

20See, Robinson, e.g., (coverage 585 S.W.2d 593 existed being part where a child injured cared for as of business the grandchild duty insured's because the insured did breach child, grandchild). toward the cared-for but toward her 21See, (no e.g., Allstate, 706 N.E.2d when 893 paid blankets fell on child under insured's care and suffocated duty protect supervise because insured's and the children business). under her care arose within her 22See,e.g., Co., v. Aetna Cas. & 109 Kirsch Sur. So. 2d (Fla. 1992) App. summary (reversing judgment Ct. for insurer day by grease in when child care was burned hot bacon because regularly provider whether care cooked breakfast as an separate activity apart and her was a from business determina fact-finder). by tion to be made the Floyd, (coverage provided 23See 427 S.E.2d 193 when child injured by by day care was lawn mower driven mowing directly provider's child was not because lawn care). to the related engage in a for" anal- "but effect, the courts

insured. ysis, asking the incident would but for giving If the incident have occurred. rise to a claim claim business, occurred but for not have would policy. the insurance is not covered excep- approach A is to construe fifth against narrowly of the insured favor tion approach company.25 This is consistent with poli- interpretation of insurance case law on Wisconsin approach reason as follows: the courts cies. Under this Interpretation ordinarily is a an insurance appellate question court to determine of law for an analysis benefiting independently, of the cir- from language gives in an insurance A court cuit court.26 meaning, construing ordinary policy its common and person policy in a reasonable the insurance as would policy position When an insurance the of the insured.27 reasonably susceptible to more than in is read context 24 (no Fire, Economy See, e.g., 525 N.E.2d 539 by a vehicle driven child in care was struck where child up child in the care because parent picking another pick up had to injured parent if the had not would not have been children). her own 25See, Myrtil, (coverage e.g., F.Supp. 1198 existed 510 ordinarily are exception, therein which because the "activities ambiguous and must be pursuits," is incident to non-business Farm, State insurer); 430 N.E.2d 641 against construed exception, "activities (coverage applying because existed pursuits," ordinarily to non-business therein are incident which ambiguity, resolved in creates an which is to the facts of the case insured). favor of Co., 222 627, Mut. Auto. Ins. 2d

26Hull v. State Farm Wis. (1998). 636, 586 N.W.2d 863 27 Prop. & Cas. Corp. v. Northbrook See Wisconsin Label (Ct. 1998) Co., 800, 806, App. 29 Ins. 2d 586 N.W.2d 221 Wis. 824 ambiguous.28 ambiguity construction, one it is An in an against insurance is resolved the insurer and in Policy provisions tending favor of the insured.29 liability narrowly against limit are construed insurer.30 approach,

¶ 41. Under this fifth courts acknowl- edge pursuit exception that the non-business has been subject litigation country to considerable across the "nearly language and all of the courts have found the interpretation application."31 difficult of Faced conflicting body with this law, case these courts have ambiguously concluded that is worded against company. and must be construed the insurance ¶ 42. We have studied the numerous cases and any readily meaning are unable find identifiable in language pursuits," "usual to non-business when read with the exclusion for business in present care business cases such as the one. We there- join language fore the courts that have characterized similar to that the Continental Insurance's renter's policy regarding the "usual to non-business v. Co., Cieslewicz Mut. Serv. Cas. Ins. (quoting 84 Wis. 2d (1978)). 97-98, 267 N.W.2d 595-98 Label, See Wisconsin 221 Wis. 2d at 806.

29Myrtil, (when F.Supp. language of an insurance ambiguous, provision is construed favor of the insured company because the insurance ambigu could "cure the ity by using explicit language more place which would the Donaldson v. Urban meaning beyond question"); of the clause Interests, Inc., Land 224, 230, 211 Wis. 2d 564 N.W.2d 728 (1997) (ambiguities policy's in a terms are to resolved in be favor coverage because the party insurer is the best suited to elimi ambiguity). nate 30 Donaldson, See 211 Wis. 2d at 230. 31 Robinson, See 585 S.W.2d at 595.

