Economy Fire & Casualty Co. v. Bassett

Sherry Bassett (defendant) operated a licensed day-care facility at her Illinois home. Bassett had homeowner’s insurance through Economy Fire & Casualty Company (Economy) (plaintiff), which she purchased through Connie Gott and Robylee Gott (the Gotts) (defendants) at the Burnett Insurance Agency. When purchasing the insurance, Bassett told Robylee that she baby-sat in her home but did not know to ask about business coverage and relied on the Gotts’ judgment. Connie, who filled out Bassett’s insurance application, lived on the same street and knew prior to the issuance of the policy that Bassett baby-sat for pay. The Gotts had even referred a family member to Bassett’s day care. The Gotts did not warn Bassett that she might need additional business coverage. One of the children in Bassett’s day care, Dylan Jones (Dylan) (defendant), was injured when Patricia Mills (defendant) struck him with her car when picking up her children from day care. Dylan’s parents sued Mills and Bassett. Economy provisionally defended Bassett in the lawsuit but filed a simultaneous sub judice action seeking a declaratory judgment that Bassett’s policy did not cover Dylan’s accident because Bassett’s plan excluded bodily injury arising out of business pursuits of the insured. Dylan, through his guardian ad litem, Doug Dorris, (defendant), filed a third-party action against the Gotts and Bruce Burnett, d/b/a Burnett Insurance Agency, (defendant) alleging breach of fiduciary duty and breach of oral contract to obtain business insurance for her. The trial court found for Economy against Bassett, Mills, and Dylan, finding (1) that the accident arose from business pursuits, which were excluded from the policy, and (2) that the Gotts and Burnett were not agents of Economy, so it was not bound by their actions. The trial court further found in favor of the Gotts and Burnett regarding the third-party claims of Bassett and Dylan. Dylan appealed.