Plumbing Work Done By A Carpenter Not Considered Professional Services

By Don R. Sampen, published, Chicago Daily Law Bulletin, August 23, 2022

The 1st District Appellate Court recently held that a carpenter performing plumbing work for a friend, and causing property damage, was entitled to coverage under the carpenter’s own homeowner’s policy, despite “business pursuits” and professional services exclusions in the policy.

The case is Stonegate Insurance Co. v. Smith, 2022 IL App (1st) 210931 (June 22). The homeowner’s insurer (appellant), Stonegate, was represented by Shelist & Pena LLC of Chicago. No other parties filed a brief on appeal.

John Smith, a carpenter by trade, performed plumbing work in a townhouse residence basement as a favor for the son-in-law of the townhouse owner. In the process, a torch he was using to heat pipes caused a fire that damaged an upstairs townhouse and other property.

Insurers for one of the townhouses catching fire, and for the condominium association, paid for much of the damage and sought subrogation from Smith and his own homeowners’ insurer, Stonegate.

Stonegate denied coverage based on two exclusions in the policy, a professional services exclusion and business pursuits exclusion. It also claimed Smith violated the notice and cooperation clauses in the policy, and took the position that the policy it issued for Smith’s residence should not be construed to cover property damage at another residence.

The trial court granted summary judgment in favor of coverage, and Stonegate took this appeal.

Analysis

In an opinion by Justice Robert E. Gordon, the 1st District affirmed. He initially took up the professional services exclusion. Noting that the term was not defined in the policy, he turned to prior case law.

He observed that professional services are not limited to those who are licensed by a governmental authority. Rather, he wrote, those services encompass any business activity conducted by the insured that involves specialized knowledge, labor or skill, and is predominantly mental or intellectual as opposed to physical or manual in nature.

Assuming that Smith’s work at the time of the fire required specialized knowledge or skill, Gordon opined that the heating of pipes with a torch was neither predominantly mental or intellectual. It therefore did not qualify as a professional service.

He then turned to the business pursuits exclusion. Here, Gordon focused on the fact that Smith was doing plumbing work even though he was not a plumber, he was not being compensated for his work, and he was doing it as a favor for a friend. Under these circumstances his work was not a business pursuit, and the exclusion did not apply.

As for the notice and cooperation conditions, Gordon observed that Stonegate had received notice of the fire within 30 days of its occurrence, which was adequate. Stonegate apparently based its cooperation objection on the fact that Smith did not provide adequate information about the fire.

Gordon found, however, that Smith communicated with Stonegate several times about the fire, and that Stonegate was not sufficiently proactive in seeking greater cooperation. Gordon therefore rejected these grounds for denying coverage.

Finally, Stonegate’s argument that the homeowner’s policy it issued to Smith should not be construed to provide liability coverage for his activities at someone else’s residence, was based in part on Smith’s own admission. He testified at his deposition that it would be “nuts” to assume his policy extended to work he performed at another’s residence.

Gordon nonetheless turned to the policy language. He noted that certain coverages in the policy were excluded for conditions arising away from the insured’s premises. But none of those exclusions applied to the insured’s personal liability. The policy therefore provided coverage.

As a result, the 1st District affirmed in favor of coverage.

Key Points

• “Professional services,” as used in a professional services exclusion, refer to the insured’s activities involving specialized knowledge, labor or skill, and which are predominantly mental or intellectual as opposed to physical or manual in nature.
• A “business pursuit,” for purposes of a business pursuits exclusion, does not involve services performed by the insured as a favor, for which the insured is not compensated, and which is not within his or her area of expertise.