Coverage was denied under two insurance policies. The first, essentially a rural homeowner's policy, excluded claims resulting from business activities. The second, a commercial operations policy, excluded claims for property in the care and custody of the insured. The Court of Appeals upheld the denial of coverage under both policies.

Before IRWIN, SIEVERS, and INBODY, JJ.

SIEVERS, Judge.

Larry J. Erickson boarded his show quarter horse, Cody's Classy Girl, at the farm and stable of LeRoy Carhart and kept his horse trailer and some tack there as well. As a result of a fire at Carhart's stable, the horse was killed, the tack was destroyed, and the trailer was damaged. Erickson sued Carhart for his losses and received a judgment for $26,689. Erickson sought to collect part of the judgment by garnishing Carhart's insurer, Farm Bureau Insurance Company of Nebraska (Farm Bureau), which had written a "Country Squire" policy and a common-commercial policy covering both commercial property and commercial general liability for Carhart. Farm Bureau asserts that each policy excluded coverage for Erickson's judgment against Carhart. An application to determine garnishee liability was filed by Erickson in the district court for Sarpy County, and after a trial, the district court found that neither of the Farm Bureau policies provided coverage for the judgment. Erickson now appeals to this court. Because both Farm Bureau policies exclude coverage, and because Farm Bureau is not estopped from asserting those exclusions, we affirm the trial court's decision.

On September 6, 1991, a fire occurred on Carhart's premises which destroyed Cody's Classy Girl and Erickson's tack, and damaged Erickson's horse trailer. On the date of the fire, Carhart had two policies in effect with Farm Bureau, a common-commercial policy and a Country Squire policy. Shortly after the fire, Erickson asserted his claim for payment against Farm Bureau. On October 4, 1991, a Farm Bureau claims adjuster wrote to Erickson, denying his claim. The pertinent portions of that letter, which specifically referenced only the common-commercial policy, are:

I must respectfully decline payment of your claim as this policy does not have any coverage for personal property. The only coverage under this policy is for the building.There is also liability coverage on this policy. For payment to be made under this part of the policy, there must be negligence on the part of Mr. Carhart. Our investigation into the fire does not show any negligence on Mr. Carhart's part.

Nearly 2 years later, Erickson sued Carhart. In that litigation, the parties eventually filed a confession of judgment. That confession stipulated that the fire took place and that there had been a contract for boarding Cody's Classy Girl and for storing the tack and trailer. The confession stipulated that the fire occurred when no one was present and that the horse and equipment were left unsupervised. The confession further stipulated that Carhart had "breached the bailment contract by failing to redeliver Cody's Classy Girl and Equipment in an undamaged condition, said breach having occurred due to the negligent acts and omissions of [Carhart]."

The district court for Sarpy County, upon consideration of the confession of judgment, found a breach of the bailment contract "due to the negligent acts and omissions" of Carhart, but the court did not specify the particulars of negligence. Judgment in the amount of $26,689 was entered on November 15, 1994. Within a matter of days, Erickson filed an affidavit and praecipe for summons in garnishment against Carhart, alleging that Farm Bureau had property of and was indebted to Carhart. Farm Bureau responded to the garnishment interrogatories and admitted that the common-commercial policy and the Country Squire policy were in effect at the time of the fire. However, Farm Bureau asserted that coverage under the common-commercial policy was excluded due to exclusions found in Section I, Coverage A., Exclusions 2.b. and j. In the Country Squire policy, coverage was allegedly excluded by Part II, Coverage L- 1, Exclusions 2.a. At trial on the garnishment matter, the two policies were received into evidence, as were the applications for those policies. The Country Squire application disclosed the "business pursuit" of "boarding horses," as did the common-commercial policy application.

The Country Squire policy provided that Farm Bureau covered "[p]ersonal property owned or used by any insured [Carhart] while on the residence premises shown in the declarations as being the location of the property." There was no evidence that Carhart owned or used the horse, the tack, or the trailer. Part II, Section L, the liability section of the Country Squire policy, provides:

"COVERAGE L-1, FARM, RANCH AND PERSONAL LIABILITY[.] We [Farm Bureau] will pay damages for bodily injury or property damage for which the law holds an insured responsible when caused by an occurrence to which this coverage applies." However, under Part II, Exclusions, the Country Squire policy states at Section 2.:

COVERAGE L-1, FARM, RANCH AND PERSONAL LIABILITY, AND COVERAGE M-1, PREMISE AND EMPLOYEE MEDICAL, DO NOT APPLY TO BODILY INJURY OR PROPERTY DAMAGE:
a. arising out of business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured.

Turning to the common-commercial policy, the commercial general liability portion provides that Farm Bureau will pay "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which th[e] insurance applies." This policy also contains the following provision:

Section I--COVERAGESCOVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
....
2. Exclusions.This insurance does not apply to:
....b. "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement....
....j. "Property damage" to:
....(4) Personal property in your care, custody or control.

