Anderson v. Rugged Races, LLC, 42 F.4th 955 (8th Cir. 2022)
Posted: May 8, 2023 Filed under: Minnesota, Racing, Release (pre-injury contract not to sue) | Tags: Bang the Gong, Course Race, Federal Court of Appeals, Greater than Ordinary Negligence, Gross negligence, Jump, Minnesota, Mud Run, obstacle, Obstacle course racing, Obsticle Course, Ordinary Negligence, Platform, Release, Rugged Maniac, Spartan Race, Tough Mudder Leave a commentTo Read an Analysis of this decision see: Sloppy but still lucky? Obstacle course avoids lawsuit with release, however, it was close
Anderson v. Rugged Races, LLC, 42 F.4th 955 (8th Cir. 2022)
42 F.4th 955
Jeanne ANDERSON, Plaintiff – Appellant
v.
RUGGED RACES, LLC; Dennis Raedeke, Inc., doing business as Wild Mountain Recreation Area, Defendants – Appellees
No. 20-3436
United States Court of Appeals, Eighth Circuit.
Submitted: February 16, 2022
Filed: August 2, 2022
Counsel who represented the appellant was L. Michael Hall, of Saint Cloud, MN and Mara Brust of Saint Cloud, MN.
Counsel who represented the appellee was John M. Bjorkman, of Saint Paul, MN, Mark A. Solheim, of Saint Paul, MN, Anthony James Novak, of Saint Paul, MN and Pat Henry O’Neill of Saint Paul, MN.
Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges.
LOKEN, Circuit Judge.
In September 2016, Jeanne Anderson shattered her heel bone participating in the Rugged Maniac Twin Cities 5k obstacle race at the Wild Mountain Recreation Area (“Wild Mountain”). In 2018, Anderson sued Rugged Races LLC (“Rugged Races”), the race promoter, and Dennis Raedeke, Inc., the owner of Wild Mountain, alleging that defendants were “grossly negligent” in failing to perform their duties to protect race participants from unreasonable risks of harm. She appeals the district court’s1 grant of summary judgment in favor of both defendants. The diversity action is governed by Minnesota state law. Reviewing the grant of summary judgment de novo , we affirm. See
Kraft v. Ingersoll-Rand Co., 136 F.3d 584, 585-86 (8th Cir. 1998) (standard of review).
I. Background
Since 2010, Rugged Races has planned hundreds of obstacle races around the country, including Rugged Maniac Twin Cities. The events feature an obstacle course with a series of challenges involving barbed wire, fire, water, and mud, followed by a post-race party. When Anderson registered for the 2016 Twin Cities event, she signed a Race Participant Agreement (the Agreement). In Part III of the Agreement, titled Assumption of Inherent Risks , Anderson acknowledged:
I understand fully the inherent risks involved in the Event and assert that I am willingly and voluntarily participating in the Event. … (1) I understand the nature of the Event; (2) I understand the physical and mental demands that this activity will place upon me; and (3) I understand that I may be injured by participating in the Event. I hereby assert that I knowingly assume all of the inherent risks of the activity and take full responsibility for any and all damages, liabilities, losses or expenses that I incur as a result of participating in the Event.
In Part IV, titled Waiver of Liability for Ordinary Negligence, Anderson waived and discharged both Rugged Races and Wild Mountain “from any and all claims resulting from the INHERENT RISKS of the Event or the ORDINARY NEGLIGENCE of Rugged Races LLC (or other Released Parties).” Anderson again signed the Agreement when she checked in on race day.
After starting the race and completing the first seven obstacles, Anderson reached the “Bang the Gong” challenge. This obstacle required her to jump from a raised platform, attempt to slap a gong in midair, and land in a pit of muddy water. When Anderson landed in the pit her “left foot hit something hard.” She crawled from the pit, received medical attention, and learned she had shattered the calcaneus bone in her left heel. Of the more than 4000 participants in the 2016 race, four others were injured on the Bang the Gong obstacle, suffering injuries to their foot or ankle after landing in the pit.
Anderson’s Complaint alleged (i) that defendants had duties to design and construct a reasonably safe course, maintain the course in a safe condition, inspect the course for unreasonable risks of harm, warn race participants of unreasonable risks, supervise parties responsible for performing those duties, and operate and maintain the course to ensure participants were not exposed to unreasonable risks; and (ii) that defendants were grossly negligent in failing to perform each of these duties. After discovery, defendants moved for summary judgment. The summary judgment record includes deposition testimony from Anderson and Rugged Races employees, declarations from the other injured participants, reports by Anderson’s expert witnesses, and other documentary evidence.
The district court granted summary judgment in favor of both defendants. Anderson v. Rugged Races LLC, 496 F. Supp. 3d 1270 (D. Minn. 2020). The court concluded that the exculpatory clause in the Agreement barred any claims for ordinary negligence and that Anderson had failed to show “greater-than-ordinary negligence.” On appeal, Anderson argues (i) the exculpatory clause is unenforceable; (ii) if enforceable, it does not waive claims based on defendants’ alleged greater-than-ordinary negligence; and (iii) the summary judgment record includes evidence from which a reasonable jury could find greater-than-ordinary negligence. Defendants argue the district court properly granted summary judgment because there is insufficient evidence of greater-than-ordinary negligence. They further argue that Minnesota law does not recognize any claim other than the claims for ordinary negligence that Anderson waived in the Agreement.2
We will affirm the grant of summary judgment when the evidence viewed in the light most favorable to the nonmoving party presents “no genuine issue of material fact” from which “a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis omitted); see Fed. R. Civ. P. 56(a). “A mere scintilla of evidence is insufficient to defeat summary judgment and if a nonmoving party who has the burden of persuasion at trial does not present sufficient evidence as to any element of the cause of action, then summary judgment is appropriate.” Brunsting v. Lutsen Mountains Corp., 601 F.3d 813, 820 (8th Cir. 2010) (quotations and citations omitted).
II. Analysis
On appeal, Anderson argues that her waiver of ordinary negligence claims in the Agreement is not enforceable and, alternatively, that it does not waive claims based on greater-than-ordinary negligence. Defendants counter that the exculpatory clause is valid and enforceable and bars all of Anderson’s claims. There is a considerable body of relevant Minnesota case law on these issues.
A. Under Minnesota law, there is no common law action for “gross negligence.” See Peet v. Roth Hotel Co., 191 Minn. 151, 253 N.W. 546, 548 (1934). However, the negligence standard governing particular claims may be varied by statute or by contract. See, e.g., State v. Bolsinger, 221 Minn. 154, 21 N.W.2d 480 (1946) (criminal negligence statute), overruled on other grounds, State v. Engle, 743 N.W.2d 592 (Minn. 2008). Under Minnesota law, as in most States, “ordinary negligence” is the “failure to exercise such care as persons of ordinary prudence usually exercise under such circumstances.” Domagala v. Rolland, 805 N.W.2d 14, 22 (Minn. 2011) (quotation omitted). Gross negligence is “substantially and appreciably higher in magnitude than ordinary negligence … [and is] the absence of slight diligence, or the want of even scant care.” Bolsinger, 21 N.W.2d at 485.