825 pursuits" exception pursuits" exclu- "business undisputed applied this case facts of to the sion when position persons ambiguous. in the Reasonable as reasonably present plaintiff case could in the exception coverage they for under this had that believe supervision rule child. The and control of their own company against the insurance construction of narrow applies ambiguity present in which the in the case liability.32 exception to exists as an ¶ the renter's therefore conclude 43. We policy provides Riehls for the to the insurance plaintiffs negligent Stephanie in Riehl was claim allegedly supervision child, who and control of her own Justin. caused harm to interpre- an are mindful that too broad 44. We pursuits" exception the "usual to non-business

tation of might significantly pursuits" exclu- limit the "business pursuits" [read the "usual to non-business sion. "To pro- broadly] require exception insurers too would (e.g. many persons liability self- vide gardeners, janitors) employed home- cooks, under merely policies these businesses owners because life." activities common to non-business involve Coverage present case under exception pursuits" not, does "usual to non-business swallowing the rule of however, result plaintiff pursuits" The exclusion. the "business argument acknowledged that if her child had at oral merely tipped suffocated, in his child seat and over ambiguous in the pursuits exclusion is not The business pursuit in engaged in a business present case. The Riehls were ambiguity arises operation of a home care business. exception to the broad pursuits" from the "usual to non-business pursuits. exclusion for business Bartel, 127 2d at 317.

33See Wis. giving negligent supervision rise to a claim of of her coverage care, child in there would be no under the policy. they renter's insurance The Riehls concede that coverage Stephanie have no for the claim that Riehl negligently supervised Holding the deceased infant. coverage Stephanie negligent that exists for Riehl's supervision apply of her own child does not the lan- guage pursuits" exception of the "usual to non-business broadly pursuits so the business exclusion meaningless, interpret becomes nor does it the "usual pursuits" exception narrowly to non-business so as to exception illusory. render the Thus, our decision that alleged the renter's insurance covers the Riehls' negligent supervision of their own child rests comforta- bly ground within a middle between these two problematic outcomes.

I—I HH HH ¶ 46. We turn now to the issue of reformation. parties agreed The circuit court determined that the request day that the Riehls did not that, as a law, matter of the Riehls were therefore not Accordingly, entitled to reformation. the circuit court granted summary judgment Continental's motion for on this issue. plaintiffs

¶ 47. We have concluded that the claim negligently supervised that the Riehls and controlled their own son falls within the of the insurance policy. Reformation of the insurance is therefore necessary or relevant to this claim. Because cover- age plaintiffs for the claim the Riehls were negligent caring plaintiffs for the infant Justin in operation of their home care business is barred of the exclusion, reformation the business policy an issue.34 remains insurance surrounding Although the issu- ¶48. facts largely policy are renter's insurance ance the Riehls' dispute, undisputed An ear- facts are as follows: through policy Dumke Insurance issued lier had been agency, Inc., an insurance that Services, and Financial day provided the home care to the Riehls for employee Insur- Fritz, an of Dumke business; Curt C. day Stephanie Riehl was Services, ance knew that request expressly provider; Riehl did not care day Leonard meeting employee coverage during with his care employee meeting Fritz, of the with Fritz; at the end by signed form filled out an insurance Leonard Riehl things, among that Leonard stated, other Fritz that home; in his and the have a business Riehl did not issued Insurance renter's Continental pursuits exclu- the business to the Riehls contained defining specifically as sion, operations. including day care argues, cir- Insurance 49. Continental undisputed agreed, these facts entitled cuit court that brought may also relevant to the claims Reformation be against Dumke Insur Insurance and the Riehls Continental Services, The circuit court explained in note above. ance summary judg Dumke Insurance Services' motion for denied circuit against all claims it. The court ment to dismiss might Services still apparently reasoned that Dumke Insurance inquiring trier of fact found that into the negligent be if the performed that the Riehls had Riehls' file would have disclosed coverage. Dumke past in the and had Insurance home care implication the circuit court denial of argues that Services that the Riehls were is that it should have known its motion Accord liability coverage for their care business. requesting argues the Riehls were ingly, Dumke Insurance Services entitled to reformation. summary judgment

it to on the issue of reformation. argue The Riehls and Dumke Insurance Services disputed summary judgment two facts exist that make (1) improper: on the issue of reformation Was there a "mutual mistake" about the of Continental Insurance's renter's insurance sufficient to war- (2) rant reformation? Would Continental Insurance policy covering liability have issued a for the operation? general may 50. The rule is that a contract be "writing

