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Coverage Opinions Turns 9!

The Most Wrongly Decided Coverage Decision I Have Ever Encountered

Coverage Opinions Turns 9!

I am excited to report that this month marks the 9th anniversary of Coverage Opinions. That's the pottery anniversary if you are thinking about sending a gift.

Of course, there could be no 9-year anniversary to mark if it were not for you – the dear Coverage Opinions reader. I can't thank you enough for taking the time to do so, despite having such busy schedules and being inundated with other newsletters, case alert email blasts and the like, competing for your time.

I appreciate the loads of reader email that I receive – mostly positive, but sometimes taking me to task for something I said or didn't say -- and that's fine too. And people sometimes kindly send cases or news stories that they think I'll enjoy or might merit a write-up.

And, of course, I am thankful for all of the Coverage Opinions readers who see my passion and knowledge for coverage and retain me to represent them when the need for coverage counsel arises. Likewise, so many CO readers put their trust in me and my co-authors by using Insurance Key Issues as a resource. 

I am also lucky for the friendships that I have made with CO readers who reached out about something they saw.          

Putting together CO is an extremely time-consuming endeavor. Hearing from people, that they read and enjoy it, provides the mojo that I need to keep it going.

Again, thank you for your loyal readership.

-- Randy

The Most Wrongly Decided Coverage Decision I Have Ever Encountered

In my "Top 10 Duty to Defend Issues" webinar, I discuss predicaments that insurers face when determining whether a duty to defend is owed and denying a defense. I also address the challenges of litigating the issue and why insurers lose cases that they do not believe they should. These points could not be made more clearly than in AIX Specialty Ins. Co. v. Shanika Everett, No. 19-2533 (M.D. Fla. June 16, 2021). [I'll still catching up on things from the summer.]

But Everett is more than just a lesson in insurer difficulties with the duty to defend. It is also the most wrongly decided coverage decision that I have ever encountered. I know, that's a mighty bold statement. But read on. You won't regret it. Then tell me if I'm exaggerating.          

The facts and coverage issue in Everett do not get much simpler than this. In 2018, Shaneka Everett filed suit against MLK Liquors in Florida state court. She alleged that, in 2016, she was shot by a "Projectile (to wit: a bullet)" at the premises operated by MLK Liquors. She alleged that she has suffered, and will continue to suffer, damages as a result of the injuries sustained. In general, Everett alleged that MLK Liquors was liable because it breached all kinds of duties to keep its premises safe and protect her. 

AIX insured MLK Liquors under a CGL policy and undertook its defense subject to a reservation of rights. AIX filed an action seeking a declaratory judgment that it had no duty to defend or indemnify MLK Liquors.

There seemed to be no dispute that the terms of the insuring agreement were satisfied – there was "bodily injury," during the policy period, and it caused by an "occurrence."  

AIX argued that no coverage was owed based on the policy's Firearms Exclusion, which provided as follows:

"It is understood that no coverage is afforded by this policy for any injury, death, claims, or actions occasioned directly or indirectly or as an incident to the discharge of firearms by person or persons on or about the insured premises."

Despite the fact that Ms. Everett was injured by a "projectile (to wit: a bullet)," the court concluded that the Firearms Exclusion did not apply. Really.

Everett argued that the Firearms Exclusion was inapplicable because it addresses injuries resulting from the discharge of multiple firearms. But her suit against MLK Liquors "relate[d] to a single projectile that was fired by a single firearm that impacted her body." (emphasis added).

Noting that it must construe the Firearms Exclusion according to its plain meaning, and strictly as it is an exclusion, the court observed as follows:

"Significantly, the Firearms Exclusion uses the plural form of 'firearm' and distinguishes between the discharge of firearms by 'person' and the discharge of firearms by 'persons' by utilizing 'or,' a disjunctive."

Since the exclusion applies to injuries resulting from the discharge of multiple firearms, and Everett alleged that she was shot by a "projectile (to wit: a bullet)," the court held that the Firearms Exclusion did not apply. 

Wait. There's more. The court also pointed out that the policy did not define "firearms." Turning to Merriam-Webster Dictionary, the court concluded that "firearm" is defined a "a weapon from which a shot is discharged by gunpowder—usually used of small arms."

As the court saw it, it was not clear from the complaint that Everett was shot by "small arms" where the discharge was by gunpowder.

Thus, the concluded that "Everett's complaint in the Underlying Litigation, fairly read, alleges facts which create potential coverage under the Policy so as to give rise to the duty to defend." (emphasis in original).

This case goes right to the heart of what I discuss in my "Top 10 Duty to Defend Issues" webinar concerning the challenge that insurers face when determining whether a duty to defend is owed.

I get it. The court said that exclusions are construed narrowly and there is a duty to defend if facts create potential coverage. But this a bridge way too far. 

Tell me, was I exaggerating?

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