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Just because you have a piece of paper saying you are an additional insured, it does not mean there is any coverage under any policy to protect you.

Additional insured certificates are limited by two things, what the underlying policy provides coverage for and what the certificate of insurance says it will cover. Lacking  coverage under the policy or lacking the necessary language in the additional insured certificate you are hanging in the wind without any insurance coverage.

For an additional insured certificate to be valid, you must put together three things. A contract which identifies the requirements or insurance you are looking for. An insurance policy that insures those requirements and a certificate of insurance that covers those requirements or better states as the requirements are set forth in the original contract. Lacking any, one of those and you are just wasting paper.

When you get a certificate of insurance, you must then read it to make sure you meet the requirements it may set out. If there is a limitation on the amount of time you have to file a claim or a specific way to notify the insured, make sure you follow those procedures. 

Finally, whenever you file any claim with any insurance company for coverage, follow the procedures the policy requires then follow up with a letter providing notice the insurance company in writing.

Great American Alliance Insurance Company, v. Windermere Baptist Conference Center, Inc., et al., 2017 U.S. Dist. LEXIS 103148

State: Missouri, United States District Court for the Western District of Missouri, Central Division 

Plaintiff: Great American Alliance Insurance Company 

Defendant: Windermere Baptist Conference Center, Inc., et al. 

Plaintiff Claims: Great American now moves for summary judgment on its requested declaratory judgment that: (1) no liability coverage exists under its policy issued to Student Life for any claims asserted in the underlying lawsuit against Windermere or Windermere’s employees, including Kendra Brown; (2) Great American owes no duty to defend Windermere, Kendra Brown, or any other Windermere employees in the underlying lawsuit; and
(3) no medical payments coverage exists for Karlee Richards. 

Defendant Defenses:   No coverage provided under the policy or certificate of insurance

Holding: Split decision, however the insurance company will not pay anything under the certificate of insurance 

Year: 2017 

This is a legally complicated case with simple facts. A church rented a camp from Student Life, which had contracted with a church camp called Windermere. The reservation form and simple agreement between the camp and the church required the issuance of a certificate of insurance. 

A camper, part of the church group fell while riding the zip line. She sued. That lawsuit was still pending when this lawsuit was started to determine whose insurance was required to defend against the camper’s lawsuit. 

In that case, damages are being sought against them for injuries sustained by Karlee Richards after she fell while zip-lining at The Edge, a ropes course at Windermere’s Conference Center. Kendra Brown was an employee of Windermere, working at the Edge at the time of  the accident.

 The injured camper Richards was with the Searcy Baptist Church. They rented the camp through Student Life. Student Life rented the camp from Windermere. The contract between Student Life and Windermere is the one at question here. Windermere required a certificate of insurance from Student Life. 

June 2014, Karlee Richards and her Searcy Baptist Church youth group were attending a summer camp at Windermere’s Conference Center, which was sponsored by Lifeway Christian Resources of the Southern Baptist Conference, d.b.a. Student Life. Student Life contracted with Windermere to hold the church camp at Windermere’s facility in Missouri. Student Life had a liability policy with Great American, and Windermere was an additional insured on that policy. The additional insured endorsement provides that the additional insured, in this case Windermere, is only covered for “liability arising out of the ownership, maintenance or use of that portion of the premises leased to Great American contends that Windermere is not entitled to coverage for Kaylee Richards’s injuries because Windermere did not “lease” the Edge to Student Life because the Edge was not specifically mentioned in Student Life’s written agreement with Windermere.

 The first issue the court skipped was the policy that Student Life had, was restrictive and had minimal coverage. It had a requirement that all claims had to be made in one year. This may not be bad, but if the statute of limitations for the type of injury is two years or three, you may not have coverage for a claim because you did not know you had one until after the time period had run. 

Student Life is the named insured on a Commercial General Liability policy with Great American. The policy requires that all requests for medical payments be made within one year of the accident that gives rise to the insurance claim. Also, when there is other valid and collectible excess insurance coverage, the Great American policy provides that Great American will have no duty to defend its insured against a claim for damages.

 On top of the claim limitation period, the coverage was solely excess coverage. Meaning the coverage did on top of any other coverage the insured had and had no duty to defend or pay for attorneys. It only had to pay for a claim after the
limits of the underlying policy were exhausted. No underlying policy was ever mentioned in the case so it is unknown if one existed.

If this is the only policy, Student Life purchased, they bought the wrong one! 

Another issue was whether the student life policy would provide coverage for employees of Windermere that were sued based on the accident. 

This suit was brought by the Student Life insurance company, Great American Alliance Insurance Company, asking the court to tell Student Life it was not going to pay or defend any of the claims brought by the injured camper against Windermere. 

Analysis: making sense of the law based on these facts.

 The court first looked at whether the additional insured certificate was ambiguous. If so, then the court had to interpret the ambiguity under Missouri’s law.

An ambiguity is an uncertainty in the meaning of the policy.

  If an ambiguity exists, the policy language will be construed against the insurer. Mendota, “‘An ambiguity exists when there is
duplicity, indistinctness, or uncertainty in the meaning of the language of the policy.'” “‘To test whether the language used in the policy is ambiguous, the language is considered in the light in which it would normally be understood by the lay person who bought and paid for the policy.'” Whether an insurance policy is ambiguous is a question of law.” 

The burden of proving there is coverage falls on the party seeking it, in this case, Windermere. An ambiguity exists if there are different interpretations of the language in the policy. There are two types of Ambiguities, Latent and patent. 

A policy is ambiguous if it is “fairly open to different interpretations” because it contains “duplicity, indistinctness, or uncertainty of meaning.” Importantly, there are two types of ambiguities in the law: patent and latent. “A patent ambiguity is detected from the face of the document, whereas a latent ambiguity is found ‘when the particular words of a document apply equally well to two different objects or some external circumstances make their meaning uncertain.'” 

Here the court found that a patent ambiguity existed. 

For these reasons, a patent ambiguity exists. The disputed phrase not only should be interpreted in favor of the Defendants, but the Defendants’ interpretation is arguably the only one that would make sense to an ordinary person under these circumstances. 

The court also found a latent ambiguity existed in the certificate of insurance. 

A latent ambiguity exists when a contract “on its face appears clear and unambiguous, but some collateral matter makes the meaning
uncertain.” Id. In other words, an ambiguity is “latent if language, which is plain on its face, becomes uncertain upon application.”

 If an ambiguity is found in an insurance policy, the ambiguity is construed against the insurance company. “In the
alternative, it is well-settled that an ambiguity within an insurance policy must be construed against the insurer
.”

Consequently, the court ruled on this issue, that there was coverage for Windermere from the Student Life Policy. However, the court found against Student Life and Windermere on the other issues.

Windermere requested coverage for defending its employees, which the court denied. 

Great American argues that no coverage exists for Brown or any other Windermere employee because the Additional Insured Endorsement does not provide additional insured status and/or coverage for an additional insured’s employees. Brown is not identified anywhere in Student Life’s Great American policy nor is she listed as an Additional Insured on a Certificate of Liability. Therefore, any coverage for Brown would necessarily derive from her status as Windermere’s employee, and employees are not covered as insureds by the Additional Insured Endorsement. 

The court agreed with Great American that no coverage was described in the certificate of insurance. 

The next issue was, whether or not there was a duty to defend. A duty to defend is to pay the cost of the lawsuit; attorney fees, expert witness fees, etc. 

Under Missouri law, the duty to defend “arises whenever there is a potential or possible liability to pay based on the facts at the outset of the case and is not dependent on the probable liability to pay based on the facts ascertained through trial.” 

Because there was no coverage for the Windermere employees, there was no duty to defend them either. A duty to defend must be specifically identified in the policy. In this case the policy specifically stated, there was no duty to defend. 

As to whether Great American owes a duty to defend Windermere, the Endorsement makes clear that any coverage for Windermere as an additional insured would be excess, and the policy does not afford a defense when (1) its coverage is excess and (2) when the insured is being provided a defense by another carrier. 

The last issue was whether medical expenses of the injured camper were owed by Great American to Windermere. Again, since the policy specifically stated there was no coverage for medical expenses this was denied. The court also found the
requirement under the policy to make a claim for medical expenses had to be done within one year, and that time had lapsed; therefore, no medical expenses were owed by the Student Life Policy with Great American. 

The decision was split, however, in reality; Windermere got nothing from the decision. If Windermere lost its suit or exhausted its own liability insurance policy protection, it could, then see money from the Student Life policy with Great American, but no other coverage was owed by Great American. However, that meant the camper was going to have to win millions probably to exhaust the Windermere policy and Windermere or its insurance company was going to foot the bill with no help from the policy under the certificate of insurance. 

So Now What? 

This is a classic case were not knowing or checking what happens when you receive an additional insured certificate ends up costing you more money than not having one. 

The underlying policy by the group coming into the camp was crap. On top of that it had major restrictions on when it would pay. Add to those issues the certificate of insurance was badly written and the company receiving the additional insured certificate received a worthless piece of paper. On top of that it cost them a lot of money I’m guessing to sue to find out they were not going to get anything from the policy.

 1.       Issue a request for a Certificate of Insurance in a contract or the contract. Set forth in the contract everything you must have and the type of insurance policy that must be underlying the certificate of insurance.

2.      Request a copy of the insurance policy be delivered with the certificate of insurance. Again, if the policy is crap, you are getting crap. 

3.      Make sure the insurance policy covers what the contract says it should cover. 

4.      Make sure the certificate of insurance covers what the contract says it must cover. 

Just collecting certificates of insurance to put in a box or file cabinet are only killing trees. It is probably not providing you any protection as in this case.

 What do you think? Leave a comment.

 To Comment Click on the Heading and go to the bottom of the page. 

Copyright 2017 Recreation Law (720) 334 8529 

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Great American Alliance Insurance Company, Plaintiff, vs. Windermere Baptist Conference Center, Inc., et al., 2017 U.S. Dist. LEXIS 103148

Great American Alliance Insurance Company, Plaintiff, vs. Windermere Baptist Conference Center, Inc., et al., 2017 U.S. Dist. LEXIS 103148

Great American Alliance Insurance Company, Plaintiff, vs. Windermere Baptist Conference Center, Inc., et al., Defendants.

No. 2:16-cv-04046-NKL

United States District Court for the Western District of Missouri, Central Division

2017 U.S. Dist. LEXIS 103148

July 5, 2017, Decided

July 5, 2017, Filed

PRIOR HISTORY: Great Am. Alliance Ins. Co. v. Windermere Baptist Conf. Ctr., Inc., 2016 U.S. Dist. LEXIS 92701 (W.D. Mo., July 18, 2016)

COUNSEL: [*1] For Great American Alliance Insurance Company, Plaintiff: John S. Sandberg, LEAD ATTORNEY, Kenneth R. Goleaner, Sandberg, Phoenix & von Gontard, PC-St. Louis, St. Louis, MO.

For Windermere Baptist Conference Center, Inc., Defendant: Amber Joy Simon, Lauren E. Tucker McCubbin, LEAD ATTORNEYS, Lisa A. Weixelman, Polsinelli PC – KCMO, Kansas City, MO.

For Kendra Brown, Defendant: Christopher P. Rackers, LEAD ATTORNEY, Kaci R Peterson, Schreimann, Rackers & Francka, LLC, Jefferson City, MO.

For Jeremy Richards, Karlee Richards, Defendants: Patrick M. Martucci, LEAD ATTORNEY, Johnson, Vorhees & Martucci – Joplin, Joplin, MO.

JUDGES: NANETTE K. LAUGHREY, United States District Judge.

OPINION BY: NANETTE K. LAUGHREY

OPINION

ORDER

This case principally concerns whether Defendants, Windermere Baptist Conference Center and Kendra Brown, have insurance coverage under a Great American policy for potential liability in a suit pending in Morgan County. In that case, damages are being sought against them for injuries sustained by Karlee Richards after she fell while zip-lining at The Edge, a ropes course at Windermere’s Conference Center. Kendra Brown was an employee of Windermere, working at the Edge at the time of the accident.

In [*2] June 2014, Karlee Richards and her Searcy Baptist Church youth group were attending a summer camp at Windermere’s Conference Center, which was sponsored by Lifeway Christian Resources of the Southern Baptist Conference, d.b.a. Student Life.1 Student Life contracted with Windermere to hold the church camp at Windermere’s facility in Missouri. Student Life had a liability policy with Great American, and Windermere was an additional insured on that policy. The additional insured endorsement provides that the additional insured, in this case Windermere, is only covered for “liability arising out of the ownership, maintenance or use of that portion of the premises leased to [Student Life] [by Windemere].” [Doc. 35-17, p.1 (“Endorsement”)]. Great American contends that Windermere is not entitled to coverage for Kaylee Richards’s injuries because Windermere did not “lease” the Edge to Student Life because the Edge was not specifically mentioned in Student Life’s written agreement with Windermere.

