By Kirk A. Pasich, Cassandra S. Franklin, Sandra Smith Thayer, Shaun H. Crosner and Julia K. Holt, Attorneys, Dickstein Shapiro LLP
Written and edited by a team of Dickstein Shapiro Insurance Coverage Group attorneys, the "New Appleman Sports and Entertainment Insurance Law & Practice Guide" provides a wide-ranging discussion and practical analysis of insurance coverage issues common in the entertainment and sports industries.
Commercial general liability ("CGL") policies provide the broadest coverage available to entertainment and sports businesses for liabilities involving bodily injury and property damage. Indeed, a number of the claims that entertainment and sports insureds commonly face may fall within a CGL policy's coverage for bodily injury and property damage. Furthermore, to trigger a CGL insurer's defense duty, the alleged "bodily injury" need not be expressly stated on the face of the complaint as such. Given that an insurer's duty to defend typically is determined by the potential for coverage, allegations typically will be interpreted liberally.
In Manzarek v. St. Paul Fire & Insurance Co., 519 F.3d 1025, 1031 (9th Cir. 2008), Robby Krieger and Ray Manzarek, two of the founding members of The Doors, had been sued by John Densmore, the drummer of The Doors. Densmore alleged that Krieger and Manzarek, who were touring as members of the band "The Doors of the 21st Century," were liable for infringing on The Doors name, trademark, and logo in conjunction with their tours and marketing. He also alleged that he had suffered damage to his "'reputation and stature'" insofar as the infringement caused people to believe that he "was not, and is not, an integral and respected part of The Doors band or is one member who can easily be replaced by another drummer."
Krieger and Manzarek notified their CGL insurer, which denied coverage. The insurer argued that there was no coverage because, among other reasons, Densmore had not alleged "bodily injury" because he had not alleged that he had suffered any physical injury.
The court disagreed for purposes of the duty to defend. It explained that "'[a]ny doubt as to whether the facts establish the existence of the defense duty must be resolved in the insured's favor'" (citation omitted). The court held that the allegation that Densmore's "reputation and stature" had been damaged were "sufficient to raise the potential of an award of mental anguish or emotional distress damages," which fell within the policy's definition of "bodily injury."
The "Participants in Athletic or Entertainment Events" Exclusion CGL policies frequently contain provisions that exclude coverage for injuries to "participants" in entertainment or sporting events.
Courts have interpreted these exclusions as barring coverage for injuries sustained by athletes and performers during athletic competition or other live events. See, e.g., Giacomelli v. Scottsdale Ins. Co., 354 Mont. 15, 24 (2009) ("athletic or sports participants" exclusion barred coverage for injuries suffered by jockeys during horserace); Madison Cnty. Sheriff's Posse, Inc. v. Horseman's United Ass'n, Inc., 434 So. 2d 1387 (Ala. 1983) ("athletic participant" exclusion barred coverage for injuries sustained by participant in rodeo suffered while practicing prior to event when horse tripped over farm equipment); Jefferson Ins. Co. of New York v. Sea World of Fla., Inc., 586 So. 2d 95 (Fla. Dist. Ct. App. 1991) ("Exhibition Participants" exclusion applied to bar coverage for lawsuit filed by parents of diver killed while driving jet ski during water ski show); Zurich Reins. (London) Ltd. v. Westville Riding Club, Inc., 82 F. Supp. 2d 1254, 1255 (E.D. Okla. 1999) (no coverage when member of audience injured at rodeo after accepting announcer's invitation to come out of the stands and participate in contest to remove ribbon from bull's horns); Ducks Hockey Club, Inc. v. Mount Vernon Fire Ins. Co., 39 A.D.2d 568 (N.Y. App. Div. 1972) (policy covered "athletic contests and all undertakings operated by lessee of Long Island Arena; no coverage for claimant injured while skating because policy coverage only "liability resulting from spectators being present in the building for exhibitions, athletic contests or any other undertaking operated by [the] insured," not "the risk of the participatory sport of ice skating").
