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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


Here is another reason to write releases carefully. Release used the term inherent to describe the risks which the court concluded made the risk inherently dangerous and voids the release.

Defendant bungee jump operator failed to attach the bungee to the platform. Plaintiff fell into an airbag that had been partially deflated due to the bungee hitting the back first. TV news crew recorded it all.

Hatch v. V.P. Fair Foundation, Inc., 990 S.W.2d 126; 1999 Mo. App. LEXIS 315

State: Missouri

Plaintiff: Loren Martin Hatch

Defendants: V.P. Fair Foundation, Inc. Respondent/Cross-Appellant, and Northstar Entertainment, Inc.,

Plaintiff Claims:

Defendant Defenses:

Holding: for the plaintiff

Year: 1999

Honestly, this case is a summary of the issues I’ve been pushing for years. Better, you might call it, what you need to do as a defendant to make sure the plaintiff wins no matter how great your defense counsel is. Believe me, the defense team in this case was awesome; they just had an uphill battle. Consequently, I wish I had read it years before this to have shoved us in the right direction earlier.

There are two different defendants in this case. Sometimes the decision looks at both defendants equally and sometimes individually; consequently, it gets confusing. The defendant V.P. Fair Foundation, Inc., puts on an annual multi-day fair in downtown St. Louis to celebrate the Fourth of July.

Defendant V.P. Fair Foundation, Inc., (Fair) hired the defendant Northstar Entertainment, Inc., (Northstar) to provide a bungee jumping attraction for the fair.

The plaintiff was the first person to jump the day of the incident. The plaintiff arrived when the attraction opened but before any employees of Defendant, Northstar has arrived. When the Northstar employees arrived, the Northstar employees weighed the plaintiff, had him sign a release of liability and a log book.

The plaintiff was placed in a harness around his ankles and waist and fastened the bungee cord to the harness. The plaintiff then walked to the bungee cage and entered the cage with a Northstar employee who was the jumpmaster, a reporter and a cameraman for the local TV station. A crane lifted the cage into the air 170 feet above the ground. The cage door was opened; the bungee cord straightened out, and the plaintiff was told he was “was locked in and safe to jump.”

Unfortunately, no one attached the bungee cord to the crane, and when Hatch leaped off the platform, he plunged 170 feet to the ground. Initially, Hatch fell head-first. Although not attached, the bungee cord momentarily snagged on the bungee cage and stretched out. Breaking loose, the cord recoiled and struck Hatch as it passed him. The force of the recoil apparently reversed Hatch’s position so that his descent was upright. The bungee cord and tackle, together weighing between seventy-five and eighty pounds, reached the airbag first and partially deflated it prior to his landing. After landing feet-first in the airbag, Hatch was taken to the hospital. As a result of the fall, Hatch sustained serious injuries to his back, legs, and shoulders.

A tape of the event was shown to the jury.

The plaintiff suffered serious back, leg and shoulder injuries. He was eventually fired from his job as an accountant because he missed so many days at work because he could not concentrate.

The plaintiff sued the defendants on multiple negligence theories. Prior to trial, several motions for summary judgment were granted for the defendants. At trial, the plaintiff’s case was down to two “questions of whether Northstar acted recklessly and whether bungee jumping constituted an inherently dangerous activity were submitted to the jury.” The jury found that bungee jumping was inherently dangerous and awarded the plaintiff $500,000.

The defendants filed a motion for J.N.O.V. (see Skiing collision in Utah were the collision was caused by one skier falling down in front of the other skier for a definition of J.N.O.V.) The court granted the defendant’s Motion for Judgment Not Withstanding the Verdict.

Everyone then appealed.

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

The court looked at a couple of factual issues. A safety manual was created by an association of bungee jumping businesses. The defendant Northstar adopted the manual. However, the safety manual was ignored by the Northstar employees. The court specifically pointed out the following issues the Northstar employees did not follow from the safety manual.

The manual called for a crew of six, Northstar supplied only a crew of five; the manual specified that the controller must be twenty-five years old, Northstar’s controller was eighteen years old; the manual required every piece of equipment to be inspected daily and recorded on a checklist, there was no record of an inspection on July 5, 1993, indicating that Northstar’s employees either failed to inspect the equipment, failed to record the inspections, or failed to do both; the manual required a test jump before opening the bungee jump to the public, Northstar failed to conduct a test jump on the day of Hatch’s fall.

The court then looked at the plaintiff’s appeal issues starting with the J.N.O.V on the Premises Liability claim. The plaintiff’s suit was based on the duty a landowner owes to people on its land, in this case the Defendant’s Fair’s duty to the plaintiff.

The plaintiff was classified as an invitee of the Defendant Fair. That means the defendant owed the plaintiff a duty of ordinary and reasonable care to prevent injury to the plaintiff. That care can be eliminated if the landowner hires an independent contractor to do work rather than the landowner himself. The liability is shifted to the contractor. In this case Defendant Fair hired Defendant Northstar and shifted the liability of a bungee jump on the land of Defendant Fair to Defendant Northstar.

However, hiring an independent contractor is not an absolute shift of liability.

Nevertheless, there are at least two exceptions under which a non-negligent landowner may be held vicariously liable for the negligence of an independent contractor: the landowner control exception and the inherently dangerous activity exception.

The issues in this case were the inherently dangerous activity exception.

Under this exception, a landowner who hires an independent contractor to perform an inherently dangerous activity has a nondelegable duty to take special precautions to prevent injury from the activity. The landowner “remains liable for the torts of the contractor, simply for commissioning the activity. The liability attaches without any need for showing that the employer is in any respect negligent. It is purely vicarious.

Several theories abound about using contractors to shift liability; however, they are rarely if ever successful. It may shift liability initially; however, the person hiring the independent contractor can always be found liable for something if the independent contractor was negligent.

The theory upon which this liability is based is that a person who engages a contractor to do work of an inherently dangerous character remains subject to an absolute, nondelegable duty to see that it is performed with that degree of care which is appropriate to the circumstances, or in other words, to see that all reasonable precautions shall be taken during its performance, to the end that third persons may be effectually protected against injury.

Not brought up in this trial but important is even if you shift the liability to an independent contractor, you are still liable for hiring the wrong contractor. In some state’s proof you hired, the wrong contractor is the independent contractor was negligent.

The court then looked at the issues of the J.N.O.V.

An appellate court will affirm the entry of a judgment notwithstanding the verdict only when all of the evidence and reasonable inferences drawn therefrom are so strongly against the plaintiff’s case that there is no room for reasonable minds to differ and the defendant was entitled to judgment as a matter of law. Only when the plaintiff has failed to make a submissible case should the trial court grant a motion for judgment notwithstanding the verdict. Id. To determine whether a plaintiff, who obtained a jury verdict, has made a submissible case, we view the evidence in a light most favorable to the plaintiff, giving plaintiff the benefit of all reasonable inferences.

The issue then fell on whether or not bungee jumping was an inherently dangerous activity. The trial court found that bungee jumping could be performed safely; therefore, it was not an inherently dangerous activity.

Under Missouri’s law an inherently dangerous activity is “an activity that necessarily presents a substantial risk of harm unless adequate precautions are taken.” Taken from the Missouri Jury Instructions, MAI 16.08.

Proof of the fact bungee jumping was an inherently dangerous activity was found by the court in the release the Defendant Northstar had the plaintiff sign.

Northstar’s release form contained the following language:

The participant is fully aware that bungee-jumping and all associated activities is a calculated risk sport and contains inherent risk and dangers (including serious injury or death) that no amount of care, caution, instruction, or expertise can eliminate. [Emphasize added]

No other evidence was looked at by the court to prove the activity inherently dangerous. Because the release said the sport had inherent risks the court found the sport was inherently dangerous!

The next issue was whether the action of failing to attach the bungee cord to the cage was collateral negligence. ”Collateral negligence occurs when the negligence is unusual or foreign to the normal contemplated risks of performing the activity.” If the actions of Defendant Northstar were collateral, then Defendant Fair would not be vicariously liable. Meaning if the actions of a contractor were collateral the landowner was not liable.

The issue then becomes should the landowner have contemplated that the Defendant Northstar would have failed to hookup the bungee cord to the cage. “…the proper focus for the factfinder is whether the landowner contemplated or should have contemplated the type of negligence committed by the independent contractor.

The test is whether or not the independent contractor’s acts were or should have been within the contemplation of the landowner. The Restatement provides that a landowner may be required to contemplate abnormal or unusual kinds of negligence if the circumstances under which the activity is performed give the landowner warning of special reasons to take precautions or some special risk of harm to others inherent in the activity.

The court found that the landowner, Defendant Fair, should have contemplated that the employee of Defendant Northstar would have failed to hook the bungee cord to the cage.

The participant’s safety in making a bungee jump depends in large part on the security of the bungee cord. The risk that a participant could be injured as a result of any failure of the cord, its attachment, or the persons operating the jump is a peculiar risk that V.P. Fair should have contemplated. Accordingly, Hatch made a submissible case under the inherently dangerous activity exception.

The court then found the entry of the J.N.O.V. was incorrect.

The next issue the court touched upon was a claim by the plaintiff whom the defendants were operating as a joint venture. A joint venture is a legal entity used where to business or people join together for a limited purpose to accomplish a goal. “A joint venture is an “association of persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge.”

A joint venture requires:

(1) an express of implied agreement among the members; (2) a common purpose to be carried out by the members; (3) a community of pecuniary interests in that common purpose; and (4) an equal voice, giving an equal right of control in the direction of the enterprise.

The trial court found, and the appellate court agreed there was no joint venture here.

…there was no agreement between V.P. Fair and Northstar to share profits and losses from the bungee jumping operation and because V.P. Fair did not exercise sufficient control over the bungee jumping operation.

The court could not find a joint venture between Defendant Fair and Defendant Northstar. The Appellate court upheld the trial court’s granting of the defendants’ Motion for Summary judgment on this issue.

The court then went and reviewed the issues brought up by the Defendant’s appeal. The defendants argued that Missouri does not recognize a claim for recklessness.

