This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1998).




Depositors Insurance Company,



Brenda K. Dotray,


Jill Grabau,


Filed February 23, 1999

Reversed and Remanded

Kalitowski, Judge

Chisago County District Court

File No. C99867

Sylvia Ivey Zinn, Deborah K. Hackerson, Brendel and Zinn, Ltd., 46 East Fourth Street, Suite 804, St. Paul, MN 55101 (for respondent Depositors Insurance Company)

John H. Martin, 910 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (for respondent Brenda K. Dotray)

Thomas H. Crouch, Meagher & Geer P.L.L.P., 4200 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 (for appellant)

Considered and decided by Anderson, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.



After she was attacked and bitten by a dog, appellant Jill Grabau filed a complaint against the dog's owner, Brenda K. Dotray, to recover damages for her injuries. Respondent Depositors Insurance Company (Depositors), Dotray's home insurance carrier, sought a declaratory judgment that Depositors has no duty to indemnify or defend Dotray or to extend medical pay benefits to Grabau. Grabau challenges the district court's summary judgment order contending the district court erred because Depositors failed to establish that Dotray's dog breeding activities were a business and that, even if Dotray's activities were a business, that the "business exclusion" exception in Dotray's insurance contract applied to these facts. We reverse and remand.


On appeal from summary judgment, we consider whether there are any genuine issues of material fact, and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Interpretation of an insurance policy is a matter of law, and as such this court may determine whether the district court properly interpreted and applied the law to the particular facts of this case. State Farm Mut. Auto. Ins. Co. v. Budget Rent-A-Car Sys., Inc., 359 N.W.2d 673, 675-76 (Minn. App. 1984). An insurer denying coverage bears the burden of proof and insurance exclusion clauses must be strictly interpreted against the insurer. Reinsurance Ass'n of Minnesota v. Patch, 383 N.W.2d 708, 711 (Minn. App. 1986).


Grabau argues the district court erred in determining by summary judgment that appellant's injuries are excluded from insurance coverage because Dotray's dog breeding activities were a business. We agree. The policy states as follows:

Medical Payments to Others do not apply to bodily injury or Property damage: * * * arising out of or in connection with a business engaged in by an insured. This exclusion applies but is not limited to an act or omission, regardless of its nature or circumstance, involving a service or duty rendered, promised, owed, or implied to be provided because of the nature of the business.

Dotray's policy defines a business as a "trade, profession, or occupation."

The Minnesota Supreme Court has defined business pursuits in a homeowner's policy as

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.' * * * In excluding `business pursuits' the policy intends to exclude coverage of commercial enterprises rather than the type of activity here demonstrated.

Allied Mut. Cas. Co. v. Askerud, 254 Minn. 156, 163, 94 N.W.2d 534, 539-40 (1959) (finding business exclusion inapplicable to personal injury at work site where two men agreed to build home on property which one owned).

Similarly, in Patch, this court stated:

[W]e cannot conclude Patch's repair activities were for the purpose of earning a livelihood, or amounted to a trade, profession or occupation. The record does not document that Patch derived any profits or regular income from his repair activities. On this record we cannot conclude Patch's repair activities amounted to a "commercial enterprise" intended to generate profits or financial gain.

Patch, 383 N.W.2d at 712.

Together, Askerud and Patch indicate that Minnesota uses the two-pronged definition of business pursuit that is accepted in most jurisdictions. See Krings v. Safeco Ins. Co. of America, 628 P.2d 1071, 1074 (Kan. App. 1981) (explaining that two-prong test is followed by an overwhelming number of jurisdictions that have addressed the issue). According to this definition, a business pursuit is an activity that is regularly engaged in with an intent to generate profits or financial gain. See id. (describing the elements as continuity and profit motive).

Here, in granting summary judgment to Depositors, the district court failed to find that Dotray regularly bred and sold dogs for the purpose of earning a livelihood. See Askerud, 254 Minn. at 163, 94 N.W.2d at 539-40 (indicating that the term business refers to the type of activity in which persons regularly engage for purpose of earning livelihood or for gain such as trade, profession or occupation). Further, although the district court found that Dotray made some income from dog breeding, it did not find that Dotray made profits, or most importantly, that she intended to profit from the activity. See Patch, 383 N.W.2d at 712 (finding no commercial enterprise because there was no intent to generate profits, or to gain financially). Moreover, Dotray testified she put the money from dog breeding back into the costs of caring for the dogs and that her ultimate goal for breeding dogs was to produce dogs to show rather than to make a profit. Because the district court failed to make the proper findings, and Dotray's testimony raises genuine issues of material fact, we conclude that summary judgment on this issue was inappropriate.


Grabau also argues that even if Dotray's activities were a business, the district court erred in determining by summary judgment that the business pursuits exclusion applies because her injuries resulted from caring for a family pet, an act not solely attributable to the "business." We agree.

Dotray's policy states: "[the business pursuits exclusion] does not apply to: 1) activities which are usual to non-business pursuits." The supreme court has stated that

it is the nature of the particular act involved and its relationship, or lack of relationship, to the business that controls. * * * In order for an act to be considered part of a business pursuit, it must be an act that contributes to, or furthers the interest of, the business and one that is peculiar to it. It must be an act that the insured would not normally perform but for the business and must be solely referable to the conduct of the business.

Farmers Ins. Exchange v. Sipple, 255 N.W.2d 373, 375 (Minn. 1977) (quoting Lawrence A. Frazier, The "Business Pursuits" Exclusion in Personal Liability Insurance Policies: What the Courts have Done with it, 1970 Ins. L.J. 519, 533 (1970)) (emphasis omitted). In Sipple, the court found an assault by the insured, although it arose in a business setting, was not an act peculiar to the business activities of the insured and thus, the business pursuits exclusion did not apply. Id. Further this court has found that where an activity has a dual purpose, the business exclusion is inapplicable. See Hennings v. State Farm Fire and Cas. Co., 438 N.W.2d 680, 684 (Minn. App. 1989) (finding dual business/pleasure purpose of boat outing that led to accident rendered business exclusion inapplicable).

In granting summary judgment, the district court stated that the fact that Grabau was bitten by a house pet "was not significant" because:

* * * [T]he evidence shows that she was taking care of all of the dogs, hence was taking care of dogs which were kept as part of a business, not exclusively doing a favor for a neighbor by taking care of a pet.

However, because it is undisputed that the dog that bit Grabau was a house pet, the fact that Grabau was also tending to other "business" dogs is not dispositive. There is a fact question regarding whether the act that led to Grabau's injury was solely referable to the business, and therefore summary judgment was not appropriate.

Reversed and remanded.