However, even though courts have applied these exclusions to injuries sustained by participants of athletic or entertainment events, the general rules of policy interpretation require courts to construe all ambiguities in an insured's favor. Therefore, when the injured party is not clearly a "participant" in an athletic or entertainment event, a number of courts have found the exclusion inapplicable.
In Interstate Fire Insurance Co. v. Harmon, 580 F.2d 184 (5th Cir. 1978), a photographer covering a motorcycle jump event was injured when hit by a motorcyclist. The insurer denied coverage, arguing that the photographer was not a spectator and was, therefore, not covered because its policy excluded claims by participants and persons employed on or about the premises. The court disagreed. It held that the exclusion applied only to participants and persons having a working relationship to the track. "These would naturally include pit attendants, mechanics, stewards, other officials and all employed by the track.... A professional photographer employed by a third party has nothing to do with the participants and their employeesor the track and its employees."
In Clermont Central Soccer Ass'n v. Cincinnati Insurance Co., 82 Ohio Misc. 2d 31 (1995), a soccer association sought coverage for a lawsuit brought by a referee who had been injured when he fell during a soccer game. The insurer denied coverage, citing an exclusion for injury to "'any person while practicing for or participating in any sports or athletic contest or exhibition...'" The court found the exclusion was ambiguous because "participant" was susceptible of more than one meaning. It could be synonymous with "player" or could apply to anyone involved in any way with the event. In Garcia v. St. Bernard Parish School Board, 576 So. 2d 975 (La. 1991), a cheerleader was injured while performing an acrobatic stunt during a high school football game. When the insured school board sought coverage for the cheerleader's injuries under its liability policy, its insurer denied coverage. The insurer argued that an exclusion for "bodily injury to any person while practicing for or participating in any contest or exhibition of an athletic or sports nature barred coverage. The court disagreed. It noted the exclusion did not unambiguously include cheerleaders. While a school board would typically sponsor activities incidental to football contests, including performances by cheerleaders, bands, pep squads, flag squads, or drill teams, these groups, said the court, are not participants in the football contest. An injury to a member of those groups during a football game would clearly not be within the contemplation of the policy provision.
Entertainment and sports insureds should not assume that exclusions for participant injuries only apply to the events themselves. Often, the exclusions are drafted more broadly to exclude injuries sustained in practice for, or travel to and from, the event. See, e.g., U.S. Fire Ins. Co. v. Ohio High Sch. Athletic Ass'n, 71 Ohio App. 3d 760, 762 (1991) (policy excluded liability arising out of activities of any player, coach, manager, or any person under contract to insured while engaged in any game or contest or practice or in course of travel to any destination for purpose of practicing for, or participating, in any contest).
Excerpted from "New Appleman Sports and Entertainment Insurance Law & Practice Guide," by Kirk A. Pasich, Cassandra S. Franklin, Sandra Smith Thayer, Shaun H. Crosner and Julia K. Holt. Published by LexisNexis © 2010. Used by permission. Available for purchase from the LexisNexis online bookstore for $139.
Kirk Pasich is the leader of and a partner in Dickstein Shapiro's Insurance Coverage Group and represents insureds in complex coverage matters. He can be reached at email@example.com. Cassandra S. Franklin is a deputy practice leader and partner in Dickstein Shapiro's Insurance Coverage Group. She can be reached at firstname.lastname@example.org. Sandra Smith Thayer is a partner in Dickstein Shapiro's Insurance Coverage Group, national co-leader of the firm's Insurance Coverage Initiatives, and a member of the firm's Entertainment and Sports Insurance Initiative. She can be reached at email@example.com. Shaun H. Crosner is an associate in Dickstein Shapiro's Insurance Coverage Group and coleader of the firm's Entertainment and Sports Insurance Initiative. He can be reached at firstname.lastname@example.org. Julia K. Holt is counsel at Paceline Consulting and a former associate at Dickstein Shapiro.
Reprinted and/or posted with the permission of Daily Journal Corp. (2010).
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