Recklessness looks to the tortfeasor’s state of mind. Recklessness is an aggravated form of negligence which differs in quality, rather than in degree, from ordinary lack of care. It is applied to conduct which is negligent, rather than intentional, but which is so far from a proper state of mind that it is treated in many respects as if it were so intended.

The court then differentiated recklessness from negligence.

Negligence is one kind of tort, an unintentional injury usually predicated upon failure to observe a prescribed standard of care while a willful, wanton, reckless injury is another kind of tort, an intentional injury often based upon an act done in utter disregard of the consequences. Reckless conduct may be negligent in that it is unreasonable but it is and must be something more than unreasonable, “it must contain a risk of harm to others in excess of that necessary to make the conduct unreasonable and therefore, negligent.” “The actor’s (defendant’s) conduct is in reckless disregard of the safety of another if he intentionally does an act or fails to do an act which it is his duty to the other to do, knowing or having reason to know of facts which would lead a reasonable man to realize that the actor’s conduct not only creates an unreasonable risk of bodily harm to the other but also involves a high degree of probability that substantial harm will result to him.”

The release signed by the plaintiff stopped the plaintiffs simple or ordinary negligence claims. However, under Missouri’s law, like the majority of states a release cannot bar a claim for more than negligence. “There is no question that one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest.”

Since the release only stopped the negligence claim the recklessness was a valid claim under Missouri’s law.

The next issue raised by the Defendants was remittitur. Simply stated remittitur is a request to reduce the damages awarded by the plaintiff because they are too great. For a court to reduce excessive damages it must find:

(1) present and future loss of income, (2) medical expenses, (3) plaintiff’s age, (4) the nature and severity of the injuries, (5) economic factors, (6) awards given in similar cases, and (7) the superior opportunity of the trial court and jury to appraise plaintiff’s injuries and other damages.

The court found that both the damages awarded by the jury were substantiated by the injury and damages the plaintiff had suffered, and none of the defendants failed to prove to the judge the requirements for a remittitur were met. “We do not find that the verdict is so grossly excessive as to shock the conscience or that both the jury, and the judge abused their discretion.”

The case was sent back to the trial court for the judgment to be reinstated against the defendants in the amount of $500,000.00.

So Now What?

First if you are going to adopt a manual, a standard, a program an emergency plan, you have to understand it, explain it and use it.  Saying you are trying to be safe while ignoring safety issues does not work. Worse, as in this case, adopting the manual was proof that what you did was wrong, and proof that was you did was more than simple negligence. It showed the appellate court that you failed the plaintiff miserably because it was there in black and white.

Second the whole theory that you can shift liability away from yourself by hiring an independent contractor does not work. In this case, that act increased the liability of the defendant and provided no defense because the actions of the defendant who was negligent were not controllable by the other defendant.

If it is your land, your operation, your business, your liability may change its name, however, it never leaves. Instead of being sued for negligence, you will be sued for negligently hiring a bad contractor. Instead of having a defense to litigation you will be liable with no defense because you had no control over the independent contractor.

If you walk into court looking bad, or in this case having a video prove you are bad, your chances of winning are slim.

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Hatch v. V.P. Fair Foundation, Inc., 990 S.W.2d 126; 1999 Mo. App. LEXIS 315

Hatch v. V.P. Fair Foundation, Inc., 990 S.W.2d 126; 1999 Mo. App. LEXIS 315

Loren Martin Hatch, Appellant/Cross-Respondent, vs. V.P. Fair Foundation, Inc. Respondent/Cross-Appellant, and Northstar Entertainment, Inc., Respondent/Cross-Appellant.

Nos. ED73279, ED73280

COURT OF APPEALS OF MISSOURI, EASTERN DISTRICT, DIVISION TWO

990 S.W.2d 126; 1999 Mo. App. LEXIS 315

March 16, 1999, Filed

SUBSEQUENT HISTORY: [**1] As Corrected March 30, 1999.

PRIOR HISTORY: Appeal from the Circuit Court of the City of St. Louis. Hon. Floyd McBride.

DISPOSITION: JUDGMENT NOTWITHSTANDING THE VERDICT IN FAVOR OF V.P. FAIR REVERSED AND REMANDED FOR ENTRY OF JUDGMENT AGAINST V.P. FAIR IN ACCORDANCE WITH THE VERDICT. REMAINDER OF JUDGMENT AFFIRMED.

COUNSEL: Richard C. Witzel, David A. Dimmitt, Witzel, Kearns, Kenney & Dimmitt, St. Louis, MO. Alan G. Kimbrell Louis, MO, for appellant/cross-respondent.

Thomas C. Walsh, Elizabeth C. Carver, St. Louis, MO, for respondents/cross-appellants.

JUDGES: James R. Dowd, Judge, Kathianne Knaup Crane, P.J., concurs. Mary Rhodes Russell, J., concurs.

OPINION BY: JAMES R. DOWD

OPINION

[*130] OPINION

This is an appeal and a cross-appeal from a judgment entered on a jury verdict in a personal injury lawsuit commenced by Loren Martin Hatch against defendants V.P. Fair Foundation, Inc. (“V.P. Fair”) and Northstar Entertainment, Inc. (“Northstar”) to recover damages for injuries Hatch suffered when Northstar failed to attach the bungee cord to the crane when he made a bungee jump. The jury awarded Hatch $ 5,000,000, finding V.P. Fair vicariously liable on a premises liability theory and Northstar liable on a recklessness theory. Hatch appeals from the trial court’s grant of V.P. [**2] Fair’s motion for judgment notwithstanding the verdict on his premises liability claim and from the trial court’s entry of summary judgment on two of his other claims against V.P. Fair. He also appeals from the trial court’s grant of summary judgment on his negligence [*131] claim against Northstar. In their cross-appeal, 1 defendants claim that the trial court erred in submitting Hatch’s recklessness claim to the jury and in defining recklessness for the jury. Defendants also contend that the trial court abused its discretion in overruling their motion for a remittitur of the jury’s verdict. We reverse the judgment notwithstanding the verdict in favor of V.P. Fair and remand for entry of judgment against V.P. Fair in accordance with the verdict. In all other respects the judgment is affirmed.

1 V.P. Fair has joined Northstar’s cross-appeal as a “conditional cross-appellant” to assert errors in the denial of its motion for new trial that would become viable if the judgment notwithstanding the verdict in its favor is reversed. See Rule 72.01(c)(1).

[**3] I. Factual Background

V.P. Fair organizes an annual multi-day fair in downtown St. Louis to celebrate the Fourth of July. The fair offers a variety of events and activities, including air shows, musical performances, food stands, and amusement rides. In 1993, V.P. Fair contracted with Northstar for the provision of a bungee jumping 2 attraction. On July 5, 1993, Hatch and a group of his friends arrived at the fair between 10:30 and 10:45 a.m. Although the fair and all of its activities were scheduled to open at 10:00 a.m., Northstar’s employees had yet to arrive at the site. Hatch purchased a ticket to bungee jump and waited approximately fifteen minutes until Northstar’s employees arrived and set up the attraction. Hatch was then called into a tent area where he was weighed and signed a log book. He also signed a document written by Northstar, entitled “Release and Waiver of Liability and Indemnity Agreement.”

2 The bungee jump in this case was designed to allow participants to jump from a substantial height secured by an elastic cord attached to a crane. A participant’s fall is arrested when the cord reaches its length, stretches, and recoils, causing the participant to bounce. Following the jump, the participant is slowly lowered to the ground and unhooked.

[**4] Hatch was then prepared for his bungee jump. He was to be the first jumper of the day. A Northstar employee placed a harness around Hatch’s waist and ankles, and fastened the bungee cord to the harness. Hatch walked to the bungee cage where he joined Paul Murray, Northstar’s jumpmaster, and a reporter and cameraman from a local television station. A crane lifted the bungee cage 170 feet above the ground, and Murray opened the cage door and straightened out the bungee cord inside the cage. Murray then directed Hatch to the front of the cage and told him that he was locked in and safe to jump. Unfortunately, no one had attached the bungee cord to the crane, and when Hatch leaped off the platform, he plunged 170 feet to the ground. Initially, Hatch fell head-first. Although not attached, the bungee cord momentarily snagged on the bungee cage and stretched out. Breaking loose, the cord recoiled and struck Hatch as it passed him. The force of the recoil apparently reversed Hatch’s position so that his descent was upright. The bungee cord and tackle, together weighing between seventy-five and eighty pounds, reached the airbag first and partially deflated it prior to his landing. After [**5] landing feet-first in the airbag, Hatch was taken to the hospital. As a result of the fall, Hatch sustained serious injuries to his back, legs, and shoulders. A tape depicting the premises, the preparation for the jump, and the jump itself was shown to the jury.

At some point prior to the 1993 fair, Northstar adopted a safety manual. The manual was created by an association of bungee jumping businesses in an effort to provide safety guidelines for operating a bungee jumping attraction. The manual’s safety procedures were largely ignored by Northstar’s crew. The manual called for a crew of six, Northstar supplied only a crew of five; the manual specified that the controller must be twenty-five years old, Northstar’s controller was eighteen years [*132] old; the manual required every piece of equipment to be inspected daily and recorded on a checklist, there was no record of an inspection on July 5, 1993, indicating that Northstar’s employees either failed to inspect the equipment, failed to record the inspections, or failed to do both; the manual required a test jump before opening the bungee jump to the public, Northstar failed to conduct a test jump on the day of Hatch’s fall.