1 Lifeway Christian Resources of the Southern Baptist Convention does business as Student Life. The Court refers to Lifeway and Student Life interchangeably throughout the remainder of this Order as simply, “Student Life.”

Pending before the Court is Great American’s Motion for Summary Judgment. [Doc. 34]. For the following reasons, the Motion is granted in part and denied in part.

I. Undisputed Facts2

2 Unless otherwise noted, the facts recited are those which are properly supported and undisputed.

A. The Student Life [*3] Camp at Windermere

Windermere Baptist Conference Center is a large Conference Center on the Lake of the Ozarks with over 300 acres and 126 buildings, including group lodging, a dining hall, conference space, cabins, a chapel, and a gift shop. Windermere also offers various recreational facilities and activities at its campus, including the Edge. Organizations like Student Life use Windermere’s facilities for summer church camps.

Student Life had been conducting camps at Windermere for about ten years prior to its June 2014 camp. In January 2014, Student Life and Windermere executed an Amended Conference Contract. The “Amended Conference Contract,” provides:

Amended Conference Contract

. . .

EVENT INFORMATION

Event Name: Student Life #1 ’14 (June 2-6, 2014)

Expected #: 1000

Arrive Date: Saturday, May 31, 2014

(Check in begins at 3:00 PM. Rooms may not be available until 6:00 PM. . .)

Depart Date: Saturday, June 7, 2014

Lodging Check out time is 11:00 AM. Keys must be turned in by this time. . .)

LODGING INFORMATION

Lodging Type Start End Nights Units Cost Total
Per Person (Student Life Extra) 5/31/14 6/2/14 2 25 $17.50 $825.00
Per Person (Student Life Extra) 6/1/14 6/2/14 1 15 $17.50 $262.50
Per Person (Student Life [*4] ’14) 6/2/14 6/5/14 4 1,000 $70.00 $70,000
Minimum
Total for Lodging: $71,137.50 $56,910.00

You will need to provide Windermere a rooming list (names of individuals occupying each room) and a copy of your conference or retreat schedule at the time of check-in.

. . .

MEAL INFORMATION

Minimum
Total for Meals: $76,570.00 $61,733.00

. . .

All guests eating in the dining hall must have a meal ticket or wrist band to be

admitted into the Dining Hall.

. . .

CONFERENCE SPACE INFORMATION

Facility/Room Start End Cost
Wilderness Creek Auditorium (1500) 6/1/14 8:00am 6/6/14 12:00pm
Deer Ridge Conf Rm 1 (30) 6/2/14 3:00pm 6/6/14 12:00pm
Total for Conference Space: $0.00

. . .

Use of conference space and facilities begins at the start time stated in the contract. Conference or facility space usage time ends at the time stated in the contract and must be empty of all guests and guest items.

. . .

ENTITY OBLIGATION

Estimated Total Payment $147,707.50
Total Minimum Payment $118,643.00
Property Damage/Abuse

The above named group will have financial responsibility for any damages and excessive wear and tear it incurs to the Windermere grounds, facilities or property to the extent that such damage or excessive wear and tear arises [*5] from the negligence or willful misconduct of the above named group. Cleanup of any facilities or grounds that are excessively dirty will be the financial responsibility of the group.

[Doc. 35-5 (“Amended Conference Contract”)].

The parties’ Amended Conference Contract does not identify every building or activity that was available to campers during Student Life’s camp at Windermere. For example, the chapel, which is made available to any group attending a camp at Windermere, is not listed. In addition, the dining hall is not specifically listed under the “Conference Space Information” heading, despite the Amended Conference Contract listing a price for meals Windermere is to provide.

In addition, it is undisputed that Windermere offered various free recreational activities to its guest campers, including those who attended the Student Life camp. Windermere also offered some special recreational activities that required an additional fee and reservations. The Edge was one such activity. The Edge, a ropes and zip-lining course, is not accessible to campers at Windermere without special scheduling, the purchase of tickets, and the execution of a “Recreational Release” form. Student Life [*6] advertised Windermere’s recreational facilities, including “The Edge,” as available for use to its campers, and it was Student Life’s expectation that these facilities would be available.

In addition to the Amended Conference Contract, Student Life also completed a Facilities Request Form, and Windermere completed a Fax Back Response Sheet. [Docs. 40-3 and 40-4]. The Fax Back Response Sheet provides:

Student Life Camp

Windermere Conference Center

Recreation:

. . .

What are some free-time options on your campus?

o Sand Volleyball, Outdoor Basketball, Tennis, Mini Golf, Disc Golf, Pool, Hiking, The Edge (low/high ropes course), Paintball, Waterfront Activities (Inflatable water park, kayak, canoe, paddle boats, fishing, etc) (See attached PDF on available Recreation Packages).

[Doc. 40-4, p. 3].

B. Great American Insurance Policy

Student Life is the named insured on a Commercial General Liability policy with Great American. The policy requires that all requests for medical payments be made within one year of the accident that gives rise to the insurance claim. [Doc. 42-2, p. 62 of 166]. Also, when there is other valid and collectible excess insurance coverage, the Great American policy provides [*7] that Great American will have no duty to defend its insured against a claim for damages. [Doc. 42-2, p. 67-68 of 166].

Because Student Life was contracting with Windermere for its event, Windermere was named as an additional insured on Student Life’s Great American policy. The Certificate of Liability Insurance was issued by Great American on May 8, 2014, and Windermere accepted. The Certificate referenced Great American’s policy issued to Student Life, Policy No.: GLP 0310189 and stated:

Event: Student Life Event Dates: May 31-June 7 and June 14-20, 2014 Windermere Conference Center is included as Additional Insured on the General Liability policy, as per endorsement #CG 82 24, ed. 12/01, and on the Automobile Liability policy, as per endorsement #CA 8518, ed. 6/09.

[Doc. 35-7 (“Certificate of Liability Insurance”)].

C. The Underlying Lawsuit

The Searcy Baptist Church youth group was one of the groups of campers that attended Student Life’s camp at Windermere in June of 2014. Karlee Richards and the rest of the Searcy youth group were scheduled to ride The Edge on June 4, 2014. They paid Windermere an additional fee for this activity. While zip-lining at The Edge that day, Richards fell [*8] and was injured. Kendra Brown, a Windermere employee, was working at the Edge at the time of the accident.

Following Karlee Richards’s accident at The Edge, her father, Jeremy Richards, both individually and as Next Friend, brought suit against Windermere and several of Windermere’s employees, including Kendra Brown. This lawsuit is currently pending in the Circuit Court of Morgan County, Missouri and seeks damages for Karlee Richards’s physical injuries sustained at The Edge.

On November 17, 2015, Windermere and Kendra Brown tendered claims to Great American for defense and indemnity of the underlying lawsuit, seeking coverage as additional insureds under Student Life’s Great American policy. [Doc. 35-15 (“Demand Letter”)]. The letter also demanded Medical Payments coverage for Karlee Richards’s medical expenses. The demand for Medical Payments coverage was made more than one year after Richards’s June 4, 2014 accident at The Edge. [Docs. 35-15 (“Demand Letter”) and 35-18 (“Feb. 4, 2016 Denial Letter”)].

Great American responded to the parties’ demand letter with a request for additional information, including information regarding Windermere’s coverage through Church Mutual Insurance [*9] Company. Windermere’s insurer, Church Mutual, was defending Windermere in the underlying lawsuit. [Doc. 35-14, p. 1 of 7 (“Dec. 17, 2015 Letter”)]. In subsequent correspondence with Great American, Windermere also stated, “Church Mutual, the insurer for ‘Windermere’ has tendered its full two million dollars in liability insurance.” [Doc. 35-14, p. 1 of 7 (“Dec. 17, 2015 Letter”)].

In its February 4, 2016 denial letter to Windermere and Brown, Great American concluded that Richards’s accident did not arise out of the ownership, maintenance, or use of the premises Windermere leased to Student Life and denied Windermere’s tender. Great American’s letter also provided that:

[E]ven if indemnity coverage did exist for Windermere and Kendra Brown under the Lifeway Policy, it is also clear that that [sic] Great American owes no defense obligation of the pending lawsuit. Your December 17, 2015 correspondence renewing the tender of defense on behalf of both Windermere and Kendra Brown makes clear that Windermere is being afforded a defense by Church Mutual and that Kendra Brown is being defended by both Church Mutual and Shelter. . . . [T]he Social Service Agency General Liability Broadening Endorsement [*10] makes clear that any coverage that did exist would be excess over all other insurance, including both the Church Mutual and Shelter policies. The “Other Insurance” provision of the Lifeway Policy makes clear that, where its coverage is excess and a defense is being provided by another carrier, Great American owes no duty to defend. Hence, Windermere’s and Kendra Brown’s tender of the defense of the pending lawsuit is denied for this additional reason.

[Doc. 35-18, p. 6 (“Feb. 4, 2016 Denial Letter”)]. Great American also denied Brown’s tender, stating that she was not an additional insured on the policy. Id.

II. Discussion

Windermere seeks coverage in the underlying Morgan County lawsuit as an additional insured under the Great American policy issued to Student Life. After denying Windermere’s tender, Great American filed suit before this Court seeking a declaratory judgment regarding its obligations under the policy. Great American now moves for summary judgment on its requested declaratory judgment that: (1) no liability coverage exists under its policy issued to Student Life for any claims asserted in the underlying lawsuit against Windermere or Windermere’s employees, including Kendra [*11] Brown; (2) Great American owes no duty to defend Windermere, Kendra Brown, or any other Windermere employees in the underlying lawsuit; and (3) no medical payments coverage exists for Karlee Richards.

A movant is entitled to summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The rule requires summary judgment to be entered “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).

A federal court sitting in diversity applies the choice-of-law rules of the state where the court sits, in this case, Missouri. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); American Guarantee Liability Ins. Co. v. U.S. Fidelity & Guaranty Co., 668 F.3d 991, 996 (8th Cir.2012). But a court need not undertake a choice-of-law inquiry unless an actual conflict of law is demonstrated. Prudential Ins. Co. of Am. v. Kamrath, 475 F.3d 920, 924 (8th Cir.2007) (citation omitted). Because the parties do not raise any actual conflict and because they do not dispute that Missouri law applies, the Court applies Missouri law.3

3 Plaintiff Great American contends no choice of law analysis is necessary because the outcome is the same under the law of the three states that could potentially apply: Missouri, Tennessee, and Alabama. Because Defendants Windermere, Brown, and the Richards contend Missouri law should apply, the Court concludes that the parties agree to the application of Missouri law.

A. Interpretation of Insurance Policies in Missouri

The interpretation [*12] of an insurance policy is a question of law to be determined by the Court. Mendota Ins. Co. v. Lawson, 456 S.W.3d 898, 903 (Mo. Ct. App. 2015). The ultimate goal of contract interpretation is to determine the intent of the parties. Bolinger v. Clarks Mut. Ins. Co., 485 S.W.3d 803, 809 (Mo. Ct. App. 2016). To determine the intent of the parties, the language in the contract is to be read according to its plain and ordinary meaning. Mendota, 456 S.W.3d at 903.

In interpreting an insurance policy, “[t]he key is whether the contract language is ambiguous or unambiguous.” Todd v. Mo. United Sch. Ins. Council, 223 S.W.3d 156, 160 (Mo. banc 2007). If an ambiguity exists, the policy language will be construed against the insurer. Mendota, 456 S.W.3d at 904. “‘An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the meaning of the language of the policy.'” Fanning v. Progressive Northwestern Ins. Co., 412 S.W.3d 360, 364 (Mo. Ct. App. 2013) (quoting Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007)). “‘To test whether the language used in the policy is ambiguous, the language is considered in the light in which it would normally be understood by the lay person who bought and paid for the policy.'” Blumer v. Automobile Club Inter–Ins, 340 S.W.3d 214, 219 (Mo. Ct. App. 2011) (quoting Heringer v. Am. Family Mut. Ins. Co., 140 S.W.3d 100, 102 (Mo. Ct. App. 2004)). “Whether an insurance policy is ambiguous is a question of law.” Todd, 223 S.W.3d at 160.

“[T]he parties seeking to establish coverage under the insurance policy have the burden of proving that the claim is within the coverage afforded by the policy . . . even though they are denominated as defendants in a declaratory judgment action.” State Farm Fire & Cas. Co. v. D.T.S., 867 S.W.2d 642 (Mo. Ct. App. 1993).

