Hunt Club’s Additional Insured Endorsement Doesn’t Cover Members for Personal Hunting Activities

By Richard B. Wolf | July 28, 2015

The United States Court of Appeals for the Fifth Circuit, applying Virginia law, decided that a hunt club’s additional insured endorsement for club members provided no coverage to club member Timothy Johnson, who shot at a deer from club-leased property and wounded Danny Marks, Jr. as he drove on a nearby public road. (Marks And Johnson v. Scottsdale Ins. Co., 2015 U.S. App. LEXIS 11072 filed June 29, 2015).

Marks sued Johnson and the club in Virginia court for negligence, and Scottsdale Insurance Company, which insured the club under a commercial general liability policy, defended the club but denied coverage to Johnson, contending that the endorsement did not cover club members for their personal recreational activities. Marks filed a second complaint in state court, this time against Scottsdale, which removed the case to federal court based on diversity jurisdiction and filed a counterclaim regarding coverage. Johnson joined the district court litigation.

Marks and Johnson contended that an additional insured endorsement to the Scottsdale policy extended coverage for Johnson’s personal recreational activities since the accident arose from Johnson’s hunting, one of the club’s activities.

The additional insured endorsement read as follows:

“WHO IS AN INSURED . . . is amended to include as an insured any of your members, but only with respect to their liability for your activities or activities they perform on your behalf.”

The policy defined the terms “you” and “your” as the hunt club, so that the endorsement effectively extended policy coverage to club members, but only with respect to their liability for the club’s activities or activities members performed on the club’s behalf.

The issue in the coverage suit was whether Johnson, a club member, was an insured under the endorsement for purposes of Marks’s injury lawsuit against him.

The court answered the question by applying ordinary contract-interpretation principles, deducing the parties’ intent from the words of the policy itself. Marks conceded on appeal from a summary judgment for Scottsdale that the second clause of the additional insured endorsement – extending coverage to member activities performed on the club’s behalf – did not apply to Johnson’s hunting activities, because he was not acting for the club. Marks, however, argued that the first clause – covering member liability for club activities – did apply to Johnson’s shooting accident, because hunting was a club activity. Alternatively, Marks attempted to invoke Virginia’s rule of insurance contract construction that ambiguous policy language must be construed against the insurer. Therefore, Marks argued that the first clause of the additional insured endorsement was at least ambiguous on whether it imposed insurer liability if the liability of the club member arose from a type of activity – hunting – conducted by the club.

The Court of Appeals rejected both arguments, ruling instead that the clause covering club members’ liability for the club’s activities unambiguously restricts coverage to situations where a member is alleged to be vicariously liable for activities of the club as an entity. The court therefore rejected Marks’s argument that the policy covered the injury suit just because the shooting occurred during a hunt club activity, or arose from a club activity – hunting. The court found that the wording of the endorsement did not support the arguments, and that the court was not at liberty to add words not found in the policy. Members, it held, are covered by the endorsement for their derivative liability for the club’s own corporate activities, not for the members’ own activities, whether or not the club promoted or engaged in the same activities.

The Court of Appeals said that its reading of the policy was confirmed by looking at the endorsement as a whole. It noted that the policy wording makes it clear that the policy is not intended to cover every member pursuit at the club. This point, it noted, is reinforced by the joint operation of the additional insured endorsement’s two clauses. The first clause, it explained, is most naturally read to apply to actions of the club as an entity for which a member might be held vicariously liable. The individual activities of club members, by contrast, are covered by the second clause for activities members perform on the club’s behalf, but only when they are undertaken at the request or for the benefit of the club, a condition that Marks conceded was not satisfied by the facts of this case.

Finally, the court said, Marks’s reading of the endorsement would make the vicarious liability restriction on coverage entirely superfluous, since all members’ club-like activities would be covered already, by the first endorsement clause, and the court declined to adopt a construction of the endorsement that renders so much of it redundant, or its limiting language irrelevant.

Having determined the policy’s limited scope of coverage, the court next looked to Marks’s injury lawsuit complaint to determine whether the allegations against Johnson fell within the scope of that coverage. The court found that the complaint did not allege any facts that, if proved, would render Scottsdale liable under the policy as construed by the court. Marks, as pointed out by the court, alleged only that Johnson, a member of the club, was on land leased by the club and regularly used by club members when he negligently fired his weapon at a deer. As Marks conceded, those allegations, if proved, were not sufficient to bring Marks’s claim under the second clause of the endorsement, member activities undertaken on the club’s behalf. Nor does the complaint seek to hold Johnson liable vicariously for the club’s activities, so the first clause was not triggered by the complaint. Since it was clear from the Marks suit complaint that Scottsdale would not be liable for any judgment against Johnson, Scottsdale had no duty to defend or indemnify Johnson under the additional insured endorsement of the liability policy. Accordingly, the court held that the magistrate judge in the coverage litigation properly granted summary judgment to Scottsdale and denied summary judgment to Marks and Johnson.

Richard B. Wolf is a partner in the Los Angeles office of the nationwide law firm of Lewis Brisbois Bisgaard & Smith LLP. Since 1970, Wolf has specialized in insurance coverage advice and litigation.

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