After [**6] his fall, Hatch instituted this lawsuit against Northstar and V.P. Fair. The second amended petition consisted of eight counts and contained several theories of recovery. Count I of the second amended petition (“Careless Disregard–Joint Venture”) sought damages from both defendants, jointly and severally, for negligence based on the theory of joint venture. Count II (“Negligence/Careless Disregard–Northstar Entertainment, Inc.”) sought damages from Northstar for negligence in failing to take reasonable efforts to ensure the safety of the bungee jumping operation. Count III (“Negligence/Careless Disregard–V.P. Fair Foundation, Inc.”) sought damages from V.P. Fair for its negligence in failing to inspect Northstar’s bungee jumping operation to ensure that it was being operated in a reasonably safe manner. Count IV (“Premises Liability–Defendant V.P. Fair Foundation, Inc.”) sought damages from V.P. Fair on a premises liability theory for negligence in (1) inviting the public onto its premises which were not in a reasonably safe condition for intended use, (2) failing to warn the public of the existence of a dangerous condition, and (3) failing to inspect the premises and to discover [**7] the defective conditions. Count V (“Gross Negligence/Conscious Disregard–Joint Venture”) sought damages from both defendants, jointly and severally, for gross negligence or recklessness on a joint venture theory. Count VI (“Gross Negligence/Conscious Disregard–Northstar Entertainment, Inc.”) sought damages from Northstar based on Northstar’s gross negligence or recklessness in failing to inspect the bungee jumping equipment and in failing to attach the bungee cord to the crane or cage assembly prior to Hatch’s jump. Count VII (“Gross Negligence/Conscious Disregard–V.P. Fair Foundation, Inc.”) sought damages from V.P. Fair based on its gross negligence or recklessness in failing to inspect Northstar’s bungee jumping operation. Count VIII (“Premises Liability–Defendant V.P. Fair Foundation, Inc.”) sought damages from V.P. Fair based on its gross negligence or recklessness in (1) inviting the public onto its premises when the premises were not in a reasonably safe condition, (2) failing to warn the public of the existence of a dangerous condition on the premises, and (3) failing to inspect the premises and to discover the defective condition.

Prior to trial, defendants filed [**8] motions for summary judgment. The court granted summary judgment in favor of defendants on Counts I and V, finding no joint venture because there was no agreement between V.P. Fair and Northstar to share profits and losses from the bungee jumping operation and because V.P. Fair did not exercise sufficient control over the bungee jumping operation. The court also granted summary judgment in favor of Northstar on Count II, finding that the release signed by Hatch barred his negligence claim against Northstar. As to Count IV, the court found that V.P. Fair could be liable under a premises liability theory only if bungee jumping was an inherently dangerous activity. It entered summary judgment in favor of V.P. Fair on Count VII because it did not state a viable claim against V.P. Fair independently of Count IV. It also entered summary judgment on Count VIII.

Hatch proceeded to trial on Counts IV and VI. 3 The questions of whether Northstar acted recklessly and whether bungee jumping constituted an inherently dangerous activity were submitted to the jury. [*133] On the recklessness claim, the jury returned a verdict in favor of Hatch and against Northstar. The jury also found that bungee [**9] jumping was an inherently dangerous activity and returned a verdict in favor of Hatch and against V.P. Fair on the premises liability claim. The jury awarded Hatch $ 5,000,000 in damages, and the trial court entered a judgment against defendants in that amount. Defendants filed post-trial motions for judgment notwithstanding the verdict, new trial, and remittitur. The trial court granted V.P. Fair’s motion for judgment notwithstanding the verdict and overruled the remaining post-trial motions. This appeal followed.

3 It appears that Hatch abandoned Count III at trial.

On appeal, Hatch contends that the trial court erred in: (1) granting V.P. Fair’s motion for judgment notwithstanding the verdict on the basis that bungee jumping is not an inherently dangerous activity, (2) sustaining V.P. Fair’s motion for summary judgment on the ground that defendants were not engaged in a joint venture, (3) sustaining V.P. Fair’s motion for summary judgment on the premises liability claim based on retained control because [**10] V.P. Fair did not surrender sufficient control of the premises to avoid liability for the dangerous condition to which patrons of the bungee jumping operation were exposed, and (4) sustaining Northstar’s motion for summary judgment on his claim for negligence and holding that the release he signed exculpated Northstar from liability for its future negligence. We hold that there was sufficient evidence to support a finding that bungee jumping is an inherently dangerous activity and that the risk was not caused by collateral negligence; therefore, the trial court erred in granting the judgment notwithstanding the verdict in favor of V.P. Fair. Accordingly, we reverse the judgment notwithstanding the verdict in favor of V.P. Fair and remand for entry of judgment in accordance with the verdict. However, we hold that the trial court did not err in sustaining V.P. Fair’s motion for summary judgment on the grounds that it was not engaged in a joint venture. Because V.P. Fair is vicariously liable as a landowner under the inherently dangerous activity exception, we do not need to address the question of whether it is also liable based on retained control. We likewise need not reach the merits [**11] of the question of whether Hatch’s release released Northstar’s negligence because, even if Hatch had a claim for negligence against Northstar, he has already been awarded damages for his injuries based on his recklessness claim against Northstar.

In their cross-appeal, defendants argue that the trial court erred in: (1) submitting Hatch’s claim of recklessness to the jury because Missouri does not recognize a cause of action for recklessness; and (2) overruling defendants’ motion for new trial because the jury instruction defining the term “recklessness” failed to include a standard of care. Defendants also claim that the trial court abused its discretion in overruling their motion for remittitur of the jury’s verdict. We find no error in the points raised on cross-appeal.

II. Hatch’s Appeal

A. Judgment Notwithstanding the Verdict – Premises Liability

In his first point, Hatch argues that the trial court erred in granting V.P. Fair’s motion for judgment notwithstanding the verdict on the basis of its finding that as a matter of law bungee jumping is not an inherently dangerous activity. The parties agree that for the purposes of tort liability, V.P. Fair is [**12] considered a landowner of the fairgrounds.

[HN1] In general, a landowner owes a duty of ordinary and reasonable care to invitees to prevent injury to the invitee. Hunt v. Jefferson Arms Apartment Co., 679 S.W.2d 875, 879 (Mo.App. E.D.1984). A well-recognized exception to this general rule exists when a landowner hires an independent contractor. A landowner is not vicariously liable for injuries to third [*134] parties caused by the negligence of the independent contractor or his employees. Lawrence v. Bainbridge Apartments, 957 S.W.2d 400, 403-04 (Mo.App. W.D.1997). Thus, by hiring an independent contractor, the landowner may shift the duty to use reasonable and ordinary care to prevent injury to the independent contractor. Halmick v. SBC Corporate Servs., Inc., 832 S.W.2d 925, 927 (Mo.App. E.D.1992).

[HN2] Nevertheless, there are at least two exceptions under which a non-negligent landowner may be held vicariously liable for the negligence of an independent contractor: the landowner control exception and the inherently dangerous activity exception. Lawrence, 957 S.W.2d at 404. As previously stated, in this opinion we reach only the application of the inherently dangerous activity [**13] exception.

As a preliminary matter, the parties disagree whether the determination of whether an activity is inherently dangerous is a question of law or fact. Defendants argue that Zueck v. Oppenheimer Gateway Properties, Inc., 809 S.W.2d 384 (Mo. banc 1991), stands for the proposition that the issue of whether an activity is inherently dangerous is entirely one of law. We disagree. By noting that the question is initially one of law, Zueck simply enunciated the firmly rooted principle that the trial court must initially decide as a question of law whether or not a plaintiff has made a submissible case. Id. at 386. The court noted that for the purposes of its opinion in Zueck it was assuming that the work in issue was inherently dangerous, thereby removing any issue of unresolved fact. Id. The court did not engage in any further discussion of the matter or purport to overrule any appellate decisions to the contrary.

Furthermore, at the time Zueck was decided, substantial authority indicated that the question of whether a particular activity is “inherently dangerous” is generally a question of fact for the jury. See Smith v. Inter-County Telephone [**14] Co., 559 S.W.2d 518, 524 (Mo. banc 1977); Nance v. Leritz, 785 S.W.2d 790, 792 (Mo.App. E.D.1990); Floyd v. Benson, 753 S.W.2d 945, 948 (Mo.App. S.D.1988); Donovan v. General Motors, 762 F.2d 701, 703 (8th Cir. 1985). Therefore, we find Zueck does not stand for the proposition that the question of whether a specific activity is inherently dangerous is solely a question of law. Developments after the Supreme Court handed down Zueck also support this conclusion. After Zueck, the Missouri Supreme Court Committee on Jury Instructions adopted MAI 16.08, which leaves for the jury the ultimate question of whether an activity is inherently dangerous. Accordingly, we hold that [HN3] the determination of whether an activity is inherently dangerous, while initially a question of law, is ultimately a question of fact.

[HN4] Landowner liability under the inherently dangerous activity exception is a species of premises liability. Matteuzzi v. Columbus Partnership, L.P., 866 S.W.2d 128, 130 (Mo. banc 1993). Under this exception, a landowner who hires an independent contractor to perform an inherently dangerous activity has a nondelegable duty to take special precautions to [**15] prevent injury from the activity. Id. The landowner “remains liable for the torts of the contractor, simply for commissioning the activity. The liability attaches without any need for showing that the employer is in any respect negligent. It is purely vicarious.” Ballinger v. Gascosage Elec. Coop., 788 S.W.2d 506, 511 (Mo. banc 1990).

The theory upon which this liability is based is that a person who engages a contractor to do work of an inherently dangerous character remains subject to an absolute, nondelegable duty to see that it is performed with that degree of care which is appropriate to the circumstances, or in other words, to see that all reasonable precautions shall be taken during its performance, to the end that third persons may be effectually protected against injury.

[*135] 41 Am.Jur.2d Independent Contractors sec. 41 (1968).

[HN5] A landowner who hires an independent contractor to perform an inherently dangerous activity, however, is not vicariously liable for every act of an independent contractor that causes injury to a third party. According to the Restatement (Second) of Torts, 4 the inherently dangerous activity exception applies only where “the harm [**16] results from the negligence of the contractor in failing to take precautions against the danger involved in the work itself, which the employer should contemplate at the time of the contract.” Restatement (Second) of Torts sec. 427 cmt. d (1965). On the other hand, if the contractor’s negligence is “collateral,” the general rule of landowner non-liability applies. Nance, 785 S.W.2d at 793; Restatement (Second) of Torts sec. 426 cmt. a (1965).

4 In Ballinger, the court stated that the Restatement correctly reflects Missouri law with respect to the inherently dangerous activity exception. 788 S.W.2d at 511. MAI 16.08, which was adopted after the Ballinger decision, cites the Restatement as authority.

