Defendant Dolosich was injured when she was bitten by a horse while riding on property owned by policyholder, Stecz. She sued Stecz. Steczs insurance company filed this lawsuit for a declaration that it was not obligated to defend Stecz in that lawsuit because the accident was not covered by Seczs homeowners policy due to the business exclusion in that policy. The trial court agreed with the insurance company.
The Court of Appeals agreed with that decision on appeal. The boarding activity operated out of Steczs property was a business, although not one in which a profit had yet been shown. Nevertheless, because the boarding activity was engaged in with a profit motive it was a business activity and therefore excluded from the homeowners policy.
Defendants-appellants Mariann and James Dolosich appeal the decision of the Cuyahoga County Common Pleas Court granting summary judgment in favor of plaintiff-appellee State Automobile Mutual Insurance Company. For the reasons that follow, we affirm.
On September 20, 1995, Mariann Dolosich was injured when she was attacked and bitten by a horse in the indoor riding arena of the Dogwood Trails stables, located at 954 Center Road, Hinckley, Ohio. The property is owned by appellant George Stecz. At the time of the incident, Stecz was covered by State Automobile Insurance Company Homeowner's Policy, policy number HDP4429397, which provided coverage for bodily injury, property damage and medical payments to others resulting from an accident during the policy period.
On January 24, 1997, Mariann and James Dolosich filed a personal injury lawsuit in the Court of Common Pleas of Medina County, Ohio, naming Dogwood Trails, George Stecz and Connie Rosborough as defendants. Mariann Dolosich, et al. v. Dogwood Trails, et al., Medina County Common Pleas, Case No. 97CIV0323.
On September 9, 1997, State Automobile Insurance Company filed this declaratory judgment action seeking a declaration that Stecz's homeowner's policy does not provide for a defense or indemnification of George Stecz, Connie Rosborough or Dogwood Trails in the Medina County personal injury lawsuit.
The parties took the depositions of Mariann Dolosich, Connie Rosborough and George Stecz. Mariann Dolosich testified that in July or August of 1995, she responded to an advertisement in a local newspaper regarding the sale or rental of a horse at Dogwood Trails. When she drove up to the property, she saw a sign near the driveway which said "Dogwood Trails." Dolosich met with Connie Rosborough, who informed Dolosich that she was "in charge of running things" at Dogwood Trails. Dolosich testified that she told Rosborough that she wanted to lease a horse named Patches, but after checking with George and George's ex- wife Josephine, who lived with George, Rosborough informed her that she could not lease Patches. Eventually, Dolosich and Rosborough agreed that Dolosich would lease a horse named Treasure for $150 per month. In exchange, Dolosich could ride and groom Treasure whenever she wanted. After riding Treasure a few times, however, Dolosich decided that she was not comfortable on him, so she and Rosborough arranged for Dolosich to lease a horse named Zack at the same price. Dolosich testified that she made at least two lease payments of $150 each to Dogwood Trails.
During July and August 1995, Dolosich rode Zack several times a week. Dolosich testified that on these occasions, she observed several other people who boarded their horses at Dogwood Trails either riding or grooming their horses.
Dolosich testified that she was injured on September 20, 1995, while she was riding Zack in the indoor riding arena at Dogwood Trails. A horse named Skip, who was also being ridden in the indoor arena, jumped on Zack, knocked Dolosich off her horse, and then bit her arm and back.
Connie Rosborough testified that the genesis of her business arrangement with George and Josephine was in January 1995, when she responded to a newspaper advertisement regarding the rental of one of the barns on Stecz's property. Rosborough telephoned Stecz and spoke with him about renting the arena barn, but the rental price was too high. Approximately one month later, Rosborough called Stecz to discuss an arrangement whereby she could board her horse at Stecz's barn in exchange for her work around the barn. Rosborough testified that in a subsequent meeting, she, George, and Josephine discussed starting a stabling, boarding and/or livery service on the premises. Rosborough testified that because the cost of insurance for a livery operation was too high, she, George and Josephine decided to establish a horse boarding and stabling business on the premises. Rosborough testified further that they decided to forego liability insurance on the business because the cost of the premiums was too high.