B. Liability Coverage [*13] for Windermere as Additional Insured

The Great American policy’s declarations page lists Student Life as the named insured. Windermere is listed as an additional Insured as follows:

5. AUTOMATIC ADDITIONAL INSURED(S)

a. Additional Insured — Manager or Lessor of Premises

(1) This policy is amended to include as an insured any person or organization (hereinafter called Additional Insured) from whom you lease or rent property and which requires you to add such person or organization as an Additional Insured

***

(2) With respect to the insurance afforded the Additional Insured identified in Paragraph A.(1) of this endorsement, the following additional provisions apply:

(a) This insurance applies only to liability arising out of the ownership, maintenance or use of that portion of the premises leased to [Student Life].

[Doc. 35-17, p. 1 (“Endorsement”)]

Great American contends that the reference in Section 5.a.(2)(a) to “premises leased to you” refers to the specific places identified in the Amended Conference Contract between Windermere and Student Life. According to Great American, because the Edge is not listed, Windermere’s potential liability for the accident at the Edge is not covered. In contrast, Windermere [*14] argues that “premises lease” includes all the places on its property that Student Life campers were authorized to access, including the Edge.

1. Interpretation of Section 5.a.(2)(a)4

4 Defendants Brown and the Richards argue that the limitation of liability in Section 5.a.(2)(a) does not apply to Windermere because that section refers to Paragraph A.(1), and Windermere is identified as an Additional Insured by Paragraph a.(1). In other words, these Defendants reason that the parties must be referring to something other than the preceding paragraph a.(1) because capital A.(1) rather than lower case a.(1) was used. Defendants further reason that the only “Paragraph A.(1)” in the endorsement is located in Section 7A.(1) which limits liability to $300,000 for personal property and building damage rented to an additional insured. The Court rejects this argument because the reference to “A” instead of “a” is clearly a minor typographical error, and the Defendants’ strained interpretation of Section 7 in this context makes no sense. In Mendota Insurance Company v. Ware, 348 S.W.3d 68 (Mo. Ct. App. 2011), the Missouri Court of Appeals rejected a similar argument based on a typographical error because the “policy’s intended meaning, would be apparent to an ordinary reader.” Id. at 73. In the context of the Great American policy, it would not be reasonable for an ordinary reader to think that the use of A.(1), immediately after a section labeled a.(1), would be referring to 7A.(1) when 7A.(1) has nothing to do with identifying an additional insured and is not located in close proximity to the paragraph that does deal with the additional insured.

Whether an insurance provision is ambiguous is a question of law for the Court. General Am. Life Ins. Co. v. Barrett, 847 S.W.2d 125, 131 (Mo. Ct. App. 1993). A policy is ambiguous if it is “fairly open to different interpretations” because it contains “duplicity, indistinctness, or uncertainty of meaning.” Id. Importantly, there are two types of ambiguities in the law: patent and latent. Cent. United Life Ins. Co. v. Huff, 358 S.W.3d 88, 95 (Mo. Ct. App. 2011). “A patent ambiguity is detected from the face of the document, whereas a latent ambiguity is found ‘when the particular words of a document apply equally well to two different objects or some external circumstances make their meaning uncertain.'” Id. (quoting Jake C. Byers, Inc. v. J.B.C. Invs., 834 S.W.2d 806, 816 (Mo. Ct. App. 1992)).

a. Patent Ambiguity

The key phrase that this Court must interpret and apply is “portion of the premises leased to [Student Life].” “The words of a policy must be given their plain and ordinary meaning consistent with the reasonable expectation and objectives of the parties, unless it is obvious that a technical meaning was intended.” Bolinger v. Clarks Mut. Ins. Co., 485 S.W.3d 803, 809 (Mo. Ct. App. 2016). (internal quotation marks removed). Counsel for Great American argues that the term “lease” is understood by everyone [*15] to be a premise over which one has exclusive or near exclusive control. [Oral Argument Transcript, p. 3]. Therefore, the word “lease” would only cover the property over which Student Life had exclusive control by the terms of the Amended Conference Contract. In contrast, Windermere effectively argues that all of the documents surrounding the formation of the insurance policy demonstrate that an ordinary person would not intend the technical meaning of the term “lease,” i.e. exclusive possession, but instead, would expect it to cover all of the Windermere property to which Student Life campers had authorized access.

Under Missouri law, a lease gives exclusive5 use of property for a determined period of time to the lessee. Chubb Group of Ins. Cos. v. C.F. Murphy & Associates, Inc., 656 S.W.2d 766, 777 (Mo. Ct. App. 1983). The term “lease” gives rise to a landlord-tenant relationship, whereby the tenant has “exclusive possession of the premises as against all the world,” including the landlord. Santa Fe Trail Neighborhood Redevelopment Corp. v. W.F. Coen & Co., 154 S.W.3d 432, 439 (Mo. Ct. App. 2005) (internal quotation marks and citations removed). In contrast, “[a] license is only a privilege to enter certain premises for a specific purpose. Kimack v. Adams, 930 S.W.2d 505, 507 (Mo. Ct. App. 1996). The difference between a lease and a license is technical and difficult to determine. Santa Fe, 154 S.W.3d at 439.

5 Great American did not cite to a case that says “near exclusive” possession is enough, and the Court has found no such statement in Missouri law.

When there is a conflict between the technical definition [*16] of a term in a policy and what a reasonable person would understand, the lay definition controls unless it is obvious that a technical definition was intended. Mansion Hills Condo. Ass’n v. Am. Fam. Mut. Ins. Co., 62 S.W.3d 633, 638 (Mo. Ct. App. 2001). “To determine the [lay definition] of a term, courts will consult standard English language dictionaries.” Id. Merriam Webster’s New College Dictionary defines “leased” as “property occupied or used under the terms of a lease.” Webster’s II New College Dictionary (1995). “Lease” is defined as “a contract granting occupation or use of property during a certain period in exchange for a specified rent.” Id. “Premises” is defined as “land and the buildings on it.” Id. Those definitions do not indicate possession is exclusive.

In this context, did the parties intend the phrase “premises leased to you” to have a technical meaning–i.e. the formation of a landlord-tenant relationship between Windermere and Student Life whereby Student Life would have exclusive control over the property listed in the Amended Conference Contract, even as to Windermere? The Certificate of Insurance6 suggests otherwise. [Doc. 35-7]. It states:

Event: Student Life Event Dates: May 31-June 7 and June 14-20, 2014 Windermere Conference Center is included as [*17] Additional Insured on the General Liability policy, as per endorsement #CG 82 24, ed. 12/01, and on the Automobile Liability policy, as per endorsement #CA 8518, ed. 6/09.

This language does not suggest that the parties intended a landlord-tenant relationship being created between Student Life and Windermere. Rather, it suggests that Great American knew it was providing liability insurance to Windermere for an event — the camp — being held by Student Life on the Windermere campus. At a minimum, there is a conflict between the technical meaning of the word lease and what an ordinary person would understand under these circumstances, taking into account the dictionary definitions. In those circumstances, the technical definition does not control. See Mansion Hills Condo. Ass’n v. Am. Fam. Mut. Ins. Co., 62 S.W.3d 633, 638 (Mo. Ct. App. 2001).

6 Because the Certificate of Liability was issued to Windermere for the purpose of adding Windermere as an additional insured, “as per endorsement #CG 82 24 ed. 12/01,” the Certificate arguably became a part of the insurance contract. See Corder v. Morgan Roofing Co., 355 Mo. 127, 195 S.W.2d 441 (Mo. 1946) (finding certificate of insurance that doubled liability coverage, added insurance for property damage, and certified complete coverage of all operations in connection with the insured’s construction contract was part of the insurance contract); see also, Section 1.5.a.(1) of this endorsement:

This policy is amended to include as an insured any person or organization (hereinafter called Additional Insured) from whom you lease or rent property and which requires you to add such person or organization as an Additional Insured on this policy.

Further, State ex rel. State Highway Commission v. Johnson, 592 S.W.2d 854, 857-8 (Mo. Ct. App. 1979), says that a court may consider the circumstances under which the contract was made. These circumstances, as discussed below in the section on latent ambiguity, also support [*18] a finding that an ordinary person would expect to be covered for camp activities, not just for dorm rooms and conference space.

For these reasons, a patent ambiguity exists. The disputed phrase not only should be interpreted in favor of the Defendants, but the Defendants’ interpretation is arguably the only one that would make sense to an ordinary person under these circumstances.

b. Latent Ambiguity

Even if there were no patent ambiguity, the Court can look at extrinsic evidence to determine if there is a latent ambiguity.7 Royal Banks of Mo. v. Fridkin, 819 S.W.2d 359, 362 (Mo. banc 1991) (“A latent ambiguity . . . must be developed by extrinsic evidence.”).

7 Although Defendants do not use the term latent ambiguity, this appears to be the crux of Defendants’ argument: that even if the “premises leased” term is not ambiguous on its face, it is ambiguous when applied to the facts at hand.

A latent ambiguity exists when a contract “on its face appears clear and unambiguous, but some collateral matter makes the meaning uncertain.” Id. In other words, an ambiguity is “latent if language, which is plain on its face, becomes uncertain upon application.” Gen. Am. Life Ins. Co. v. Barrett, 847 S.W.2d 125, 131 (Mo. Ct. App. 1993). For example, “[a] latent ambiguity may be one in which the description of the property is clear upon the face of the instrument, but it turns out that there is more than one estate to which the description applies; or it may be one where the property is imperfectly or in some respects erroneously described, so as not to refer with precision [*19] to any particular object.” Muilenburg, Inc. v. Cherokee Rose Design & Build, LLC, 250 S.W.3d 848, 854-55 (Mo. Ct. App. 2008) (quoting Prestigiacamo v. Am. Equitable Assur. Co. of N.Y., 240 Mo. App. 839, 221 S.W.2d 217, 221 (1949) (internal quotation marks omitted)). The case of Royal Banks of Mo. v. Fridkin, 819 S.W.2d 359, 362 (Mo. banc 1991) provides another example. In Royal Banks, the Missouri Supreme Court found a latent ambiguity in an otherwise unambiguous contract where the contract described a $10,000.00 promissory note but where no $10,000.00 promissory note actually existed. Id. Looking to extrinsic evidence, the court concluded, “Evidence of a promissory note that fits the description in the guaranty in all respects except for principal amount, coupled with the fact that a $10,000.00 note did not exist, is a collateral matter that renders the meaning of the guaranty uncertain. Once it became apparent that there was no $10,000.00 note but instead only a $50,000.00 note, a latent ambiguity existed.” Id.

Although parol evidence may not ordinarily be considered to create an ambiguity, the Court may consider such evidence to demonstrate the existence of collateral matters that create a latent ambiguity. Royal Banks of Mo. v. Fridkin, 819 S.W.2d 359, 362 (Mo. banc. 1991) (“A latent ambiguity is not apparent on the face of the writing and therefore, must be developed by extrinsic evidence.”). Therefore, the Court may consider extrinsic evidence to determine if a latent ambiguity exists. In this case, [*20] in the absence of a definition of “premises leased,” the surrounding facts suggest a latent ambiguity about what was intended by this term.

The plain language of the Amended Conference Contract alludes to Student Life’s use of and access to many more properties than merely conference space and lodging units during its event. For example, the Contract’s plain language contemplates Student Life’s use of a dining hall8 because the meals they contracted for were to be served there. Yet, the Contract does not specifically list the dining hall. Likewise, the Contract does not mention the chapel, despite Windermere’s title as Windermere Baptist Conference Center and its practice of contracting with church groups to conduct summer church camps. At a minimum, a jury could find the parties intended that campers would have access to the chapel, even though it was not listed. Finally, the Contract, like the Certificate of Insurance, refers to an “Event,” and Great American’s interpretation of the Contract considers only part of what was going to occur at that event.

8 The Contract’s “Meal Information” section provides start and end times for specific meals and alludes to Student Life’s use of the Dining Hall, stating, “All guests eating in the dining hall must have a meal ticket or wrist band to be admitted into the Dining Hall.” [Doc. 35-5, p. 2].

The Court also considers the parties’ Fax Back Response Sheet. [Doc. 40-4]. This document confirms that the purpose of the parties’ [*21] agreement was to host an event, referred to by the Sheet as “Student Life Camp.” [Doc. 40-4]. In addition, the Sheet shows the parties’ understanding that Student Life’s campers would have access to not only conference and dorm space, but also a church for worship, recreational fields, a gymnasium, hiking trails, a body of water for “waterfront activities,” and as is relevant in this case, The Edge ropes course:

What are some free-time options on your campus?

o Sand Volleyball, Outdoor Basketball, Tennis, Mini Golf, Disc Golf, Pool, Hiking, The Edge (low/high ropes course), Paintball, Waterfront Activities (Inflatable water park, kayak, canoe, paddle boats, fishing, etc) . . .