[HN6] The Restatement defines collateral negligence as “negligence which is unusual or abnormal, or foreign to the normal or contemplated risks of doing the work, as distinguished from negligence which creates only the normal or contemplated risk.” Restatement (Second) of Torts sec. 426 cmt. a (1965). Under [**17] this rule,

a landowner is not required to contemplate or anticipate abnormal or unusual kinds of negligence on the part of the contractor, or negligence in the performance of the operative details of the work which ordinarily may be expected to be carried out with proper care, unless the circumstances under which the work is done give him warning of some special reason to take precautions, or some special risk of harm to others inherent in the work.

Restatement (Second) of Torts sec. 426 cmt. b (1965).

[HN7] An appellate court will affirm the entry of a judgment notwithstanding the verdict only when all of the evidence and reasonable inferences drawn therefrom are so strongly against the plaintiff’s case that there is no room for reasonable minds to differ and the defendant was entitled to judgment as a matter of law. Thieme v. Tour-Toiseshell, Inc., 887 S.W.2d 795, 796 (Mo.App. E.D.1994). Only when the plaintiff has failed to make a submissible case should the trial court grant a motion for judgment notwithstanding the verdict. Id. To determine whether a plaintiff, who obtained a jury verdict, has made a submissible case, we view the evidence in a light most favorable [**18] to the plaintiff, giving plaintiff the benefit of all reasonable inferences. Id.

In its judgment notwithstanding the verdict, the trial court first concluded that bungee jumping was not inherently dangerous as a matter of law because the evidence indicated that bungee jumping could be done safely. In so holding, the trial court relied on dicta found in Reed v. Ocello, 859 S.W.2d 242 (Mo.App. E.D.1993), in which this Court stated “if there is a safe way to perform the activity, it is not inherently dangerous, and the general rule of landowner non-liability applies.” Id. at 245; see also Lammert v. Lesco Auto Sales, 936 S.W.2d 846, 850 (Mo.App. E.D.1996) (relying on Reed for the same proposition).

In our view the dicta in Reed and Lammert directly contradicts Ballinger v. Gascosage Electric Cooperative, 788 S.W.2d 506 (Mo. banc 1990), in which the court stated that [HN8] “the essence of inherent danger . . . is the need for special precaution. It is not sufficient for the defendant to show that the work can be done safely.” Id. at 509; see also W. Keeton, et al., Prosser and Keeton on The Law of Torts 512-15 (5th ed. 1984). The holdings [**19] in Reed and Lammert correctly hold that the [*136] activity in question in those cases was not inherently dangerous, however, the dicta indicating that an activity is not inherently dangerous if it can be performed safely should not be followed. Accordingly, the trial court erred in entering judgment notwithstanding the verdict in favor of V.P. Fair.

[HN9] To initially determine whether an activity is inherently dangerous, Zueck, 809 S.W.2d at 384, the trial judge should begin by ascertaining the nature of the activity and the manner in which the activity is ordinarily performed. If after considering these factors the trial court concludes the activity does not involve some peculiar risk of harm, then the activity is not inherently dangerous as a matter of law. If the trial court does not so find, then the question should be submitted to the jury pursuant to MAI 16.08.

In this case, while there was evidence that the activity could be done safely, there was also evidence, including Northstar’s release form itself, 5 which would support a conclusion that by its very nature the activity involves some peculiar risk of physical harm. Thus, the trial court erred in determining [**20] as a matter of law that bungee jumping is not inherently dangerous.

5 Northstar’s release form contained the following language:

The participant is fully aware that bungee-jumping and all associated activities is a calculated risk sport and contains inherent risk and dangers (including serious injury or death) that no amount of care, caution, instruction, or expertise can eliminate.

Having found sufficient evidence to support a finding that the bungee jump in this case was inherently dangerous, we must next determine if Northstar’s failure to attach the bungee cord is an act of collateral negligence. In its judgment notwithstanding the verdict, the trial court found that Northstar’s failure to attach the bungee cord was an act of collateral negligence. Collateral negligence would preclude a finding that the V.P. Fair is vicariously liable. We conclude that the trial court misinterpreted the collateral negligence rule.

[HN10] Collateral negligence occurs when the negligence is unusual or foreign to the [**21] normal contemplated risks of performing the activity. Restatement (Second) of Torts sec. 426 cmt. a (1965). A landowner is not immune from liability simply because the independent contractor’s negligence contributed to the third party’s injury. Nance, 785 S.W.2d at 793. Instead, the proper focus for the factfinder is whether the landowner contemplated or should have contemplated the type of negligence committed by the independent contractor. Id.; Restatement (Second) of Torts sec. 426 cmt. b (1965). As to what an employer is and is not expected to contemplate, the Restatement provides the following example:

[HN11] An employer may hire a contractor to make an excavation, reasonably expecting that the contractor will proceed in the normal and usual manner with bulldozer or with pick and shovel. When the contractor, for his own reasons, decides to use blasting instead, and the blasting is done in a negligent manner, so that it injures the plaintiff, such negligence is “collateral” to the contemplated risk, and the employer is not liable. If, on the other hand, the blasting is provided for or contemplated by the contract, the negligence in the course of the operation is within the [**22] risk contemplated, and the employer is responsible for it.

Id.

[HN12] The test is whether or not the independent contractor’s acts were or should have been within the contemplation of the landowner. The Restatement provides that a landowner may be required to contemplate abnormal or unusual kinds of negligence if the circumstances under which the activity is performed give the landowner warning of special reasons to take precautions or some special risk of harm to others inherent in the activity. [*137] Restatement (Second) of Torts sec. 426 cmt. b (1965). Here, because of the extreme height involved, V.P. Fair should have been aware of a special risk of injury to bungee jumping participants if Northstar failed to properly attach the bungee cord. V.P. Fair had the opportunity to argue to the jury that Northstar’s actions were not and should not have been within its contemplation. The participant’s safety in making a bungee jump depends in large part on the security of the bungee cord. The risk that a participant could be injured as a result of any failure of the cord, its attachment, or the persons operating the jump is a peculiar risk that V.P. Fair should have contemplated. Accordingly, [**23] Hatch made a submissible case under the inherently dangerous activity exception.

The trial court properly instructed the jury under MAI 16.08 to determine whether bungee jumping was inherently dangerous. 6 We are satisfied that in considering whether the activity of bungee jumping was inherently dangerous, the jury reasonably could have found that unless adequate precautions were taken, bungee jumping necessarily presents a substantial risk of harm. In addition, the jury reasonably could have found that the risk of injury from a fall is a risk that inheres in bungee jumping itself in the absence of adequate precautions and that the risk was not negligently created solely as the result of the improper manner in which Northstar performed the work. Because Hatch made a submissible case under the inherently dangerous activity exception, the trial court erred in entering judgment notwithstanding the verdict.

6 [HN13] MAI 16.08 defines inherently dangerous activity as an activity that necessarily presents a substantial risk of harm unless adequate precautions are taken.

The Notes on Use accompanying MAI 16.08 [HN14] authorize the defendant to request the court to further instruct the jury that an inherently dangerous activity does not include a risk of harm that is not inherent in or a normal part of the work to be performed and that is negligently created solely as a result of the improper manner in which the work under the contract is performed.

This additional provision, which defendants requested be given, properly submitted the question of whether or not Northstar’s negligence was collateral and, if it was, whether or not it was the sole cause of the risk of harm.

[**24] V.P. Fair argues that the judgment notwithstanding the verdict can be sustained on other grounds set forth in its motion for judgment notwithstanding the verdict, even if not relied on by the trial court. See Budding v. Garland Floor Co., 939 S.W.2d 419, 421 (Mo.App. E.D.1996). It requests that we sustain the judgment notwithstanding the verdict on the ground that the inherently dangerous activity exception permits a landowner to be held vicariously liable only for an independent contractor’s negligent acts and not for its reckless acts or on the ground that its release precludes Hatch’s premises liability claim.

Neither of these grounds was raised in V.P. Fair’s motion for directed verdict. [HN15] Rule 72.01(a) requires that a motion for a directed verdict state the specific grounds therefore. Rule 72.01(b) provides that when a motion for directed verdict is not granted, “the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion.” A motion for judgment notwithstanding the verdict is a motion “to have judgment entered in accordance with the motion for a directed verdict.” Id. For this reason a sufficient [**25] motion for a directed verdict is required to preserve the motion for judgment notwithstanding the verdict and for appeal. Fust v. Francois, 913 S.W.2d 38, 45 (Mo.App. E.D.1995). V.P. Fair’s failure to raise these issues as grounds for its motion for directed verdict precluded it from obtaining a judgment notwithstanding the verdict in its favor on these grounds and further precludes it from obtaining appellate review of the trial [*138] court’s failure to enter judgment notwithstanding the verdict on these grounds. Id.

B. Summary Judgment Issues

In his next three points Hatch asserts the trial court erred in entering summary judgment against him on his claims based on joint venture, premises liability based on retention of control, and Northstar’s negligence. For the reasons stated in Part I, we only address the joint venture claim.

1. Preservation of Error

Defendants initially challenge our jurisdiction to consider any of the points of error based on the summary judgment because they were not raised in the motion for new trial. They argue that for the same reasons that error in granting a directed verdict must be preserved in the motion for new trial, a summary [**26] judgment should be likewise preserved. We disagree. [HN16] On appeal we treat summary judgments as the equivalent of court-tried cases and do not require that such judgments be preserved for review in motions for new trial. Title Ins. Corp. of St. Louis v. United States, 432 S.W.2d 787, 790 (Mo.App. 1968). This rule applies whether or not any issues in the case which were not resolved by summary judgment proceeded to trial.

2. Joint Venture

Hatch asserts the trial court erred in entering summary judgment against him on his claims that V.P. Fair was jointly liable with Northstar on the grounds of joint venture. We disagree. [HN17] A joint venture is an “association of persons to carry out a single business enterprise for profit, for which purpose they combine their property, money, effects, skill and knowledge.” Labor Discount Ctr., Inc. v. State Bank & Trust Co. of Wellston, 526 S.W.2d 407, 424 (Mo.App. 1975) (internal quotations omitted). The elements of a joint venture are: (1) an express of implied agreement among the members; (2) a common purpose to be carried out by the members; (3) a community of pecuniary interests in that common purpose; and (4) an equal voice, giving an [**27] equal right of control in the direction of the enterprise. Eads v. Kinstler Agency, Inc., 929 S.W.2d 289, 292 (Mo.App. W.D.1996).