According to Rosborough, Josephine decided upon the name "Dogwood Trails" and then painted a sign, stating "Dogwood Trails, Boarding," which Rosborough and George hung up near the driveway to the barns. It was agreed that Rosborough would act as the manager of the business and she had cards printed up identifying her as the manager at Dogwood Trails. Rosborough also distributed flyers in the local area regarding boarding, leasing and trailering horses at Dogwood Trails. Rosborough testified that she, George and Josephine jointly purchased two horses and a horse trailer for Dogwood Trails, with the intent of renting or leasing the horses for the business.
In June 1995, Josephine opened a checking account, under the name "George Stecz d/b/a Dogwood Trails," at Strongsville Savings Bank. Rosborough testified that she, George and Josephine were joint signators on the account, which was used to pay operating expenses for the business. Rosborough testified that she deposited Dolosich's payments and the checks received from the persons who were boarding their horses at Dogwood Trails into the account and wrote checks on the account to pay for grain, hay and two stable hands who worked at Dogwood Trails.
In his deposition, George Stecz testified that he is the owner of Cleveland Metallizing, Inc., where he works full-time. Stecz acknowledged that at the time of Dolosich's injury, he was conducting a "boarding business" at Dogwood Trails. Stecz testified that at the time of Dolosich's injury, there were four horses boarded at Dogwood Trails, although the goal was to board twenty-two horses, the maximum capacity of the barn, for a fee of $185 to $200 per month per horse.
Stecz testified that Rosborough was to be a "player" in the business. He admitted that he had a business relationship with Rosborough when Dolosich was injured, but denied that he was aware of any leasing arrangement between Dolosich and Dogwood Trails. Stecz also denied that he ever "rented" horses. Stecz admitted, however, that he took deductions on his income taxes based upon business expenses incurred by Dogwood Trails.
On June 15, 1998, State Auto filed a motion for summary judgment, arguing that Stecz's homeowner's insurance policy excludes coverage for injury or property damage arising out of Stecz's "business pursuits," and, therefore, State Auto has no duty to defend or indemnify Stecz, Dogwood Trails or Rosborough in the Medina County personal injury action. Appellants opposed the motion. On July 16, 1998, the trial court granted State Auto's motion for summary judgment. On August 6, 1998, the trial court denied appellants' motion for reconsideration.
Appellants timely appealed, assigning one assignment of error for our review:
THE TRIAL COURT ERRED IN FIND[ING] THAT MRS. DOLOSICH'S INJURY AROSE OUT OF OR IN CONNECTION WITH A BUSINESS ENGAGED IN BY GEORGE STECZ.
We review the trial court's granting of summary judgment de novo in accordance with the standards set forth in Rule 56(C) of the Ohio Rules of Civil Procedure. North Coast Cable v. Hanneman (1994), 98 Ohio App.3d 434, 440, 648 N.E.2d 875. To obtain a summary judgment under Civ.R. 56(C), the moving party must demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The moving party bears the initial burden of informing the court of the basis for the motion and identifying those portions of the record which support the requested judgment. Vahila v. Hall (1997), 77 Ohio St.3d 421, 430, 674 N.E.2d 1164. If the moving party discharges its initial burden, the party against whom the motion is made then bears a reciprocal burden of specificity to oppose the motion. Id. See, also, Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 526 N.E.2d 798. Summary judgment is appropriate if, after construing the evidence most favorably for the party against whom the motion is made, reasonable minds can reach only a conclusion that is adverse to that party. State ex rel. The v. Cos. v. Marshall (1988), 81 Ohio St.3d 467, 473, 692 N.E.2d 198; Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 364 N.E.2d 267.
The construction of an insurance contract, like that of any other contract, is a matter of law. Hybud Equip. Corp. v. Sphere Drake Ins. Co., Ltd. (1992), 64 Ohio St.3d 657, 597 N.E.2d 1096; Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 374 N.E.2d 146. Courts are required to interpret the contract in such a way as to give effect to the intention of the parties at the time the agreement was entered into, as evidenced by the provisions of the contract. Dealers Dairy Products Co. v. Royal Ins. Co. (1960), 170 Ohio St. 336, 164 N.E.2d 745; Progressive Specialty Ins. Co. v. Easton (1990), 66 Ohio App.3d 177, 583 N.E.2d 1064.