In the Race Participant Agreement, Anderson waived all claims resulting from “the INHERENT RISKS of the Event or the ORDINARY NEGLIGENCE” of the defendants. Minnesota Courts call provisions of this type exculpatory clauses. In Schlobohm v. Spa Petite, Inc., 326 N.W.2d 920 (Minn. 1982), the Supreme Court of Minnesota dismissed a fitness spa member’s negligence action, based on the exculpatory clause in her membership agreement. The Court noted that prior cases had upheld exculpatory clauses in construction contracts and commercial leases:
Even though we have recognized the validity of exculpatory clauses in certain circumstances, they are not favored in the law. A clause exonerating a party from liability will be strictly construed against the benefited party. If the clause is either ambiguous in scope or purports to release the benefited party from liability for intentional, willful or wanton acts, it will not be enforced .
Id. at 923 (emphasis added, citation omitted). Reversing the denial of summary judgment, the Court held:
that the exculpatory clause in Spa Petite’s membership contract was unambiguous and limited to exoneration from negligence; that there was not disparity of bargaining power; and that the clause was not void as against public policy.
Id. at 926.
In Beehner v. Cragun Corp., 636 N.W.2d 821 (Minn. Ct. App. 2001), the Minnesota Court of Appeals considered a riding stable’s exculpatory clause. Unlike the exculpatory clause in Schlobohm, which applied to “all acts of active or passive negligence,” 326 N.W.2d at 922, the clause in Beehner was limited to claims of “ordinary negligence” and expressly excluded claims based on “gross negligence and willful and wanton misconduct.” 636 N.W.2d at 825. Reversing the grant of summary judgment in favor of the riding stable, the Court held:
In a dispute over the applicability of an exculpatory clause, summary judgment is appropriate only when it is uncontested that the party benefited by the exculpatory clause has committed no greater-than-ordinary negligence . Thus, summary judgment is appropriate here only if Outback’s conduct does not, as a matter of law, rise to the level of gross negligence or wanton and willful misconduct .
Id. at 829 (emphasis added and citation omitted).
The district court treated Beehner as controlling Minnesota authority and applied the greater-than-ordinary negligence standard. Defendants argue Minnesota law does not recognize any claim other than the claims for ordinary negligence. We need not resolve that question in this case because, in granting summary judgment in favor of defendants, the district court adopted the view of this issue that is most favorable to Anderson, the non-moving party. Because we agree with the court that Anderson presented insufficient evidence of greater-than-ordinary negligence, we assume without deciding that this standard is consistent with controlling Minnesota law.
In addition to arguing that greater-than-ordinary negligence is the correct standard, Anderson argues that the exculpatory clause at issue is unenforceable because it is ambiguous in scope: Minnesota law imposes on defendants as the landowner and operator of a for-profit recreational activity a duty to exercise a “high degree of care” to ensure that invitees are not exposed to unreasonable risks of harm. Hanson v. Christensen, 275 Minn. 204, 145 N.W.2d 868, 873-74 (1966) ; see
Olmanson v. LeSueur Cty., 693 N.W.2d 876, 881 (Minn. 2005) ; Isler v. Burman, 305 Minn. 288, 232 N.W.2d 818, 821 (1975). This argument is without merit. First, the “ordinary negligence” clause in the Agreement is less, or at least no more ambiguous than the exculpatory clause held to be un ambiguous in Schlobohm, 326 N.W.2d at 922-23 (the term “all acts of active or passive negligence … specifically purports to exonerate Spa Petite from liability for acts of negligence and negligence only”), and Beehner, 636 N.W.2d at 827. Second, when the duty to exercise this high degree of care applies, it is an ordinary negligence duty to exercise “reasonable care, meaning care commensurate with the risks involved.” Hanson, 145 N.W.2d at 873. Thus, that the waiver of claims for “ordinary negligence” includes this type of duty for landowners and for-profit operators does not make the waiver ambiguous. We agree with the district court that the Agreement’s exculpatory clause is unambiguously limited to ordinary negligence. As in Beehner, Anderson was a voluntary participant in a recreational activity that does not “implicate[ ] a public or essential service.” 636 N.W.2d at 828.
B. Anderson claims defendants exhibited greater-than-ordinary negligence in the design, construction, supervision, and maintenance of the Bang the Gong obstacle. The district court properly rejected these claims.
On appeal Anderson first argues there was greater-than-ordinary negligence in the design of the Bang the Gong challenge based on expert testimony supporting her claim that a deeper level of water in the landing pit could have prevented her injury. However, Bang the Gong was not a new obstacle for the 2016 Rugged Maniac race. Rather it was tested, used in multiple previous events, and modeled on an earlier obstacle that was safely used for years. We agree with the district court that “[t]he fact that thousands of participants — many of whom undoubtedly outweighed Anderson — jumped into the landing pit without incident is compelling evidence that the water level was not unreasonably low.” Anderson, 496 F. Supp. 3d at 1285.
Anderson also argues the summary judgment record supports her claim of greater-than-ordinary negligence in the construction process for the 2016 event. Like the district court, we disagree. Rugged Races followed a detailed protocol when constructing Bang the Gong for this and other events, described in deposition testimony by Rugged Races’ Senior Vice President, Bradford Scudder, and a construction crew member from the 2016 race, Christian Melnik. The process involved digging a pit, removing debris, lining the pit with a tarp, filling it with water, and then constructing the platform participants would use to jump into the pit. The protocol requires crew members to inspect the pit three separate times before it is filled to ensure no rocks, roots, or other debris are present. They conduct two subsequent visual inspections after the pit is filled, including on the morning of the race. Although there was no supporting documentation, Melnik testified that he was not aware that the construction crew ever deviated from this protocol before, during, or after the 2016 race. Anderson, 496 F. Supp. 3d at 1274. The district court properly concluded that such evidence would be admissible as evidence of Rugged Races’ routine. See Fed. R. Evid. 406 (court may admit evidence of routine practice “regardless of whether it is corroborated or whether there was an eyewitness”).
Anderson concedes the admissibility of the Rule 406 evidence, but argues such “self-serving assertion[s]” are not dispositive. True enough. But this testimony by persons familiar with and involved in the process was strong evidence that Rugged Races complied with its established routine of carefully constructing and inspecting the obstacle before the race. Anderson’s disputed evidence of a submerged rock3 was insufficient to create a material issue of fact that would meet her burden to prove that defendants were liable for greater-than-ordinary negligence. Anderson, 496 F. Supp. 3d at 1280. We agree with the district court that Anderson offered “little more than speculation” supporting her contentions that the rock was present before the pit was filled and would have been discovered had the construction crew not acted with greater-than-ordinary negligence. Id. at 1284. To avoid summary judgment, the nonmoving party must provide “sufficient probative evidence” based on “more than mere speculation [or] conjecture.” Ball v. City of Lincoln, 870 F.3d 722, 727 (8th Cir. 2017) (quotation omitted).
