This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1994).




Milbank Insurance Company,



James Wagemaker, as Personal Representative of the Estate

of Gregory O'Halloran, Decedent,


Mary Ledesma, as Trustee for the Heirs and Next of Kin

of Jose A. Ledesma, Decedent,


James Moody,



Plymouth Plumbing, et al., intervenors,


Filed December 10, 1996


Parker, Judge

Renville County District Court

File No. 65C8000841

Michael S. Kreidler, Louise A. Behrendt, Stich, Angell, Kreidler, Brownson & Ballou, P.A., 250 Second Avenue South, Suite 120, Minneapolis, MN 55401-2122 (for appellant)

William W. Thompson, Schmidt, Thompson, Johnson & Moody, 707 Litchfield Avenue Southwest, Suite 100, Post Office Box 913, Willmar, MN 56201-0931 (for respondent Wagemaker)

Bruce P. Grostephan, Peterson, Engberg & Peterson, 700 Title Insurance Building, 400 Second Avenue South, Minneapolis, MN 55401 (for respondent Ledesma)

Carol A. Kubic, Christopher A. Nelson, Pustorino, Pederson, Tilton & Parrington, P.A., 4005 West 65th Street, Suite 200, Minneapolis, MN 55435-1765 (for respondent Plymouth Plumbing and General Casualty Insurance Company)

Considered and decided by Parker, Presiding Judge, Peterson, Judge, and Willis, Judge.



Appellant Milbank Insurance Company (Milbank) brought suit seeking a declaratory judgment that it was not obligated to provide coverage to its insured for any claims or liability arising out of a motor vehicle accident involving decedent O'Halloran's 1976 International truck. Respondents, in turn, moved for summary judgment. The district court determined that neither a "business pursuits" exclusion nor a "public or livery conveyance" exclusion in the insured's personal automobile policy applied to preclude coverage, and granted respondents' summary judgment motion. Milbank appeals. We affirm.


Summary judgment shall be rendered

if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to judgment as a matter of law.

Minn. R. Civ. P. 56.03.

On appeal from summary judgment, we ask "whether there are any genuine issues of material fact" and "whether the lower courts erred in their application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). The summary judgment standard mirrors the directed verdict standard, "'which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict.'" Carlisle v. City of Minneapolis, 437 N.W.2d 712, 715 (Minn. App. 1989) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511 (1986)).

"[I]n ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burden."

Richie v. Paramount Pictures Corp., 544 N.W.2d 21, 26 (Minn. 1996) (quoting Anderson, 477 U.S. at 254, 106 S. Ct. at 2513).

The nonmoving party has the burden of producing evidence as to all material facts for which it bears the burden of proof at trial.

Goward v. City of Minneapolis, 456 N.W.2d 460, 464 (Minn. App. 1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552-53 (1986)). Although evidence must be viewed in the light most favorable to the nonmoving party and doubts and factual inferences should be resolved in favor of that party,

summary judgment on a claim is mandatory against a party who fails to establish an essential element of that claim, if that party has the burden of proof, because this failure renders all other facts immaterial.

Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994).

1. "Interpretation of an insurance policy is a question of law subject to de novo review." National Family Ins. v. Bunton, 509 N.W.2d 565, 567 (Minn. App. 1993). The court must construe policy language

according to the terms the parties have used, and the language used must be given its ordinary and usual meaning so as to give effect to the intention of the parties as it appears from the contract.

Dairyland Ins. Co. v. Implement Dealers Ins. Co., 294 Minn. 236, 244-45, 199 N.W.2d 806, 811 (1972). An insurer denying coverage under a policy exclusion bears the burden of proving the exclusion applies, and an exclusion clause must be strictly construed against the insurer. Reinsurance Ass'n v. Patch, 383 N.W.2d 708, 711 (Minn. App. 1986).

Gregory O'Halloran's auto insurance policy excluded coverage for any person

[m]aintaining or using any vehicle while that person is employed or otherwise engaged in any "business" (other than farming or ranching) * * *.

The policy definition of business provided that "'[b]usiness' includes trade, profession or occupation."

The district court found that the business pursuits exclusion in O'Halloran's auto insurance policy did not apply, based on the following facts. No party claimed that O'Halloran's water-hauling was related to his occupation of farming. In 1994, O'Halloran earned a gross income of $183,100, mostly from farming. He received only $2,075 from two personal friends, Lyle Jahnke and Paul Schmoll, for hauling water for their bottled-water business. The money paid for hauling water did not cover the cost of operating his truck. O'Halloran did not maintain business records for his water-hauling and did not promote or advertise any kind of hauling business.

The district court concluded that Milbank had presented insufficient facts to establish that O'Halloran's water-hauling was a "trade, profession, or occupation" or that the water-hauling was a "commercial enterprise" intended to generate profit or financial gain.

Milbank contends that this case is distinguishable from Allied Mut. Cas. Co. v. Askerud, 254 Minn. 156, 94 N.W.2d 534 (1959), and Patch, 383 N.W.2d 708. But, in both Askerud and Patch, the courts declined to apply business pursuits exclusions to activities that the insureds performed on a part-time basis and that were unrelated to the insureds' main occupations. Askerud, 254 Minn. at 163, 94 N.W.2d at 540; Patch, 383 N.W.2d at 712. In both cases, the insureds received some form of compensation for their activities, but not a profit or regular income. Askerud, 254 Minn. at 157-58, 94 N.W.2d at 536-37 (insured would receive either payment for his labor in constructing house or would move into house); Patch, 383 N.W.2d at 712 (insured received compensation from hardware store for repairing bikes).