reformed when the that evidences or embodies agreement part express an in whole or in fails to agreement parties because of a mistake of both as to writing."35 granting the contents or effect of the In summary judg- Continental Insurance's motion for denying ment reformation, the circuit court focused on following language in Trible v. Tower Insurance (1969), Co., 43 Wis. 2d 182-83, 168 N.W.2d 148 proven that a mutual mistake must be for reformation: When a policy involved, ¶ insurance is mutual mistake proven when the party applying for insurance proves that he made certain statements to the agent concerning desired, the coverage but (Second) (1979). Restatement Contracts 155§ contract, To win reformation of an insurance the insured prove prior must that there was a agreement oral between the parties which, through negligence, mistake or the written policy express, although does not the written insur- policy ance was intended to so state. International Chiropractors Gonstead, 524, 528-29, Ins. v. 71 Wis. 2d (1976) (citing N.W.2d 725 Schuster v. Germantown Mut. Ins. Co., 447, 162 (1968); 40 Wis. 2d Ahnapee N.W.2d 129 & W.R. Co. (1968)). Challoner, 134, 137, 148 v. 34 Wis. 2d N.W.2d 646 provide not as issued does desired. "the issue of found that

¶ The circuit court 51. up being day provider .the came but.. care Riehl Mrs. request business did not is that Mr. Riehl evidence coverage circuit court concluded care." The for they had not establish that Riehls did because the requesting employee cover- Fritz made statements they age not entitled to business, were reformation. makes clear

¶ the circuit court The order of 52. request treating express circuit court was that the only type of evidence in Trible as the described justify contract. the insurance reformation of would in Trible that reformation was However, the conclusion express request justified for cover- there was an when age compel can no conclusion that there be does request. express without an reformation contracts, there In the context of insurance 53. regarding special On reformation. considerations are may not be rewritten to bind hand, the one contemplate and for risk that it did not insurer to a premium.36 hand, the other no But on it received which required out a cause less is to make "in insurance cases ordinary contract reformation than of action for disputes."37 Artmar, Co., & Cas. Inc. v. United Fire (1967), the court stated 181, 148 641

34 2d N.W.2d Wis. negligence agent.. "[a] of an .is due to the that mistake Chiropractors, 71 Wis. 2d at 527. 36SeeInt'l Co., 37Artmar, 181, Fire & Cas. 2d Inc. v. United 34 Wis. (1967). v. State Farm See also Williams 186, 148 N.W.2d 641 (1993) 234, Co., Fire & Cas. 2d 509 N.W.2d 180 Wis. Artmar). (quoting ground

satisfactory reformation, for the since insured agent ordinarily upon properly relies to set out application."38 facts in the An action for reformation is permitted, court, stated the Artmar when there is a agent though mistake an even the mistake is not technically mutual.39 positively Artmar the insured could not requested coverage outbuildings.

assert he had that for alleged always However, insured that had he policy pro- intended and believed that the insurance outbuildings vided for the and that provide coverage did not because the mistake or ne- glect agent.40 of the insurance This court affirmed the company's trial court’s denial of the insurance motion summary judgment. for This court that noted agent previously had issued a that outbuildings covered the and that because the same agent coverage, policy providing drafted earlier agent knew the insured wanted insurance cover- age outbuildings. on the The Artmar decision makes may justified clear that reformation be when the insured can demonstrate that there an under- was standing regarding prior on the desired based dealings, request express in the of an even absence coverage. argue summary judgment

¶ 56. The Riehls improper present on the issue of was in the reformation case, because an issue of fact exists to whether as negligently Dumke Insurance Services failed obtain liability coverage They argue for the business. gives that the evidence to an inference that the rise 38Artmar, 34 Wis. 2d at 187. 397d.