We further agree with the district court that Anderson submitted insufficient evidence to establish that defendants acted with greater-than-ordinary negligence during or after the race. The district court estimated that Anderson was injured at approximately 1:00 pm.4 The court carefully reviewed when defendants would have learned that four other participants reported similar injuries before concluding that the record did not support Anderson’s contention that Rugged Races knew or should have known of a rock in the landing pit in time to take preventive action. 496 F. Supp. 3d at 1278-80. Anderson argues prior notice is irrelevant because Rugged Races created the danger. Rugged Races constructed the obstacle, but there is no evidence that Rugged Races placed a dangerous rock in the pit, only circumstantial evidence that it failed to discover a hidden danger. Under Minnesota law, landowners are not “insurers of safety of their patrons.” Hanson, 145 N.W.2d at 873. “Unless the dangerous condition actually resulted from the direct actions of a landowner or his or her employees, a negligence theory of recovery is appropriate only where the landowner had actual or constructive knowledge of the dangerous condition.” Rinn v. Minn. State Agric. Soc’y, 611 N.W.2d 361, 365 (Minn. Ct. App. 2000).
Here, the first two injuries were similar to Anderson’s and occurred earlier, but neither injury report mentioned a rock in the pit, only that the injured participant “landed wrong” or “jumped into … uneven terrain.” The other three injuries, including Anderson’s, occurred between 1:00-1:30pm. The injury reports reported there was a rock in the pit, but Rugged Races was not made aware of these reports in time to put it on notice that preventive action might be needed. See
Otis v. First Nat’l Bank of Minneapolis, 292 Minn. 497, 195 N.W.2d 432, 433 (1972) (no actual or constructive notice when hazard only present for 20 minutes). Because “an act or omission is not negligent unless the actor had knowledge or notice that it involves danger to another,” Rugged Races’ failure to remove the rock from the landing pit before Anderson’s injury is not a sufficient showing of greater-than-ordinary negligence. Rue v. Wendland, 226 Minn. 449, 33 N.W.2d 593, 595 (1948). And given the nature of the obstacle and the evidence of Rugged Races’ careful inspection procedures when creating the obstacle, the record does not provide sufficient evidence that any uneven terrain in the landing pit was the product of greater-than-ordinary negligence.
Finally, Anderson argues that Rugged Races failed to maintain the water level in the Bang the Gong pit to the depth required by its protocol, a further example of greater-than-ordinary negligence. The district court declined to consider this issue because Anderson first raised it at the summary judgment hearing. 496 F. Supp. 3d at 1285 n.11. As Anderson “did not sufficiently present [the] argument” to the district court, we will not consider it on appeal. Cole v. Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 533 F.3d 932, 936 (8th Cir. 2008).
III. Conclusion
In summary, our careful review of the record confirms the district court did not err in concluding Anderson failed to establish greater-than-ordinary negligence as a matter of law. Accordingly, her negligence claims are waived by the valid and enforceable exculpatory clause in the Race Participant Agreement. The judgment of the district court is affirmed.
——–
Notes:
1 The Honorable Patrick J. Schiltz, now Chief Judge of the United States District Court for the District of Minnesota
2 Defendants also argue (i) Anderson waived any claim based on greater-than-ordinary negligence by alleging only gross negligence in her Complaint; and (ii) Anderson’s claims are barred by the Minnesota doctrine of primary assumption of the risk. Given our resolution of Anderson’s appeal, we need not consider these issues.
3 Though there was no physical evidence of a submerged rock in the landing pit, Anderson and the other injured participants described “feeling a rock or similar object” when they landed. In ruling on defendants’ motion for summary judgment, the district court properly concluded it “therefore must assume that a rock was present in the landing pit of Bang the Gong.” Anderson, 496 F. Supp. 3d at 1278 n.7.
4 The district court estimated 1:00pm “based on the fact that Anderson did not report her injury until 1:15 pm, after she had hurt her foot, crawled out of the pit, reported her need for medical attention, waited for a medic to arrive, and been transported to the medical tent.” Anderson, 496 F. Supp. 3d at 1275 n.4.
@2023 Summit Magic Publishing, LLC
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Have you ever read your insurance policy? You should! The one at issue in this case specifically excluded the risks the policy was bought to cover.
Posted: October 1, 2018 Filed under: Insurance, Kentucky, Racing | Tags: activities, Additional Insured, Advertising, allegations, Ambiguity, appeals, Athletic, bodily injury, Capitol Specialty Insurance, concurrent, coverage, declaratory judgment, Definitions, Dictionary, endorsements, exclusions, Extreme Rampage, genuine, insurance application, Insurance policy, insured, matter of law, modified, Mud Run, Obstacle Course, Operations, participants, peril, policyholder, practicing, provides, proximate, sponsor, Summary judgment, Tough Mudder Leave a commentAn event organizer of a 5K Extreme Rampage purchased an insurance policy that specifically excluded coverage for a 5K run with obstacles, mud runs, and tough-guy races.
Johnson v. Capitol Specialty Ins. Corp., 2018 Ky. App. Unpub. LEXIS 447
State: Kentucky, Court of Appeals of Kentucky
Plaintiff: Chris Johnson D/B/A Extreme Rampage, and Chris Johnson, and Christopher Johnson, Rampage LLC, Christopher Johnson D/B/A Rampage, LLC, and/or Extreme Rampage, Casey Arnold, Individually and as Administratrix Of the Estate of Chad Arnold, and as Next Friend and Guardian/ Conservator for Miles Arnold, and as Assignee for All Claims Held By “The Johnson Parties
Defendant: Capitol Specialty Insurance Corporation
Plaintiff Claims: negligence; violation of the Kentucky Consumer Protection Act and the Unfair Claims Settlement Practices Act; fraud; and breach of contract
Defendant Defenses:
Holding:
Year: 2018
Summary
Insurance litigation about a claim for an event, service, trip, or liability is much costlier and time-consuming than any litigation concerning an injury.
In this case, the event owner and organizer of a mud run obstacle course in Kentucky purchased insurance for the event, which excluded all coverage needed for the event. Effectively, the plaintiff in this case paid for paper that had no value.
The trial courts and the appellate court agreed with the insurance company because the exclusions were in the policy that was available to the insured prior to the event.
Facts
The plaintiff in this appeal created and owned a mud run obstacle course the Extreme Rampage. Johnson the individual created Extreme Rampage LLC, which then organized and ran the event.
The event was a 3K obstacle race, similar if not identical to mud runs, death races, etc., The race was to be held at the Kentucky Horse Park. The horse park required a $1 million-dollar policy covering them.
Johnson contacted an insurance agent over the phone who completed an application and sent it off. A quote was received and accepted. The cost was $477.00, which should have been the first clue; it was too cheap. The only part of the application or proposal that Johnson saw was the “subjectivities page” which stated the policy was to be issued after a list of things were verified. The items to be verified list things as rallies, cattle drives, etc., but did not list obstacle courses, running events, or the like.
When the policy was issued it contained two exclusions. The first was labeled the sponsor exclusion by the court and stated:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY
EXCLUSION — ATHLETIC OR SPORTS PARTICIPANTS
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART.
SCHEDULE
Description of Operations:
Special event — 5K run with obstacles.
. . .