At trial, Erickson testified briefly about boarding his horse with Carhart and the subsequent fire. He asserted his claim against Farm Bureau and recounted receiving the October 4, 1991, letter from the Farm Bureau claims adjuster, Steve Wittmuss, which we have quoted earlier herein. Erickson testified that after Farm Bureau declined coverage and payment, he secured counsel and pursued the action against Carhart, which resulted in the judgment involved in this garnishment. The agent, who wrote the coverage and took the report of the fire, also testified briefly. The adjuster, Wittmuss, testified with respect to the Farm Bureau letter of October 4, 1991. The policies were received in evidence. The court entered judgment in Farm Bureau's favor, finding that there was no coverage under the policies for Erickson's judgment against Carhart.

Although Erickson sets forth six assignments of error, they may be summarized and reduced to the following: That the trial court erred in failing to find that there was coverage under the policies and that the trial court erred in failing to find that Farm Bureau was estopped from denying insurance coverage on any ground other than that Carhart was not negligent.

In the case at hand, there are no disputed issues of fact. The construction of a contract is a matter of law, in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below. Larsen v. First Bank, 245 Neb. 950, 515 N.W.2d 804 (1994).

An insurance policy is to be construed as any other contract to give effect to the parties' intentions, and when the terms of the contract are clear, they are to be accorded their plain and ordinary meaning. Design Data Corp. v. Maryland Cas. Co., 243 Neb. 945, 503 N.W.2d 552 (1993). The parties to an insurance contract may contract for any lawful coverage, and the insurer may limit its liability and impose restrictions and conditions upon its obligation under the contract not inconsistent with public policy or statute. Id.

The Country Squire policy is essentially a homeowner's policy. According to the testimony of the Farm Bureau agent who took the application from Carhart, the common-commercial policy was applied for and issued because a business could not be covered under the Country Squire policy, and Carhart was in the business of commercially boarding horses.

The exclusion in the Country Squire policy upon which Farm Bureau relies clearly prevents coverage. The exclusion has been quoted in the statement of facts, but to reiterate, it provides that the coverage for bodily injury or property damage under the policy is excluded when the property damage "arise[s] out of business pursuits of any insured...." The horse was at Carhart's barn only because Erickson was boarding it there, and the tack and trailer were there for the same reason. There is little more to say about this provision, other than it excludes coverage for property damage arising out of Carhart's horse-boarding operation.

Turning to the general liability portion of the common-commercial policy, once again, the exclusion is clear and leaves little, if anything, to be said:

2. Exclusions.
This insurance does not apply to:
....
b. "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement....
....
j. "Property damage" to:
....(4) Personal property in your care, custody or control.

Erickson's personal property was in Carhart's care, custody, and control, and therefore the exclusion, by its plain and clear language, precludes coverage.

The principal argument Erickson uses to overcome the fact that coverage is obviously excluded under the plain language of the exclusions in both policies is the doctrine which goes by the curious name of "mending one's hold." This doctrine is a variation on the theme of estoppel. Erickson frames the issue as whether Farm Bureau, after previously giving one reason for its denial of coverage for the loss of Erickson's property, is free to frame the denial of liability upon another and different ground after litigation has begun. The rule is that an insurer that gives one reason for its conduct and decision as to a matter of controversy cannot, after litigation has begun, defend upon another and different ground. See Bisgard v. Johnson, 3 Neb.App. 198, 525 N.W.2d 225 (1994), and cases collected therein. This is the "mending one's hold" doctrine.

In the case at hand, Erickson's argument is that the claims adjuster's letter of October 4, 1991, said that there was liability coverage under the common- commercial policy. "For payment to be made under this part of the policy, there must be negligence on the part of Mr. Carhart." Therefore, Erickson reasons that if such negligence were established, then Farm Bureau would be estopped to deny coverage. In other words, as a result of the "mending one's hold" doctrine and the claims adjuster's letter, if Carhart's negligence were proved, Erickson would be entitled to have Farm Bureau pay its judgment against Carhart, notwithstanding policy exclusions to the contrary. In short, Erickson contends that Farm Bureau is estopped from arguing any defense other than that Carhart was not negligent. Further, Farm Bureau cannot claim that Carhart was not negligent because the district court's judgment in the underlying lawsuit by Erickson against Carhart had already found Carhart negligent.