40Artmar, Id. at 186. coverage understanding parties care had an provided Services Dumke Insurance and that be would knowledge They negligent. point to Fritz's was provider, Stephanie as well as to a Riehl was through purchased policy Dumke prior Riehls coverage providing for the Riehls' Services Insurance day care business. distinguishable from the facts of is 57. Artmar present a case in which the involved case. Artmar personally

parties several other for had dealt with each say, prepared years. to as Nevertheless, we are not judgment summary in the for of law on a motion matter present could find trier of fact case, that no reasonable on the Riehls' mistake occurred based that a mutual coverage provided and the mis- that the belief agent failing provide neglect or of the take coverage.41 intended final makes one Insurance 58. Continental contending against

argument that refor- reformation, provide it because does mation is not available type Continen- that the insured intended.42 presented undisputed asserts that it tal Insurance day care cover- not have issued that it would evidence they requested age it. Dumke if had to the Riehls disputes circuit this assertion. The Services Insurance aspect Insur- of Continental did not address this court reformation, Artmar test second half of the negli of the provide did not because whether the circuit court's denial of agent, related to the gence of the summary judgment motion for Dumke Insurance Services' and the Riehls by Continental Insurance dismiss the claims notes 1 and 34 above. against it. See (Third) 27:4, at Segalia, § Couch on Insurance See 2 Russ (3d 1999). 27-9 ed. argument,43

ance's and we cannot conclude as a matter of law that Continental Insurance would not have policy issued renter's insurance the to Riehls that included for their care business. remanding ¶ 59. In the court, to circuit note we regardless disputed of that the facts, resolution of the may Riehls not be entitled to reformation. The rem- edy equitable nature, reformation is so that a circuit court reformation, has discretion to withhold appropriate, if even reformation would otherwise on be grounds traditionally permitted that have courts of equity to withhold However, relief.44 the circuit court's order makes clear that its decision not was based on grounds equitable ground but rather on the no dispute expressly existed that the Riehls not did request liability coverage for their care business. regarding Since we conclude that facts are reformation dispute, portion we reverse the of the circuit court judgment granting summary judgment to Continental Insurance on the issue of reformation.

¶ portion sum, 60. we cir- reverse judgment granting summary judgment cuit court's to Continental Insurance as to whether the renter's plaintiffs against covers the claim negligent supervision Riehls for and control of their portion Furthermore, own son. we reverse that of the judgment granting summary judgment court circuit to Continental Insurance on the issue of reformation. We

43Continental proposed Insurance submitted a order that finding included a that Continental Insurance would not have it issued Riehls had known of home finding business. The circuit court struck this from its order parties' arguments did not address on this issue. (Second) (1979). See Restatement 155 cmt d § Contracts to the court for fur- remand the cause circuit therefore proceedings this decision. ther inconsistent with

By judgment circuit court is of the the Court.—The the circuit court. the cause remanded to reversed and (dissenting). WILCOX, 61. P. J. The hold- JON majority's opinion ing glean lengthy that, is I from the country around the have some other courts because regarding opposite conclusions an insurance come provision here, at issue this contract similar to one ambiguous. majority op. See at contract majority language strains to find the Because the ambiguous through rules sources, extrinsic it in favor majority finding coverage. op. ¶¶ See at 42-43. As of majority pre- result, contravenes well-established ambiguity in cedent that holds that an insurance through be extrinsic sources. contract cannot found troubling, majority however, is the fact that More day care facilities over favors unlicensed in-home carry licensed care facilities that insurance for rea- risks associated with such businesses. For these respectfully sons, I dissent.

I begin language I in the 62. with the renter's language insurance contract. The contract states: DO LOSSES WE NOT COVER Liability Expense and Medical Personal 1. cov- injury bodily or to erages apply do not property damage:

834 j. Arising out of business or you any person.

covered This exclusion does apply not to:

(1) Activities which are usual to non-business

pursuits; methodology today accepted. Our well —before —was interpreted language gen- We have insurance contract erally using govern the same rules that other contracts. Smith v. Atlantic Co., 808, Mut. Ins. 155 Wis. 810, 2d (1990). purpose 456 N.W.2d 597 The is to ascertain and carry parties. out intent theof Gen. Cas. Co. Wis. (1997). Hills, v. 167, 175, 209 Wis. 2d 561 N.W.2d 718 Policy language interpreted according plain is its to ordinary meaning, as understood a reasonable Employers insured. Kremers-Urban Co. v. American Co., Ins. 119 722, Wis. 2d 351 735, 156, N.W.2d (1984). language ambigu- we If determine that the narrowly against ous, it bewill construed the insurer. Peace v. Co., Northwestern Nat'l 106, Ins. 2dWis. (1999). go However, 596 N.W.2d 429 dowe beyond ambigu- the written document, unless we find ity it. within Id. majority any ambiguity fails find resorting

