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Litz v. State Farm Fire and Casualty Co.6/27/1997
m filed a declaratory judgment action seeking, inter alia, a declaration that State Farm was not obligated to indemnify and defend Pamela and David Litz. In its complaint in the declaratory judgment action, State Farm alleged that "David and Pamela Litz were providing care and babysitting services for Stephanie Wright on a regular basis and had been receiving financial compensation for these services." The complaint also referred to the facts alleged in the complaint in the Wright's underlying tort action. In that complaint, the Wrights alleged that "David and Pamela Litz were babysitting the Minor Plaintiff Stephanie Wright" when she was injured. In the answer to the declaratory judgment complaint, Pamela Litz "denied that the alleged bodily injury arose 'out of business pursuits' of an insured, as the term 'business' is defined in the policy." David Litz "asserted that regardless of whether or not his wife, Pamela Litz, was engaging in a 'business pursuit' out of which the alleged bodily injury arose, that he was never so engaged and as such, the purported exclusion does not apply to him."
At the declaratory judgment trial, State Farm introduced evidence that Mrs. Litz's babysitting constituted a business pursuit. The Litzes countered with evidence that Mrs. Litz had only agreed to babysit as a favor to a neighbor and only for a temporary period of time. The circuit court concluded that Mrs. Litz's babysitting services constituted a business pursuit and, therefore, the business pursuits exclusion of the policy applied. On that basis, the court declared that "State Farm Fire and Casualty Company is not obligated to defend and/or indemnify Defendants Pamela J. Litz and David W. Litz in the case of Wright v. Litz."
We hold that the circuit court properly entertained the declaratory judgment action as to Pamela Litz. Mrs. Litz did not deny that she was babysitting for Stephanie Wright at the time of the accident. Rather, in defending the declaratory judgment action, she contended that the babysitting did not constitute a business pursuit within the meaning of the policy exclusion. The circuit court concluded that "the babysitting services provided by Pamela Litz at the time of the alleged injury . . . constitute a business pursuit as defined in the State Farm policy," and this issue was not raised on appeal. Thus, we affirm the declaratory judgment as it pertains to Pamela Litz.
We hold that, as to David Litz, the circuit court erred in entertaining a declaratory judgment action prior to the tort trial. The trial court decided an issue in the declaratory judgment action that is necessary to decide in the tort case against Mr. Litz. Specifically, State Farm's complaint in the declaratory judgment action alleges that Mr. Litz, as well as Mrs. Litz, babysat for Stephanie. In his answer, however, Mr. Litz asserted that, even if his wife's babysitting constitutes a business pursuit, he was never engaged in the business pursuit. Thus, the issue of whether Mr. Litz participated in the babysitting, regardless of whether it is classified as a business pursuit, is an issue to be resolved in the underlying tort case. Entertaining the declaratory judgment before the tort trial was error in this case as to Mr. Litz because in order to declare that State Farm had no duty to indemnify or defend Mr. Litz, it must first be established that Mr. Litz participated in the babysitting. As noted above, this is an issue that necessarily will be decided at the tort trial. According to Brohawn and its progeny, this issue is inappropriate for resolution in the declaratory judgment action prior to the tort trial. Accordingly, we reverse the declaratory judgment as it pertains to David Litz.
JUDGMEN
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