Because the insurance carrier typically drafts the policy, where policy language is ambiguous, that language is to be construed in the way that is most favorable to the insured. American Financial Corp. v. Fireman's Fund Ins. Co. (1968), 15 Ohio St.2d 171, 173, 239 N.E.2d 33. This general principle applies with even greater force to language that purports to limit or to qualify coverage. Id.; Watkins v. Brown (1994), 97 Ohio App.3d 160, 646 N.E.2d 485, paragraph six of the syllabus. If an exclusionary clause will reasonably admit of an interpretation that would preserve coverage for the insured, then as a matter of law, a court is bound to adopt the construction that favors coverage. Id.; Lester v. State Farm Mut. Auto. Ins. Co. (1989), 64 Ohio App.3d 52, 54, 580 N.E.2d 793. If, however, an exclusionary clause has only one reasonable interpretation, a court is bound to enforce the provision accordingly. See Progressive Specialty Ins. Co. v. Easton (1990), 66 Ohio App.3d 177, 180, 583 N.E.2d 1064.
As an initial matter, we note that neither appellants nor appellee cite the correct applicable exclusion from Stecz's policy. Appellants argue that the policy excludes coverage for personal liability and medical payments to others "arising out of or in connection with a business engaged in by an insured." Appellants contend that the exclusion does not apply, however, to "activities which are usual to non-business pursuits." Appellee, on the other hand, contends that Stecz's homeowner's policy contains the following exclusion:
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 an insured or the rental or holding for rental of any part of any premises by an injured.
Neither appellants nor appellee are correct.
Appellee cites the exclusion before it was modified in 1987 by the Supplemental Provisions to the policy. As modified, the exclusion provides:
1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage: * *
b.(1) arising out of or in connection with a business engaged in by an insured. This exclusion applies but is not limited to an act or omission, regardless or its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the business;
b.(2) arising out of the rental or holding for rental of any part of any premises by an insured. This exclusion does not apply to the rental or holding for rental of an insured location:
(i) on an occasional basis if used only as a residence:
(ii) in part for use only as a residence, unless a single family unit is intended for use by the occupying family to lodge more than two roomers or boarders; or
(iii) in part, as an office, school, studio or private garage.
As modified, the exclusion does not contain an exception for activities which are usual to non-business pursuits. "Business" is defined in the policy as including "trade, profession, or occupation."
In Lenart v. Doversberger (May 12, 1994), Cuyahoga App. Nos. 65372, 65373, this Court recognized that activities which are not the principal business of an insured can nevertheless constitute a "business pursuit" for purposes of a policy exclusion. The Court stated:
In State Farm Fire & Casualty Co. v. Hiermer, 720 F.Supp. 1310 (S.D.Ohio, 1988), aff'd, 884 F.2d 580 (6th Cir.1989), the federal court applying Ohio law held that in order for an activity to constitute a "business pursuit," two elements must be satisfied, viz., (1) continuity; and (2) profit motive. The federal court relied in part upon Asbury v. Indiana Union Mutual Insurance Co. (1982), 441 N.E.2d 232, 240, in which the Indiana court interpreted the two elements requisite to a business pursuit as follows:
As to the first, there must be a customary engagement or a stated occupation; and, as to the latter, there must be shown to be such activity as means of livelihood, gainful employment, means of earning a living, procuring subsistence or profit, commercial transactions or engagements.
The Court explained that a profit motive does not necessarily require an actual profit and, further, that actual profit need not be an immediate or even primary consideration of a business pursuit. Id.
In their assignment of error, appellants argue that the trial court erred in granting State Auto's motion for summary judgment because Stecz's horse boarding business lacked continuity and a profit motive and, therefore, was not a business engaged in by Stecz. Appellants contend that there was no continuity to the business because the Steczs had started boarding horses only eight months prior to Mariann Dolosich's injury. Further, they contend there was no profit motive for the business because the income for the four horses boarded at Dogwood Trails amounted to less than five hundred dollars per month and was used "exclusively" to pay the expenses of maintaining the horses that resided at Dogwood Trails. We disagree.