At the outset of our analysis, we observe that the adjuster's letter is not a model of clarity or internal consistency. In fact, Erickson's argument that "there is only property coverage on the building, not the contents, but there is also liability coverage which will result in payment, if Carhart was negligent" is not an unreasonable reading of the Farm Bureau adjuster's letter. Accordingly, to suggest that Farm Bureau had made negligence on Carhart's part the only prerequisite for payment is not an unreasonable interpretation of the letter. However, when it answered the garnishment interrogatories, Farm Bureau asserted reasons for denying the claim besides the lack of Carhart's negligence--it said there were specific policy exclusions which prevented coverage. Thus, the question we decide under the "mending one's hold" doctrine is whether Farm Bureau can, after its adjuster's letter was sent, "saddle up" a new defense--specific policy exclusions.

In Bisgard, the insurer, when garnished, was allowed to assert additional defenses beyond those asserted in its agent's correspondence when the claim was denied. Moreover, Design Data Corp. v. Maryland Cas. Co., 243 Neb. 945, 503 N.W.2d 552 (1993), refines the doctrine at issue, holding that the "mending one's hold" estoppel doctrine cannot be applied to expand the scope of coverage. The court in Design Data Corp. explained:

While the rule as to "mending one's hold" may be alive and well as to conditions of forfeiture, generally it has no application to matters relating to coverage, and estoppel cannot be invoked to expand the scope of coverage of an insurance contract absent a showing of detrimental good faith reliance upon statements or conduct of the party against whom estoppel is invoked which reasonably led an insured to believe coverage was present. In Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 406 N.W.2d 640 (1987), apparently the insurance company had furnished a defense to the insured all the way through judgment without a reservation of rights. It was not until the insurance company answered interrogatories in garnishment that it claimed that the people whom it had defended as insureds were not insureds as defined in the policy. This case is not applicable to the present situation.

As to Mutual Benefit Life Ins. Co. v. Chisholm, 213 Neb. 301, 329 N.W.2d 103 (1983), to the extent that it may suggest that coverage on an insurance policy may be extended by estoppel without a showing of detrimental reliance, it is disapproved.

(Emphasis supplied.) 243 Neb. at 957-58, 503 N.W.2d at 560.

In Design Data Corp., the court relied upon the opinion of the Oregon Supreme Court in ABCD ... Vision v. Fireman's Fund Ins. Companies, 304 Or. 301, 744 P.2d 998 (1987). That decision explained that when assessing a claim that policy exclusions have been lost via estoppel, "the correct procedure is to determine first whether the provisions upon which the insurer relies are conditions of forfeiture that are subject to estoppel or, instead, are matters relating to the scope of coverage." 304 Or. at 307, 744 P.2d at 1001. The Oregon court's holding, which our Supreme Court quoted with approval, was that " '[e]stoppel cannot be invoked to expand insurance coverage or the scope of an insurance contract....' " Design Data Corp., 243 Neb. at 956, 503 N.W.2d at 560. As a consequence, the court in Design Data Corp. disapproved Mutual Benefit Life Ins. Co. v. Chisholm, 213 Neb. 301, 329 N.W.2d 103 (1983), to the extent that Chisholm suggested that estoppel could extend coverage of an insurance policy without a showing of detrimental reliance.

Accordingly, the estoppel doctrine could apply, for example, to an insurer's late assertion that a claim or loss was not covered because the insured had not filed a written proof of loss within the time required by the policy. The proof of loss is a condition which, if unsatisfied, could result in the loss of coverage which would otherwise exist. By contrast, if a homeowner's policy covered the insured's house but specifically excluded coverage for a barn located on the same property, the insured would need to show detrimental reliance before the estoppel doctrine of "mending one's hold" would operate to expand the coverage to include the barn.

In the instant case, Erickson seeks to bring himself within the Design Data Corp. holding by arguing that he relied upon the Farm Bureau claims adjuster's letter by hiring a lawyer and filing a lawsuit which resulted in a judicial finding of negligence on Carhart's part. This argument ignores the part of the letter which states that "this policy does not have any coverage for personal property" and focuses solely on the portion which states that "[f]or payment to be made under this part of the policy, there must be negligence on the part of Mr. Carhart." We have previously acknowledged the internal inconsistencies of the letter. But, because Design Data Corp. succinctly limits the estoppel doctrine of "mending one's hold" to prevent expansion of coverage beyond the policy terms absent detrimental reliance-, we need not try to divine the true meaning of the adjuster's letter. For analytical purposes, it is easier and cleaner to simply proceed directly to the question of whether there was detrimental reliance thereupon. Therefore, we assume that the adjuster's letter fails to assert the policy exclusions which Farm Bureau relied upon in its answers to the garnishment interrogatories.

