Salzi v. Virginia Farm Bureau Insurance

Present: 	All the Justices
VICTOR H. SALZI, ET AL.
OPINION BY JUSTICE LEROY R. HASSELL, SR.
v. 	Record No. 010438 	January 11, 2002
VIRGINIA FARM BUREAU MUTUAL
INSURANCE COMPANY
FROM THE CIRCUIT COURT OF CHARLOTTE COUNTY
Charles L. McCormick, III, Judge
In this appeal, we consider whether a provision in an
insurance contract is ambiguous and, therefore, unenforceable.
Victor H. and Lorraine Salzi filed their amended motion
for judgment against Virginia Farm Bureau Mutual Insurance
Company (Virginia Farm Bureau). 	They alleged that Virginia
Farm Bureau breached its insurance contract by failing to
indemnify them for damages sustained to a barn as a result of
a hurricane. 	The parties entered into a stipulation of facts,
and the litigants submitted the matter to the circuit court
for summary judgment on the issue whether a business use
exclusion in the contract absolved Virginia Farm Bureau of any
obligation to pay the stipulated damages. 	The circuit court
held that the exclusion was clear and unambiguous and that
Virginia Farm Bureau had no duty to indemnify the Salzis for
their loss. 	The circuit court entered a final judgment, and
the Salzis appeal.

Victor H. and Lorraine Salzi were the named insureds
under a homeowners insurance policy issued by Virginia Farm
Bureau. 	The property insured included a barn that had an
actual cash value in excess of $16,120.
On September 15, 1996, the barn collapsed. 	"At the time
of the [l]oss, the barn contained between 1,500 and 3,000
bales of hay, which measured approximately 2' x 4' each."
James Renneth Marston owned the hay that was stored in the
barn. 	Marston operates a tobacco farm "with a profit motive
in Charlotte County." 	Marston raised tobacco "over more than
115 acres in Charlotte, Appomattox and Campbell Counties." 	He
raised the hay stored in the Salzis' barn "as part of his
normal crop rotation in his tobacco farming operation."
Marston did not have sufficient space on his own farm to store
the hay, and he "asked for and received permission from Victor
Salzi to store hay in the barn." 	Marston had "free access to
the barn." 	Marston did not need permission from the Salzis
when he wanted access to the barn.
Marston had not used the Salzis' barn in the past.
Marston did not rent the barn from the Salzis, nor had he
discussed rental terms with them. 	"Marston thanked Salzi for
allowing him to use the barn, and gave Salzi $100 as a
neighborly gesture." 	Marston had intended to sell the hay
stored in the barn to a buyer, but the buyer no longer desired
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to purchase the hay after it was damaged in the hurricane that
caused the barn to collapse. 	The Salzis filed a claim with
Virginia Farm Bureau for damages to the barn.
Virginia Farm Bureau denied the claim on the basis that
the barn was used "for business" at the time of the loss.
Virginia Farm Bureau's insurance contract that had been issued
to the Salzis contained the following pertinent provisions:
"The following definitions apply to this policy.
. . . .
"Business means a trade, profession, or other
occupation including farming, all whether full
or part time, or the rental of any property to
others. 	(However, business does not include
the occasional rental, for residential
purposes, of the portion of the insured
premises normally occupied exclusively by your
household.)
. . . .
"PRINCIPAL PROPERTY COVERAGES
. . . .
"Coverage B – Related Private Structures on the
Premises – This policy covers related private
structures on the insured premises which are not
attached to your residence. 	(Structures connected
to the residence by only a fence, utility line or
similar connection are considered to be related
private structures.) . . . .
"Coverage B does not cover:
"1. 	structures used for business."
The Salzis argue that the definition of the word
"business" in the insurance contract is vague, ambiguous, and
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susceptible to two reasonable interpretations. 	The Salzis
contend that the language in the policy "speaks in specific
terms of the insured's activity, use or ownership, not that of
a third party. 	The business use exclusion applies . . . to
Salzi's business, not Marston's temporary, one time use of the
barn to store hay." 	Continuing, the Salzis argue that even
though Virginia Farm Bureau "is clearly attempting to limit
its liability by excluding coverage for the commercial use of
the barn . . . the limitation applies to the insured's
business use of the structure, for the insured's trade, or the
insured's profession, or the insured's other occupation or the
insured's rental to others. 	The use of the word 'others' in
the sentence limits the applicability of the exclusion to the
insureds." 	The Salzis contend that the policy's definition of
business could mean one of two things: (i) the business
exclusion only applies if the Salzis use the barn in their
trade, profession, or occupation, or (ii) the exclusion
applies if the Salzis and Marston used the barn in their
trades, professions, or occupations. 	We disagree with the
Salzis.