Regardless of whether Stecz's horse boarding business realized an actual profit, continuity and profit motive were evident. First, eight months of continued operation is sufficiently long to demonstrate continuity. Moreover, although the business began only eight months prior to Dolosich's injury, the business clearly had a long-term plan. Stecz testified that although there were only four horses boarded at Dogwood Trails at the time of Dolosich's injury, the plan was to eventually board twenty-two horses, the maximum capacity of the barn, for a fee of $185 to $200 per month per horse.
It is also apparent that the business was started with a profit motive. Stecz testified that Rosborough was to be a "player" in the business and, in fact, that she had entered into the business with him and Josephine because there was a possibility that she might be laid off at her current secretarial position and she was hoping that Dogwood Trails could replace her current job. Stecz also testified that he took deductions on his income taxes based upon the business expenses incurred by Dogwood Trails.
Appellants also argue that Stecz's primary "trade, profession, or occupation" is his metallizing company. Therefore, they contend, even if Stecz was boarding horses at Dogwood Trails for a fee, because the business is not his primary business, it is not excluded from coverage. Appellants' argument is without merit.
The "Definitions" section of Stecz's policy provides that " 'business' includes trade, profession or occupation." There is no reference in the definition to the primary trade, profession or occupation of the insured. Moreover, because the word "includes" is a term of expansion, the definition here must be read to mean that "business" includes, but is not limited to, the primary trade, profession or occupation of the insured.
Appellants also argue that Dolosich did not board a horse at Dogwood Trails and was not injured by a boarded horse. Rather, she was injured by a horse that she was leasing from George Stecz on a monthly basis. Therefore, appellants contend, even if Stecz was running a "horse boarding" business at Dogwood Trails, Dolosich's injury did not arise out of his operation of the business. We disagree.
Connie Rosborough testified that she passed out flyers in the local area regarding boarding and leasing horses at Dogwood Trails. She also testified that she, George and Josephine jointly purchased two horses for Dogwood Trails, with the intent of renting or leasing the horses for the business. Moreover, although Stecz testified that he was not aware that Dolosich was leasing Zack from Dogwood Trails, he also testified that he had seen Dolosich riding Zack in the indoor riding arena at Dogwood Trails several times prior to the accident on September 20, 1995. Accordingly, it is apparent that leasing horses was part of the business of Dogwood Trails and that Dolosich's injury arose out of the business.
Appellants also argue that the business exclusion in Stecz's homeowners policy does not apply to conduct ordinarily incident to a non-business pursuit. Appellants contend that Stecz's ownership of horses was a non-business pursuit. Therefore, appellants contend, because Mariann Dolosich was merely "exercising" Zack on Stecz's property, her injury arose out of conduct ordinarily incident to a non-business pursuit. Appellants' argument has no merit.
First, we note that Stecz's policy does not contain the exception argued by appellants. Furthermore, we have already determined that Stecz was engaged in the business of boarding and leasing horses at Dogwood Trails. Contrary to appellants' argument, Dolosich was not merely "exercising" Zack for Stecz when she was injured. Rather, she was riding Zack in the indoor riding arena at Dogwood Trails for her pleasure, pursuant to her lease arrangement with Dogwood Trails. Accordingly, even if Stecz's policy did contain an exception for conduct ordinarily incident to a non-business pursuit, the exception would not apply to Dolosich's injury.
Courts must interpret insurance contracts "to the end that a reasonable interpretation of the insurance contract consistent with the apparent object and plain intent of the parties may be determined." Lenart, supra, citing Eick v. Central Reserve Life of N. America Ins. Co. (July 9, 1987), Cuyahoga App. No. 52188, unreported. The fact that Stecz, Josephine and Rosborough investigated the cost of liability insurance for Dogwood Trials, but decided not to purchase it because the premiums were too high, demonstrates that Stecz knew that his State Automobile homeowner's policy would not cover the business.
Accordingly, the trial court did not err in granting State Auto's motion for summary judgment. State Automobile has no duty to defend or indemnify George Stecz, Connie Rosborough or Dogwood Trails in the Medina County personal injury lawsuit.
Appellants' assignment of error is overruled.
It is ordered that appellee recover of appellant its costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
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