The insurer's motion for summary judgment, attempting to bar coverage under two endorsements for a wrongful death suit, was denied. Essex Ins. Co. v. FD Event Co., LLC, 2017 U.S. Dist. LEXIS 124400 (C.D. Calif. July 25, 2017).
FD Event owned an amusement attraction known as Free Drop, which was operated at county fairs and festivals. Participants paid an admission fee to FD Event in order to jump from a scaffold structure onto an inflatable airbag below.
FD Event had a policy with Essex. When securing the policy, FD Event understood that there was no coverage for amusement devices, inflatables, rides or animals. 28th Event, who ran the San Bernardino County Fair, was an additional insured on the policy.
During the fair, Sabrina Gordon fell from the scaffold structure, missed the inflatable airbag, and suffered fatal injuries. The Gordon Claimants sued FD Event, 28th District and others for negligent design, construction, and supervision of the FreeDrop. Essex agreed to defend FD Event and 28th District, subject to a reservation of rights.
Essex then sued for a judicial determination that it had no duty to defend or indemnify. It relied on two endorsements, an "Amusement Liability Endorsement" and a "Special Events and Spectator Liability Exclusions Endorsement." The Amusement Liability Endorsement stated "this insurance does not apply to 'bodily injury' . . . arising out of . . . [t]he operation, maintenance, use, or existence of any ride, machinery, equipment . . . not scheduled on the declarations page of this policy."
Essex maintained that the policy was issued with the Amusement Liability Endorsement, but a policy subpoenaed by the Gordon Claimants from a broker did not include the endorsement. An issue of fact therefore existed, preventing summary judgment on this endorsement.
Subsection (c) of the Special Events and Spectator Liability Exclusions Endorsement provided there was "no coverage for bodily injury 'arising out of' participating in an 'exhibition,' 'show,' 'performance' or 'other special event.'" Subsection (e) barred coverage for "bodily injury sustained by any . . . person, while in an activity area, such as, but not limited to: an arena, chute, corral, pit area, race track, set up area, show area, state, staging area, or similar place of activity." Essex contended that because the FreeDrop consisted of a metal scaffold structure next to an inflatable airbag, the scaffold structure constituted an "activity area" under Clause (c).
The court concluded that Clause (c) was not reasonably susceptible to the interpretation proposed by Essex. Essex sought to convert the FreeDrop from a fair attraction into a show or performance because the FreeDrop occurred in plain view of other fair attendees. But Sabrina Gordon engaged in an individual activity, the purpose of which was to experience a free fall from a chosen height. While other fair attendees could watch individuals atop the FreeDrop, the purpose of the FreeDrop was not specifically for spectators; rather it was to profit from individuals seeking to have a free fall experience.
Clause (e), standing alone, was broad. It would bar coverage for any bodily injury occurring in "an activity area" which was defined by a non-exhaustive list of examples. But Clause (e) could not stand alone. Instead, it had to be interpreted within the context of the entire endorsements exclusion. The court determined that "activity area," as defined in Clause (e), referred to activity areas associated with events, and encompassed the locations where participants and spectators would be subject to risk of bodily injury while at such events. They would include horseraces in a chute, corral staging area or race track; theatrical performances or exhibitions of goods in a set up area, stage or show area.
Therefore, coverage was not barred by either Clause (c) or Clause(e) of the Special Events and Spectator Liability Exclusions Endorsement. The interpretations offered by Essex were unreasonable in light of the greater context of the exclusions endorsement, as well as the language of the provision itself.