People severely injured believe that the only possible recourse is the insurance available to the tortfeasor. The injured party, if the insurer refuses to cover the tortfeasor, will enter into an agreement with the tortfeasor as to a judgment that they promised to only collect from the insurer and, by so doing, protect the assets of the tortfeasor in hope of getting major damages and bad faith damages from an insurer. As my readers are aware this is not always a wise decision. In McGirk v. Certain Underwriters at Lloyd’s, Civil Action 3:13CV00020 (W.D.Va. 02/21/2014) [enhanced version available to lexis.com subscribers], a Mr. McGirk attempted to profit from his injuries by going after the insurer for the tortfeasor.
On June 13, 2009, plaintiff Sage McGirk participated in a group skydive offered by Skydive Factory. Robert Mehl, an agent of Skydive Factory, piloted the airplane carrying the group, which took off from the Orange County Airport in Orange, Virginia. After the jumpers exited the plane upon reaching the proper altitude and position, Mehl turned and made a low pass over the landing area. In doing so, the aircraft struck McGirk’s parachute in mid-air, which caused him to fall to the ground and suffer serious injuries.
At the time of the incident, Skydive Factory had a liability insurance policy issued by Lloyd’s (“the Policy”). The Policy insured Skydive Factory against certain liability and property damage arising from Skydive Factory’s use of a DeHavilland DHC-6 Twin Otter operated on the day of the incident.
The policy stated that it was written “To pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, excluding any passenger, and for damages because of injury to or destruction of property, including the loss of use thereof, caused by an occurrence and arising out of the ownership, maintenance or use of the Aircraft.”
An endorsement to the Policy contains the following exclusion (“the Exclusion”): “Combined Single Limit (Bodily Injury/ Property Damage) excluding Passenger Legal Liability, excluding Liability to Occupants and excluding Liability to and of the jumpers after descending from aircraft and whilst attempting to exit the Aircraft.”
McGirk filed a personal injury suit against Mehl and Skydive Factory. Lloyd’s denied coverage and refused to defend Mehl. Mehl ultimately agreed to the entry of a judgment against him in the amount of $975,000.00. By separate agreement, McGirk agreed not to enforce the judgment against Mehl in excess of $3,000.00, and to accept from Mehl an assignment of his rights to pursue redress from Lloyd’s.
McGirk sued Lloyd’s requesting a judgment declaring that Lloyd’s was obligated to defend and indemnify Mehl and is liable for the consent judgment. Lloyd’s moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Relying on the Exclusion because the Policy plainly excludes coverage for any liability to skydivers like McGirk.
DISCUSSIONThe interpretation of an insurance policy, including the determination and resolution of ambiguities, is a question of law for the court to decide. The policy is to be considered as a whole and each provision is to be given effect and interpreted so as to harmonize with the others.
Lloyd’s argues that the exclusion is capable of only one reasonable interpretation, namely that the Policy excludes coverage for liability to skydivers: (1) while they are in, on, or boarding the aircraft as passengers; (2) while they are attempting to exit the aircraft; and (3) after they have descended or jumped from the aircraft. Lloyd’s interpretation of the Exclusion is supported by the United States Court of Appeals for the Fifth Circuit’s decision in Willingham v. Life & Casualty Ins. Co., 216 F.2d 226 (5th Cir. 1954) [enhanced version available to lexis.com subscribers]. In Willingham, the beneficiary of a life insurance policy, whose husband jumped or was thrown from a private airplane, sought to avoid an accidental death benefit exclusion for “death resulting from operating, riding in, or descending from any kind of aircraft . . . .” The Fifth Circuit held that the exclusion was “unambiguous and its meaning clear,” and that the district court properly held that the plaintiff was not entitled to recover the accidental death benefit. The Fifth Circuit found it “too clear for serious argument that . . . ‘descending from’ included . . . jumping from the airplane” and otherwise leaving or exiting the airplane in any manner.