Having said this, we are nonetheless unable to see how the retention of counsel by Erickson and his filing of a lawsuit against Carhart, in which action Carhart confessed judgment, constitutes detrimental reliance upon the claims adjuster's letter of October 4, 1991, or upon the position of Farm Bureau taken therein. The law of estoppel ordinarily requires that there be reliance in good faith upon statements or conduct of the party to be estopped and a change of position by the party claiming the estoppel to his injury, detriment, or prejudice. See Tighe v. Security Nat. Life Ins. Co., 191 Neb. 271, 214 N.W.2d 622 (1974). (For a complete delineation of the elements of equitable estoppel, both as to the estopped party and the party asserting the estoppel, see Hamilton v. Hamilton, 242 Neb. 687, 496 N.W.2d 507 (1993).) The classic example of detrimental reliance which estops the assertion of a defense is where a party lulls an adversary into a false sense of security, thereby causing the adversary to subject his or her claim to the bar of the statute of limitations, which is then pleaded as a defense. See Muller v. Thaut, 230 Neb. 244, 430 N.W.2d 884 (1988) (medical malpractice action in which defendant doctor was accused of having concealed cause of death of plaintiff's daughter).

Here, since Farm Bureau had clearly denied payment of Erickson's loss by asserting the lack of coverage for personal property as well as the lack of negligence on the part of Carhart, Erickson's retention of counsel and the obtaining of a judgment is not detrimental reliance. Erickson was obviously forced to resort to the legal process to attempt to secure any payment from Carhart. Although there was reliance in the sense that Erickson obviously understood that litigation would be necessary in order to recover from Farm Bureau, Erickson did not change his position to his injury, detriment, or prejudice. In fact, the opposite is true. The judgment against Carhart was entered for $26,689 plus costs. However, when the garnishment was filed 3 days later, according to the application to determine garnishee liability, the amount of the judgment was only $24,189 "when all payments to the plaintiff are accounted for...." Obviously, Carhart (or someone not revealed by the record) paid $2,500 on the judgment. Thus, the lawsuit was a benefit to Erickson--not an injurious or detrimental change of position.

We find that there is no evidence of detrimental reliance by Erickson which, under the "mending one's hold" estoppel doctrine, must be shown in order to expand coverage under either the common-commercial or the Country Squire policy, by nullifying the exclusions which plainly exclude coverage. The district court properly rejected Erickson's claim that Farm Bureau was estopped from asserting the policy exclusions as defenses. In short, Farm Bureau can indeed successfully "saddle up" and "ride" its defenses of policy exclusions.

Common-Commercial Policy.

During the process of writing the Country Squire policy, the Farm Bureau agent learned that Carhart was involved in commercial horse boarding. The agent testified that this led to Carhart's purchasing additional coverage from Farm Bureau for the risks associated with boarding horses in his barn, because such risks were not covered under the Country Squire policy. Erickson argues that since the destruction of the horse and tack involved in this case was one of those contemplated risks, there is coverage under the section of the common- commercial policy which provides:

11.a. "Products-completed operations hazard" includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.

From this provision of the policy, Erickson argues that since Carhart's work, i.e., horse boarding, had not been fully performed and the loss of the horse arose out of that work, there is coverage under the common-commercial policy pursuant to paragraphs (1) and (2). However, what Erickson ignores is that this provision of the policy is found in Section V, the "Definitions" section of the commercial general liability portion of the common-commercial policy and that the exclusions in Section I, the "Coverages" section of the commercial general liability portion of the policy, specifically 2.b. and j., are applicable to the entire commercial general liability portion of the policy. Thus, we need not engage in any detailed analysis of these policy provisions or of Erickson's argument, since the exclusions, which we have found to be operable, and upon which Farm Bureau relied, make such analysis unnecessary. The policy language of the exclusions is:

2. EXCLUSIONS.
This insurance does not apply to:
....
b. "Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement....
....
j. "Property damage" to:
....
(4) Personal property in your care, custody or control.

Under 2.j.(4), coverage is excluded for "[p]ersonal property in [Carhart's] care, custody or control" with respect to property damage. Clearly, the horse, the tack, and the trailer are all personal property and were in Carhart's care, custody, and control. Thus, subsection j. excludes coverage and negates Erickson's claim that there is coverage under the "products-completed operations hazard" provision of the commercial general liability portion of the policy.

We note in conclusion that in the commercial property portion of the common- commercial policy, Farm Bureau agrees to the following:

We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
1. Covered Property
....
c. Personal Property of Others that is:
(1) In your care, custody or control; and
(2) Located in or on the building described in the Declarations....

However, page 1 of the declarations shows that there was no contents coverage under this policy, since the coverage was limited to $75,000 for the "frame building occupied as stables." Moreover, the evidence adduced with respect to the securing of insurance shows that at the time the commercial property application was completed, only coverage on the barn in the amount of $75,000 was requested. There was no request for coverage on the barn's contents, and no premium was paid for contents coverage. In short, Farm Bureau and Carhart did not have a contract of insurance covering the contents of Carhart's barn in which he boarded horses, including Erickson's horse.

For all of the foregoing reasons, the judgment of the district court finding no liability against the garnishee, Farm Bureau, is affirmed.

AFFIRMED.

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