In Askerud the supreme court explained:

There was no activity in the sense of a "trade, profession or occupation" being conducted on the property. The insured was regularly employed at the George A. Hormel Company and this was the only house he ever attempted to build, although he had helped friends on other occasions during his spare time. He had often engaged in repair jobs during off hours, and he and [his friend] "used to get together to make this and that together." He was not an experienced carpenter or contractor. We are of the opinion that the business contemplated by the printed provisions of the policy was a type of activity in which persons regularly engage for the purpose of earning a livelihood or for gain such as a "trade, profession or occupation." This criteria is certainly not met by the spare time endeavors of the insured in this case. In excluding "business pursuits" the policy intends to exclude coverage of commercial enterprises rather than the type of activity here demonstrated.

Askerud, 254 Minn. at 163, 94 N.W.2d at 539-40; see also Patch, 383 N.W.2d at 712 (absent evidence that insured derived profits or regular income from repairing bikes, court could not conclude that "repair activities amounted to a 'commercial enterprise' intended to generate profits or financial gain").

In this case, the record indicates that O'Halloran hauled water as a favor for his friends in his spare time and at his convenience. It is undisputed that the occupation from which O'Halloran earned his livelihood was farming. The facts alleged show that O'Halloran received compensation for hauling water but did not indicate that he derived profit from the activity. Milbank argues that the affidavits submitted by respondents were insufficient to prove O'Halloran did not profit by hauling water because the affidavits did not specifically describe the affiants' trucks or itemize the costs associated with operating such trucks. But Milbank had the burden of presenting sufficient facts ultimately to establish that the policy exclusion applied to O'Halloran hauling water. See Patch, 383 N.W.2d at 711 (insurer denying coverage under a policy exclusion has the burden of proving that exclusion applies); Goward, 456 N.W.2d at 464 ("nonmoving party has the burden of producing evidence as to all material facts for which it bears the burden of proof at trial"). Milbank did not present facts showing that O'Halloran earned a profit hauling water.

In light of Milbank's burden to present sufficient facts to prove that the business pursuits exclusion applied, and applying the rule of strict construction, we conclude that the district court properly determined the business pursuits exclusion did not apply to O'Halloran's water-hauling activities. Our conclusion is supported by O'Halloran's application for insurance, which required him to designate whether a vehicle was used for pleasure, business, or farming. Peggy Neuman, an underwriter for Milbank, stated in a deposition that the application is intended to indicate a vehicle's principal use, but not necessarily its exclusive use.

2. The public or livery conveyance exclusion in O'Halloran's policy excluded coverage for

liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.

The policy did not define public or livery conveyance.

In St. Paul Mercury Indem. Co. v. Knoph, 251 Minn. 366, 87 N.W.2d 636 (1958), the supreme court addressed the applicability of a public or livery conveyance exclusion. The court determined the exclusion did not apply when the insured, a partner in a taxicab business and acting as the dispatcher, used his personal auto (in the absence of an available cab) to respond to a call for a taxi. Id. at 369, 87 N.W.2d at 638. The court explained:

[T]he primary factor in determining whether a vehicle is used as a public or livery conveyance depends upon whether the transportation is generally available to the public rather than whether any money has been or will be paid. Thus, where the persons transported were limited to members of a club, fellow employees, or fellow show members, the courts have uniformly imposed liability upon the insurance companies even though in the latter two cases this was a habitual practice.

Id. at 369, 87 N.W.2d at 638 (footnotes omitted).

The term "public conveyance" means a vehicle used indiscriminately in conveying the public, and "not limited to certain persons and particular occasions, or governed by special terms." The words "public conveyance" imply "the holding out of the vehicle to the general public for carrying passengers for hire." The words "livery conveyance" have about the same meaning.

Id. at 369 n.8, 87 N.W.2d at 638 n.8 (citing Elliott v. Behner, 96 P.2d 852, 857 (Kan. 1939)). Courts in other jurisdictions have applied public or livery conveyance exclusions uniformly whether people or goods are being transported. See, e.g., Canal Ins. Co., Inc. v. Gensco, Inc., 404 S.W.2d 908, 910 (Tex. App. 1966); Allied Mut. Cas. Co. v. Milbank Mut. Ins. Co., 129 N.W.2d 543, 544 (S.D. 1964).

O'Halloran hauled water only for a single business owned by two of his friends. For six weeks during the year, he also hauled corn to a local cannery for himself and some neighbors. Milbank argues that O'Halloran's corn-hauling and water-hauling combined could be sufficient to constitute holding his truck out for public use. Milbank did not present facts, however, showing that O'Halloran held his truck out to the public for hire. The people for whom he performed hauling were limited to his neighbors and his close friends. Under Knoph, the district court properly determined that Milbank failed to create a material issue of fact on the application of the public or livery conveyance exclusion.

Moreover, insurance agent Diane Porath admitted she was fully apprised of the corn-hauling when she obtained the policy from Milbank for O'Halloran. An agent may bind an insurance company by her representations. Morrison v. Swenson, 274 Minn. 127, 135, 142 N.W.2d 640, 645 (Minn. 1966). Thus, Milbank considered the corn-hauling to be a farm use when it issued the policy and cannot now argue that the corn-hauling should be considered in determining whether the public or livery conveyance exclusion applied.

Because we affirm the district court's determination that neither the business pursuits nor the public or livery conveyance exclusion applied, we do not reach the remaining coverage issues raised by respondents.

3. Respondent James Wagemaker sought review of the district court's denial of his motion for attorney fees. During oral argument, Wagemaker conceded that he was not entitled to attorney fees under the supreme court's recent decision in American Standard Ins. Co. v. Le, 551 N.W.2d 923 (Minn. 1996).