With respect to any operations shown in the Schedule, this insurance does not apply to “bodily injury” to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.
And the second exclusion labeled by the court as the participant exclusion provided as follows:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY EXCLUSION — PARTICIPANTS
(SPECIFIED ACTIVITIES/OPERATIONS)
SCHEDULE
Descriptions of Activity/Operations
Mud Runs and Tough Guy Races
This insurance does not apply to “bodily injury,” “property damage,” “personal or advertising injury” or medical expense arising out of any preparation for or participation in any of the activities or operations shown in the schedule above.
During the race, one of the participants collapsed and died. His wife sued. The insurance company denied coverage. That means the insurance company was not only not going to pay the claim, they were not going to pay for attorneys to defend the case.
The Insurance Company filed a declaratory action. This lawsuit was between Johnson, the policyholder, and the insurance company where the insurance company was looking for a ruling stating it had no duty to provide coverage. This is a request for an immediate decision from the court on the interpretation of the policy.
Johnson, the insured, and Arnold the family of the deceased participant both filed suit against the insurance company. The trial court combined the two lawsuits into one. Both filed motions for summary judgment and the insurance company filed its motion for summary judgment.
After reading the exclusions, the policy only covered spectators at the event. The spectators had to be 100′ from the event so any spectator injured that was closer than 100′ to the event could sue, and Johnson would have no coverage for that claim either. Basically, the policy was a worthless piece of paper for the event.
The trial court granted the insurance company’s motion for summary judgment, and this appeal ensued. Both Johnson and the Arnold family appealed.
Analysis: making sense of the law based on these facts.
Insurance policies have their own set of laws. Even though they are contracts, after the contract is formed, new ways of interpreting a policy are created.
One such rule is any ambiguity in the policy will be ruled or interpreted against the insurance company. Since policies are presented as a take it or leave it contract, any mistakes in the contract are ruled so the policyholder wins.
The first claim is a quasi-fraud claim based on the lack of information concerning the exclusions. The court looked at this more as a situation where the event organizer did not read the policy.
Johnson cannot avoid the terms of the insurance contract by pleading ignorance of its contents. It is axiomatic that “insured persons are charged with knowledge of their policy’s contents.
Because Johnson signed the policy (? Application not the policy, in reality) Johnson was held to the terms of the policy.
Although Johnson claims, based on his interaction with Delre, that the terms of the policy were not what he had anticipated, no genuine issue of material fact exists that Johnson signed the policy and, as a matter of law, was presumed to know its contents.
The next argument was the insurance agent the event organizer worked with was an agent of the insurance company Capitol. As such, the agents could be liable and the agents could create liability for Capitol. An agency is created when the principal, the insurance company, grants specific authority to the agent.
“Actual authority arises from a direct, intentional granting of specific authority from a principal to an agent.” The Restatement (Third) of Agency § 2.02(1) (2006) provides that “[a]n agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act.”
However, there was no evidence in the record to show any agency between the insurance salesperson and the insurance company, even though the salesperson is called an agent.
The next argument was over the language in the policy. The event organizer argued the exclusion should not apply because the term “sponsor” was ambiguous.
Exclusions in insurance contracts are to be narrowly interpreted, and all questions resolved in favor of the insured. Exceptions and exclusions are to be strictly construed so as to render the insurance effective. Any doubt as to the coverage or terms of a policy should be resolved in favor of the insured. And since the policy is drafted in all details by the insurance company, it must be held strictly accountable for the language used.
After narrowly interpreting the policy, any ambiguity in the language of the policy must be interpreted in favor of the policyholder and against the insurance company.
…[t]he rule of strict construction against an insurance company certainly does not mean that every doubt must be resolved against it and does not interfere with the rule that the policy must receive a reasonable interpretation consistent with the parties’ object and intent or narrowly expressed in the plain meaning and/or language of the contract. Neither should a nonexistent ambiguity be utilized to resolve a policy against the company. We consider that courts should not rewrite an insurance contract to enlarge the risk to the insurer.
However, the court found the term in this case, was not ambiguous.
The event organizer then argued that the Concurrent Proximate Cause Doctrine should apply in this case. The concurrent proximate cause doctrine holds that when an insured event flows from an insured event, the protection afforded by the insurance policy flows with to the new event.
Where the loss is essentially caused by an insured peril with the contribution of an excluded peril merely as part of the chain of events leading to the loss, there is coverage under the policy. Stated alternately, coverage will exist where a covered and noncovered peril join to cause the loss provided that the covered peril is the efficient and dominant cause.
The court found that there was no insured event to begin with so nothing could “flow” to the uninsured event.
The appellate court upheld the motion in the declaratory action by the trial court stating the insurance company Capitol had no duty to defend the event organizer Johnson and thus any liability to the Arnold family.
So Now What?
This is simple. You MUST do the following things if you are the owners, sponsor, organizer, or insured with an insurance policy.
- Read it
- Understand it
- Make sure it covers what you need it to cover.
-
Find an agent who understands what you need and can communicate that to all the insurance companies he may be working with.
- If that means getting the insurance company out from behind their desk and down the river, to an event, or in your factory do that.
- If that means getting the insurance company out from behind their desk and down the river, to an event, or in your factory do that.
- Always confirm in writing or electronically that the coverage you requested and need is covered in the policy you are purchasing.
- Ask to see the policy and any exclusions, prerequisites, or other requirements before paying for it. Once you open your wallet, you won’t get your money back.
- If the price of the policy is too good to be true, start investigating. On average a policy should cost $5 to $10 per person per day for outdoor recreation coverage. That amount is the bottom line and can go beyond that. If you are purchasing a policy at 1980 prices of $2.00 per person per day, you are buying worthless paper.
You cannot be in business without an insurance policy. Contrary to popular belief, insurance policies do not attract lawsuits. How do people know if you are insured? If they do not know you are insured, how can someone decide to sue just because you have money.
If for no other reason, you need a policy that will pay to prove you are right. The attorney fees, court costs, exhibits, and witness fees alone on a small case will exceed $50K. That means with no policy or a bad policy, you are out $50 to $100K before you even begin to pay a claim.
Insurance policies are difficult. I spent six years, three before and three after working for Nationwide Insurance. Reading a policy, let alone understanding it is mind-numbing and hard. But you better or you will be standing in the cold because someone took your house.
 James H. “Jim” Moss |
Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers, avalanche beacon manufacturers, and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us |
Outdoor Recreation Insurance, Risk Management, and Law
Jim is the author or co-author of six books about the legal issues in the outdoor recreation world; the latest is Outdoor Recreation Insurance, Risk Management and Law.
To see Jim’s complete bio go here and to see his CV you can find it here. To find out the purpose of this website go here.
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Johnson v. Capitol Specialty Ins. Corp., 2018 Ky. App. Unpub. LEXIS 447
Posted: September 12, 2018 Filed under: Insurance, Kentucky, Legal Case, Racing | Tags: activities, Additional Insured, Advertising, allegations, Ambiguity, appeals, Athletic, bodily injury, Capitol Specialty Insurance, concurrent, coverage, declaratory judgment, Definitions, Dictionary, endorsements, exclusions, Extreme Rampage, genuine, insurance application, Insurance policy, insured, matter of law, modified, Mud Run, Obstacle Course, Operations, participants, peril, policyholder, practicing, provides, proximate, sponsor, Summary judgment, Tough Mudder, Trial court Leave a comment-
To Read an Analysis of this decision see: Have you ever read your insurance policy? You should! The one at issue in this case specifically excluded the risks the policy was bought to cover.