See generally [Doc. 40-4 and p. 3 (emphasis added)]. Because Student Life was contracting with Windermere for an event–to host a camp complete with various camp activities and facilities–the Court cannot find that a reasonable insured would have intended the term, “premises leased,” to limit its coverage only to liability arising out of conference rooms and lodging units.

There is no dispute that Student Life camper, Karlee Richards, was authorized to access The Edge at the time of her accident. Based on the Fax [*22] Back Response Sheet, alone, which suggests that Student Life would expect to have access to The Edge during its event, a reasonable juror could conclude that The Edge was a “portion of the premises leased,” which would entitle Windermere to coverage as an additional insured for its liability to Richards. Therefore, summary judgment must be denied.9

9 Although Defendants did not file their own motions for summary judgment, Defendants ask the Court to grant summary judgment in their favor, citing Fed. R. Civ. P. 56(f)(1), which provides: “After giving notice and a reasonable time to respond, the court may: (1) grant summary judgment for a nonmovant.” [Doc. 53]. Granting summary judgment for the non-movants under this rule is discretionary. Due to the fact that the focus of this briefing has been on Great American’s request for summary judgment, the Court declines to exercise its discretion under this provision. However, the Court will permit Defendants to file their own motions for summary judgment within 20 days of the date of this Order, not inconsistent with this order as to the issues ruled against them.

In the alternative, it is well-settled that an ambiguity within an insurance policy must be construed against the insurer. Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d 208, 210 (Mo. banc 1992). As already discussed, an ambiguity exists as to what the parties intended “premises leased” to refer to. Therefore, construing this ambiguous term against Great American requires the Court to apply the meaning “which would be attached by an ordinary person of average understanding if purchasing insurance.” Id. An ordinary insured could reasonably understand this phrase to refer to the areas to which Student Life had access during its event at Windermere. Therefore, Great American’s Motion for Summary Judgement must be denied on this issue.

Great American’s cited authorities do not require a different outcome. First, the coverage disputes in many of Great American’s authorities center on how to interpret “arising out of,” [*23] without any dispute as to what properties the parties understood to be the “leased premises” covered by the additional insured endorsement at issue. In contrast to the facts before this Court, each of these cases involved an undisputed lease contract between a landlord and tenant, rather than an event contract between two organizations, and there was no dispute or ambiguity surrounding what property was meant by the “premises leased” or a similar term. See, e.g., Belz Park Place v. P.F. Chang’s China Bistro, Inc., 2015 WL 11145058 (W.D. Tenn. Mar. 23, 2015) (within context of landlord-tenant relationship, involving a lease contract, and no dispute about the leased premises); Liberty Mut. Ins. Co. v. Michigan Mut. Ins. Co., 891 N.E.2d 99 (Ind. Ct. App. 2008) (same); Northbrook Ins. Co. v. American States Ins. Co., 495 N.W.2d 450 (Minn. Ct. App. 1993) (same); Hilton Hotels Corp v. Employers Ins. of Wausau, 629 So.2d 1064 (Fla. Dist. Ct. App. 1994) (same); SFH, Inc. v. Millard Refrigerated Svcs., Inc., 339 F.3d 738 (8th Cir. 2003) (same).

For example, in U.S. Fidelity & Guar. v. Drazic, 877 S.W.2d 140 (Mo. Ct. App. 1994). the Missouri Court of Appeals considered additional insured coverage within the context of a landlord-tenant relationship and an unambiguous lease contract. The Drazics leased a portion of their basement to the Brewers, and the Drazics were named as additional insureds under the Brewers’ liability insurance policy. Id. at 141. After the Brewers’ employee fell in a parking lot near the Drazics’ building and injured herself, she filed suit alleging that the Drazics negligently discharged steam from their dry cleaning business, which formed ice on the parking area [*24] causing her fall. Id. at 141-42. The policy’s additional insured endorsement provided coverage to the Drazics as additional insureds “but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises designated below leased to the named insured.” Id. at 142-43 (emphasis added). The court considered the parties’ lease contract, which identified the premises leased as a “designated portion of a commercial building known and numbered as 418 Manchester Road, Ballwin, Missouri 63011, plus the area adjacent to the entrance of Brewer’s Quilt Shop for installation of their office.” Id. at 142. The court reasoned that the endorsement’s “plain language contemplated coverage for the Drazics as additional insureds for liability arising out of incidents taking place in that part of the building leased to the Brewers pursuant to the lease contract” and that there was no coverage because the accident at issue “took place on a parking area outside the building.” Id. at 143.

In contrast to Drazic, the Great American policy does not limit coverage to the “premises designated below” accompanied by a lease that specifically identifies an address or description of the area unambiguously covered by this [*25] clause. Also unlike the facts before this Court, there is no dispute or uncertainty in Drazic about what is meant by the “premises [leased].”

In addition, the Court rejects Great American’s reliance on Drazic for the separate proposition that “the purpose of additional insured endorsements obtained in a landlord-tenant context is to provide landlords protection from vicarious liability due to a tenant‘s action which takes place on the premises that the tenant has leased.” [Doc. 35, p. 16 (quoting Drazic, 877 S.W.2d at 143)]. Despite articulating this theory, the Drazic court did not resolve the coverage question based on vicarious liability: “The injury to Leary occurred due to alleged negligence on the part of the landlords’ business . . . and it did not occur on the premises leased to the [tenants].” Drazic, 877 S.W.2d at 143 (emphasis added). Furthermore, to the extent Great American contends that additional insured coverage is limited to acts for which Windermere is vicariously liable, the Court disagrees. The case from which this theory originated involved an insurance contract materially different from the one at issue here because the policy language in that case specifically limited coverage for additional insureds “against [*26] vicarious liability for the acts of the named insured.” See Hormel Foods Corp. v. Northbrook Property and Cas. Ins. Co., 938 F. Supp. 555, 558-560 (D. Minn. 1996) (quoting Harbor Ins. Co. v. Lewis, 562 F. Supp. 800, 802 (E.D. Pa. 1983) and explaining the origins and inapplicability of this theory). In contrast, coverage under the Great American policy cannot be said to turn on “vicarious liability” because the policy provision does not use this language.

As for other cases cited by Great American, these cases are distinguishable because they involve starkly different contract language than the term, “premises leased,” which this Court has found to be ambiguous. See, e.g., Lancaster v. Ferrell Paving, Inc., 397 S.W.3d 606 (Tenn. Ct. App. 2012) (involving different endorsement language: “liability arising out of your ongoing operations performed for the [additional] insured”) (emphasis added). Finally, Great American’s reliance on contract cases outside of the insurance context is misplaced because these cases also interpret contract provisions that are unlike the policy language at issue here. See, e.g., Once Upon a Time, LLC v. Chappelle Properties, LLC, 209 So. 3d 1094, 2016 WL 3031347 (Ala. 2016) (applying Alabama law to an indemnity agreement that did not contain the language “arising out of” or “premises leased” and did not involve insurance policy); Union Realty Co., Ltd. v. Family Dollar Stores of Tennessee, Inc., 255 S.W.3d 586 (Tenn. Ct. App. 2008) (interpreting contract language regarding the landlord’s and tenant’s obligations to procure insurance but no interpretation of insurance policy language at [*27] issue); Pilla v. Tom-Boy, Inc., 756 S.W.2d 638 (Mo. Ct. App. 1988) (interpreting indemnity provision in a lease that did not contain the language “arising out of” outside of insurance context and no dispute surrounding what constituted the leased premises).

Finally, the Court rejects Great American’s separate argument that whether a tenant has “shared” versus “exclusive” use of an area controls whether that area is part of the “premises leased” covered by an insurance endorsement. For example, in Colony Ins. Co. v. Pinewoods Enterprises, Inc., 29 F. Supp. 2d 1079 (E.D. Mo. 1998), a district court found insurance coverage for liability arising out of an area shared between the additional insured and other parties. In Colony, Bledsoe and Pinewoods entered a leasing contract in which Bledsoe (the lessee) leased portions of Pinewood’s campgrounds for a concert. Id. at 1081. Pinewoods was named as an additional insured under Bledsoe’s general liability policy with Colony Insurance. Id. During the concert, a rain storm caused many of the concert goers to take shelter on and under a deck attached to a lodge at the campground. Id. The lodge’s deck collapsed, injuring numerous concertgoers. Id. At issue was whether Colony Insurance’s coverage of Pinewoods as an additional insured extended to this accident. Id.

The court considered both the insurance [*28] policy endorsement and the parties’ lease contract. The endorsement provided additional insured coverage “but only with respect to liability arising out of your [Bledsoe’s] operations or premises owned by or rented to you.” Id. at 1082. The leasing contract specifically provided that Bledsoe “shall have the exclusive use of the Pinewoods Park” for a specific time period with the exception of the Lodge area. Id. at 1081-82. The contract also provided:

(5) LESSEE [Bledsoe], its customers, guests and invitees will share the Lodge area and facilities, i.e. store, gift shop, bait and tackle area . . . with the fishermen and permanent guests and any campers reserved prior to June 10, 1995.

Id. at 1082. The court concluded that Bledsoe leased the lodge area because the contract “specifically (albeit not exclusively) lease[d] the lodge area to Bledsoe,” and the endorsement provided that coverage extended to “the premises owned by or rented to you.” Id. at 1083 (emphasis added). The court concluded that “Colony’s additional insured endorsement extend[ed] coverage to Pinewoods for any liability arising out of the collapse of the lodge’s deck because the lodge was part of the premises leased to Bledsoe.” Id. In contrast to Great American’s contention that exclusivity [*29] is required, the Colony court still found the lodge premises to be “rented to” Bledsoe for purposes of additional insured coverage, despite the fact that the parties’ lease agreement provided that Bledsoe would “share” the lodge area premises at issue “with the fishermen and permanent guests and any campers.” Id. (emphasis added).

C. Liability Coverage for Kendra Brown or Other Windermere Employees

Great American also moves for summary judgment on the issue of coverage for Kendra Brown, Windermere’s employee. Great American argues that no coverage exists for Brown or any other Windermere employee because the Additional Insured Endorsement does not provide additional insured status and/or coverage for an additional insured’s employees. Brown is not identified anywhere in Student Life’s Great American policy nor is she listed as an Additional Insured on a Certificate of Liability. Therefore, any coverage for Brown would necessarily derive from her status as Windermere’s employee, and employees are not covered as insureds by the Additional Insured Endorsement.

Brown does not dispute that the Additional Insured Endorsement fails to provide coverage for an additional insured’s employees. Instead, [*30] Brown argues that Windermere should be considered a “Named Insured,” which in turn, makes the provisions applicable to “Named Insureds” also applicable to Windermere, including the provision that expands coverage for “Named Insureds” to their employees. The Court rejects this argument as based on an unreasonable interpretation of the policy.

Brown contends that the policy does not define “Named Insured,” and thus, it must be given the meaning that would be attached by an ordinary person. Brown reasons that an ordinary person would define “Named Insured” as a person or entity that is actually named as an insured. In turn, Brown says, because the Certificate of Liability names Windermere as an additional insured, Windermere must be a “Named Insured.” Brown next points to the following provision:

Throughout this Policy the words “you” and “your” refer to the Named Insured shown in the Declarations, and any other person or organization qualifying as a named insured under this Policy.

The word “insured” means any person or organization qualifying as such under

SECTION II — WHO IS AN INSURED.

***

[Doc. 42-2, p. 65 of 166 (“CGL Policy”)]. Brown contends that because she has established that Windermere [*31] is a “Named Insured,” “you” and “your” throughout the policy must also refer to Windermere. Next, Brown points to Section II of the policy:

SECTION II — WHO IS AN INSURED

2. Each of the following is also an Insured:

a. Your . . . “employees,” . . . but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.

[Doc. 42-2, p. 65 of 166 (“CGL Policy”)]. Brown argues that if the Court accepts her contention as true that Windermere is a “Named Insured,” then “your” refers to Windermere, which means that Brown “is also an Insured” as “[y]our [Windermere’s] ’employee,'” according to Section II.2.a.

Brown’s argument fails because it is based on an unreasonable interpretation that Windermere is somehow a “Named Insured,” a status unsupported by the policy’s clear language.10 First, the policy distinguishes between mere “insureds” and those insureds that are “Named Insureds.” Compare “The word ‘insured’ means any person or organization qualifying as such under SECTION II — WHO IS AN INSURED” with “Throughout this Policy the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations, and any other person or organization qualifying [*32] as a named insured under this Policy.” [Doc. 42-2, p. 65 of 166 (“CGL Policy”)]. The fact that the policy differentiates between the two statuses shows that they are different terms, despite Brown’s contention that all insureds named are “Named Insureds.”