No express agreement between V.P. Fair and Northstar to act as joint venturers was in the summary judgment record. Further, no such agreement could be implied because the parties’ contract expressly included an addendum that Northstar is an independent contractor and is not authorized to act as an agent or employee of V.P. Fair. [HN18] The existence of a different type of express contract is in itself inconsistent with a claimed relationship of joint venture by implication. Martin v. City of Washington, 848 S.W.2d 487, 495 (Mo. banc 1993); see also Jeff-Cole Quarries, Inc. v. Bell, 454 S.W.2d 5, 16 (Mo. 1970). A court may not imply a joint venture where it is evident a different business form was involved. Rosenfeld v. Brooks, 895 S.W.2d 132, 135 (Mo.App. E.D.1995).

In addition, the record did not support a finding that the parties had a community of pecuniary interest. [HN19] The mere fact that both parties have an economic interest in the activity does not make them joint venturers. Eads, 929 S.W.2d at 292. The community of pecuniary interest requires [**28] that the parties have a right to share in the profits and a duty to share in the losses. United States Fidelity & Guar. Co. v. Houf, 695 S.W.2d 924, 928 (Mo.App. E.D.1985); Labor Discount Ctr., 526 S.W.2d at 424-25. Profit is defined as the excess of income over expenditures. Labor Discount Ctr., 526 S.W.2d at 424. The summary judgment record established that V.P. Fair’s fee was to come out of Northstar’s gross income from the bungee jump operation whether or not Northstar made any profit, and V.P. Fair was not to share in any of Northstar’s losses.

[*139] Lastly, the record does not support a finding that V.P. Fair had an equal right to control the bungee jump. There must be some active participation in the enterprise and some control over the subject matter thereof or property engaged therein. Jeff-Cole Quarries, 454 S.W.2d at 15. The evidence that V.P. Fair chose the site, permitted Northstar to use its logo, took tickets and payment, controlled the crowd, and lined up prospective jumpers does not establish that V.P. Fair had any voice, much less an equal voice, in the details of the operation of the bungee jump. See Archer v. Outboard Marine Corp., 908 S.W.2d 701, [**29] 703 (Mo.App. W.D.1995). Further, defendants presented uncontradicted testimony that no one from the V.P. Fair was in control of physical activities of Northstar’s employees or the manner in which the bungee jump was conducted.

The trial court did not err in granting summary judgment in V.P. Fair’s favor on Counts I and V. This point is denied.

III. Northstar’s and V.P. Fair’s Cross-Appeal

A. Recklessness Claim

1. Existence of a Cause of Action for Recklessness

Defendants contend that Missouri does not recognize a cause of action for recklessness, and therefore, the trial court erred in submitting Hatch’s recklessness claim against Northstar to the jury. In support of their argument, defendants rely chiefly upon Fowler v. Park Corp., 673 S.W.2d 749, 755 (Mo. banc 1984), in which the court noted that “there are no legal degrees of negligence.” We disagree with defendants’ argument.

When the Fowler court said that there are no legal degrees of negligence in Missouri, it was referring to the fact that Missouri does not recognize a doctrine, originally developed in bailment law, which recognizes three “degrees” of negligence: slight negligence, [**30] which is the failure to use great care; ordinary negligence, which is the failure to use ordinary care; and gross negligence, which is the failure to use even slight care. See Prosser and Keeton sec. 34, at 210; see also 57A Am.Jur.2d Negligence secs. 240-43 (1989). This theory has been rejected by the courts of most states, including Missouri. See Fowler, 673 S.W.2d at 755; Virginia D. v. Madesco Investment Corp., 648 S.W.2d 881, 886 n. 11 (Mo. banc 1983). [HN20] The prevailing view is that “there are no ‘degrees’ of care or negligence as a matter of law; there are only different amounts of care, as a matter of fact.” Prosser and Keeton sec. 34, at 211.

[HN21] The fact that Missouri does not recognize legal degrees of negligence has nothing to do with whether Missouri recognizes a cause of action for recklessness. Recklessness looks to the tortfeasor’s state of mind. Id. Recklessness is an aggravated form of negligence which differs in quality, rather than in degree, from ordinary lack of care. Id. It is applied to conduct which is negligent, rather than intentional, but which is so far from a proper state of mind that it is treated in many respects as if it were so [**31] intended. Id. at 212-13.

Missouri recognizes a cause of action for recklessness which our supreme court has explained and defined as follows:

[HN22] Negligence is one kind of tort, an unintentional injury usually predicated upon failure to observe a prescribed standard of care (52 Am.Jur., Sec. 20) while a willful, wanton, reckless injury is another kind of tort, an intentional injury often based upon an act done in utter disregard of the consequences. 52 Am.Jur., Secs. 22, 23; 38 Am.Jur., Secs. 4, 5. Reckless conduct may be negligent in that it is unreasonable but it is and must be something more than unreasonable, “it must contain a risk of harm to others in excess of that necessary to make the conduct unreasonable and therefore, negligent.” 2 Restatement, Torts, p. 1294. “The actor’s (defendant’s) conduct [*140] is in reckless disregard of the safety of another if he intentionally does an act or fails to do an act which it is his duty to the other to do, knowing or having reason to know of facts which would lead a reasonable man to realize that the actor’s conduct not only creates an unreasonable risk of bodily harm to the other but also involves a high degree of probability that substantial [**32] harm will result to him.” 2 Restatement, Torts, Secs. 500, 501.

Nichols v. Bresnahan, 357 Mo. 1126, 212 S.W.2d 570, 573 (Mo. 1948).

In this case Hatch proceeded on his recklessness claim after the trial court found that his release precluded his negligence claim but did not release Northstar’s recklessness. ” [HN23] There is no question that one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest.” Alack v. Vic Tanny Int’l of Missouri, Inc., 923 S.W.2d 330, 337 (Mo. banc 1996). This point is denied.

2. Definition of Recklessness in Jury Instructions

Defendants next claim that the trial court erroneously defined recklessness in its instruction to the jury in that the instruction failed to include a standard or degree of care by which to measure Northstar’s actions. We do not reach the merits of this point because Northstar failed to preserve this issue for review.

[HN24] In order to preserve claims of instructional error for review, counsel is required to make specific objections to the instruction at trial and again raise the error in the motion for new trial. Rule 70.03 [**33] provides:

Counsel shall make specific objections to instructions considered erroneous. No party may assign as error the giving or failure to give instructions unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.

Defendants did not make a specific objection at trial to the failure to include a standard of care in Instruction No. 6 at trial. Rather, they objected on different grounds. Counsel stated:

First, it’s not in MAI. Second, there is no independent cause of action for recklessness for Missouri. Third, the standard here is gross negligence and the recklessness definition tendered by the plaintiff is not the proper definition for gross negligence.

[HN25] Where an alleged error relating to an instruction differs from the objections made to the trial court, the error may not be reviewed on appeal. Seidel v. Gordon A. Gundaker Real Estate Co., 904 S.W.2d 357, 364 (Mo.App. E.D.1995); Wilson v. Kaufmann, 847 S.W.2d 840, 846-47 (Mo.App. E.D.1992).

Northstar argues that the objection was not insufficient because a different, more generalized standard should apply [**34] to instructions which are not in MAI and the objection that was given should have alerted the trial judge to the irregularity of the entire submission. We disagree. First, Rule 70.03 is not limited to those instructions which are in MAI. Second, even if one objection can preserve a different one, a contention with which we disagree, none of the specific objections raised was a valid objection and in no way alerted the trial judge to the fact that there might be a different or valid problem with the instruction.

Northstar next requests that if the objection was not preserved, we review for plain error because of the seriousness of the error. We decline to do so. This was a long and complex trial. If the instruction was as seriously erroneous as Northstar contends, counsel should have made that flaw known to the trial court prior to submission to the jury. [HN26] Rule 70.03 is designed to prevent retrials for instructional error which was not brought to the trial court’s attention prior to submission. This point is denied.

[*141] B. Remittitur

In their final point of error, defendants contend that the trial court abused its discretion in refusing to enter a remittitur of the jury’s verdict [**35] because it exceeds reasonable compensation for Hatch’s injuries and damages. Specifically, defendants claim that the damages award greatly exceeds Hatch’s economic damages and is out of line with similar cases.

[HN27] Although the trial court has broad discretion in ordering a remittitur, the assessment of damages is primarily the function of the jury. King v. Unidynamics Corp., 943 S.W.2d 262, 268 (Mo.App. E.D.1997). We will not disturb the trial court’s decision whether or not to reduce damages absent an abuse of discretion so grossly excessive that it shocks the conscience and convinces this Court that both the trial judge and the jury have abused their discretion. Id. In reviewing whether a verdict is excessive, our review is limited to the evidence supporting the verdict. Wright v. Fox-Stanley Photo Prods., Inc., 639 S.W.2d 407, 410 (Mo.App. E.D.1982).

[HN28] There is no precise formula for determining whether a verdict is excessive, and each case must be considered on its own facts with the ultimate test being what fairly and reasonably compensates plaintiff for the injuries sustained. Seabaugh v. Milde Farms, Inc., 816 S.W.2d 202, 211 (Mo. banc 1991). In Magnuson [**36] by Mabe v. Kelsey-Hayes Co., 844 S.W.2d 448, 458 (Mo.App. W.D.1992), the court listed several factors to assist in the determination of whether an award is excessive. These factors include: (1) present and future loss of income, (2) medical expenses, (3) plaintiff’s age, (4) the nature and severity of the injuries, (5) economic factors, (6) awards given in similar cases, and (7) the superior opportunity of the trial court and jury to appraise plaintiff’s injuries and other damages. Id.