Since “descending” from the aircraft plainly means getting down, alighting, or “jump[ing] from” the aircraft, as Willingham holds, once that act occurs, anything that happens subsequent to that act is logically “after” the act. Additionally, McGirk’s suggested interpretation – that “after descending from aircraft” refers only to the point in time when the jumper has finally reached the ground and, thus, that coverage was not excluded for the period of time in which McGirk was in the air – is inconsistent with the remaining portions of the Exclusion. Given the clear intent of the Exclusion, McGirk’s suggested reading, which would create a small window of coverage for jumpers after they have jumped from the aircraft but before they have reached the ground, is unreasonable.
Every insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any rider, endorsement, or application made a part of the policy. The court found no ambiguity in the use of the term “jumpers,” and concluded that the term unquestionably includes skydivers like McGirk, who jump from aircraft. This conclusion is supported by McGirk’s own pleadings, in which he repeatedly refers to himself as a “jumper.”
COVERAGE IS NOT MANDATED BY STATUTE
In his final argument, which was the subject of supplemental briefing by the parties, McGirk maintains that coverage for his injuries is required by Georgia statute. McGirk’s statutory argument is based on § 33-7-9 of the Georgia Code, [enhanced version available to lexis.com subscribers], which defines “vehicle insurance” as follows: “Vehicle insurance is insurance against loss of or damage to any land vehicle or aircraft, … from any hazard or cause, and against any loss, liability, or expense resulting from or incident to ownership, maintenance, or use of any such … aircraft …”
The court agreed with Lloyd’s that § 33-7-9 itself does nothing more than provide a definition of the term “vehicle insurance.” On its face, the statute does not mandate coverage, much less use any words suggesting an affirmative obligation, such as “shall,” “must,” or “require.”
The court agreed with Lloyd’s that in the absence of any statutory provision setting forth mandatory minimum requirements for aircraft liability insurance, or prohibiting insurers from excluding coverage for liability to jumpers, McGirk’s statutory argument was rejected.
In sum, after considering the Policy in its entirety, the court concludes that the Exclusion is unambiguous and subject to only one reasonable interpretation: that the Policy excludes coverage for liability arising during any phase of skydiving, including the phase in which jumpers are in the air after jumping or descending from aircraft. Because McGirk was a jumper, and since he was injured after descending from the airplane piloted by Mehl, the court concluded that the Policy excludes coverage for liability to McGirk.
The court dismissed the suit.
The tortfeasor, Skydive Factory, avoided a serious bodily injury lawsuit for a payment of no more than $3,000. McGirk received a judgment for almost a million dollars that is noncollectable. The tort judgment is worth nothing more than a piece of paper that can be framed and hung on the wall. Skydive Factory owned, according to the policy, more than one aircraft. It had assets to defend itself and make a one-sided deal with McGirk.
McGirk allowed greed to overturn reason. He gave up a bird in hand for a hoped for two in the bush only to see them, and his judgment, fly away.
Before entering into such a deal McGirk and his counsel should have sought the advice of competent insurance coverage counsel, determined the value of all of the assets of Skydive Factory and Mehl. They clearly did not do or the result would have been different.
By Barry Zalma, Attorney and Consultant
Reprinted with Permission from Zalma on Insurance, (c) 2014, Barry Zalma.
Barry Zalma, Esq., CFE, is a California attorney who limits his practice to consultation regarding insurance coverage, insurance claims handling, insurance bad faith and fraud and acting as a mediator or arbitrator on insurance disputes. Mr. Zalma serves as a consultant and expert almost equally for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. He recently published the e-books, "Zalma on Rescission in California - 2013"; "Random Thoughts on Insurance" containing posts from this blog; "Zalma on Insurance;" "Murder and Insurance Don't Mix;" “Heads I Win, Tails You Lose — 2011,” “Zalma on Diminution in Value Damages,” “Arson for Profit” and “Zalma on California Claims Regulations,” and others that are available at Zalma Books.
Mr. Zalma can be contacted at Barry Zalma or firstname.lastname@example.org, and you can access his free "Zalma on Insurance Fraud" newsletter at Zalma’s Insurance Fraud Letter.
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