A federal judge from the Eastern District of Michigan has ruled for an insurance provider, leaving the Cleveland Indians Baseball Co., L.P. and a company that provided an inflatable slide without coverage as they fend off a wrongful death lawsuit.
The incident occurred on June 12, 2010 during one of the team’s scheduled Kids Fun Day events. Two Cleveland Indians spectators, Douglas Johnson and David Brown, were injured when an inflatable slide, which was provided by National Pastime Sports, LLC (NPS) for the event, collapsed. Johnson died on June 21, 2010, “presumably as a result of the injuries suffered while attending the Kids Fun Day,” according to the court. The Johnson Estate and David Brown filed a lawsuit against the Indians and NPS.
Three months prior to Johnson’s death, the Indians executed a Production Agreement with NPS to produce certain elements of 10 fan festivals, known as “Kids Fun Days,” at Indians games, including an inflatable slide.
Pursuant to the agreement, NPS was also to “provide comprehensive general liability insurance coverage. . . covering any claims, demands, causes of action, liability or damages, including legal costs and attorney fees, arising out of obligations or performance by producer under [the] Agreement.”
NPS contacted CSI Insurance Group to procure insurance coverage in accordance with its Production Agreement with the Indians. On March 2, 2010, NPS submitted an Annual Events Application to CSI. On the application, an agent for NPS checked the “yes” box next to the qualification question: “Any event with bounce houses or inflatables? (If yes, certificates of insurance are required).”
NPS accepted the proposal. And on April 27, 2010, CSI, backed by the New Hampshire Insurance Co. (NHI), issued a Certificate of Insurance to NPS and the Cleveland Indians.
On June 12, 2010, during one of the scheduled Kids Fun Day events, two spectators, Douglas Johnson and David Brown, were injured when an inflatable slide, which was provided by NPS for the Kids Fun Day event, collapsed. Mr. Johnson died on June 21, 2010, presumably as a result of the injuries suffered while attending the Kids Fun Day. The Johnson Estate and David Brown filed a lawsuit against the Indians and NPS.
On June 22, 2010, NPS contacted CSI and notified it of the Johnson/Brown suit. Two days later, the Indians tendered the Johnson/Brown suit to NPS for defense and indemnification. Despite the fact that NPS indicated on its Annual Events Application that the Kids Fun Days would include inflatables, NHI claims administrator wrote a letter to the Indians on August 11, 2010, notifying the team that the Johnson/Brown suit was not covered under the terms of the insurance policy. In the letter, NHI referenced the policy’s endorsement, which excluded coverage for bodily injury “[a]rising out of ownership, operation, maintenance or use of any ‘amusement device.’”
NPS sued, seeking a declaration that NHI defend and indemnify NPS in the litigation, as well as alleging negligence against CSI.
NHI subsequently filed a third-party complaint against the Indians and a counterclaim against NPS. The Cleveland Indians, in turn, filed a counterclaim against NHI for a declaratory judgment, and a fourth-party complaint against CSI.
The instant opinion addresses NHI’s motion for judgment on the pleadings under Fed. R. Civ. P. 12(c).
“In its motion, NHIC asserts that both the Amusement Device exclusion and the Temporary Structure exclusion preclude coverage of the underlying lawsuit,” wrote the court.
The court agreed, at least as far as the policy’s Amusement Device exception, finding that it “unambiguously precludes coverage for injury arising out of the use or maintenance of slides, and therefore precludes coverage for the underlying lawsuit.”
In so ruling, the court was unmoved by the argument of NPS and the Indians that the exclusion “does not extend to the circumstances surrounding Mr. Johnson’s and Mr. Brown’s injuries. Both parties essentially present the same argument: that the Policy does provide coverage for the underlying incident because the policy ‘only excludes coverage for any participant on an amusement device,’ and Mr. Johnson and Mr. Brown were merely ‘spectators.’ NPS further asserts that the Amusement Device exclusion does not apply to spectators and that at ‘the very minimum, the language is sufficiently ambiguous to warrant denial’ of NHIC’s motion. Similarly, Cleveland takes the position that the Amusement Device exclusion does not extend to the underlying lawsuit because Mr. Johnson and Mr. Brown did not actually ride the amusement device.”
The court, however, deemed “NPS’s and Cleveland’s interpretations of the Amusement Device exclusion to be unreasonable interpretations of the policy.”
It continued: “The fact that Mr. Johnson and Mr. Brown were not actively riding the amusement device is irrelevant because the exclusion creates no such requirement. … Such an interpretation would render meaningless the language of the endorsement that states: ‘arising out of the ownership, operation, maintenance, or use.’ As stated above, courts are to give effect to every word, clause, and phrase of a contract.”
National Pastime Sports, LLC v. CSI Insurance Group, and New Hampshire Insurance Co.; E.D. Mich.; Case No.: 11-11378, 2012 U.S. Dist. LEXIS 51497; 4/12/12
Attorneys of Record: (for plaintiff) Howard W. Burdett, Jr., Boyle Burdett, Grosse Pointe Park, MI. (for defendant) Jeffrey C. Gerish, Nicole E. Wilinski, Plunkett & Cooney, Bloomfield Hills, MI. (for thirdparty defendant) George M. DeGrood, III, Michelle A. Thomas, Thomas, DeGrood, Southfield, MI. David C. Anderson, Collins, Einhorn, Southfield, MI.
