THIS MORNING, THE TEXAS SUPREME COURT ruled that leasing your yard for the mining of limestone is a business pursuit and excluded under a Homeowners policy.  Seems to make sense to us, you know, like duh, but the Court insisted this is a case of first impression.  Thus, we must carry out our journalistic duty and report it to you.

In this action to declare coverage under a homeowner’s policy, involving the duty to defend against lawsuits arising from the policyholder’s lease for mining on her property, the principal issue is whether the policyholder’s claim falls under the policy’s “business pursuits” exclusion.  Hallman leased her property for limestone mining, which led to lawsuits by neighboring property owners.  Allstate sued to determine whether Hallman’s policy covered her claim.  In the policy definitions section “occurrence” was defined as an “accident, including exposure to conditions” resulting in bodily injury or property damage.  The policy’s “business pursuits” exclusion stated the policy did not cover bodily injury or damage “arising out of or in connection with a business engaged in by an insured.”  The policy defined business as “trade, profession or occupation.” The trial court granted summary judgment for Allstate.  The court of appeals reversed.

The Supreme Court reversed and rendered holding that Hallman’s lease to the mining company constituted a business pursuit that excludes the allegations from policy coverage. Although the Court notes that the business-pursuits exclusion is a common insurance policy provision, the Court has never directly addressed its application.  The San Antonio Court of Appeals, in United Services Automobile Ass’n v. Pennington , 810 S.W.2d 777 (1991), defined business pursuits in a case involving an exclusion provision substantially identical to this one, as involving two elements:  (1) continuity or regularity of the activity, and (2) a profit motive, usually as a means of livelihood, gainful employment, earning a living, procuring subsistence or financial gain, a commercial transaction or engagement.  By narrowly limiting its focus to Hallman’s initial execution of the lease, the court of appeals misconstrued the nature of commercial leasing activity.  Hallman executed only one lease, but until that lease expires she is perpetually engaged in the act of leasing her property to the mining company and meets the continuity requirement.  And in this circumstance, a profit motive can be inferred from the nature of the activity.  ALLSTATE INS. CO. v. HALLMAN (TEX 2004).   You can access the opinion and briefs at:

Opinion in HTML

Opinion in PDF

Online Briefs

FROM THE DEPARTMENT OF “NOTHING BETTER TO DO, SO LET’S PASS A LAW ANYWAY!” comes this:  Over the protest of some child health advocates, the Texas House passed a bill which protects a mother’s right to send a cupcake to school in her kid’s lunchbox.   In an inspiring show of bi-partisan spirit, the leader of the House Democratic Caucus referred to a Republican colleague as “Sugarplum.”

LEGISLATIVE SHORTS:  This week, an asbestos reform bill was filed in the Texas Senate which would establish restrictive medical criteria as to who qualifies to claim injury due to asbestos exposure.  Thanks to the Texas Associations of Defense Counsel, a bill was filed in the Senate which would restore the dollar for dollar settlement credit in non-medical litigation.