Allstate loses effort to avoid coverage under homeowner policy
David Mian, the owner and sole employee of a small business, purchased a press from another company with the intention of removing a vise attached to the press, for use in his business. After removing the vise, he intended to sell the press for scrap. Several years later, it was more convenient to simply give the press to another company, Century Tool and Die. In use at Century, a defect in the press caused serious injury to Joshua Sparks. Sparks sued Mian, alleging that his negligence was a cause of the injury. Allstate provided homeowners' insurance to Mian, providing liability coverage in the event of Mian's negligence. It filed suit, asking the Court to rule that it did not have to provide coverage for this incident, because it had an exclusion in the policy for injuries resulting from the insured's "business activities."
The trial court ruled that the terms of the exclusion did not apply to void coverage for this potential liability and Allstate appealed. The Court of Appeals unanimously held that the lower court was correct. It pointed out that under prior decisions of the Court, a business activity exclusion requires evidence of a profit motive (or "economic gain") and evidence of "continuity" in order to constitute a "business." In other words, selling your used pickup doesn't put you in the "business" of selling motor vehicles.Applying this principle to the instant case, the judges unanimously agreed that since Mian never used the press in his business and never even used the vise he removed from it, his ownership and later sale of the press was not part of his "business." Furthermore, the act of "giving" the press to a third-party severed the causal link between Mian's business and the subsequent injury to Sparks. Allstate was required to provide the liability coverage it sold to Mian.