As a result of his fall, Hatch sustained serious injuries to his back, legs, and shoulders. He has undergone six surgeries, including the placement and subsequent removal of spinal hardware devices. Hatch suffers from chronic pain syndrome and depression for which he takes pain medication and antidepressants. He is no longer able to engage in many of the activities he enjoyed prior to the accident. He cannot exercise, participate in sports or actively interact with his four children. Hatch, who was thirty-nine years old at the time of the accident, was terminated by his employer for excessive absences due to his injuries. Prior to his fall, he maintained an exemplary work record and had consistently [**37] received outstanding evaluations. He is presently unable to work as an auditor or accountant because of his inability to concentrate due to ongoing pain and physical limitations. An economic expert testified that Hatch’s past wage losses were $ 37,000 and that his future wage losses were $ 670,000. His medical expenses at the time of trial totaled $ 150,000.

Defendants argue that the jury’s award is excessive when compared to similar cases. This, however, is not the sole test. Fowler v. Park Corp., 673 S.W.2d 749, 758 n.15 (Mo. banc 1984); Bender v. Burlington-Northern R.R. Co., 654 S.W.2d 194, 202 (Mo.App. S.D.1983). The trial court was in the best position to evaluate the evidence regarding Hatch’s injuries and damages. We do not find that the verdict is so grossly excessive as to shock the conscience or that both the jury and the judge abused their discretion. Point denied.

The judgment is affirmed in part and reversed in part. The case is remanded with directions to reinstate the verdict against V.P. Fair and to enter judgment thereon.

James R. Dowd, Judge

Kathianne Knaup Crane, [**38] P.J., concurs.

Mary Rhodes Russell, J., concurs.


US Army and BSA not liable for injured kids on Army base. No control by the BSA and recreational use defense by US Army.

Agency requires more than just relationship; it requires actual control over the alleged agents.

Wilson v. United States, 989 F.2d 953; 1993 U.S. App. LEXIS 6165, (8th Cir. 1993)

State: Missouri, United States Court of Appeals for the Eighth Circuit

Plaintiff: Mark D. Wilson; Janet L. Wilson, Jason S. Harbian; Michael Harbian; Sharon Harbian; Daniel R. Winfrey, a Minor, by Susan Crump, his Mother and Next Friend, and; Susan Crump

Defendant: United States of America; the Boy Scouts of America

Plaintiff Claims: Federal Tort Claims Act, and against the Boy Scouts of America (BSA) pursuant to Missouri state law, for negligent supervision and failure to train the adult supervisors

Defendant Defenses: No relationship between the BSA and the adult volunteers and the Missouri Recreational Use Statute

Holding: for the Defendant

Year: 1993

A group of Boy Scouts and their adult leaders were at Fort Leonard Wood, a US Army military post for the weekend to participate in the Army’s Youth Tour Program. The boys and adults stayed in a barrack. Stacked beside the barrack were aluminum alloy irrigation pipes that were approximately 30’ long. The pipes were stacked there when not in use for six years.

Three of the boys grabbed one of the pipes and carried it 20’ west of the building and raised it to a vertical position. It came in contact with a high-voltage line injuring two boys and killing one.

Because one of the defendants was the United States, as the owner of the land and property under the supervision and control of the US Army, the case was brought in the Federal District Court of Missouri for the Eastern District of Missouri.

The trial court dismissed the claims of all plaintiffs because of the Missouri recreational use act for the defendant US Army, and the BSA did not owe the plaintiff’s a duty of care. The plaintiff’s appealed.

Analysis

To sue an agency of the United States, your claims must meet the requirements of the Federal Tort Claims Act. The act allows the defendant to assert any defense allowed under the act and as allowed under the law of the state where the incident occurred.

In this case, the defendant US raised the defense provided by the Missouri Recreational Land Use Statute, Mo. Rev. Stat. §§ 537.345 – 537.348. The act provides immunity to landowners who make their property available for recreation without an entry charge.

Except as provided in sections 537.345 to 537.348, an owner of land owes no duty of care to any person who enters on the land without charge to keep his land safe for recreational use or to give any general or specific warning with respect to any natural or artificial condition, structure, or personal property thereon.

Recreational use is defined by the act as “hunting, fishing, camping, picnicking, biking, nature study [and] winter sports.”

The immunity is available unless the landowner is:

…found to have been either maliciously or grossly negligent in failing to guard or warn against a dangerous condition which the owner knew or should have known to be dangerous, or if the landowner negligently failed to warn or guard against an ultrahazardous condition. Other exceptions to the nonliability of the statute include injuries occurring on or in any “noncovered land,” which is defined as land used primarily for commercial, industrial or manufacturing purposes.

The Army charged $2.00 per person to say in the building. The plaintiff’s argued that the recreational use act then did not apply to the defendant US Army.

1) the Army charged $ 2.00 per person to be billeted in Building 1614; (2) the United States receives an economic benefit from offering its land; (3) the Boy Scouts were not members of the “general public,” and thus were not covered by the Act; (4) the injury occurred on “noncovered land;” and (5) the United States negligently failed to protect against an ultrahazardous condition.

The Fort was called an open military post. That means that members of the public were allowed to visit the post. The post was open to the public for “fishing, hunting, hiking, camping, picnicking or canoeing.” The Fort also offered the Youth Tour Program which allowed national youth organizations such as the BSA special programs not available to the general public. These programs included “visits to the Fort’s museum, an indoor rifle range, an obstacle course and a cannon range.”

If the youth group or in this case, the BSA, want to spend the night, the Army charges a $2.00 per person fee.

This fee covers the cost of maintaining and equipping the facility with mattresses, toilet paper, soap, and other supplies. If a troop chooses to stay overnight but no beds are available, the lodging fee is reduced to $ 1.00 per person/per night.

The application of the Missouri Recreational Use Statute, construes fees in the act as defined to enter upon the land. The $2.00 fee was paid to stay overnight in the building, entrance onto the base was free.

There is no evidence in the record to indicate that this fee would have been charged to either participate in the Youth Tour Program, or to enter Fort Leonard Wood, if the scouts had elected not to stay overnight. In fact, all the Fort Leonard Wood documents relating to this fee provide that it is a “lodging” fee, and that it is assessed on a per person/per night basis.

The remaining arguments presented by the plaintiffs were quickly dismissed by the court in a paragraph for each argument.

The court then turned to the claims against the Boy Scouts of America. In order to hold the National Council of the BSA liable for the acts of the volunteer adult leaders in Missouri, the plaintiff has to prove an agency relationship existed between the BSA and the adults. This would allow the plaintiff’s to argue a vicarious liability claim against the BSA.  

The appellants claim the BSA had the right to control and supervise Troop 392’s adults, that the BSA is liable for the negligent acts of the troop’s adult leaders which were committed within the scope and course of their agency relationship, and further that the troop’s adult leaders were clothed with implied and apparent authority to act on behalf of the BSA when they were present at Fort Leonard Wood.

The court then accurately related the legal relationship between the BSA national office and volunteers of a unit.

The Boy Scouts of America is a congressionally chartered benevolent national organization, which is divided into geographic areas known as local councils. Three hundred ninety-eight local councils are chartered in the United States. Local sponsors, such as schools, churches or civic organizations apply for charters from the BSA through their local council. Local volunteers form a patrol leaders’ council to plan troop activities. BSA does not conduct or require any training for these adult volunteers. Troops do not need permission from BSA before participating in activities, with the exception of tours outside the United States or five hundred miles or more from the local council. The BSA had no advanced notice of Troop 392’s trip to Fort Leonard Wood. The troop was not required, nor did it receive, permission from the BSA to go to Fort Leonard Wood.

The court then examined the requirements of respondeat superior, needed to hold an employer liable for the acts of an employee.

Liability based on respondeat superior requires some evidence that a master-servant relationship existed between the parties. The test to determine if respondeat superior applies is whether the person sought to be charged as a master had “the right or power to control and direct the physical conduct of the other in the performance of the act.” If there is no right to control, there is no liability.

The plaintiff failed to produce any evidence that the BSA national council has any control over the “specific activities of individual troops, or that it had a duty to control, supervise or train volunteer leaders for the Fort Leonard Wood activity.”

The appellate court upheld the lower court’s dismissal of the case.

So Now What?

This is another situation where the recreational use statute has been parsed by how the many paid were used by the landowner. Money paid to enter the land does not allow the landowner to use the defense of the state recreational use statute. Money paid for other things once on the land may still allow the use of the statute as a defense.

However, this is a narrow reading of the law and would be specific to each state law. Make sure you have consulted with a local attorney familiar with the law before making this decision to charge for other items.

The Boy Scouts of America do not supervise, control or have any power or authority over its volunteers.

 

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Wilson v. United States of America, 989 F.2d 953; 1993 U.S. App. LEXIS 6165

Wilson v. United States of America, 989 F.2d 953; 1993 U.S. App. LEXIS 6165

Mark D. Wilson; Janet L. Wilson, Appellants, v. United States of America; The Boy Scouts of America, Appellees. Mark D. Wilson; Janet L. Wilson, Plaintiffs, v. The Boy Scouts of America, Defendants. Jason S. Harbian; Michael Harbian; Sharon Harbian; Daniel R. Winfrey, a Minor, by Susan Crump, his Mother and Next Friend, and; Susan Crump, Appellants, v. United States of America; The Boy Scouts of America, Appellees.

No. 92-1438, No. 92-3363

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

989 F.2d 953; 1993 U.S. App. LEXIS 6165

September 18, 1992, Submitted

March 29, 1993, Filed

SUBSEQUENT HISTORY: [**1] Rehearing Denied May 10, 1993, Reported at: 1993 U.S. App. LEXIS 10903.

PRIOR HISTORY: Appeals from the United States District Court for the Eastern District of Missouri. District No. 89-1696-C-7. Jean C. Hamilton, U.S. District Judge.

DISPOSITION: Affirmed

CASE SUMMARY:

COUNSEL: For MARK D. WILSON, JANET L. WILSON, Plaintiffs – Appellants: Alan E. DeWoskin, 314-727-6330, Suite 426, 225 S. Meramec Avenue, St. Louis, MO 63105.

For UNITED STATES OF AMERICA, Defendant – Appellee: Joseph Moore, Asst. U.S. Attorney, 314-539-3280, U.S. ATTORNEY’S OFFICE, 1114 Market Street, St. Louis, MO 63101. Robert William Cockerham, BROWN & JAMES, 705 Olive Street, Suite 1100, St. Louis, MO 63101, 314-421-3400. For BOY SCOUTS, OF AMERICA, Defendants – Appellees: Russell F. Watters, Robert William Cockerham, Thomas Michael Ward, BROWN & JAMES, 705 Olive Street, Suite 1100, St. Louis, MO 63101, 314-421-3400.

