Halloween, and, in particular, candy, was at the heart of a recent fascinating underlying and companion coverage case.

On October 31, 2015, Sanford Grigsby, like millions of others, passed out candy to the ghosts and goblins who knocked on his door in suburban Cleveland.  But there was something about a stop at Grigsby’s house that differed from most.  Grigsby was a dentist.  So, in addition to Gobstoppers, his trick or treaters each received a small zip-lock bag containing a toothbrush and travel-size tube of toothpaste.  The toothbrush was imprinted with Sanford Grigsby, D.D.S. and his office phone number.  Inside the bag was a folded piece of 8 ½ x 11 paper, with Dr. Grigsby’s offer letterhead, and the text: “Happy Halloween!  Enjoy your candy and then come see Dr. Sandy!”  Grigsby knew it made him look like Scrooge – but he believed in never missing a chance to promote good dental health.  Plus, thanks to the overzealous marketing tactics of toothpaste manufacturers, he had 500 travel-size tubes of toothpaste in his office that he was desperate to unload.

Skip McMaster, age 10, and dressed as Harry Potter, knocked on Dr. Grigsby’s door and was handed Gobstoppers and one of Grigsby’s toothbrush/toothpaste bags. 

Two days later, Skip’s father, Melvin, ate Skip’s Gobstoppers (with Skip’s permission).  Melvin bit down on the candy and cracked two crowns in his mouth.  The cost to remake them was $6,000 plus plain and suffering and hours of time out of Melvin’s life to deal with the numerous dentist’s office visits. 

Melvin decided to file suit against Dr. Grigsby.  It was easy to identify Grigsby as the Gobstopper-ghoul.  Skip did not like Gobstoppers and had made a note to himself to avoid Grigsby’s house the following year.  And Melvin was willing to testify that Skip had received no other Gobstoppers in his candy bag.  Product ID was satisfied.

Melvin had a difficult time finding a lawyer to take the case.  Several turned him down on the basis that, as a matter of law, he could not maintain an action against Dr. Grigsby.  As these lawyers saw it, Grigsby simply had no liability for the incident.  Prepared to give up, Melvin went to see one last lawyer.  This time the attorney saw a cause of action – strict liability.  As for the law’s requirement that Dr. Grigsby be a manufacturer, retailer or distributor of the product, they would argue that he was a distributor.  By including the toothbrush with his name and office phone number, plus the note stating “Enjoy your candy and then come see Dr. Sandy!,” Grigsby was in fact selling Gobstoppers, through a deferred payment scheme -- fees for dental services arising out of Gobstopper-caused cavities. 

Melvin McMaster filed suit against Sanford Grigsby, D.D.S. in state court in Cuyahoga County, Ohio.  He sought payment of $6,000 for the replacement of the two crowns and damages for pain and suffering. 

Grigsby did not have a homeowner’s policy, with liability insurance, as he was renting his house and also did not have a renter’s policy.  So Grigsby tendered the McMaster suit to his dental malpractice insurer – Molar Property & Casualty Ins. Co.  Molar declined to defend Grigsby on the basis that the policy’s insuring agreement was not satisfied.  Specifically, as Molar saw it, the complaint did not allege that McMaster’s injury was caused by Grigsby “arising out of the performance of dental services.”    

With nowhere to turn, Grigsby retained a lawyer and filed the Ohio equivalent of a 12(b)(6) motion to dismiss for failure to state a claim.  The court, in Melvin McMaster vs. Sanford Grigsby, D.D.S., No. 17-2145 (Cuyahoga Cty. Jan. 3, 2017) acknowledged that McMaster’s cause of action was novel.  However, based on the high burden required for granting a 12(b)(6) motion, the court could not say that McMaster had no claim.  The court explained: “If all Dr. Grigsby had done was given away toothpaste and a toothbrush, even with his name and office phone number, this court would not hesitate to conclude that Dr. Grigsby was simply a concerned dentist and not a distributor of Gobstoppers for purposes of the state’s strict liability law.  But Grigsby went further.  This court cannot say, at this preliminary stage, that Dr. Grigsby, having included the note inviting people to see him, after getting a cavity from the Gobstoppers, was not selling the candy, through the deferred payment scheme alleged by plaintiff.”  Id. at 3.        

Grigsby, now faced with the prospect of the litigation going forward, and a six-figure estimate for defense costs, settled the action for $22,500.

Grigsby, now spitting mad, filed suit against Molar P&C, seeing recovery of his $9,000 in defense costs, the $22,500 settlement and damages for bad faith.  Molar filed a motion for summary judgment, arguing that McMaster’s injury was not caused by Grigsby “arising out of the performance of dental services.”  Grigsby cross-moved.

Brace yourself.  The court, in Grigsby v. Molar Property & Casualty Ins. Co., No. 18-1387 (Cuyahoga Cty. Sept. 5, 2018) held that McMaster’s injury was caused by Grigsby “arising out of the performance of dental services.”  The court explained: “By giving out a toothbrush and toothpaste to the trick or treaters, Dr. Grigsby was acknowledging that eating candy can be hazardous to a child’s teeth. He was promoting good dental hygiene to address the risk.  Based on the broad meaning given to the term ‘arising out of’ as used in insurance policies, and this court’s mandate to interpret a coverage grant broadly, this court holds that Mr. McMaster’s injury was arising out of the performance of Dr. Grigsby’s dental services.”
     
Scary decision. 

The molar of the story: It’s safer to give out Peeps.