10 Furthermore, even if the Court accepted Brown’s contention that Windermere, an Additional Insured, was in fact, a Named Insured, Brown still has not shown that she is entitled to coverage under the policy as a Windermere employee because she has not alleged any facts or argument that her liability to Richards arose from “acts within the scope of [her] employment . . . or while performing duties related to the conduct of [Windermere’s] business.” Section II.(2).a.; [Doc. 42-2, p. 65 of 166 (“CGL Policy”)].

Furthermore, the policy’s plain language identifies which insureds are “Named Insureds.” First, the top of the policy’s Declarations page states:

NAMED INSURED LIFEWAY CHRISTIAN RESOURCES OF THE SOUTHERN BAPTIST CONVENTION

[Doc. 42-2, p. 29 of 166]. Therefore, because Student Life is “shown in the Declarations,” it is a “Named Insured.” The policy also includes a Named Insured Endorsement, which amends the Declarations by providing, “It is agreed that the Named Insured shown in the Declarations is amended to read as follows.” [Doc. 42-2, p. 41 of 166]. This statement is followed by a list of various organizations’ names related to Lifeway, which the endorsement provides are also included as Named Insureds. Id. Accordingly, it is reasonable to conclude that these organizations constitute “any other . . . organization qualifying as a named insured under this Policy” and therefore are also “Named Insureds.” [Doc. 42-2, p. 65 of 166 (“CGL [*33] Policy”)]. Based on the policy’s plain language, an ordinary person would understand “Named Insured” to refer to those insureds identified on the Declarations Page next to “NAMED INSURED” and those insureds identified in the Named Insured Endorsement. To interpret the policy to mean that anyone named as an insured, including those named as Additional Insureds, were also entitled to the same expansive level of coverage as the “Named Insureds” would be unreasonable.

In contrast to those entities that are clearly designated as “Named Insureds,” Windermere is not listed as a Named Insured on either the Declarations page or on the endorsement adding Named Insureds to the Declarations page. Instead, the policy’s only reference to Windermere is located in the Certificate of Liability it was issued prior to Student Life’s 2014 camp, which included it as an “Additional Insured,” providing:

Windermere Conference Center is included as Additional Insured on the General Liability policy, as per endorsement #CG 82 24, ed. 12/01, and on the Automobile Liability policy, as per endorsement #CA 8518, ed. 6/09.

[Doc. 35-7 (“Certificate of Liability Insurance”) (emphasis added)]. The Additional Insured Endorsement [*34] provides that it “is added to SECTION II — WHO IS AN INSURED, 5. AUTOMATIC ADDITIONAL INSURED(S).” [Doc. 35-17, p.1 (“Endorsement”).] Had Great American intended to make Windermere a “Named Insured,” it could have identified it as a “Named Insured” within the Certificate of Liability, or it could have provided that Windermere be added to the Named Insured Endorsement, rather than merely “Section II — Who is an Insured.” It did neither. For these reasons, an ordinary person would understand Windermere to be an “insured,” not a “Named Insured,” and thus, the words “you” and “your” throughout the policy do not refer to Windermere. Accordingly, the provision that expands coverage for “Named Insureds” to cover their employees as insureds does not apply to Windermere. Because Brown is not an insured under the policy and therefore not entitled to coverage, summary judgment is granted in favor of Great American on this point.

D. Duty to Defend

Great American also contends that it owes no duty to defend Windermere or Brown and it should be granted summary judgment on this claim. Under Missouri law, the duty to defend “arises whenever there is a potential or possible liability to pay based on [*35] the facts at the outset of the case and is not dependent on the probable liability to pay based on the facts ascertained through trial.” Columbia Cas. Co. v. HIAR Holding, L.L.C., 411 S.W.3d 258, 265 n.10 (Mo. 2013) (internal quotation marks removed). Because the Court has already found that Brown and other Windermere employees are not insureds under Great American’s policy and thus, not entitled to coverage, it follows that Great American has no duty to defend Brown.11

11 This rationale was also articulated in Great American’s denial letter, which provided:

First, as to Kendra Brown, she is not listed as an additional insured on the Certificate of Liability Insurance, nor is there any indication on the [Certificate] that additional insured status is to be afforded to employees of Windermere. Finally, there is nothing in the specific form referenced on the Certificate . . . nor anywhere else in the Lifeway Policy, that affords additional insured status to Kendra Brown or any other Windermere employee. . . . Kendra Brown is simply not an additional insured under the Lifeway Policy such that Great American is denying the tender made on behalf of Kendra Brown.

[Doc. 35-18, p. 5-6 of 12 (“Feb. 4, 2016 Denial Letter”)].

As to whether Great American owes a duty to defend Windermere, the Endorsement makes clear that any coverage for Windermere as an additional insured would be excess, and the policy does not afford [*36] a defense when (1) its coverage is excess and (2) when the insured is being provided a defense by another carrier.12 Under Missouri law, “‘an insurer’s duty to defend is purely contractual.'” Markel Am. Ins. Co. v. Unnerstall, 2009 U.S. Dist. LEXIS 3430, 2009 WL 57451 at *4 (E.D. Mo. 2009) (quoting Crown Ctr. Redevelopment Corp. v. Occidental Fire, 716 S.W.2d 348 (Mo. Ct. App. 1986)). “If there is no contract to defend, there is no duty to defend.” Id. In relevant part, the Endorsement provides:

5. AUTOMATIC ADDITIONAL INSURED(S)

a. Additional Insured — Manager or Lessor of Premises

***

(2) With respect to the insurance afforded the Additional Insured identified in Paragraph A.(1) of this endorsement, the following additional provisions apply:

***

(d) Coverage provided herein is excess over any other valid and collectible insurance available to the Additional Insured whether the other insurance is primary, excess, contingent or on any other basis unless a written contractual arrangement specifically requires this insurance to be primary.

12 This rationale was also articulated in Great American’s denial letter, which provided:

[E]ven if indemnity coverage did exist for Windermere and Kendra Brown under the Lifeway Policy, it is also clear that that [sic] Great American owes no defense obligation of the pending lawsuit. Your December 17, 2015 correspondence renewing the tender of defense on behalf of both Windermere and Kendra Brown makes clear that Windermere is being [*37] afforded a defense by Church Mutual and that Kendra Brown is being defended by both Church Mutual and Shelter. . . . [T]he Social Service Agency General Liability Broadening Endorsement makes clear that any coverage that did exist would be excess over all other insurance, including both the Church Mutual and Shelter policies. The “Other Insurance” provision of the Lifeway Policy makes clear that, where its coverage is excess and a defense is being provided by another carrier, Great American owes no duty to defend. Hence, Windermere’s and Kendra Brown’s tender of the defense of the pending lawsuit is denied for this additional reason.

[Doc. 35-18, p. 6 (“Feb. 4, 2016 Denial Letter”)].

The Additional Insured Endorsement’s Section 5.a.(2)(d) is clear that any coverage afforded is “excess over any other valid and collectible insurance,” regardless of the priority of coverage of the insurance–be it “primary, excess, [or] contingent.” In this case, Church Mutual had already tendered, or attempted to tender its policy limits on Windermere’s behalf in the underlying lawsuit. Therefore, although Windermere is entitled to coverage under the Great American policy, this coverage is excess.

The Other Insurance provision then states that where coverage is excess [*38] and the insured is being provided a defense by another carrier, Great American has no defense obligation. [Doc. 42-2, p. 66-68 of 166 (“CGL Policy”)]. Specifically, this provision provides:

SECTION IV — COMMERCIAL GENERAL LIABILITY CONDITIONS

***

4. Other Insurance

***

(2) When this insurance is excess we will have no duty under Coverages A or B to defend the Insured against any “suit” if any other insurer has a duty to defend the Insured against the “suit.” . . .

Windermere is currently being defended by its own insurance carrier, Church Mutual. Because the policy is clear that there is no defense obligation where coverage is excess and a defense is being provided by another carrier, which is the case here, the Court rejects Windermere’s contention that it is entitled to a defense based on a potential for coverage. Therefore, summary judgment is granted for Great American on its duty to defend.

E. Medical Payments Coverage

Finally, Great American moves for summary judgment as to the Medical Payments coverage for Richards’s medical expenses. In its November 17, 2015 letter to Great American, Windermere demanded the Coverage C Medical Payments limits for Richards. The provision governing Medical [*39] Payments provides in relevant part:

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

***

Coverage C — Medical Payments

1. Insuring Agreement

a. We will pay medical expenses as described below for “bodily injury” caused by an accident:

***

provided that:

***

(b) the expenses are incurred and reported to us within one year of the date of the accident; and

***

[Doc. 42-2, p. 62 of 166 (“CGL Policy”)].

Great American argues that it is entitled to summary judgment as to this coverage because medical expenses were not reported to Great American within the time limit provided in Paragraph 1.a.(b). This provision provides that Great American will pay medical expenses for bodily injury “provided that . . . (b) the expenses are incurred and reported to us within one year of the date of the accident.” Section 1.a.(b) (emphasis added).

Richards’s accident occurred on June 4, 2014. Neither she nor anyone on her behalf made claim for Medical Payments coverage until Windermere’s November 17, 2015 demand letter more than one year after the date of the accident. Therefore, Great American is entitled to summary judgment as to the Medical Payments coverage.

III. Conclusion

For the reasons set forth above, Plaintiff Great American Alliance [*40] Insurance Company’s motion for summary judgment is granted in part and denied in part. [Doc. 34]. Summary judgment is granted on Great American’s liability coverage for Kendra Brown, individually, as an additional insured; Great American’s duty to defend Kendra Brown and Windermere; and Great American’s Medical Payments coverage for Karlee Richards’s injuries. Summary judgment is denied on Great American’s coverage for Windermere as an additional insured. It is further ordered that on or before July 25, 2017, Defendants may file any motions for summary judgment not inconsistent with this order as to the issues ruled against them.

/s/ Nanette K. Laughrey

NANETTE K. LAUGHREY

United States District Judge

Dated: July 5, 2017

Jefferson City, Missouri


What happens if you fail to follow the requirements of your insurance policy and do not get a release signed? In New Hampshire, you have no coverage.

You either have to create an absolutely fool proof system or take your release
online. If they don’t sign they don’t climb!

Colony Insurance Company v. Dover Indoor Climbing Gym & a., 158 N.H. 628; 974 A.2d
399; 2009 N.H. LEXIS 51

State: New Hampshire, Supreme Court of New Hampshire

Plaintiff: Colony Insurance Company

Defendant: Dover Indoor Climbing Gym& a.

Plaintiff Claims: There was no insurance coverage because the insured did not get a release signed by the injured claimant

Defendant Defenses: The insurance policy endorsement requiring a release to be signed was ambiguous

Holding: For the Plaintiff Insurance Company

Year: 2009

This is a scary case, yet the outcome is correct. The plaintiff insurance company issued a policy to the defendant climbing gym. An endorsement (an added amendment to the contract) to the policy said there would only be coverage if the gym all customers sign a release.

 An endorsement to the policy stated: “All ‘participants’ shall be required to sign a waiver or release of liability in
your favor prior to engaging in any ‘climbing activity.’ “It further stated: “Failure to conform to this warranty will render this policy null and void as [sic] those claims brought against you.”

A climber came to the gym with a group of friends. The gym asked everyone if they had a release on file, and no one said no. (Yes really stupid procedures!) Bigelow was part of the group and did not have a release on file and had not signed a release. While climbing Bigelow fell and was injured.

Bigelow accompanied friends to the climbing gym, but did not sign a waiver. He testified that he was never asked to sign a waiver; the gym owner’s affidavit stated that the owner asked the group of climbers if they had waivers on file and received no negative answers. It is undisputed; however, that Bigelow did not sign a waiver or release. While climbing, Bigelow fell and sustained serious injuries.

The defendant climbing gym put the plaintiff insurance company on notice of the claim. When the insurance company found out no release was signed, the insurance company filed a declaratory judgment motion. A declaratory judgment is a way to go into a court and say there is no coverage under this policy because there was no release. It is an attempt to be a quick interpretation of the contract so the bigger issue can be resolved quickly.

The gym then put Colony on notice to defend and pay any verdict obtained by Bigelow. In response, Colony filed a petition for declaratory judgment, arguing that the gym’s failure to obtain a release from Bigelow absolved Colony of any duty to defend or indemnify the gym.

Both parties filed motions for summary judgment. The trial court granted the climbing gym’s motion for summary judgment saying the endorsement requiring the signed release was ambiguous. The ambiguity was created because the insurance company had not provided the gym with a sample waiver to use.

The trial court found that Colony’s failure to provide the gym with a sample waiver rendered the endorsement provision ambiguous. The trial court therefore denied Colony’s motion for summary judgment, and granted the defendants’ cross-motion for summary judgment. 