JUDGES: Before HANSEN, Circuit Judge, and HEANEY and ROSS, Senior Circuit Judges.

OPINION BY: ROSS

OPINION

[*954] ROSS, Senior Circuit Judge.

Appellants Mark Wilson and Janet Wilson, the parents of Anthony Wilson, and [*955] Jason Harbian and Daniel Winfrey, and their parents, appeal from the trial court’s 1 grant of summary judgment in favor of appellees United States of America and the Boy Scouts of America, in an action arising out of the death of Anthony Wilson and the injuries sustained by Jason Harbian and Daniel Winfrey.

1 The Honorable Jean C. Hamilton, United States District Judge for the Eastern District of Missouri.

On April 22, 1988, Anthony Wilson, Daniel Winfrey and Jason Harbian, members of Troop 392 of the Boy Scouts of America, St. Louis Area Council, along with other boy scouts and five adult leaders, went to Fort Leonard Wood, a United States Army military post, on a boy scout trip as part of the Army’s Youth Tour Program. A pile of lightweight aluminum [**2] alloy irrigation pipes, approximately thirty feet in length, were stacked outside Building 1614, where the troop was billeted for the weekend. The pipes had been used for irrigation of the athletic field adjacent to the building, and when not in use, were stored alongside the building. The pipes had been stacked in this manner for approximately six years.

On the second night of their weekend stay, at approximately 10:30 p.m., Anthony, age thirteen, and five or six other scouts, ages twelve to sixteen, were outside Building 1614, while the leaders were inside the building. Anthony, Daniel and Jason picked up one of the aluminum pipes, carried it approximately twenty feet west of the building, and raised it to a near vertical position, causing the pipe to come in contact with a 7,200 volt power line which ran over the building. All three scouts received electric shocks; Anthony died as a result of the injuries he sustained.

Mark and Janet Wilson brought a wrongful death action against the United States pursuant to the Federal Tort Claims Act, and against the Boy Scouts of America (BSA) pursuant to Missouri state law, for negligent supervision and failure to train the adult supervisors. [**3] Sometime later the Harbian/Winfrey plaintiffs filed personal injury actions against both the United States and the BSA, and eventually these cases were consolidated with the Wilson case for trial. Motions for summary judgment filed by the United States and the BSA were eventually granted as against all appellants. 2

2 On December 4, 1992, following oral argument of the Wilson appeal before this court, the Harbian and Winfrey cases were consolidated with the Wilson appeal. All parties agree that these cases arose from the same occurrence and are identical in material fact and law. The Harbians and the Winfreys rely on the briefs and oral argument submitted in the Wilson appeal. The Wilsons, Harbians and Winfreys will be collectively referred to as “appellants.”

The appellants’ theory of recovery against the BSA is based on an alleged agency relationship between the BSA and the adult volunteers supervising the scouts. The district court granted the BSA’s motion for summary judgment, concluding [**4] that appellants failed to produce any evidence that the national organization of the BSA had a duty to control, supervise or train volunteer leaders for the Fort Leonard Wood activity. The district court also granted the United States’ motion for summary judgment based on its finding that the United States owed no duty of care to the scouts because they were recreational users of the property under Missouri’s Recreational Land Use Statute. See Mo. Rev. Stat. § 537.346. After careful consideration of each allegation raised by the appellants, we affirm the decision of the district court.

I. United States of America

The action against the United States arises [HN1] under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 2671-2680, thus, the “United States shall be liable . . . in the same manner and to the same extent as a private individual under like circumstances.” Id. at § 2674. Further, the United States is “entitled to assert any defense based upon judicial or legislative immunity which otherwise would have been available to the employee of the United States . . . as well as any other defenses to which the United States is entitled.” [**5] Id. Therefore, the United States is entitled to [*956] the benefit of state recreational use statutes, if applicable, when it is sued under the Federal Tort Claims Act. See Hegg v. United States, 817 F.2d 1328, 1329 (8th Cir. 1987) (construing the Iowa Recreational Use Statute); Umpleby v. United States, 806 F.2d 812, 815 (8th Cir. 1986) (applying North Dakota’s Recreational Use Statute).

[HN2] The Missouri Recreational Land Use Statute, Mo. Rev. Stat. §§ 537.345 – 537.348 immunizes landowners who make their property available for the recreational use of others without an entry charge. The statute specifically provides:

[HN3] Except as provided in sections 537.345 to 537.348, an owner of land owes no duty of care to any person who enters on the land without charge to keep his land safe for recreational use or to give any general or specific warning with respect to any natural or artificial condition, structure, or personal property thereon.

Id. at § 537.346. “Charge” is defined in the statute as:

[HN4] the admission price or fee asked by an owner of land or an invitation or permission without price or fee to use land for recreational [**6] purposes when such invitation or permission is given for the purpose of sales promotion, advertising or public goodwill in fostering business purposes.

Id. at § 537.345(1). “Recreational use” as defined in the statute includes outdoor activities, such as “hunting, fishing, camping, picnicking, biking, nature study [and] winter sports. Id. at § 537.345(4).

[HN5] While providing for a general immunity against liability, a landowner may nonetheless be liable if found to have been either maliciously or grossly negligent in failing to guard or warn against a dangerous condition which the owner knew or should have known to be dangerous, or if the landowner negligently failed to warn or guard against an ultrahazardous condition. Id. at § 537.348(1). Other exceptions to the nonliability of the statute include injuries occurring on or in any “noncovered land,” which is defined as land used primarily for commercial, industrial or manufacturing purposes. Id. at § 537.348(3)(d).

The appellants contend that the Missouri Recreational Land Use Statute does not apply to the United States because (1) the Army charged $ 2.00 per person to be billeted in Building 1614; (2) the United States [**7] receives an economic benefit from offering its land; (3) the Boy Scouts were not members of the “general public,” and thus were not covered by the Act; (4) the injury occurred on “noncovered land;” and (5) the United States negligently failed to protect against an ultrahazardous condition.

A.

Fort Leonard Wood is an open military post, where members of the public can freely enter without being stopped or questioned by guards or military police. Specified areas are open to the public for fishing, hunting, hiking, camping, picnicking or canoeing. Many tours are given to various groups, such as senior citizens and church and school groups, free of charge. The Fort also offers a Youth Tour Program which is open only to national youth organizations, such as the Boy Scouts of America. The program includes activities which are not available to the general public, such as visits to the Fort’s museum, an indoor rifle range, an obstacle course and a cannon range.

If a troop in the Youth Tour Program chooses to stay overnight in Building 1614, a $ 2.00 per person/per night lodging fee is charged. This fee covers the cost of maintaining and equipping the facility with mattresses, toilet paper, [**8] soap, and other supplies. If a troop chooses to stay overnight but no beds are available, the lodging fee is reduced to $ 1.00 per person/per night. Significantly, the lodging fee is charged on a per person/per night basis, while there is no charge for the tour itself, which is offered only on Saturdays.

The interpretation of the various recreational use statutes is controlled by the precise language of each statute. Courts that have construed recreational land use statutes with language similar to the Missouri statute have interpreted “charge” as ” [*957] an admission fee to enter the land.” For example, in Genco v. Connecticut Light and Power Co., 7 Conn. App. 164, 508 A.2d 58, 62 (Conn. App. Ct. 1986), noting that the Connecticut General Statute § 52-557f defines “charge” as “the admission price or fee asked in return for invitation or permission to enter or go upon the land,” the court held that “the only way to avoid inconsistent application of the Act . . . is to interpret the word ‘charge’ as an actual admission price paid for permission to enter the land at the time of its use for recreational purposes.” Id. (emphasis added).

Furthermore, a parking fee paid by [**9] a camper is not a charge within the meaning of the Nebraska Recreational Use Statute, which defines “charge” as “the amount of money asked in return for an invitation to enter or go upon the land.” Garreans v. City of Omaha, 216 Neb. 487, 345 N.W.2d 309, 313 (Neb. 1984) (emphasis added). In Garreans, the court noted that the

charges were made for the right to park a camper on a pad, for the right to pitch a tent in a tent camping area, and for the use of camper dumping facilities. Payment of the fee . . . did not entitle . . . [the person paying the fee] to a greater right to use any of the park’s other facilities than that had by the general public.

Id.

As in Jones v. United States, 693 F.2d 1299, 1303 (9th Cir. 1982), where a one dollar fee was charged the injured plaintiff to rent an inner tube for snow sliding, the fee paid by the scouts to bunk in Building 1614 was not “charged to members of the public for entry on to the land or for use of the land.” Id. Rather, the scouts paid the $ 2.00 fee to bunk in Building 1614, but entered the park without paying a fee. The Jones court held that the plaintiff [**10] “could have used . . . the Park without making any payment if she had brought her own tube.” Id. Similarly, the appellants could have used Fort Leonard Wood without making this $ 2.00 payment if they had chosen not to stay overnight. The Missouri statute does not provide that the immunity for an entire parcel should be nullified if a landowner charges for admission to a different portion of the parcel, nor would such a rule be consistent with the statute’s purpose. “Consideration should not be deemed given . . . unless it is a charge necessary to utilize the overall benefits of a recreational area so that it may be regarded as an entrance or admission fee.” Moss v. Department of Natural Resources, 62 Ohio St. 2d 138, 404 N.E.2d 742, 745 (Ohio 1980) (emphasis added).

The appellants herein paid $ 2.00 per night for the right to stay overnight in Building 1614. There is no evidence in the record to indicate that this fee would have been charged to either participate in the Youth Tour Program, or to enter Fort Leonard Wood, if the scouts had elected not to stay overnight. In fact, all of the Fort Leonard Wood documents relating to this fee provide that it is a “lodging” [**11] fee and that it is assessed on a per person/per night basis. The appellants have failed to present any evidence that the fee was required in order to enter Fort Leonard Wood.

B.