Johnson v. Capitol Specialty Ins. Corp.
Court of Appeals of Kentucky
June 22, 2018, Rendered
NO. 2017-CA-000171-MR, NO. 2017-CA-000172-MR
2018 Ky. App. Unpub. LEXIS 447 *; 2018 WL 3090503CHRIS JOHNSON D/B/A EXTREME RAMPAGE, AND CHRIS JOHNSON, AND CHRISTOPHER JOHNSON, RAMPAGE LLC, CHRISTOPHER JOHNSON D/B/A RAMPAGE, LLC, AND/OR EXTREME RAMPAGE (COLLECTIVELY KNOWN AS “THE JOHNSON PARTIES”) BY AND THROUGH ASSIGNEE CASEY ARNOLD, APPELLANTS v. CAPITOL SPECIALTY INSURANCE CORPORATION, APPELLEE;CASEY ARNOLD, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF CHAD ARNOLD, AND AS NEXT FRIEND AND GUARDIAN/ CONSERVATOR FOR MILES ARNOLD, AND AS ASSIGNEE FOR ALL CLAIMS HELD BY “THE JOHNSON PARTIES”, APPELLANTS v. CAPITOL SPECIALTY INSURANCE CORPORATION, APPELLEE
Notice: THIS OPINION IS DESIGNATED “NOT TO BE PUBLISHED.” PURSUANT TO THE RULES OF CIVIL PROCEDURE PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C), THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE CITED OR USED AS BINDING PRECEDENT IN ANY OTHER CASE IN ANY COURT OF THIS STATE; HOWEVER, UNPUBLISHED KENTUCKY APPELLATE DECISIONS, RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED DECISION IN THE FILED DOCUMENT AND A COPY OF THE ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE DOCUMENT TO THE COURT AND ALL PARTIES TO THE ACTION.
Prior History: [*1] APPEAL FROM FAYETTE CIRCUIT COURT. HONORABLE KIMBERLY N. BUNNELL, JUDGE. ACTION NOS. 14-CI-00948 & 15-CI-00777. APPEAL FROM FAYETTE CIRCUIT COURT. HONORABLE KIMBERLY N. BUNNELL, JUDGE. ACTION NOS. 14-CI-00948 & 15-CI-00777.
Counsel: BRIEFS FOR APPELLANTS, CHRIS JOHNSON D/B/A EXTREME RAMPAGE, AND CHRIS JOHNSON, AND CHRISTOPHER JOHNSON, RAMPAGE LLC, CHRISTOPHER JOHNSON D/B/A RAMPAGE, LLC, AND/OR EXTREME RAMPAGE: Don A. Pisacano, Lexington, Kentucky.
BRIEFS FOR APPELLANTS, CASEY ARNOLD, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF CHAD ARNOLD, AND AS NEXT FRIEND AND GUARDIAN/ CONSERVATOR FOR MILES ARNOLD, AND AS ASSIGNEE FOR ALL CLAIMS HELD BY “THE JOHNSON PARTIES”: A. Neal Herrington, Christopher H. Morris, Louisville, Kentucky.
BRIEFS FOR APPELLEE, CAPITOL SPECIALTY INSURANCE CORPORATION: Richard J. Rinear, Zachary D. Bahorik, Cincinnati, Ohio.
Judges: BEFORE: CLAYTON, CHIEF JUDGE; MAZE AND THOMPSON, JUDGES. MAZE, JUDGE, CONCURS. THOMPSON, JUDGE, CONCURS IN RESULT ONLY.
AFFIRMING
CLAYTON, CHIEF JUDGE: These consolidated appeals1 are taken from a Fayette Circuit Court order entering declaratory summary judgment in favor of Capitol Specialty Insurance Corporation. The primary issue is whether a [*2] general commercial liability insurance policy issued by Capitol covers potential damages stemming from the death of a participant in an obstacle race, or whether exclusions in the policy bar recovery.
The obstacle race, known as “Extreme Rampage,” was organized and presented by Chris Johnson, the owner of Rampage, LLC. The 5K race, which included a climbing wall and mud pits, was held at the Kentucky Horse Park on March 2, 2013. Under the terms of his contract with the Horse Park, Johnson was required to “provide public liability insurance issued by a reputable company, which shall cover both participants and spectators with policy coverage of one million dollars ($1,000,000.00) minimum for each bodily injury[.]”
Johnson purchased the policy from Stephen Delre, an insurance agent employed at the Tim Hamilton Insurance Agency (“THIA”). Delre filled out an application for insurance on Johnson’s behalf and submitted it to Insurance Intermediaries, Inc. (“III”). III submitted the application to Capitol. Capitol prepared a proposal for coverage which III gave to THIA. Johnson accepted the proposal and III produced the policy based upon the terms offered by Capitol.
The policy contained two [*3] provisions excluding bodily injury to the event participants from its coverage. For purposes of this opinion, the exclusions will be referred to as the “sponsor” exclusion and the “arising out of” exclusion.
The sponsor exclusion provided as follows:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY
EXCLUSION — ATHLETIC OR SPORTS PARTICIPANTS
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART.
SCHEDULE
Description of Operations:
Special event — 5K run with obstacles.
. . .
With respect to any operations shown in the Schedule, this insurance does not apply to “bodily injury” to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.
The participant exclusion provided as follows:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY EXCLUSION — PARTICIPANTS
(SPECIFIED ACTIVITIES/OPERATIONS)
SCHEDULE
Descriptions of Activity/Operations
Mud Runs and Tough Guy Races
This insurance does not apply to “bodily injury,” “property damage,” “personal or advertising injury” or medical expense arising out of any preparation for or participation in any of the activities or operations [*4] shown in the schedule above.
During the course of the Extreme Rampage race, one of the participants, Chad Arnold, collapsed and died. His wife, Casey Arnold, acting individually, as the administratrix of his estate and as guardian/conservator for their minor son Miles (“Arnold”), filed a wrongful death suit naming numerous defendants, including Johnson. Johnson sought defense and indemnity under the Capitol policy. Capitol denied coverage and filed a declaratory judgment complaint in Fayette Circuit Court on March 17, 2014, asserting it had no duty to defend or indemnify Johnson because the policy expressly excluded coverage for event participants.
Johnson and Arnold subsequently filed a complaint in a different division of Fayette Circuit Court against Capitol, THIA, Delre, and III, asserting claims of negligence; violation of the Kentucky Consumer Protection Act and the Unfair Claims Settlement Practices Act; fraud; and breach of contract. On April 15, 2015, the two actions were consolidated by court order. Johnson and Arnold filed a motion for summary judgment; Capitol filed a motion for summary declaratory judgment. The trial court held extensive hearings on the motions and thereafter [*5] entered an order granting Capitol’s motion and dismissing with prejudice all claims asserted against Capitol by Johnson and Arnold. Additional facts will be set forth as necessary later in this opinion.