This analysis by the court was absurd. Releases need to be written for the gym, for the gym’s clients and for the state law of the state where it is to be used. A “sample” release is a guaranteed loser in most cases. However, I suspect the court was looking for anyway it could find to provide coverage for the gym.

The trial court’s ruling meant the plaintiff insurance company had to provide coverage to the defendant for any claims made by the injured climber Bigelow.

The insurance company appealed the decision. New Hampshire does not have an intermediary appellate court system so the appeal went to the New Hampshire Supreme Court.

Analysis: making sense of the law based on these facts.

Insurance policies are contracts and are interpreted as such. However, because have been written in a specific way and are always offered on a take it or leave it basis, as well as the fact the insurance company has all the cards (money) insurance policies have additional legal interpretations in addition to contract law.

The New Hampshire Supreme Court started its analysis by looking at how insurance policies are interpreted. That means the policy is read as a whole objectively. Terms are given their natural meaning, meaning there is no special interpretation of any term, and if the policy is clear and unambiguous is it enforced. No special reading of the policy is allowed based on any party to the policy’s expectations.

We construe the language of an insurance policy as would a reasonable person in the position of the insured based upon a more than casual reading of the policy as a whole. Policy terms are construed objectively, and where the terms of a policy are clear and unambiguous, we accord the language its natural and ordinary meaning. We need not examine the parties’ reasonable expectations of coverage when a policy is clear and unambiguous; absent ambiguity, our search for the parties’ intent is limited to the words of the policy.

The burden of proving that no insurance coverage exists as defined by the policy rests on the insurance company. That means coverage exists under the policy unless the insurance company can prove no coverage was written.

If an insurance company wants to limit its coverage, it is allowed to do so. However, that limitation must be clear and unambiguous. An ambiguity exists if a reasonable disagreement exists between the insurance company and the policyholder and that disagreement could lead to two or more, interpretations.

Although an insurer has a right to contractually limit the extent of its liability, it must do so “through clear and unambiguous policy language. Ambiguity exists if “reasonable disagreement between contracting parties” leads to at least two interpretations of the language. 

Ambiguities will be examined in the appropriate context and the words construed in their plain, ordinary and popular meaning. If the interpretation of the ambiguity favors the policyholder, then the coverage will favor the insured.

In determining whether an ambiguity exists, we will look to the claimed ambiguity, consider it in its appropriate context, and construe the words used according to their plain, ordinary, and popular definitions. If one of the reasonable meanings of the language favors the policyholder, the ambiguity will be construed against the insurer. 

If, however, the language in the policy is clear, the court will not bend over backward or as written in this case “perform amazing feats of linguistic gymnastics” to find an ambiguity and create coverage.

Where, however, the policy language is clear, this court “will not perform amazing feats of linguistic gymnastics to find a purported ambiguity” simply to construe the policy against the insurer and create coverage where it is clear that none was intended. 

The court then looked at the determination of the trial court which found an ambiguity because the insurance company did not provide a sample insurance policy. The Supreme Court found that was an incorrect interpretation of the policy. Even the defendant climbing gym agreed with the court on this
issue.

Even the gym, however, contends that the trial court “reached the correct result for the wrong reasons.” Thus, the gym does not argue that the endorsement creates an ambiguity by its failure to provide the insured with a sample waiver form, but, rather, that the exclusionary language is ambiguous because it states that participants shall “be required” to sign waivers as opposed to mandating that the gym obtain signed waivers.  

The court then applied to the law of New Hampshire in interpreting insurance policies to the facts of this case. The court found the language requiring a release was clear and that a reasonable person could only read it.

The clear meaning of the policy language is that the gym is required to actually obtain waivers from climbing participants. The gym’s interpretation would lead to the absurd result of requiring coverage even if the gym never actually enforced its waiver policy. A reasonable person reading the policy would not understand that coverage existed in such circumstances. The gym’s interpretation is unreasonably narrow, and is therefore not the type of alternative interpretation that renders policy language ambiguous.

Simply put the policy requires the defendant climbing gym to have everyone sign a release. If no release is signed, there was no coverage for the gym. The trial court was overturned, and the climbing gym faced the claims of the injured climber without insurance coverage.

So Now What?

One of the first cases I was involved with was very similar. A Montana stable was insured by an insurance company with an endorsement just as this one; all riders were required to sign a release. In Montana all guides, including horseback guides had to be licensed by the state. A state employee was checking out the
stable and found the releases. In Montana, you cannot use a release. (See States that do not Support the Use of a Release andMontana Statute Prohibits Use of a Release)

The state employee had the stable quit using the release, or they would lose their license to operate in Montana. A rider was injured and sued the stable, and the insurance company denied coverage. I was contacted by the law firm representing the insurance company and was floored by the facts and how the insurance company could deny coverage when it violated state regulations.

However, in that situation as well as this one, there is not much you can do to get around the situation if the policy clearly states you must have a release signed. In the Montana case, the stable owner should have immediately contacted his insurance company when he was told he could not use a release and pay to have the endorsement removed or found another insurance company to write him a policy.

In this case, a proper procedure should have been put in place to confirm signed releases rather than relying on the honesty of someone walking through the doors to the gym.

When you purchase insurance make sure you and your insurance agent are speaking clearly to each other, and you both understand what you are looking for. When the policy arrives, read the policy or pay a professional to read the policy for you looking for the coverage’s you need as well as looking for problems with the coverage.

If you ask the agent or broker to clarify the coverage you are wanting, to make sure you get that clarification in writing (or an email), so you can take that to court if necessary.

Most importantly create a system to make sure that everyone who comes to your facility, activity or business when you use a release, signs a release.

If you are interested in having me write your release, fill out this Information Form and Contract and send it to me.

What do you think? Leave a comment.

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Author: Outdoor Recreation Insurance, Risk Management and Law

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By Recreation Law           Rec-law@recreation-law.com     James H. Moss

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Additional Insured Certificates: they are just a piece of paper, unless they are part of a contract or there is an insurable interest

There seems to be a hue and cry about collecting additional insured certificates. Unless you need TP or want to wall paper an office wall, they are worthless unless the insurance company/business issuing the certificate recognizes an insurance defined insurable interest, in advance, or you have a contract that identifies an insurable interest and recognizes the need for the certificate.

The latest catch word after this fall’s conferences runs seems to be collect additional insured certificates from everyone. Although this sound’s good and an easy way to solve a problem, legally, it is just another way to kill trees. If nothing else, it will keep you in litigation for another decade between your insurance company and the one issuing the certificate fighting over whether it is valid.

Most Additional Insured Certificates of Zero value to you from an insurance standpoint.

The basis for issuing a certificate listing someone else as an additional insured, or covered by a particular policy is there must be an insurable interest.

Indemnity – Insurable Interest

Insurable interest arose out of defining indemnity. You agree to indemnify another party of their loss. The simplest way to look at this is your relationship with you and your automobile insurance policy. If you have a loss to your car, your insurance policy will indemnify you for that loss. Insurance companies have taken that one step further these days by taking over the loss and doing all the legwork, including paying the repair facility directly.

When those indemnification agreements were larger than the money on hand or the value of the business issuing the indemnification, other ways were developed to “come up with the money” to cover the indemnification. Eventually, insurance played a role in indemnifying a third party for the losses they might incur, even though the insurance policy is issued in the name of the insured.

Think about you, a certificate of insurance is issued to the insured, which was underwritten and covers someone else who was not. Don’t you think there is more to this than just issuing a piece of paper?

Issuing Policy must cover risks of the claims identified in the certificate or the agreement.

By the very nature of the definition, simplified above, you can see there are several issues present. The insurance policy is only going to cover the third party for risks that are insured. That means if the policy issued to you says it will only cover A, B and C as risks, then a claim of Z by the third party will not be covered. No matter what the certificate of insurance says, it only covers the risks insured by the original policy for the original insured.

So even before we get to whether the certificate is valid, you must make sure the policy issuing the certificate lists the claims that the certificate is expected to cover.

You have to look at the certificate itself and see if it covers anything, let alone what you need.

Legally recognizable insurable interest

The next issue is insurance policies only cover if there is a legally recognizable interest in the possible loss. That is called an “insurable interest.”

An insurable interest means the person buying the policy has a legally recognized loss that the policy will cover. The best examples are in the negative.  I cannot buy an insurance policy on my neighbor’s house. I don’t own the house; the house does not secure a debt the neighbor owes me. I have nothing invested in the neighbor’s house; therefore, I have no insurable interest in the neighbor’s house.

Another example would be life insurance. I do not have an insurable interest that would be recognized to buy a life insurance policy on my neighbor. My neighbor’s death would not cause me a loss.

Normally, life insurance policies are only issued to relatives of the insured. The exception is if you could prove an economic loss to you because someone died. So business partners can buy life insurance policies on each other because if one partner died, the other would have to hire someone to do that partners work, and you might have to buy the surviving family members of the deceased interest in the business.

Example; my neighbor and I contractually agreed upon the death of one of us to take care of the other’s property. I would then suffer a loss if my neighbor died so I might be able to purchase a life insurance policy on my neighbor. I would have to prove the contract existed and that a real value existed for the loss I might incur. I would have to prove by contract that I have an insurable interest in my neighbor.

I’m using examples in property insurance, life and health insurance and liability insurance to get these points across. An insurable interest is different in the different types of polices, health, life, property or liability, but not enough to worry about for this discussion.

Insurable interest

Insurable interests arise “naturally” in the law. When a building is purchased the bank making the loan to finance the purchase has an insurable interest. If the property is destroyed, then the banks’ chances of receiving the rest of the loan are diminished, therefore, there is an insurable interest in the bank to insure against loss. Either the bank can buy a policy covering the property or the bank can require as part of the loan that the owner/borrower insure the property for the value of the property listing the bank as an additional insured.

Landlords have a similar insurable interest. They are listed as additional insured’s under their tenant’s policy. If the property is destroyed by actions of the tenant, the landlord will lose the property or at least the rental income. Therefore, they have an insurable interest recognized by the insurance company issuing the tenant’s policy.

Another example is a ski area operating on US Forest Service land. The US Forest Service is the landowner or landlord, and the ski area is the tenant. If the ski area destroys the property, the US Forest Service suffers a loss. So the US Forest Service is listed under the ski area’s policy as an additional insured, and the Forest Service is reimbursed for the loss of value to their land.

This particular insurable interest covers two issues for the US Forest Service. It covers any loss to the property the Forest Service may have, and it protects them from lawsuits if they are joined in a suit with the ski area. The ski area, as the permittee (or tenant) was responsible for the property at the time of the injury to the guest skiing. The US Forest Service did not make the snow, groom or run the lifts; however, as the landlord or owner of the property, the Forest Service maybe sued. As such, the US Forest Service has an insurable interest covered by the ski area for a possible lawsuit.

General or Special Liability Policies and Insurable Interest

Liability interests work the same way. If a skier hits a tree in the ski area and suffers injury, the skier can sue the ski area or the US Forest Service. The ski area is the tenant who received value for the skier being on the land, and the US Forest Service owns the tree. Both can be sued. The agreement between the Forest Service and the ski area then says the ski area must protect the Forest Service from any lawsuit due to the ski area’s occupation or control of the land. By contract and law, the Forest Service has an insurable interest that will be recognized by the ski area’s insurance company.

The owner of the land where a rafting company takes their passenger’s and boats out of the water has an insurable interest. If someone falls down getting out of the boat, both may be sued. Was it the rafting companies fault for where they put the boat or the landowner’s for how the takeout was created? Since the landowner has limited control over the takeout while being used by the rafting company, he should be covered as an additional insured because he has an insurable interest. The chance of a lost due to the acts of someone he contracts with creating liability for him.

What about a restaurant that provides lunches to the rafting company? Who should receive the certificate of additional insured from whom? The rafting company could be sued because the lunch made a customer ill. The rafting company should receive a certificate of insurance from the lunch provider. At the same time, the illness may have been caused by the way the lunch was stored or prepared, so therefore the lunch provider should be an additional insured on the Rafting company’s policy.

It is these situations where both insurance companies can struggle during litigation or a contract properly written in advance might save one or both company’s time and money.

What if the rafting company stops and has their customers walk up the bank and have lunch in a restaurant at the side of the river? If the lunches are part of the trip and the restaurant is the only option, maybe the rafting company should receive a certificate of insurance from the restaurant. However, if the customer is free to pick any meal, they want from one of the several restaurants, probably not. That would be like a restaurant on the side of an interstate asking for certificates of insurance from all trucking companies.

Would the possible insurable interest change if the rafting company received a commission from the restaurant? Yes, the insurable interest would be more compelling because there is a clear financial benefit flowing between the parties. What if the restaurant provided free lunches to the raft guides?

