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COURT OF APPEALS DECISION DATED AND RELEASED July 9, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0985
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
SUZANNE SCHUCK,
Plaintiff,
v.
THE AETNA CASUALTY
& SURETY COMPANY,
Defendant-Respondent,
MED CENTERS HEALTH
CARE, INC.,
Subrogated Defendant,
ROBERT LEBEN,
Defendant-Third Party Plaintiff-Appellant,
CITY OF MILWAUKEE
DEPARTMENT
OF BUILDING INSPECTION
and CITY OF MILWAUKEE,
Defendants-Third Party Plaintiffs,
v.
THOMAS JACQUES,
JOHN TEECE and
TODD THIRY,
Third Party Defendants.
APPEAL from an order of
the circuit court for Milwaukee County:
MICHAEL J. SKWIERAWSKI, Judge. Affirmed.
Before Wedemeyer, P.J.,
Sullivan and Schudson, JJ.
PER
CURIAM. Robert Leben appeals from a summary judgment order
dismissing claims against Aetna Casualty and Surety Company. The issue before this court is whether Aetna
had a duty to defend Leben against claims arising from a personal injury action
against Leben and Aetna brought by Suzanne Schuck. The trial court concluded that Aetna had no duty to defend Leben
and granted Aetna's motion for summary judgment. Because the language of the policies unambiguously excludes
coverage for Schuck's action, Aetna had no duty to defend Leben; thus, we conclude
that the trial court properly granted summary judgment and affirm.
I. Background.
The following facts were
presented in the summary judgment materials.
On August 2, 1992, Schuck fell off the roof of a student rooming house
in Milwaukee during a party at which she had consumed alcoholic beverages. Leben was the owner of the property, which was
located at 937 North 14th Street, and leased to eight Marquette University
students. At the time of the incident,
Aetna had issued two insurance policies to Leben covering his Cedarburg
residence, approximately twenty-five miles north of Milwaukee. The first was a primary homeowners policy
with a personal liability coverage limit of $100,000, and the second was a
$1,000,000 excess personal liability policy.
Schuck sued Leben for negligence, joining Aetna in the action. The trial court dismissed all claims and
cross-claims against Aetna and found that Aetna had no duty to defend
Leben. Leben argues on appeal that “the
primary and excess policies issued by Aetna are vague and ambiguous with
respect to their exclusionary language, and should provide coverage for the
claims in plaintiff's complaint and amended complaints, or, at a minimum,
provide a defense for those claims as they are presented by the plaintiff.”
II. Analysis.
Whether either of the
policies requires Aetna to defend Leben is a matter of contract interpretation
and, therefore, a question of law that we review de novo. Williams v. State Farm Fire &
Casualty Co., 180 Wis.2d 221, 226, 509 N.W.2d 294, 296 (Ct. App.
1993). When interpreting insurance
policies, the general rule is that any ambiguity is resolved in favor of the
insured, but “when the terms of a policy are plain on their face, the policy
should not be rewritten by construction to bind the insurer to a risk it was
unwilling to cover, and for which it was not paid.” Jones v. Sears Roebuck & Co., 80 Wis.2d 321,
329, 259 N.W.2d 70, 73 (1977) (quoting Garriguenc v. Love, 67
Wis.2d 130, 135, 226 N.W.2d 414, 417 (1975)).
Leben first argues that
his primary homeowners policy imposes a duty on Aetna to defend him against the
suit brought by Schuck. The policy
contains the following definitions:
3. “business”
includes trade, profession, or occupation
....
5. “insured
location” means:
a. the residence
premises;
b. the part of any
other premises, other structures, and grounds, used by you as a residence and
which is shown in the Declarations or which is acquired by you during the
policy period for your use as a residence ....
....
9. “residence
premises” means the one or two family dwelling, other structures, and grounds
or that part of any other building where you reside and which is shown as the
“residence premises” in the Declarations.
The
policy contains the following exclusions:
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:
....
(3) the rental or holding for rental of
an insured location.
....
d. arising out of any
premises owned or rented to any insured or rented to others by any insured
which is not an insured location.
2. Coverage E -
Personal Liability, does not apply to:
....
j. personal injury
....
(2) which is caused by a violation of a
penal law or ordinance committed by or with the knowledge or consent of any insured;
The policy identified
Leben's Cedarburg property as the “residence premises.” It identified no other property as “other
insured locations.”