In granting summary declaratory judgment to Capitol, the trial court held that that the policy issued by Capitol to Johnson excluded coverage to the Johnson defendants for the underlying claims of the Arnold defendants because the sponsor exclusion was clear and unambiguous and the Johnson defendants are a “sponsor” within the plain meaning of the word as used in the exclusion. The trial court further held that, as a matter of law, neither the concurrent proximate cause doctrine nor the efficient proximate cause doctrine applies to afford coverage under the policy to the Johnson defendants for the claims of the Arnold defendants; that neither Delre nor THIA is an agent of any kind of Capitol; and finally, that no other oral or written contract modified and/or superseded the policy to afford coverage by Capitol.
These appeals by Johnson and Arnold followed.
In reviewing a grant of summary judgment, our inquiry focuses on “whether the trial court correctly found that there were no genuine [*6] issues as to any material fact and that the moving party was entitled to judgment as a matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781, 43 1 Ky. L. Summary 17 (Ky. App. 1996) (citing Kentucky Rules of Civil Procedure (CR) 56.03). Summary judgment may be granted when “as a matter of law, it appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor and against the movant.” Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 483 (Ky. 1991) (internal quotation marks and citation omitted). “The record must be viewed in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor.” Id. at 480. On the other hand, “a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial.” Id. at 482. “An appellate court need not defer to the trial court’s decision on summary judgment and will review the issue de novo because only legal questions and no factual findings are involved.” Hallahan v. The Courier-Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).
We have grouped the Appellants’ arguments into the following six categories: first, that the terms of the policy do not reflect what Johnson requested from Delre; second, that Delre and THIA were actual or apparent agents of Capitol whose alleged misrepresentations [*7] or omissions to Johnson about the policy bound their principal; third, that neither the “sponsor” exclusion nor the “arising out of” exclusion in the policy was applicable; fourth, that the exclusions create an ambiguity in the policy when read with the coverage endorsements; fifth, that the concurrent proximate cause doctrine provides coverage under the policy; and sixth, that the trial court erred in dismissing all claims against Capitol.
1. The purchase of the policy
Johnson denies that the insurance policy attached to Capitol’s declaratory judgment complaint is a true and accurate copy of the policy he purchased and admits only that the document attached to the complaint is the document he received in the mail after he had paid for the policy.
According to deposition testimony, Johnson first spoke with Delre about obtaining insurance coverage for the Extreme Rampage event in a telephone conversation in December 2012. Johnson had purchased an insurance policy for a similar race event from Delre approximately six months earlier. Delre questioned Johnson about the type of coverage he was seeking. Johnson was unaware that Delre was simultaneously filling out a “special event” insurance [*8] application. According to Johnson, he told Delre he needed participant coverage and Delre specifically asked him how many participants would be involved in the event. Delre nonetheless left blank on the “special event” application form whether athletic participant coverage was requested. Delre signed Johnson’s name to the application for insurance without Johnson reviewing the document. After the insurance application was submitted, Delre sent a proposal to Johnson which he claims he never received.
On February 8, 2013, Johnson visited Delre and THIA’s office to pay for the policy in the amount of $477. He signed a “subjectivities page” which stated that the policy quote was subject to verification of the following:
No events involving the following: abortion rights, pro choice or right-to-life rallies/parades or gatherings, air shows or ballooning events, auto racing regardless of vehicle size (including go-karts, motorcycles and snowmobiles), cattle drives, events involving inherently dangerous or stunting activities, events with water rides/slides etc., political demonstrations or protest rallies by groups with a history of violent incidents, [n]o events with fireworks displays. AND [*9] — Spectators must be a safe distance (100 feet minimum) from the obstacle course.
Johnson was not shown the actual policy, nor was he informed of the participation exclusions in the insurance proposal.
A copy of the complete policy containing the “sponsor” exclusion and the “arising out of” exclusion was mailed to Johnson on February 27, 2013. Johnson asserts that the policy did not conform to what he agreed to in his conversation with Delre and that he was never informed that participants would be excluded from coverage. He points out that the policy was also later unilaterally modified by Delre after the Horse Park requested a certificate of insurance indicating that it was an “additional insured” on the policy.
Johnson cannot avoid the terms of the insurance contract by pleading ignorance of its contents. It is axiomatic that “insured persons are charged with knowledge of their policy’s contents[.]” Bidwell v. Shelter Mut. Ins. Co., 367 S.W.3d 585, 592 (Ky. 2012) (citing National Life & Accident Ins. Co. v. Ransdell, 259 Ky. 559, 82 S.W.2d 820, 823 (1935)). “In Midwest Mutual Insurance Company v. Wireman, 54 S.W.3d 177 (Ky. App. 2001), the Court of Appeals held an insured can waive UM coverage by signing the application for liability coverage, even if the insured alleges the agent never explained the meaning of UM coverage to him.” Moore v. Globe Am. Cas. Co., 208 S.W.3d 868, 870 (Ky. 2006). “All persons are presumed to know the law and the mere lack of knowledge [*10] of the contents of a written contract for insurance cannot serve as a legal basis for avoiding its provisions.” Id. (internal quotation and citation omitted).
Although Johnson claims, based on his interaction with Delre, that the terms of the policy were not what he had anticipated, no genuine issue of material fact exists that Johnson signed the policy and, as a matter of law, was presumed to know its contents. The trial court did not err in ruling that there was no genuine issue of material fact concerning the policy and that no other oral or written contract modified or superseded the policy to afford coverage to Johnson for Arnold’s claims.
2. Were Delre and THIA agents of Capitol
Arnold seeks to hold Capitol liable for any omissions or misrepresentations of Delre and THIA by arguing that they were Capitol’s actual or apparent agents. “Under common law principles of agency, a principal is vicariously liable for damages caused by torts of commission or omission of an agent or subagent, . . . acting on behalf of and pursuant to the authority of the principal.” Williams v. Kentucky Dep’t of Educ., 113 S.W.3d 145, 151 (Ky. 2003), as modified (Sept. 23, 2003) (internal citations omitted).
“Actual authority arises from a direct, intentional granting of [*11] specific authority from a principal to an agent.” Kindred Healthcare, Inc. v. Henson, 481 S.W.3d 825, 830 (Ky. App. 2014). The Restatement (Third) of Agency § 2.02(1) (2006) provides that “[a]n agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act.” Kentucky’s Insurance Code provides that “[a]ny insurer shall be liable for the acts of its agents when the agents are acting in their capacity as representatives of the insurer and are acting within the scope of their authority.” Kentucky Revised Statutes (KRS) 304.9-035.
There is no evidence in the record that Capitol made a direct, intentional grant of authority to THIA and Delre to act as its agents or representatives; nor is there evidence that Capitol made any manifestations of its objectives to THIA or Delre with the expectation that they would act to achieve those objectives. Furthermore, as elicited in the hearing before the trial court, Capitol does not have a written agreement with THIA or Delre establishing them as its agents nor is there a registration or filing with the Kentucky Department of Insurance designating them as licensed [*12] agents of Capitol. By contrast, Delre and THIA are registered, authorized agents of Nationwide Insurance in Kentucky and Johnson actually believed he would be purchasing a Nationwide policy from Delre.