Unless the insurance company recognizes, either by industry or insurance practice that an insurable interest exists or that one is created by contract, that is covered under the policy, having a piece of paper with additional insured on it with you name means nothing. You must prove an insurable interest to prove legal coverage.

(And that is not even getting into the disclaimers listed on many certificates.)

Where are certificates of insurance valid by practice in the outdoor recreation industry? Between:

·         Retailers and Manufacturers

·         Landlords and Tenants

·         Federal Land Managers and Concession or Permit Holders

·         Contractors and the Hiring Company

Every other situation you should check with your attorney or get a contract that identifies the insurable interest and requires a certificate of insurance is issued with coverage for the issue. Even better, require that the contract be given to the insuring insurance company and the necessary language into the contract be incorporated into the certificate of insurance. Otherwise, you may spend more time and money litigating with the certificate issues covers the issue that was litigated.

Issuing additional insured certificates without thinking the process through is also a risk. First insurance companies look at how many and who you issue certificates too. If they see large number or risks or big risks, they can and do increase your premium to cover the additional risks.  So make sure you understand why and the value of issuing a certificate of insurance from your policy also.

Every year when prior to your policy coming up for renewal, you should look through your list of parties you issue certificates of insurance to and see if they still need to be issued. Once you list someone the list is never reduced or culled except by you. I’ve seen insurance policies with over a hundred business listed as insurable interests. When we got done, we only had twenty certificates to issue. Many of the old certificates were issued to companies the client was no longer doing business with or with business who had gone out of business.

This does affect your premium so be aware!

Do Something

Without an insurable interest, a certificate of insurance is worthless and probably is going to be costly. Any insurance company paying a claim is going to look for anyone else to share in that claim. Consequently, they will pull the insured into the claim knowing it may not be valid, but willing to fight that issue out in later years. You requesting your insurance company to issue certificates could pull you into litigation both the original and the later certificate validity litigation for years, for something you had no legal interest in.

Just issuing the certificate or receiving one is not enough. You must identify when and how it is valid. That requires a contract. That contract must say more than you will issue a certificate of insurance. It must identify what the certificate is insuring and why. It must identify an insurable interest.

Insurance companies are not going to issue a check just because they issued a certificate. Make sure everyone understands how, when and why, and you’ll make that process quicker, easier and without litigation.

Think about all the work you had to go through to purchase the policy in the first place. Do you believe your insurance company is going to issue another policy just because you said so? Not unless the insurance company believes the chances of paying a claim under the certificate is very very slim.

What do you think? Leave a comment.

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Indemnification between businesses requires a contract outlining the type of indemnification and a certificate of insurance from one party to the other so the insurance company knows it is on the hook.

Because no certificate of insurance was issued by the third-party insurance company, company, the contract requiring indemnification between the ski area and the manufacturer failed.

Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

State: Massachusetts, United States District Court for the District of Massachusetts

Plaintiff: Jiminy Peak Mountain Report, LLC

Defendant: Wiegand Sports, LLC, and, Navigators Specialty Insurance, CO.

Plaintiff Claims:  Indemnification

Defendant Defenses: No contract

Holding: for the Defense

Year: 2016

Obviously, this is not your normal injured guest case. This case looks at the relationship between a resort and a manufacturer who installed a ride at the resort.

In 2006 the defendant Wiegand built an Alpine Coaster for the plaintiff ski area Jiminy Peak Mountain Resort, LLC. The construction/purchase agreement (Consulting, Purchase, Delivery, Assembly and Inspection Contract) also contained language requiring the manufacturer to defend any claims that were brought against the plaintiff for injuries after the ride was built.

The construction agreement required Jiminy Peak to pay part of the premiums for the insurance policy. However, the policy was only in the name of the defendant Wiegand, and did not list Jiminy Peak as an additional insured or co-insured.

Section 8 of the Contract, titled “Rights and Obligations of [Jiminy]” included in its final subsection, 8(j), language stating that Wiegand would purchase product liability insurance for the Coaster, but that Jiminy was required to pay a portion of the premium, the amount of which would be determined based on the purchase price of the Coaster, and Jiminy would then be listed as an additional insured.

The agreement also stated that Wiegand would defend and pay for any claim that Jiminy Peak received.

…in the event of a product liability suit against [Wiegand], [Wiegand] “shall, at its own expense, defend any suit or proceeding brought against [Jiminy] and shall fully protect and indemnify [Jiminy] against any and all losses, liability, cost, recovery, or other expense in or resulting from such . . . suit (provided, however, [Jiminy] has fully performed all ongoing maintenance obligations).

In 2012, two minors were seriously injured riding the coaster. Wiegand had a commercial liability policy with the defendant Navigators Insurance Company. However, Navigators did not issue a certificate of insurance covering Jiminy Peak. The parents of the injured minors filed suit against Jiminy Peak and Wiegand. Jiminy Peak sued Wiegand and Navigator seeking a declaratory judgment requiring Wiegand and Navigator to pay the cost of defending those suits.

A declaratory judgment is a quick request for a court to issue an order. Jiminy and Wiegand dismissed their claims against each other and just were fighting the lawsuit against them. The case between Jiminy and Navigator then is the subject of this decision.

Analysis: making sense of the law based on these facts.

Navigator argued that there was a duty to defend someone who was not a named insured. Jiminy Peak was not listed on the policy as an insured, co-insured or additional insured. Navigator also argued that it had no legal relationship with Jiminy Peak; therefore, it owed Jiminy Peak no money.

Navigators argues that as an insurer it owes a duty to defend its insured, Wiegand, but it does not owe a direct duty to defend Jiminy because Jiminy is not an additional insured under the Policy. Further, the duty Navigators has under the Policy to pay defense costs to a non-insured party pursuant to a contractual liability of its insured only requires it to make payments to the insured, and only when the insured has actually requested payment. In this case, Navigators asserts that even if Wiegand is found to owe Jiminy its defense costs, it will be up to Wiegand to determine whether it wishes to pay the amount or to make a claim to Navigators. Since Navigators owes no duty directly to Jiminy and it would be up to Wiegand to determine whether to make a claim in the event judgment is entered against it with respect to Jiminy’s defense costs…

Jiminy Peak responded by arguing the contract between it, and Wiegand was enough to force Navigator to pay. (You and I go to dinner and try to convince the waiter that your friend who is not at the table should pay for our meal.)

The court looked into the requirements for an insurance company to defend under Massachusetts law.

The court begins its analysis by considering whether Massachusetts law allows Jiminy to compel payment from Navigators based on Navigators’ obligations to its insured, Wiegand. Massachusetts law imposes on insurers a “broad duty to defend its insured against any claims that create a potential for indemnity.” This duty is broad and attaches whenever the claims in the complaint match up with the language in the policy.

However, the broad language of the policy only applies to the companies named in the policy as an insured. Jiminy Peak was not named in any way under the policy.

The Contract also included provisions regarding both additional insureds and “insured contracts,” suggesting that Jiminy, like Navigators and Wiegand, understood that Wiegand’s promise to pay Jiminy’s defense costs would not grant Jiminy the status of an “additional insured” with respect to Navigators.

If Jiminy Peak had been named in the policy or listed as an additional insured, then coverage would have been provided under Navigator’s policy issued to Wiegand.

In the absence of a contractual relationship between Navigators and Jiminy, the court finds no legal basis for ordering Navigators to pay Jiminy’s defense costs directly. Any obligation upon Navigators to pay such costs will arise only after an insured, in this case Wiegand, makes a claim for payment and then its only obligation will be to Wiegand.

Jiminy Peak may still be indemnified by Navigator’s policy. However, to be covered Wiegand will have to make a claim under the policy and if Wiegand was negligent and did something defined under the policy as an insured, then coverage will be provided.

However, I doubt any coverage will be provided unless Jiminy Peak can prove that Wiegand was negligent in its relationship. The contract only applies to product liability or negligence claims of the insured, Wiegand.

So Now What?

Insurance policies are written so the language is clear. The insured or persons covered by the policy are listed on the first page, the declaration page, or as additional insured on the policy. The coverage provided by a policy is broader than the language usually required by state law. However, the broad coverage is only extended to the people listed in the policy.

If you name is not on a piece of paper issued by the insurance company you are not covered under the policy.

A certificate of insurance request by Jiminy Peak would have solved the problem.

However, requesting a certificate of insurance does not solve all problems, in fact it only solves very limited problems. For a simple certificate of insurance to provide protection, the named insured must have done something to create liability for the insured under the certificate of insurance.

Just requesting a certificate of insurance without an agreement outlining what is to be covered is worthless.

Every day I see situations were one company requests a certificate of insurance believing that provides coverage. It does not. To be effective a certificate of insurance should be issued based on a contract which outlines what is to be covered under the certificate of insurance. The certificate of insurance must confirm to the contract between the parties.

A certificate of insurance, by itself is pretty worthless. (If they had real value would insurance companies issue them so easily?)

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Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

Jiminy Peak Mountain Report, LLC, v. Wiegand Sports, LLC, 2016 U.S. Dist. LEXIS 34209

Jiminy Peak Mountain Report, LLC, Plaintiff, v. Wiegand Sports, LLC, and, Navigators Specialty Insurance, CO., Defendants.

Civil Action No. 14-40115-MGM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

2016 U.S. Dist. LEXIS 34209

March 16, 2016, Decided

March 16, 2016, Filed

CORE TERMS: insured, insurer, duty to defend, liability insurance, owe, cross-motions, liability claims, bodily injury’, declaratory, premium, state law, insurance policy, amount in controversy, threshold amount, principal place of business, wholly-owned subsidiary, disclosures, publicly, disputed, traded, judgment ordering, seriously injured, own expense, fully performed, negligence claim, indemnification, cross-claims, contractual, separately, asserting

COUNSEL: [*1] For Jiminy Peak Mountain Resort, LLC, Plaintiff: Jennifer C. Sheehan, Matthew D. Sweet, Richard J. Shea, Hamel, Marcin, Dunn, Reardon & Shea, P.C., Boston, MA.

For Navigators Specialty Insurance Company, Defendant: David A. Grossbaum, LEAD ATTORNEY, Matthew R. Watson, Hinshaw & Culbertson LLP, Boston, MA.

JUDGES: MARK G. MASTROIANNI, United States District Judge.

OPINION BY: MARK G. MASTROIANNI

OPINION

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS

(Dkt. Nos. 40 & 42)

MASTROIANNI, U.S.D.J.

I. Introduction

Plaintiff, Jiminy Peak Mountain Resort, LLC (“Jiminy”) operates a ski area in Hancock, Massachusetts. In 2005 it entered into a contract with Defendant, Wiegand Sports, LLC (“Wiegand”), to purchase a Wiegand, Alpine Coaster (the “Coaster”). The Coaster opened to the public in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. The parents of the minors subsequently filed two lawsuits (together, the “Underlying Action”), each asserting claims against Jiminy and Wiegand. Jiminy subsequently filed this suit against Wiegand and Defendant, Navigators Specialty Insurance, Co. (“Navigators”), Wiegand’s insurer at the time the minors were injured, seeking a declaratory judgment [*2] ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in the Underlying Action. Before the court are cross-motions for judgment on the pleadings from Jiminy and Navigators. Jiminy and Wiegand have stipulated to the dismissal of their cross-claims, agreeing to litigate those claims in the Underlying Action, rather than in this lawsuit.

II. Jurisdiction

In this action, Jiminy seeks an order requiring Navigators to pay Jiminy’s past and future defense costs in the Underlying Action based on the terms of the contract between Jiminy and Wiegand and the insurance policy Navigators issued to Wiegand. The relief is requested pursuant to state law. Federal courts have jurisdiction over suits brought pursuant to state law where there is complete diversity of citizenship between the adversaries and the amount in controversy exceeds a threshold amount of $75,000. 28 U.S.C. § 1332; Arbaugh v. Y&H Corp., 546 U.S. 500, 513, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006). Based on the content of the complaint and the corporate disclosures filed by the parties (Dkt. Nos. 20, 21, 55), the court finds that (1) Jiminy is a Massachusetts limited liability company, owned by two other Massachusetts limited liability companies, which in turn are owned by members who reside in Massachusetts [*3] and (2) Navigators is incorporated in Delaware, has its principal place of business in Connecticut, and is a wholly-owned subsidiary of the publicly traded Navigators Group, Inc., less than ten percent (10%) of which is owned by any other single publicly traded corporation.1 Plaintiff asserts the amount in controversy exceeds the statutory threshold amount. In the absence of any challenge from Defendant, the court finds it has jurisdiction in this case pursuant to 28 U.S.C. § 1332.

1 Though Jiminy is no longer pursuing its claim against Wiegand, the court notes that Wiegand, as a wholly-owned subsidiary of a German entity with its principal place of business in Salt Lake City, Utah, is also diverse with respect to Jiminy. (Compl. ¶ 7, Dkt. No. 1, Corp. Disclosure, ¶ 1, Dkt. No. 19.)

