Fall from Cherry on Top But No Cake

Business Exclusion Clear and Enforceable

When a farmer allows individuals access to the farm so they can pick cherries off trees in the orchard and buy the cherries at a lesser price than pre-picked cherries it is doing the business of farming. That is a reason why most farmers will buy a business liability policy to protect against the exposure of injury to the public picking cherries off the farmer’s trees. A homeowners policy is not designed to cover business losses.

In Western National Assurance Company v. John And Linda Robel, Individually And As Husband And Wife; And Robel’s Orchard, A Washington Corporation And/Or Sole Proprietorship Owned By John And Linda Robel; Vicki Posa, A Single Person, No. 35394-0-III, Court Of Appeals Of The State Of Washington Division Three (October 23, 2018) resolved an appeal by Vicki Posa from the trial court’s order granting summary judgment to respondent Western National Assurance Company concerning the existence of insurance coverage under a homeowners policy for an injury occurring in an orchard.

FACTS

Ms. Posa was injured in a fall from a three-legged ladder while picking cherries at a Green Bluff area orchard operated by John and Linda Robel. The Robels offered both pre-picked and u-pick options for customers.

Ms. Posa and a companion arrived at the Robel orchard to pick cherries for themselves. Ms. Posa and her companion spoke to a man named John and each were outfitted with a basket that strapped to the body of the picker. They were directed to the appropriate section of the orchard and told where ladders could be located.

The ladders are ten feet tall and three-legged. While using a ladder, Ms. Posa became unbalanced as the basket filled. She fell, breaking her hand and left foot. She also sustained injuries to her neck, hip, and shoulder. She underwent two surgical procedures and was expected to have additional surgery.

Ms. Posa filed suit against the Robels seeking compensation for her injuries. She alleged that the Robels, doing business as Robel’s Orchard, had failed to maintain the orchard in a safe manner and also had failed to properly instruct her on use of the ladder. Western National appointed an attorney to defend the suit and counsel appeared for the Robels.

Western National sued the Robels and Ms. Posa seeking declaratory relief. Western National asserted that the Robel’s homeowner’s policy did not provide liability coverage for the couple’s business operations. The Robels did not appear in the declaratory action and, at some point, filed for bankruptcy protection. Ms. Posa appeared and defended the declaratory action.

In response to the summary judgment motion, Ms. Posa contended that the business was farming and that the occasional self-pick customer was not within the scope of the farm’s primary operation. The trial court determined that the business exclusion provision was not ambiguous and operated to deny coverage for Ms. Posa’s injuries.

ANALYSIS

The appellate court was asked to determine whether a customer’s self-picking of cherries is a part of the business of farming.

Interpretation of an insurance policy is a question of law. Insurance policies are construed as contracts, so policy terms are interpreted according to basic contract principles. The policy is considered as a whole, and is given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance. If the language is clear, the court must enforce the policy as written and may not create ambiguity where none exists. A clause is only considered ambiguous if it is susceptible to two or more reasonable interpretations. If an ambiguity exists, the clause is construed in favor of the insured.

The policy issued by Western National includes the following definition: “4. ‘Business’ means a trade, a profession, or an occupation including farming, all whether full or part time. This includes the rental of property to others. It does not include the occasional rental for residential purposes of the part of the ‘insured premises’ normally occupied solely by ‘your’ household.”

The policy excluded from liability coverage any “bodily injury . . . resulting from activities related to the ‘business’ of an ‘insured’, except as provided by Incidental Business Coverage.”  Against the exclusions, Ms. Posa argues that there are at least factual questions about whether or not the Robels were engaged in the “business” of farming, whether self-service picking falls within the farming business, and whether instructing on proper ladder use falls within the couple’s “business.”

The appellate court found that the only conclusion to draw from the evidence is that the Robels were engaged in the business of farming. They had a cherry orchard and sold the produce to the public. That is how farming works—a crop is planted and eventually harvested for the benefit of those who consume the crop.

Whether or not the Robels made much money from u-pick operations does not change the nature of their business. The fact that there were different options for harvesting the produce likewise does not alter those facts; the identity of the harvester does not change the nature of a farming operation. It was the orchard produce that drew Ms. Posa to the Robel farm on that fateful day. The fact that the Robels may not have been working that particular day does not change the nature of their operation. They farmed by producing a crop, not by harvesting seven days a week.

Similarly, it cannot seriously be contested that using a ladder to pick cherries from a cherry tree is not part of the farming task of harvesting the crop. Any negligence in failing to properly instruct on the use of the three-legged ladder was related to the family’s farming operations. In short, the business exclusion applied to the Robels’ cherry orchard.

The appellate court concluded that the self-pick operations are part of the business operations of the orchard. The business exclusion to the homeowners policy precluded liability coverage and, therefore, the trial court correctly concluded that there was no coverage under the policy for Ms. Posa’s business-related injury and that Western National did not owe a duty to defend or indemnify the Robels.

ZALMA OPINION

A cherry orchard is a business. Ms Posa was injured as a customer of that business. She was injured while picking cherries from the Robels’ orchard. Had the Robels’ puchased a business or farm policy that covered their liability to third parties as a result of the operation of the farm Ms. Posa and the Robels would have a case against Western National or the farm insurer. They took their chances and lost resulting in bankruptcy.