As evidence of an actual agency relationship, Arnold points to the fact that THIA and Capitol both have contracts with III, the intermediary brokerage company which sent Johnson’s application for insurance to Capitol, seeking a policy proposal. The existence of contracts with the same third party was not sufficient in itself to create an actual agency relationship between THIA and Delre and Capitol. Capitol prepared the insurance proposal in reliance on the information contained in the application submitted by III; Capitol had no contact with or control over Delre or THIA. Consequently, Capitol could not be bound by what Johnson believed Delre had promised.
Similarly, there is no evidence that THIA and Delre were apparent agents of Capitol. “Apparent authority . . . is not actual authority but is the authority the agent is held out by the principal as possessing. It is a matter of appearances on which third parties come to rely.” Mark D. Dean, P.S.C. v. Commonwealth Bank & Tr. Co., 434 S.W.3d 489, 499 (Ky. 2014) (quoting Mill St. Church of Christ v. Hogan, 785 S.W.2d 263, 267 (Ky. App. 1990)). “One who represents that another is his servant [*13] or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.” Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255, 257 (Ky. 1985) (quoting Restatement (Second) of Agency § 267 (1958)).
The only representations made to Johnson by Capitol were in the form of the proposal and written policy he signed. Capitol never held out Delre and THIA as its agents. Johnson admitted he had no contact with Capitol whatsoever and did not even know the policy he purchased was provided by Capitol until after the Extreme Rampage event.
The trial court did not err in holding that no agency relationship, actual or apparent, existed between Capitol and Delre and THIA.
3. Applicability of the policy exclusions
The trial court ruled that the “sponsor” exclusion was clear and unambiguous and the Johnson defendants were a “sponsor” within the plain meaning of the word as it was used in the exclusion. The Appellants disagree, arguing that the multiple definitions of the term “sponsor,” which is not defined in the policy, render it ambiguous.
“Interpretation and construction of an insurance contract is a matter [*14] of law for the court.” Kemper Nat’l Ins. Companies v. Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 871 (Ky. 2002). Exclusions in insurance contracts
are to be narrowly interpreted and all questions resolved in favor of the insured. Exceptions and exclusions are to be strictly construed so as to render the insurance effective. Any doubt as to the coverage or terms of a policy should be resolved in favor of the insured. And since the policy is drafted in all details by the insurance company, it must be held strictly accountable for the language used.
Eyler v. Nationwide Mut. Fire Ins. Co., 824 S.W.2d 855, 859-60 (Ky. 1992) (internal citations omitted).
[t]he rule of strict construction against an insurance company certainly does not mean that every doubt must be resolved against it and does not interfere with the rule that the policy must receive a reasonable interpretation consistent with the parties’ object and intent or narrowly expressed in the plain meaning and/or language of the contract. Neither should a nonexistent ambiguity be utilized to resolve a policy against the company. We consider that courts should not rewrite an insurance contract to enlarge the risk to the insurer.
St. Paul Fire & Marine Ins. Co. v. Powell-Walton-Milward, Inc., 870 S.W.2d 223, 226-27 (Ky. 1994).
The Appellants rely on an opinion of the federal district court for the Eastern District of Pennsylvania, Sciolla v. West Bend Mut. Ins. Co., 987 F. Supp. 2d 594 (E.D. Pa. 2013) which held an identical insurance exclusion [*15] to be inapplicable after concluding the term “sponsor” is ambiguous due to the lack of a universally accepted definition of the term by dictionaries and the courts. Sciolla, 987 F. Supp. 2d at 603. The Sciolla court assembled the following dictionary definitions of “sponsor:”
The full definition given by Merriam-Webster is: “a person or an organization that pays for or plans and carries out a project or activity; especially: one that pays the cost of a radio or television program usually in return for advertising time during its course.” Merriam-Webster’s Collegiate Dictionary, 1140 (9th ed. 1983). . . .
. . . [T]he American Heritage Dictionary defines sponsor, in relevant part, as “[o]ne that finances a project or an event carried out by another person or group, especially a business enterprise that pays for radio or television programming in return for advertising time.” American Heritage Dictionary of the English Language, 1679, (4th ed., 2009). Other dictionaries defines sponsor as “[o]ne that finances a project or an event carried out by another,” The American Heritage College Dictionary, 1315 (3d ed. 1993), or, as a verb, “to pay or contribute towards the expenses of a radio or television program, a performance, [*16] or other event or work in return for advertising space or rights.” Oxford English Dictionary, 306 (2d ed. 1989).
The Sciolla court grouped the definitions into two categories: “The first concept is that of a person or an organization that pays for a project or activity. . . . The second concept is of a person or an organization that plans and carries out a project or activity.” Id. (italics in original).
As recognized by the Sciolla court, in order to be found ambiguous, a term with multiple definitions must be subject to more than one interpretation when applied to the facts of the case before it. Id. at 603. “Because a word has more than one meaning does not mean it is ambiguous. The sense of a word depends on how it is being used; only if more than one meaning applies within that context does ambiguity arise.” Board of Regents of Univ. of Minnesota v. Royal Ins. Co. of Am., 517 N.W.2d 888, 892 (Minn. 1994). As the United States Supreme Court has observed in the context of statutory interpretation, “[a]mbiguity is a creature not of definitional possibilities but of statutory context[.]” Brown v. Gardner, 513 U.S. 115, 118, 115 S. Ct. 552, 555, 130 L. Ed. 2d 462 (1994).
It is the Appellants’ position that Johnson did not “sponsor” the Extreme Rampage but actually organized, promoted, and ran the event. In his deposition, Johnson stated that he was not a “sponsor” of the [*17] Extreme Rampage event but that he “owned” the event, and that he actually discovered Delre and THIA while seeking sponsorships for Rampage events. Delre in his deposition confirmed that Johnson asked him to be a sponsor. When he was asked how he got started funding Rampage, LLC, Johnson replied “Sponsorships and my own pocket.” Thus, the evidence indicates that Johnson helped to fund Extreme Rampage and also planned and carried it out. There is no evidence that he financed a project carried out by another or that he paid for the project in exchange for advertising space.
The fact that Johnson’s actions do not meet each and every one of the multiple definitions of “sponsor” does not render the term ambiguous, however, when the term is viewed in the context of the language of the exclusion, which applies to “bodily injury to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.” (Emphasis added.)
The policy provides the following definition of “you”: “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 [*18] this policy. The words ‘we’, ‘us’ and ‘our’ refer to the company providing this insurance.” Thus, Johnson, the Named Insured, is “you.” When the term “sponsor” is viewed within the context of an insurance policy covering one discrete event sponsored by the Named Insured, Johnson, it was plainly intended to refer to Johnson and to the specific Extreme Rampage event he was sponsoring.
The Appellants argue that the trial court did not have the right to choose which of the multiple competing definitions of sponsor applied. When viewed in the context of the exclusion, however, the definition is plainly limited to the sponsorship activities of the Name Insured, Johnson.
