In the boating injury case of Westfield Ins. Co. v. Vandenberg, the question was raised to the U.S. Court of Appeal for the Seventh Circuit regarding whether the construction company insurance held by a defendant in the injury lawsuit could be liable to pay defendant’s share of damages.
The appellate court answered no.
Plaintiff previously agreed to a $25 million settlement agreement, to be paid through the assignment of claims against defendants’ insurance companies. This decision means plaintiff will have to rely on payments from the other insurers.
According to court records, the case started with a five-hour cruise on a chartered yacht on Lake Michigan. Plaintiff suffered serious injury when, while seated on a bench on the upper deck, he turned suddenly when he heard someone call his name. As he shifted his weight, the bench on which he was sitting – which was not secured to the deck – tipped over. There was no railing on the upper deck. He fell from the upper deck to the bottom deck. As a result, he was paralyzed from the chest down.
The boat was owned by a closely-held corporation of three individuals. One of those who was involved in booking and marketing also separately owned a paving company, for which he had insurance, which included a commercial liability policy and also an umbrella policy.
On those insurance policy information forms, the business owner never indicated whether he did or did not own a watercraft.
Ultimately, boating accident victim entered into a settlement agreement with all defendants. Per the agreement, the paving company, the three owners of the boat, a management firm and a finders’ firm all agreed to pay $25 million to satisfy their obligation through rights of recovery to their insurance policies. In addition, the paving company, its owner and a co-owner of the yacht agreed to pay a total of $2.3 million upfront.
That agreement was adopted by the courts.
Soon after, the paving company’s insurer sought declaratory judgment indicating it was not responsible to pay damages for this debt as it owed no duty under the paving company’s policy to pay for yacht-related injuries.
Trial court granted summary judgment to insurer on this point, and the appeals court affirmed.
Insurance company argued its policies were applicable only to the paving company/construction business. And even if it wasn’t, the insurer argued, this particular accident would have been excluded from coverage under the policy’s watercraft exclusion.
Plaintiff argued the insurance policy did not expressly exclude non-construction-related injuries, and thus they should have been covered.
But the court analyzed the effect and intention of the parties as expressed in the policy language. Here, the appeals court found trial court correctly concluded the insurance company and the paving company intended to enter an insurance contract in which insurer provided coverage only for the construction-related business. This was evidenced in the way the paving company was described in the common policy declarations section, as well as in the general liability schedule, which indicates coverage of injuries sustained in connection with construction, reconstruction, repair and or demolition. This, the court found, reflected an explicit policy intent, and thus the boating injury was excluded.
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Westfield Ins. Co. v. Vandenberg, Aug. 6, 2015, U.S. Court of Appeals for the Seventh Circuit
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