within the above insurance without appeals sources, extrinsic such as court cases1 and appeals majority One court of case opinion that the as well extensively parties as the discuss is v. State Farm Fire Rufener 585 N.W.2d 696 (Ct. Co., Casualty & 2d App. Wis. 1998). There, coverage substantially found on a was based simi provision. lar opinion problematic Id. at 504.1 find the Rufener First, here, majority opinion for two reasons. like the Rufener ambiguous by looking provision finds the to extrinsic materials and jurisdictions plain language other rather than the of the Second, written contract. Id. 507-08. asserts that the Rufener activity question, installing in a that would with the hoist assist analytical jurisdictions. Missing this from other cases step reviewing in order determine itself to finding ambiguity preordains is an a whether there coverage for insured here. analyti- following accepted However, in our applying plain language of the and

cal framework present pattern, provision a cover- to the fact denial of Vandenberg sleeping age was in must Jamie result. Stephanie home of her business activ- Riehl's because activity heightened duty ity. to Her created a business supervise of her her child's interactions with customers just facility, beyond supervising child, her own care activity parents. Her failure an which is common to all supervise her child's interaction with Jamie Vanden- to berg, center, her was a customer of in-home activity pursuit." a To "an usual to non-business majority opinion here, is otherwise, find as does driving ruling akin to one's car while on a business activity, always pursuit ais non-business because one unambiguous maintain of one's car. must control language policy provision plain of this should not be to manner, in so in order find read strained in this case. snowplowing and of a for a

removal reattachment salter/sander snowplowing it 'part was not business because business place separate at at a time "separate occurred activity." Id. at income-producing .[the] 510. The error from.. language manifest. There is no in the this statement activity distinguishes on its provisions that business based activity. long As is a income-producing as it proximity only activity if it is once—it is excluded done —even Therefore, I language provision. of the believe plain Rufener decided, incorrectly inapplicable and is the fact situation was presented this case.

h-H 1—I troubling analytical misstep ¶ More 65. than the majority's opinion, judicial in however, is its favor day day itism for in-home care facilities over licensed facilities, care which must obtain insurance to cover operating the risks associated with such a business. 2001). (Apr., § HFS See Wis. Admin. Code 45.03 As Continental Insurance in brief, indicated its it would policy not have written the Riehls' if it was aware that they day providing age were care to child a under the one without sufficient staff. A basic renter's insurance policy policy or homeowner's is not intended cover day running facility. the manifold risks in a care majority's opinion, now, 66. But under the unli- day censed in-home care facilities will have clear advantage day economic over centers, licensed care subject stringent requirements which are con- Chapter tained in 48 of the Children's Code Family Health and Services Administrative Code. See 2001). Chapter (Apr., Wis. Admin. Code HFS Unli- get by censed in-home will facilities be able to cheaper pol- with a or renter’s homeowner’s icy, comprehensive rather than a more running all the covers risks associated with holding legisla- care center. Such a undermines the Chapter provide ture's in intent 48 to safe insured prevent care facilities for children, Wisconsin and to tragic accidents such as the one that befell Jamie Van- (1999-2000). denberg. § See Wis. Stat. 48.67 HH 1—4 HH summary, apply plain, I would unambiguous language at the insurance issue to find I that there is no this case. believe majority reaching out to use extrinsic erred ambiguity, thereby find not follow- sources in order to analytical ing framework our well-settled interpreting I Further, am an insurance contract. majority's judicial deeply favoritism for troubled clearly facilities, con- home which unlicensed legislature provide of our safe travenes intention day care children. insured facilities Wisconsin I am authorized to state that Justices N. join T. this PATRICK CROOKS and DAVID PROSSER opinion.

Case Details

Case Name: Vandenberg v. Continental Insurance

Court Name: Wisconsin Supreme Court

Date Published: Jul 3, 2001

Citation: 628 N.W.2d 876

Docket Number: 99-3193

Court Abbreviation: Wis.