Because the trial court did not err in holding that the “sponsor” exclusion is applicable, we need not address the validity of the “arising out of” exclusion.
4. The applicability of the concurrent proximate cause doctrine
Johnson argues that even if the policy exclusions apply, the concurrent proximate cause doctrine provides coverage under the policy. Johnson contends that the doctrine was adopted by the Kentucky Supreme Court in Reynolds v. Travelers Indem. Co. of Am., 233 S.W.3d 197, 203 (Ky. App. 2007). Reynolds is an opinion of the Court of Appeals, and it did not officially adopt the doctrine; [*19] it approved of the reasoning in a case from our sister state in Bowers v. Farmers Insurance Exchange, 99 Wash. App. 41, 991 P.2d 734 (2000), which applied the “efficient proximate cause doctrine.” Reynolds, 233 S.W.3d at 203.
Where the loss is essentially caused by an insured peril with the contribution of an excluded peril merely as part of the chain of events leading to the loss, there is coverage under the policy. Stated alternately, coverage will exist where a covered and noncovered peril join to cause the loss provided that the covered peril is the efficient and dominant cause.
10A Couch on Insurance 3d § 148:61 (2005).
Applying the doctrine, Johnson argues that even if Chad Arnold’s participation in the race was an excluded peril, the loss was essentially caused by a peril that was insured. He contends that the allegations of Arnold’s complaint, such as failure to provide reasonable medical treatment; failure to plan and have proper policies and procedures; and failure to train, instruct, and supervise are not predicated upon a cause of action or risk that is excluded under the policy. He points to the affidavit of a doctor who reviewed Chad Arnold’s medical records and post-mortem examination and concluded that he died of a pre-existing heart condition unconnected [*20] with his participation in the race.
This argument ignores the fact that the “sponsor” exclusion does not reference causation or a specific “peril”; it merely excludes participants in the covered event from recovery for bodily injury, whatever the cause. It does not require a finding that the bodily injury was caused by participation in the event.
We agree with the reasoning of the federal district court for the Western District of Kentucky, which addressed a factually-similar situation involving a student who collapsed and died while practicing for his college lacrosse team. Underwriters Safety & Claims, Inc. v. Travelers Prop. Cas. Co. of Am., 152 F. Supp. 3d 933 (W.D. Ky. 2016), aff’d on other grounds, 661 F. App’x 325 (6th Cir. 2016). The college’s insurance policy contained an exclusion for athletic participants. The plaintiffs argued that the allegations of their complaint were focused on the college’s failure to provide pre-participation medical forms to physicians who examined the student and on the college’s failure to render proper medical treatment. The district court described these arguments as “red herrings” that attempted “to re-contextualize the fatal injury as a result of medical malpractice or concurrently caused by medical malpractice and engagement in athletic activity.” Underwriters, 152 F. Supp. 3d at 937. The complaint filed by the [*21] student’s estate “did not seek redress for a bodily injury that occurred during pre-participation athletic medical screenings. The policy specifically excludes bodily injury while engaged in athletic or sports activities. Passfield [the student] was engaged in such an activity at the time of the injury. While the Court liberally construes insurance policies in favor of the insured, the Court also strictly construes exclusions. This is an instance of the latter.” Id. Similarly, in the case before us, the exclusion applies specifically to bodily injury while participating in the Extreme Rampage. The exclusion does not require a causal link between the participation and the injury to apply. There is no genuine issue of fact that Chad Arnold was a participant in the race and that, as the complaint alleges, “during the course of the event, the decedent collapsed, consciously suffered for an undetermined amount of time, and died.”
5. Do the two exclusions create an ambiguity in the policy
Johnson further argues that the two exclusions create an ambiguity in the policy when read in conjunction with two coverage endorsements. Johnson claims that the “Combination Endorsement-Special Events” and [*22] the “Limitation-Classification Endorsement” provide unfettered coverage while the two exclusions limit coverage, thus creating an ambiguity. Johnson’s brief gives no reference to the record to show where the endorsements are found, nor does it indicate when or how the trial court addressed this issue. CR 76.12(4)(c)(v) requires an appellate brief to contain “ample supportive references to the record and . . . a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner.” The purpose of this requirement “is so that we, the reviewing Court, can be confident the issue was properly presented to the trial court and therefore, is appropriate for our consideration.” Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012). “[E]rrors to be considered for appellate review must be precisely preserved and identified in the lower court.” Skaggs v. Assad, 712 S.W.2d 947, 950 (Ky. 1986). We are simply “without authority to review issues not raised in or decided by the trial court.” Regional Jail Authority v. Tackett, 770 S.W.2d 225, 228 (Ky. 1989). Nor is it the task of the appellate court to search the record for pertinent evidence “not pointed out by the parties in their briefs.” Baker v. Weinberg, 266 S.W.3d 827, 834 (Ky. App. 2008).
We recognize that the hearing on August 25, 2016, at which this issue may have been argued before the trial court, was not recorded. [*23] Nonetheless, “when the complete record is not before the appellate court, that court must assume that the omitted record supports the decision of the trial court.” Commonwealth v. Thompson, 697 S.W.2d 143, 145 (Ky. 1985).
6. Dismissal of all claims against Capitol.
Finally, Arnold argues that the trial court erred in dismissing all causes of action against Capitol. Arnold contends that the arguments before the trial court only concerned the applicability of the insurance policy, but never addressed the additional allegations in the complaint of negligence, consumer protection, unfair claims settlement practices, and fraud. Arnold does not explain what the grounds for Capitol’s liability on these claims would be if, as the trial court ruled, the “sponsor” exclusion is valid and Delre and THIA were not acting as Capitol’s agents. Under these circumstances, the trial court did not err in dismissing all claims against Capitol.
For the foregoing reasons, the order of the Fayette Circuit Court granting summary declaratory judgment to Capitol is affirmed.
THOMPSON, JUDGE, CONCURS IN RESULT ONLY.
Bibliography
CHRIS JOHNSON D/B/A EXTREME RAMPAGE, AND CHRIS JOHNSON, AND CHRISTOPHER JOHNSON, RAMPAGE LLC, CHRISTOPHER JOHNSON D/B/A RAMPAGE, LLC, AND/OR EXTREME RAMPAGE (COLLECTIVELY KNOWN AS “THE JOHNSON PARTIES”) BY AND THROUGH ASSIGNEE CASEY ARNOLD, APPELLANTS v. CAPITOL SPECIALTY INSURANCE CORPORATION, APPELLEE;CASEY ARNOLD, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF CHAD ARNOLD, AND AS NEXT FRIEND AND GUARDIAN/ CONSERVATOR FOR MILES ARNOLD, AND AS ASSIGNEE FOR ALL CLAIMS HELD BY “THE JOHNSON PARTIES”, APPELLANTS v. CAPITOL SPECIALTY INSURANCE CORPORATION, APPELLEE, 2018 Ky. App. Unpub. LEXIS 447, 2018 WL 3090503, (Court of Appeals of Kentucky June 22, 2018, Rendered).
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Recreation Law 