The principles of contract interpretation that guide our
resolution of this appeal are well established. 	"Reasonable
policy exclusions not in conflict with statute[s] will be
enforced; to be effective, the exclusionary language must
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clearly and unambiguously bring the particular act or omission
within its scope." 	Floyd v. Northern Neck Ins. Co., 245 Va.
153, 158, 427 S.E.2d 193, 196 (1993). 	Additionally, " '[a]n
insurance policy is a contract, and, as in the case of any
other contract, the words used are given their ordinary and
customary meaning when they are susceptible of such
construction.' " 	Graphic Arts Mutual Ins. v. C.W. Warthen
Co., 240 Va. 457, 459, 397 S.E.2d 876, 877 (1990) (quoting
Hill v. State Farm Mutual Auto. Ins., 237 Va. 148, 152, 375
S.E.2d 727, 729 (1989)).
We have also stated that "an ambiguity, if one exists,
must be found on the face of the policy." 	Nationwide Mutual
Ins. v. Wenger, 222 Va. 263, 268, 278 S.E.2d 874, 877 (1981);
accord S.F. (Jane Doe) v. West American Ins. Co., 250 Va. 461,
464, 463 S.E.2d 450, 452 (1995). 	Language is ambiguous when
it may be understood in more than one way or when such
language refers to two or more things at the same time.
Lincoln National Life Ins. Co. v. Commonwealth Corrugated
Container Corp., 229 Va. 132, 136-37, 327 S.E.2d 98, 101
(1985).
The insurance contract at issue in this appeal plainly
states that the coverage does not include "structures used for
business." 	As we have already stated, the word "business" is
defined in the insurance contract as "a trade, profession, or
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other occupation including farming, all whether full or part
time, or the rental of any property to others." 	The phrase
"structures used for business" is unambiguous. 	And, the
insurance contract's definition of business is unambiguous.
We find no language in the insurance contract that
permits us to conclude that the definition of business is
limited to the Salzis' business activities as opposed to the
business activities of others, in this instance, Marston's
business activities. 	The Salzis' barn is a structure within
the plain meaning of the insurance contract. 	Their barn was
"used for business" within the plain meaning of the insurance
contract because the Salzis permitted a farmer to store in
their barn between 1,500 and 3,000 bales of hay related to the
farmer's tobacco business.
Finding no merit in the Salzis' remaining contentions, we
will affirm the judgment of the circuit court.
Affirmed.
JUSTICE KINSER, with whom JUSTICE KEENAN and JUSTICE LEMONS
join, dissenting.
I do not agree with the statement in the majority opinion
that the barn belonging to the appellants, Victor H. and
Lorraine Salzi, “was ‘used for business’ . . . because the
Salzis permitted a farmer to store in their barn between 1,500
and 3,000 bales of hay related to the farmer’s tobacco
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business.” 	In my opinion, a one-time, gratuitous use of a
barn to store a neighbor’s hay does not turn that barn into a
“structure[] used for business.”
The storing of hay in this barn on one occasion lacks the
continuity necessary to constitute a business use. 	See
Virginia Mut. Ins. Co. v. Hagy, 232 Va. 472, 475, 352 S.E.2d
316, 318 (1987) (defining, as the law of the case, the term
“business pursuit” as requiring both continuity and profit
motive). 	“[T]he term business . . . mean[s] more than a
single act.” 	Nationwide Ins. Co. v. Hill, 307 F. Supp. 801,
804 (W.D. Va. 1969), aff’d, Nationwide Ins. Co. v. Aetna
Casualty & Surety Co., 426 F.2d 313 (4th Cir. 1970).
The appellee, Virginia Farm Bureau Mutual Insurance
Company, argues that the Salzis did not assign error to the
trial court’s factual finding that the Salzis permitted their
neighbor “to use their barn to store hay in his farming
business.” 	I do not agree. 	The question whether the barn was
a “structure[] used for business” is a mixed question of law
and fact, and resolution of the question depends upon the
construction placed on that phrase in the policy. 	The Salzis
objected to the final order, in part, on the basis that the
trial court misconstrued the policy’s language, and, on
appeal, they challenged the trial court’s construction of the
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phrase “structures used for business.” 	Thus, I conclude that
this question is properly before this Court.
For these reasons, I respectfully dissent and would
reverse the judgment of the circuit court.
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