Leben claims that the
exclusions are vague and ambiguous as to the “business” and “rental or holding
for rental” language. He contends that
the policy could be read to cover an incident of general negligence such as the
one brought in this suit even though the injury-premises is not specifically
identified in the policy. Aetna, on the
other hand, argues that Leben's connection with the property and the incident
clearly falls under the “business pursuit” exclusion. Hence, it had no duty to defend.
An activity falls under
the “business pursuit” exclusion if it satisfies two elements: continuity and
profit motive. Williams,
180 Wis.2d at 228, 509 N.W.2d at 297.
Continuity requires a showing of a customary engagement or a stated
occupation. Id. Profit motive requires that the activity
“must be shown to be such activity as a means of livelihood, gainful
employment, means of earning a living, procuring subsistence or profit,
commercial transactions or engagements.”
Id. (quoting Bertler v. Employers Ins. of Wausau,
86 Wis.2d 13, 21, 271 N.W.2d 603, 607 (1978)).
In Williams, we determined that a joint venturer's
investment in Texas property satisfied both elements and was, therefore, to be
considered a “business pursuit.” Id.
at 229, 509 N.W.2d at 297.
Leben's involvement with
the property where the injury occurred was clearly part of a “business
pursuit.” Leben acquired the
14th Street premises on December 5, 1973, along with several other parcels
of real estate in Milwaukee. On August
25, 1992, Leben sold ten parcels, including the 14th Street premises. The 14th Street parcel was licensed by
the City of Milwaukee as a “Rooming House, Type I.” Leben never resided at this or any other Milwaukee property. The property was consistently engaged for
rental business which is evident from Leben's reporting it as a source of
rental income subject to depreciation deductions on federal Schedule E forms.
Leben further argues
that, even if the “business pursuit” and rental exclusions apply, they do not
extend to activities which are “ordinarily incident to non-business
pursuits.” He contends that one of
these activities is the proper maintenance of the property; however, that is
clearly part of Leben's landlord duties and connected to his rental
business. His other contention is that
the serving of alcohol to minors is an activity “incident to non-business
pursuit.” Leben's second amended
complaint bases this cause of action on § 125.07(1)(a)3, Stats., which imposed a forfeiture upon
Leben as the owner of the rental property for serving alcoholic beverages to
minors. However, both the business
pursuit and rental exclusions apply to prevent coverage or a duty to defend.[1]
Leben argues that he
reasonably believed that he was covered, but a plain reading of his primary
homeowners policy indicates that his claim falls under the “business pursuit”
exclusion. The policy also explicitly
and unambiguously excludes coverage of any “bodily injury” “arising out of any
premises ... rented to others by any insured which is not an insured
location.” It is undisputed that 937
North 14th Street was not an insured location.
By no logical legerdemain can Leben stretch Aetna's duty of defense and
coverage from his residence in Cedarburg to his multi-unit rooming house
business in Milwaukee.
Finally, Leben argues
that if the primary homeowners policy does not cover the incident, the excess
personal liability policy does. Once
again, it is necessary to look at the language of the policy. The excess policy contains the following
definitions:
3. “Business”
includes any full or part-time trade, profession or occupation, including
farming.
....
12. “Primary insurance”
or “primary insurance policy” means the types of insurance policies
shown on the Declarations that pay a loss before this policy pays. It includes renewal and replacement
policies.
The
policy contains the following exclusion:
8. any personal
injury or property damage arising out of business pursuits of
any insured or the rental of any part of any premises by any insured.
As
the above analysis indicates, coverage under this policy is similarly not
available because of the “business pursuit” and rental exclusions. The excess policy, however, contains an
exception to the exclusion for the following:
h. the regular rental
or holding for rental of any one to two-family dwelling of yours for the
exclusive use as a residence, insured by your primary insurance policy.
Leben claims that 937
North 14th Street falls under this savings clause. Leben's position is untenable considering the unambiguous
language of the provision. The
14th Street premises was not a “one to two-family dwelling,” but rather a
“Rooming House, Type I” as defined by City of Milwaukee ordinances. The 14th Street premises was a student
boarding house and not “for the exclusive use as a residence.” And finally, Leben's primary policy did not
cover 937 North 14th Street as an “insured location.” We, therefore, conclude that the savings clause does not affect
the “business pursuit” and rental exclusions.
Because of the
unambiguous language of the policies, Aetna was not required to defend Leben in
this suit. Accordingly, the order of
the trial court is affirmed.
By the Court.—Order
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.