Application Wrongfully Stated No Work on Recreational or Playground Equipment

Policy Does Not Cover Damages Caused by In-Ground Trampoline

Post 4824

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United Casualty Insurance Company (“United”) refused to defend James Snell, a landscaper, in a civil lawsuit alleging that Snell had negligently installed a ground-level trampoline in a client’s backyard. Snell sued, contending that United had breached its insurance contract with him in bad faith and seeking a declaratory judgment that United had a duty to defend and indemnify Snell. The district court granted summary judgment for United, holding that the accident did not “arise from” Snell’s “landscaping” work within the meaning of his commercial general liability policy.

The Eleventh Circuit resolved the dispute in James Snell, d.b.a. Outdoor Expressions v. United Specialty Insurance Company, No. 22-12581, United States Court of Appeals, Eleventh Circuit (May 28, 2024).

BACKGROUND

Snell’s landscaping company is named “Outdoor Expressions,” and it is located in Fairhope, Alabama. Snell was hired by the Westons to turn an above ground trampoline into a ground level trampoline.

Snell’s site work included excavation of a pit, installation of a drain and drainage sand, excavation of a trench to install a drainage pipe, installation of the drainage pipe and of a drain pump, and, most relevant here, construction of concrete block retainer walls and installation of a wood cap on the retainer walls. The retaining walls aimed to prevent erosion and collapse of the structure; the wood cap was for aesthetics. Then, after all that, Snell unboxed the trampoline, assembled it, and lowered it into the pit.

A few years later, Matthew Burton sued the Westons for injuries his daughter suffered on the Westons’ trampoline. Burton alleged that Snell “wantonly assembled, constructed and installed the trampoline in the backyard of the Weston[s]’s home,” creating “an unreasonably dangerous condition and structure on the property.”  Snell’s advised his insurer of the lawsuit only to have United that it would not defend him in the lawsuit because it policy’s obligations were limited to the specified operations that Snell, as insured performs landscaping. It concluded that the injury from the assembly and installation of a Trampoline did not arise from Snell’s performance of landscaping, and that there was no coverage for such claims.

In addition the application which predated the policy specifically asked Snell: “do you do any recreational or playground equipment construction or erection?” In response, Snell checked the “No” box.

DISCUSSION

Snell Has The Burden To Show Coverage.

Under Alabama law the party seeking coverage under a policy bears the burden of proving that coverage exists.  In short, the Specified Operations provision (fitting into the gap left by the general coverage provision) describes the contours or boundaries of coverage-it does not purport to take away coverage already granted.

Thus, the Specified Operations provision is a limitation of coverage-not an exclusion.

Snell Has Not Shown That United Had A Duty To Defend Him.

Because Snell’s insurance application-which Alabama law requires the Eleventh Circuit to consider part of the policy-expressly disclaims the work he did here. Under Alabama law, insurance contracts are subject to the same rules of interpretation as any other contract. It was undisputed that the trampoline is “recreational equipment.”

Accordingly, the Eleventh Circuit concluded that the information Snell provided in his insurance application conclusively established he was not entitled to coverage. The Eleventh Circuit concluded that Snell’s insurance application forecloses any duty to indemnify for the same reason it forecloses any duty to defend.

Bad Faith

Generally, to prove a claim for bad faith refusal to pay an insurance claim, the plaintiff has the burden to prove

  1. the existence of an insurance contract;
  2. an intentional refusal to pay the claim; and
  3. the absence of any lawful basis for the refusal and the insurer’s knowledge of that fact or the insurer’s intentional failure to determine whether there is any lawful basis for its refusal.

The District Court, having found that United had a lawful basis for denying Snell’s claim and that Snell’s breach of contract claim fails, his claim for bad faith denial also fails.  Snell did not show it was error to grant summary judgment on his bad faith claim.

ZALMA OPINION

The Commercial General Liability insurance policy issued to Mr. Snell, insured Snell against many risks of loss as long as they occurred as a result of his occupation as a landscaper that has no act that did not include any recreational or playground equipment construction or erection. Since the trampoline he installed was clearly an item of recreational or playground equipment thee was no potential for coverage to exist to defend or indemnify Snell for the injuries incurred when a child using the trampoline injured herself.

(c) 2024 Barry Zalma & ClaimSchool, Inc.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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