The remainder of appellants’ arguments with regard to the liability of the United States are also without merit. The appellants contend that the United States is outside the protection of the Missouri Recreational Land Use Statute because the scouts are not “members of the general public.” They contend that because only members of national youth organizations are eligible to participate in the Youth Tour Program, the scouts should be treated as guests or invitees. Appellants’ argument, however, relies upon a distinction not made within the language of the Missouri Recreational Land Use Statute. The plain language of the statute indicates that a landowner owes no duty of care “to any person who enters on the land without charge” for recreational purposes. Mo. Rev. Stat. § 537.346 (emphasis added).

We also reject the appellants’ argument that the United States is outside the protection of the Missouri statute because the Army’s purpose in allowing admission to Fort Leonard Wood is to develop public [*958] goodwill [**12] in fostering a business purpose. See Mo. Rev. Stat. § 537.345(1). When Boy Scout troops visit the Fort, they are not recruited or encouraged in any way to join the Army, nor are any records kept of scouts who have participated in the Youth Tour Program. Further, appellants have failed to establish that the Army operates as a business within the intended meaning of the statute.

Finally, appellants’ argument that Building 1614 was essentially a commercial “hotel” located in a “populated, residential area,” and therefore falls within the “noncovered land” exception of section 537.348(3)(d) is without merit. The record does not support appellants’ contention that the Fort was “predominately used for residential purposes,” nor that Building 1614 was operated as a commercial enterprise. Nor can we accept appellants’ argument that the United States acted with willful and wanton disregard for the safety of the troops or negligently failed to protect them against an ultrahazardous condition. There simply has been no evidence presented to establish either of these theories.

The judgment of the district court granting summary judgment in favor of the United States is affirmed.

II. Boy [**13] Scouts of America

The appellants also challenge the district court’s grant of summary judgment in favor of the Boy Scouts of America. The appellants contend there is a genuine issue of material fact as to whether an agency relationship existed between the BSA and the adult volunteers of Troop 392 so as to provide for vicarious liability for any negligence on the part of the adult leaders. The appellants claim the BSA had the right to control and supervise Troop 392’s adults, that the BSA is liable for the negligent acts of the troop’s adult leaders which were committed within the scope and course of their agency relationship, and further that the troop’s adult leaders were clothed with implied and apparent authority to act on behalf of the BSA when they were present at Fort Leonard Wood.

The appellants first argue that the district court improperly considered the affidavit of Lloyd Roitstein, Area Director in the North Central Region of the Boy Scouts of America, in considering the relationship between the national organization and the individual troops because the affidavit was not based on personal knowledge. We agree with the district court that Roitstein’s role as an Area Director [**14] establishes his personal familiarity with the Boy Scout organization and conclude that the affidavit was properly considered.

The Boy Scouts of America is a congressionally chartered benevolent national organization, which is divided into geographic areas known as local councils. Three hundred ninety-eight local councils are chartered in the United States. Local sponsors, such as schools, churches or civic organizations apply for charters from the BSA through their local council. Local volunteers form a patrol leaders’ council to plan troop activities. BSA does not conduct or require any training for these adult volunteers. Troops do not need permission from BSA before participating in activities, with the exception of tours outside the United States or five hundred miles or more from the local council. The BSA had no advanced notice of Troop 392’s trip to Fort Leonard Wood. The troop was not required, nor did it receive, permission from the BSA to go to Fort Leonard Wood.

[HN6] Under the doctrine of respondeat superior an employer is liable for the negligent acts or omissions of his employee which are committed within the scope of his employment. Light v. Lang, 539 S.W.2d 795, 799 (Mo. App. Ct. 1976). [**15] Liability based on respondeat superior requires some evidence that a master-servant relationship existed between the parties. Usrey v. Dr. Pepper Bottling Co., 385 S.W.2d 335, 338 (Mo. Ct. App. 1964). The test to determine if respondeat superior applies is whether the person sought to be charged as a master had “the right or power to control and direct the physical conduct of the other in the performance of the act.” Id. at 339. If there is no right to control, there is no liability.

Courts of other jurisdictions that have addressed the issue now before this court have rejected the imposition of liability against the BSA or the local councils, [*959] noting the lack of control these entities exercise over individual troops and their sponsoring organizations. For example, in Mauch v. Kissling, 56 Wash. App. 312, 783 P.2d 601 (Wash. Ct. App. 1989), the court found there was no basis for the doctrine of apparent authority because the plaintiff had not presented evidence that BSA consented to or had control of the scoutmaster’s activities. Id. at 605.

Similarly, in Anderson v. Boy Scouts of America, Inc., 226 Ill. App. 3d 440, 589 N.E.2d 892, 168 Ill. Dec. 492 (Ill. App. Ct. 1992), [**16] the court found the plaintiffs had failed to establish that an agency relationship existed between the plaintiffs and the local council or the BSA:

We find no provisions in the charter, bylaws, rules and regulations promulgated by the BSA, nor can plaintiffs cite to any provisions within these documents, which specifically grant BSA or its district councils direct supervisory powers over the method or manner in which adult volunteer scout leaders accomplish their tasks.

Id. at 894-95.

Recently, the Missouri Court of Appeals considered the Wilson’s cause of action against the St. Louis Area Council of the Boy Scouts of America, arising from the same circumstances of the instant case. The Missouri court dismissed the suit against the local council, finding that “Council neither controlled the actions of the troop leaders nor ran the program at Fort Leonard Wood.” While the Missouri state court decision involved the local council, it is instructional here because the relationship between the national organization and the individual troop leaders is even more remote.

Appellants also contend that sufficient facts establish a jury question as [**17] to whether a principal/agent relationship existed under a theory of implied agency or apparent authority. Implied agency and apparent authority, however, are based on manifestations by the principal which causes a third person reasonably to believe that an agent of the principal is authorized to do certain acts. Barton v. Snellson, 735 S.W.2d 160, 162 (Mo. Ct. App. 1987). Appellants contend the use of common uniforms, emblems, books and awards in the scouting program, a national insurance program, issuance of the national membership card and other printed materials locally, as well as other indicia of a relationship between BSA and the local council, create a manifestation of authority upon which an innocent third party might reasonably rely.

Appellants fail, however, to produce any evidence that BSA manifested that it had direct control over the specific activities of individual troops or that it had a duty to control, supervise or train volunteer leaders for the Fort Leonard Wood activity. On the contrary, the Boy Scout Handbook clearly provides, “what the troop does is planned by the patrol leaders’ council.” The organizational structure of the BSA [**18] leaves the control of the specific activities at the level closest to the individual troop. Appellants have produced no direct or circumstantial evidence to suggest that in this case BSA manifested control.

In summary, we conclude that the district court properly granted summary judgment in favor of the Boy Scouts of America and the United States. The judgment of the district court is affirmed.


Missouri Sales Representative

TITLE 26. TRADE AND COMMERCE (Chs. 400-421)

CHAPTER 407. MERCHANDISING PRACTICES

SALES COMMISSION

GO TO CODE ARCHIVE DIRECTORY FOR THIS JURISDICTION

§ 407.911 R.S.Mo. (2013)

§ 407.911. Definitions

As used in sections 407.911 to 407.915, the following terms mean:

(1) “Commission”, compensation accruing to a sales representative for payment by a principal, the rate of which is expressed as a percentage of the dollar amount of orders or sales, or as a specified amount per order or per sale;

(2) “Principal”, a person, firm, corporation, partnership or other business entity, whether or not it has a permanent or fixed place of business in this state, and who:

(a) Manufactures, produces, imports, provides, or distributes a product or service for sale;

(b) Contracts with a sales representative to solicit orders for the product or service; and

(c) Compensates the sales representative, in whole or in part, by commission;

(3) “Sales representative”, a person, firm, corporation, partnership, or other business entity who contracts with a principal to solicit orders and who is compensated, in whole or in part, by commission, but shall not include a person, firm, corporation, partnership, or other business entity who places orders or purchases for its own account for resale.

§ 407.912. Commission to become due, when — termination of employment, all commissions due, when

1. When a commission becomes due shall be determined in the following manner:

(1) The written terms of the contract between the principal and sales representative shall control;

(2) If there is no written contract, or if the terms of the written contract do not provide when the commission becomes due, or the terms are ambiguous or unclear, the commission shall be paid when the product or service is delivered and accepted by the purchaser or the principal receives satisfaction in full;

(3) If neither subdivision (1) nor (2) of this subsection can be used to clearly ascertain when the commission becomes due, then the commission shall be due on the date the principal accepts the order and receives satisfaction in full, unless the custom and usage prevalent in this state for the parties’ particular industry is different, in which event such custom and usage shall prevail.

2. Nothing in sections 407.911 to 407.915 shall be construed to impair a sales representative from collecting commissions on products or services ordered prior to the termination of the contract between the principal and the sales representative but delivered and accepted by the purchaser after such termination.

3. When the contract between a sales representative and a principal is terminated, all commissions then due shall be paid within thirty days of such termination. Any and all commissions which become due after the date of such termination shall be paid within thirty days of becoming due.

§ 407.913. Failure to pay sales representative commission, liability in civil action for actual damages — additional damages allowed — attorney fees and costs

Any principal who fails to timely pay the sales representative commissions earned by such sales representative shall be liable to the sales representative in a civil action for the actual damages sustained by the sales representative and an additional amount as if the sales representative were still earning commissions calculated on an annualized pro rata basis from the date of termination to the date of payment. In addition the court may award reasonable attorney’s fees and costs to the prevailing party.

§ 407.914. Out-of-state principal with sales representative soliciting in this state, Missouri courts to have jurisdiction

A principal who is not a resident or citizen of this state who contracts with a sales representative to solicit orders in this state is declared to be transacting business in this state for purposes of the exercise of jurisdiction of the courts of this state under section 506.500.

§ 407.915. Civil action for all claims against principal may be joined–express or contract waivers of commission laws, invalid

1. Nothing in sections 407.911 to 407.915 shall invalidate or restrict any other or additional right or remedy available to a sales representative from seeking to recover in one action on all claims against a principal.

2. A provision in any contract between a sales representative and a principal purporting to waive any provision of sections 407.911 to 407.915, whether by expressed waiver or by a contract subject to the laws of another state, shall be void.

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