A federal judge has denied the summary judgment motion of North American Capacity (NAC), a commercial general liability insurer, in a suit brought by Hawaiian Isle Adventures (HIA), an outdoor recreation company.
Lee Townes drowned while snorkeling during one of HIA’s outings on July 15, 2004. Mr. Townes’s wife filed suit against HIA, claiming that HIA’s negligence caused her husband’s death. NAC declined to provide a defense or coverage to HIA in the case. HIA’s suit arose out of these facts. NAC had argued that it had no duty to defend or indemnify HIA because of several exclusions, most prominently the Athletics Exclusion, in the policy.
The court ruled that NAC was unable to show that the Athletics Exclusion applied in this case. The provision in the contract excluded any injury arising out of “any sports or athletic contest or exhibition that you sponsor.” NAC argued that the provision excluded injuries resulting from (1) sports, (2) athletic contests, and (3) exhibitions. The court disagreed and ruled that the exclusion may be reasonably read to refer to “contests or exhibitions” of an athletic or sports nature. The court read the word “sports” in the provision as an adjective modifying “contest” (and possibly “exhibition”) as opposed to reading it as a noun along with “contest” and “exhibition.” The court cited Zurich Reinsurance (London) Ltd. v. Westville Riding Club, Inc., 82 F. Supp. 2d 1254, 1256 (E.D. Okla. 1999), aff’d, 203 F.3d 837 (10th Cir. 2000), in which the court read “sports” as an adjective.
The court noted that the Athletics Exclusion is a common feature in policies and that NAC did not cite any cases that read an Athletics Exclusion to be applicable to sports in general. The court wrote that, “NAC appears to concede that snorkeling is not properly considered a contest or exhibition within the meaning of this exclusions; snorkeling involves neither competition nor performance and is rather a recreational activity. Thus if ‘sports’ is an adjective modifying ‘contest’; and/or ‘exhibition’; the Athletics Exclusion is clearly inapplicable.”
The court went on to state that even if “sports” functions as a noun, it is not clear that snorkeling falls within the plain meaning of “sports.” The court writes:
“Sport” is defined by Webster’s as “an activity [that gives enjoyment or recreation], especially when competitive, requiring more or less vigorous bodily exertion and carried on, sometimes as a profession, according to some traditional form or set of rules.” Webster’s New World College Dictionary 1297 (3d ed. 1997). “Sport” is defined by The American Heritage Dictionary as “physical activity that is governed by a set of rules or customs and often engaged in competitively.” The American Heritage Dictionary 1680 (4th ed. 2006). NAC does not even suggest that snorkeling is governed by any traditional set of rules or customs, as provided by the dictionary definitions.
Hawaiian Isle Adventures, INC. v. North American Capacity Insurance Company, et al.,; D. Haw.; CIVIL NO. 08-00574 SOM/KSC, 2009 U.S. Dist. LEXIS 33795; 4/20/09
Attorneys of records: (for plaintiff) Mitchell S. Wong, LEAD ATTORNEY, Law Offices of Mitchell S. Wong, Honolulu, HI. (for defendants) Keith K. Hiraoka, LEAD ATTORNEY, Roeca Louie & Hiraoka LLP, Davies Pacific Center, Honolulu, HI; and Karen M. Winter, Lissa H. Andrews, LEAD ATTORNEYS, Devon I. Peterson, Rush Moore LLP A Limited Liability Law Partnership, Honolulu, HI.
This summary was written by University of Texas Law School student Steven Stamps.
