469_C285
DOG BITE
TRIGGERS COVERAGE DISPUTE
|
Homeowners |
Dog Bite |
|
Business Exclusion |
Severability |
New Jersey Manufacturers
Insurance Company issued a homeowners policy to Linda and Joseph Brady. The
policy contained a business pursuits exclusion that excluded liability coverage
for bodily injury or property damage "arising out of or in connection with
a business engaged in by an insured." This exclusion applied to all insureds, notwithstanding the policy's "severability
of insurance" clause, which provided: "[T]his insurance applies
separately to each insured."
Linda Brady was hired by
Linda Argent to care for Argent's infant son, Vincent, in the Brady home. While
in Linda Brady's care, Vincent was bitten in the face by a dog. The dog
ostensibly belonged to the Bradys' son, Michael, who lived with them. When Argent
sued the family, the Bradys sought a defense and indemnification under the
homeowners policy. New Jersey Manufacturers denied coverage, citing the
business pursuits exclusion. The Bradys then filed a declaratory judgment
action, seeking a finding that New Jersey Manufacturers owed them coverage.
Michael Brady also filed a claim. The court found that there was an issue of
fact as to whether Linda Brady was operating a business on the premises. The
Bradys also denied ownership of the dog. Nevertheless, the lower court
evaluated the coverage issue as if Linda Brady was operating a business and the
dog was owned by Michael Brady. It found that Michael Brady was "an
insured" and that the severability clause of the policy operated to remove
him from the business pursuits exclusion. New Jersey Manufacturers appealed
this decision.
The appeal was heard by the
Superior Court of New Jersey, Appellate Division. The court noted that the
business pursuits provision excluded coverage for injury arising out of or in
connection with a business engaged in by "an" insured, not
"the" insured. In addition, the business pursuits exclusion did not
make specific reference to the severability clause. The issue, then, was
whether New Jersey Manufacturers' failure to use "any" rather than
"an" in the business pursuits exclusion, or its failure to
specifically reference the severability clause in connection with the business
pursuits exclusion, resulted in an ambiguity that necessitated a finding of
coverage for the Bradys.
The court found that New
Jersey Manufacturers' use of the phrase "an insured" as opposed to
"any insured" or "the insured" did not create an ambiguity,
and that it could be reasonably understood to include Linda, Joseph, or Michael
Brady. The court also found that the policy's severability clause (or the
absence of a disclaimer of the applicability of that clause) did not render the
homeowners coverage ambiguous. While it might have been preferable if the
severability clause had followed the business pursuits exclusion, its absence
did not create an ambiguity. The court found "no principled reason to
afford coverage" to the Bradys. It noted that business risk insurance was
available to Linda Brady, and that Brady did not choose to purchase it when she
decided to accept the job of caring for Vincent Argent. Instead she had a
policy that excluded business risks. The court also noted that Michael Brady
was not "an innocent co-insured." If (Michael were) found to be the
owner of the dog, he would be responsible for the dog's aggressive conduct.
Weighing all of these factors, the court found that New Jersey Manufacturers
did not owe coverage to Michael Brady.
The decision of the lower
court was reversed.
Argent vs. Brady vs. New
Jersey Manufacturers Insurance Company-Superior Court of New Jersey, Appellate
Division-June 27, 2006-901 Atlantic Reporter 2d 419