Clear as mud: Is a home owner a “contractor”?
Gary Gustafson operated a business called Gustafson Excavating and Septic Systems. He was hired by Andrew Aho to perform landscaping and drainage work around a pond on Aho’s residential property. Gustafson was insured under a commercial general liability policy issued by Atlantic Casualty Insurance Company.
Aho, who was watching Gustafson’s employee clear brush near the pond with a brushhog, was injured when a piece of debris flew from the brushhog and hit him in the eye. Aho brought suit against Gustafson. Gustafson contacted his agent, who assured him that the incident would be covered by his CGL policy. Atlantic Casualty subsequently determined it had no duty to defend or indemnify Gustafson because the loss was excluded under the policy. Gustafson brought an action seeking declaratory relief.
The exclusion at issue was titled “Exclusion of Injury to Employees, Contractors and Employees of Contractors” and provided:
This insurance does not apply to:
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(ii) “bodily injury” to any “contractor” for which any insured may become liable in any capacity …
* * *
As used in this endorsement, “contractor” shall include but is not limited to any independent contractor or subcontractor of any insured, any general contractor, any developer, any property owner, any independent contractor or subcontractor of any general contractor, any independent contractor or subcontractor of any developer, any independent contractor or subcontractor of any property owner, and any and all persons working for and or providing services and/or materials of any kind for these persons or entities mentioned herein. [Emphasis added.]
Atlantic Casualty took the position that because Aho, the home owner, was “any property owner,” he came within the definition of “contractor” and therefore came within the exclusion for contractors. The trial court agreed, and Gustafson appealed.
On appeal, the court concluded that interpreting “any property owner” to mean someone, or some entity, who is commercially involved in the work being done was at least as plausible as the interpretation that a residential home owner falls within the category of contractor merely because work is being done on the home owner’s property.
Atlantic Casualty suggested that Gustafson’s argument amounted to asking the court to interpret the policy on the basis of his reasonable expectations. The court noted that the rule of reasonable expectations has no application to unambiguous contracts and that it found ambiguous the policy language that classified “any property owner” as a contractor.
The judgment of the lower court was reversed and the case remanded for entry of summary disposition in favor of Gustafson.
Atlantic Casualty Insurance Company vs. Gustafson-Court of Appeals of Michigan-May 26, 2016- No. 325739.