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Stuart v. American States Insurance

March 11, 1997

NEOMA STUART, APPELLANT,
v.
AMERICAN STATES INSURANCE, COMPANY, A FOREIGN CORPORATION, RESPONDENT.



Appeal from Superior Court of Yakima County. Docket No: 93-2-02044-8. Date filed: 09/08/95. Judge signing: Hon. Michael Leavitt.

Petition for Review Granted September 3, 1997,

Authored by Philip J. Thompson. Concurring: Dennis J. Sweeney, John A. Schultheis.

The opinion of the court was delivered by: Thompson

THOMPSON, J. Neoma Stuart was injured in a pedestrian/bicycle accident. Jody Collins, a foster child placed with Tom and Patricia McCabe, was on an outing with a foster agency representative riding his bike, when he struck Ms. Stuart. The McCabes had a homeowners policy with American States Insurance (ASI). Jody assigned his claim against ASI to Ms. Stuart, who then sued ASI. ASI moved for summary judgment claiming the business pursuits exclusion applied because the McCabes' foster home constituted a business. Ms. Stuart also moved for summary judgment. The court granted ASI's motion and denied Ms. Stuart's motion. Ms. Stuart appeals both orders claiming (1) a foster home is not a business; and (2) even if it is a business, the act of riding a bicycle is not an activity related to the conduct of operating a foster home. We reverse the order granting summary judgment to ASI and remand for trial.

The facts of this case are not in dispute. On August 5, 1991, Jody Collins, a bicyclist, struck Neoma Stuart, a pedestrian, on the Yakima Greenway. Jody Collins was a foster child living in the home of Tom and Patricia McCabe at the time of the accident. The McCabes had a standard homeowners policy with ASI.

At the time of the accident, the foster child was on an outing with the Yakima Valley Farm Worker's Clinic (YVFWC). The YVFWC provided developmental therapy to foster children placed in the McCabe residence.

The McCabes received their license to operate a foster home in December 1986 or January 1987. They had a contract with YVFWC to provide foster care for any children the State or the YVFWC might place with them. Since 1986, 12 children have been placed in their care. The McCabes have fostered as many as five children at one time. The average length of time a child has stayed with the McCabes is two to three years. The McCabes are reimbursed by the State for expenses associated with caring for the children. They receive from $369 to $870 per month per child, depending on the special needs of each child. The McCabes fill out and submit vouchers to the YVFWC each month. They do not declare the money they receive as income, nor do they claim their foster children as dependents. Both Mr. and Mrs. McCabe work outside the home.

Prior to receiving their license to operate the foster home, the McCabes applied for a homeowners policy. ASI issued them a policy which excluded injuries or property damage "arising out of business pursuits of an insured." The McCabes never informed ASI that thereafter they became a licensed foster home. According to ASI, had it known, it would have either increased their premiums or canceled the policy. ASI has a company policy that it will not insure homes in which more than two children are placed at any one time.

Ms. Stuart filed a claim against YVFWC for negligent supervision, and Jody Collins for general negligence. Jody Collins tendered his defense to ASI. ASI denied coverage due to the business pursuits exclusion. Ms. Stuart settled her claims with YVFWC and Jody Collins, and at that time, Jody assigned his claim against ASI to Ms. Stuart. Ms. Stuart then brought this action against ASI. Both Ms. Stuart and ASI moved for summary judgment. The court granted summary judgment in favor of ASI based upon the business pursuits exclusion. Ms. Stuart appeals and asks this court to reverse both the order denying her motion and the order granting ASI's motion.

When reviewing a summary judgment, the appellate court engages in the same inquiry as the trial court. McGreevy v. Oregon Mut. Ins. Co., 74 Wash. App. 858, 863, 876 P.2d 463 (1994), aff'd, 128 Wash. 2d 26, 904 P.2d 731 (1995). Summary judgment is appropriate when no genuine issues of material fact exist. Id.

Business Pursuits Exclusion

Ms. Stuart contends a foster home is not a business pursuit under the law, and thus the exclusion does not apply. Washington has analyzed the business pursuits exclusion in four cases. Stoughton v. Mutual of Enumclaw, 61 Wash. App. 365, 810 P.2d 80 (1991); Rocky Mountain Cas. Co. v. St. Martin, 60 Wash. App. 5, 802 P.2d 144 (1990), review denied, 116 Wash. 2d 1026, 812 P.2d 102 (1991); Transamerica Ins. Co. v. Preston, 30 Wash. App. 101, 632 P.2d 900 (1981); U.S. F. & G. Ins. Co. v. Brannan, 22 Wash. App. 341, 589 P.2d 817 (1979). Two of those cases provide tests for determining if an activity qualifies as a business pursuit. Stoughton, 61 Wash. App. at 369; Rocky Mountain, 60 Wash. App. at 7.

In Rocky Mountain, the issue was whether babysitting fell under the business pursuits exclusion of a homeowners policy. Id. at 6. The court considered two tests:

(1) baby-sitting is a business pursuit if it is done on a regular and continuous basis for compensation; or (2) baby-sitting is a business pursuit if it is continuous and motivated by profit. ...


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