III. Standard of Review

“‘A motion for judgment on the pleadings [under Rule 12(c)] is treated much like a Rule 12(b)(6) motion to dismiss,’ with the court viewing ‘the facts contained in the pleadings in the light most favorable to the nonmovant and draw[ing] all reasonable inferences therefrom.'” In re Loestrin 24 Fe Antitrust Litig., No. 14-2071, 2016 U.S. App. LEXIS 3049, 2016 WL 698077, at *8 (1st Cir. Feb. 22, 2016) (quoting Pérez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008)). Where, as here, the court is presented with cross-motions for judgment on the pleadings, the court’s role is [*4] “to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed.” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir. 2007) (internal citations omitted)). As in the case of a motion under Rule 12(b)(6), the court is permitted to consider documents central to the plaintiff’s claims where the authenticity of the documents is not disputed and the complaint adequately references the documents. Id. (citing Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)).

IV. Background

In December of 2005, Jiminy and Wiegand entered into a “Consulting, Purchase, Delivery, Assembly and Inspection Contract” (the “Contract”). (Compl. ¶ 9, Dkt. No. 1.) Pursuant to this contract, Jiminy agreed to purchase the Coaster and Wiegand agreed to deliver, assemble, and inspect it. (Id.) Section 8 of the Contract, titled “Rights and Obligations of [Jiminy]” included in its final subsection, 8(j), language stating that Wiegand would purchase product liability insurance for the Coaster, but that Jiminy was required to pay a portion of the premium, the amount of which would be determined based on the purchase price of the Coaster, and Jiminy would then be listed as an additional insured. (Compl. Ex. A, Contract, § 8(j), Dkt. No. 1-1.) (Id.) The Contract did not set forth the term during which Wiegand’s product [*5] liability insurance policy would apply, but did provide that Jiminy would have the option to continue as an additional insured during subsequent periods, provided it continued to pay the “same premium ratio.” Id. The same section also provided that Jiminy would separately maintain a personal injury insurance policy “at its own expense at all times so long as [it] operates [the Coaster].” (Id.) The Complaint does not assert that Jiminy continued to pay premiums to remain an additional insured under Wiegand’s product liability insurance policy.

Separately at Section 12, titled “Indemnification,” the Contract provided that:

in the event of a product liability suit against [Wiegand], [Wiegand] “shall, at its own expense, defend any suit or proceeding brought against [Jiminy] and shall fully protect and indemnify [Jiminy] against any and all losses, liability, cost, recovery, or other expense in or resulting from such . . . suit (provided, however, [Jiminy] has fully performed all ongoing maintenance obligations).

(Id. at § 12(A)(1).)

The following paragraph then provided that Jiminy would

protect, indemnify, defend and hold [Wiegand] harmless from and against any and all losses of [Wiegand] arising out of or sustained, [*6] in each case, directly or indirectly, from . . . any default by [Jiminy] . . . including without limitation, from defective/bad maintenance and/or operation of the Alpine Coaster caused by [Jiminy’s] gross negligence or willful misconduct.

(Id. at § 12(A)(2).)

Under Section 18, the Contract is to be interpreted in accordance with Massachusetts law.

(Id. at § 18.)

The Coaster was installed and became operational in 2006. In August of 2012, two minors were seriously injured while riding the Coaster. At the time of the accident, Wiegand had a general commercial liability insurance policy with Navigators (“Policy”). (Policy, Ex. C, Dkt. No. 1-3.) The Policy Period ran from March 1, 2012 through March 1, 2013. Id. Pursuant to Section I(1)(a), the Policy provided that Navigators would “pay those sums that [Wiegand] becomes legally obligated to pay as damages because of ‘bodily injury’ . . . to which [the Policy] applies.” (Id. at Section I(1)(a).) The obligation established under Section I(1)(a) is further defined in Section I(2)(b) as excluding certain types of damages, including those assumed in a contract, unless assumed in an “insured contract.” (Id. at Section I(2)(b).) In the case of an “insured contract,” “reasonable [*7] attorney fees and necessary litigation expenses incurred by or for a party other than an insured [was] deemed to be damages because of ‘bodily injury’ . . . , provided . . . that the party’s defense [had] also been assumed in the same ‘insured contract'” and the damages arise in a suit to which the Policy applied. (Id.) An “insured contract” is defined in the Policy as including “[t]hat part of any other contract or agreement pertaining to [Wiegand’s] business . . . under which [Wiegand] assume[d] the tort liability of another party to pay for ‘bodily injury’ . . . to a third person or organization.” (Id. at Section V(9)(f)). “Tort liabililty” is, in turn, defined as “a liability that would be imposed by law in the absence of any contract or agreement.” (Id.)

The parents of the minors injured on the Coaster in August of 2012 subsequently filed the Underlying Action against Jiminy and Wiegand.2 (Compl., Ex. B, Compls. in Underlying Action, Dkt. No. 1-2.) The six-count complaints3 both include a negligence claim against Jiminy (Count I), a negligence claim against Wiegand (Count II), products liability claims against Wiegand (Counts III and IV), breach of implied warranty of merchantability claim against [*8] Wiegand (Count V), and a loss of consortium claim against Wiegand and Jiminy (Count VI). (Id.) After the Underlying Action was filed, Jiminy filed this action against Wiegand and Navigators, seeking a declaratory judgment ordering Wiegand and Navigators to pay the defense costs incurred by Jiminy in connection with the Underlying Action. (Compl., Dkt. No. 1.) As mentioned above, Jiminy and Wiegand agreed to the dismissal of Jiminy’s claim seeking declaratory judgment from Wiegand in this action and instead are litigating the issues in the Underlying Action.

2 These suits were initially filed in the Eastern District of New York, but have since been transferred to this court where they are proceeding as a consolidated case – 13-cv-30108-MGM. The claims brought on behalf of the minors have already been settled. The only remaining claims in those cases are the cross-claims between Jiminy and Wiegand.

3 In both complaints, the claims are actually labeled 1-5 and 7.

V. Discussion

Both Jiminy and Navigators have moved for judgment on the pleadings. Navigators argues that as an insurer it owes a duty to defend its insured, Wiegand, but it does not owe a direct duty to defend Jiminy because Jiminy [*9] is not an additional insured under the Policy.4 Further, the duty Navigators has under the Policy to pay defense costs to a non-insured party pursuant to a contractual liability of its insured only requires it to make payments to the insured, and only when the insured has actually requested payment. In this case, Navigators asserts that even if Wiegand is found to owe Jiminy its defense costs, it will be up to Wiegand to determine whether it wishes to pay the amount or to make a claim to Navigators. Since Navigators owes no duty directly to Jiminy and it would be up to Wiegand to determine whether to make a claim in the event judgment is entered against it with respect to Jiminy’s defense costs, Navigators argues judgment on the pleadings should enter in its favor.

4 In its filings and at oral argument, Jiminy was clear that it was not claiming to be an additional insured under the Policy.

For its part, Jiminy begins its argument with the Contract, asserting first that the language in the Contract at § 12(A)(1) clearly establishes that Wiegand has a duty to pay Jiminy’s defense costs regardless of any potential factual disputes between Jiminy and Wiegand, provided (1) the defense costs are incurred [*10] in litigation in which there is a product liability claim against Wiegand and (2) Jiminy is also a defendant named in the action.5 As the Underlying Action includes product liability claims against Wiegand, as well as other claims against Jiminy, Jiminy asserts the two requirements are met. Jiminy then turns to the Policy, arguing that the Contract is an “insured contract” for purposes of the Policy. Finally, Jiminy argues that since the Policy provides coverage for liability assumed by Wiegand in an “insured contract,” Navigator, as an insurer, is required under Massachusetts law, to pay for Jiminy’s defense, without regard to the resolution of the dispute between Wiegand and Jiminy.

5 Initially, in its memorandum in support of its motion for judgment on the pleadings, Jiminy argued that it would also be necessary to establish that there were no disputes as to whether Jiminy had “fully performed all ongoing maintenance obligations.” (Compl., Ex. B, Contract §12(A)(1).) Subsequently, in its opposition to Navigators’ motion for judgment on the pleadings, Jiminy instead argued that the requirement regarding maintenance obligations applied only to indemnification claims.

Navigators has not contested, [*11] at least relative to the purpose of the motions currently before the court, that the Contract between Jiminy and Wiegand is an “insured contract” for purposes of the Policy. Also, Navigators does not dispute or that the Underlying Action is the type of litigation covered under the Policy. The court begins its analysis by considering whether Massachusetts law allows Jiminy to compel payment from Navigators based on Navigators’ obligations to its insured, Wiegand. Massachusetts law imposes on insurers a “broad duty to defend its insured against any claims that create a potential for indemnity.” Doe v. Liberty Mut. Ins. Co., 423 Mass. 366, 667 N.E.2d 1149, 1151 (Mass. 1996). This duty is broad and attaches whenever the claims in the complaint match up with the language in the policy. See Liberty Mut. Ins. Co. v. SCA Services, Inc., 412 Mass. 330, 588 N.E.2d 1346, 1347 (Mass. 1992). However, the cases cited by the parties all involve cases in which the court discussed the duty in the context of the insured.

Jiminy has not cited any cases in which a court imposed on an insurer a duty to defend a third-party beneficiary of a policy. Instead, Jiminy argues the language of the Policy providing coverage for defense costs of a third-party pursuant to an “insured contract” shows the parties’ intention that Navigators would pay such costs and, therefore, such language [*12] should be construed to impose upon Navigators a duty to make payment directly to Jiminy. The court disagrees. As demonstrated by the provisions in the Policy that allow for the designation of an additional insured, Navigators and Wiegand knew how to extend Navigators’ duties as an insurer to other parties. Damages, including defense costs, associated with “insured contracts” were handled differently, indicating that Navigators and Wiegand did not, in fact, intend that in a case like this one Navigators would have any direct obligations to Jiminy based on the Contract. The Contract also included provisions regarding both additional insureds and “insured contracts,” suggesting that Jiminy, like Navigators and Wiegand, understood that Wiegand’s promise to pay Jiminy’s defense costs would not grant Jiminy the status of an “additional insured” with respect to Navigators.

In the absence of a contractual relationship between Navigators and Jiminy, the court finds no legal basis for ordering Navigators to pay Jiminy’s defense costs directly. Any obligation upon Navigators to pay such costs will arise only after an insured, in this case Wiegand, makes a claim for payment and then its only obligation [*13] will be to Wiegand. Judgment on the pleadings in favor of Navigators is, therefore, appropriate.

VI. Conclusion

For the Foregoing reasons, Plaintiff’s Motion for Judgment on the Pleadings is hereby DENIED and Defendant’s Motion for Judgment on the Pleadings is hereby ALLOWED.

It is So Ordered.

/s/ Mark G. Mastroianni

MARK G. MASTROIANNI

United States District Judge


Insurance policies, you need to read yours and stay in touch with your agent to make sure your insurance is covering you

Several examples of popped up recently where insurance companies have altered their policies leaving the OR industry in the rain

Insurance companies do not change their policies mid-term. However they do make changes to policies and as the policies renew, those new policies incorporate the new changes.

Here is an example.

Traveler’s issues worker’s compensation policies for the cycling industry. Recently the Traveler’s worker’s compensation policy excludes from the policy employees who participate in employer (retailer) sanctioned rides.

In this case, that means that you may get a new question before your renewal or just a denial in the mail leaving you hunting for a new worker’s comp carrier.

Obviously, this is a problem for those retailers that have Travelers.    Most insurance carriers do NOT “willingly” insure the general liability for shops that have shop/group rides.

Shop rides are one of the best ways to attract new customers and retain current ones. Having your employees on these rides is super important as it is the easy way to “soft-sell” new product. Likely, your shop employee will be riding the latest-greatest bike and will be able to address any question about your product line. If the prospective customer has a good time on the ride, they will come back. The more a rider on a shop ride shows up, the more likely that rider will end up being a customer.

So, the insurance industry must feel this is a risky activity.  Yes, there are some increased risks. Making sure your employees do not take any unnecessary risks is important to mitigating the workers compensation exposure.

Do Something

Like attorneys, you need to find a good insurance broker who understands your industry. Your friend down the street maybe great, however it is the little things that can leave you hanging. The more advanced notice you have about possible non-renewals the better chance you will have at getting a good policy if that happens.

Better still is to find an agent who works in your industry and is ahead of the problems finding solutions and letting you know about the issues before you receive the letter in the mail.

Thanks to Scott Chapin who provided this tip. Scott is a broker that specializes in insuring bicycle retailers.  Scott can be reached at: chapins@rjfagencies.com or through his website.

What do you think? Leave a comment.

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