Stanley v. American Fire & Casualty Co
In Stanley v. American Fire & Casualty Co., 361 So. 2d 1030 (Ala. 1978), a child attending a day care fell into a fireplace and suffered injuries while the day care provider was making lunch for herself, her own child, and the children attending the day care.
The Stanley court held that the business-pursuits exclusion applied, but the exception did not apply. According to the court, for purposes of analyzing the exception, the relevant activity was not preparing lunch, but rather, the day care provider's failure to supervise.
Because the day care provider's failure to supervise was not an activity usual to non-business pursuits, the exception to the exclusion did not apply. See Stanley, 361 So. 2d at 1032.
In reaching its conclusion that the case fell within the business pursuits exclusion of the homeowner policy, but not within the exception for activities that are usual to nonbusiness pursuits, the court rejected the Gulf Insurance Co. v. Tilley, 280 F. Supp. 60 (N.D. Ind. 1967) analysis:
"In Tilley, the exclusionary clause was held inoperative where baby care was furnished for consideration, and the baby sustained burns when she overturned a coffee percolator. The district trial court assumed that the child care was a business pursuit, but characterized insured's coffee brewing for herself and a guest as an activity not connected with baby care, thus ordinarily incident to non-business pursuits. This analysis is questionable. The baby was burned (Page 7) because of the condition on the premises, and the baby's own activity. The business of child care contemplates the exercising of due care to safeguard a child of tender years from household conditions and activities; and, any activity of the insured in this regard from which injury results cannot logically be called an activity ordinarily incidental to a non-business pursuit. In other words, the activity referred to is failure to supervise rather than making coffee for a third party." (Id. at 1032.)
The court recognized that "the exclusionary provision is poorly worded and could have been written with more specificity," id. at 1033, but concluded that the relevant activity for purposes of the insurance policy language was "not preparing lunch, which would ordinarily be incident to a non-business pursuit, but rather to the failure to properly supervise a young child." Id.