Since President Obama called for new gun-control legislation after the Sandy Hook tragedy, sales of weapons have spiked and government officials have proposed a variety of new measures to encourage —or even mandate —gun training and ownership. In a development that is arguably unrelated to this increase in the number of people handling firearms, accidental shootings have occurred at gun shows and ranges, in gun stores and even during gun certification training courses. At the same time, legislators in at least six states are preparing bills that would require every gun owner to obtain liability coverage.
These are times that call for clarity about which gun risks liability policies will cover. For example, if a policy issued to a gun store excludes coverage for bodily injury to an “employee . . . arising out of and in the course of [his] employment,” insurers will want to know if it applies to an employee who was shot and killed while a co-worker demonstrated a handgun. In a recent West Virginia case, the trial court agreed the exclusion was unambiguous, but left it to the jury to decide whether it might nevertheless be unenforceable—because it had not been “brought to the attention” of the insured. In American States Insurance Company v. Surbaugh, No. 11-1186 (W.Va. Feb. 6, 2013), the Supreme Court of Appeals of West Virginia saved the day, declaring that the coverage issues should be decided by the court.
Gerald Kirchner and Robbie Bragg were once co-workers employed by Grimmett Enterprises, a sporting goods store in Rainelle, West Virginia. While showing a customer how to load a weapon the store had on sale, Mr. Bragg accidentally shot and killed Mr. Kirchner. Mr. Kirchner’s mother, Barbara Surbaugh filed a wrongful death action against Mr. Bragg and a workers’ compensation deliberate intent action against the store.
The parties settled those claims: The defendants agreed to entry of a judgment for $1.5 million, and Ms, Surbaugh agreed not to execute the judgment against them. Ms. Surbaugh also received an assignment of all claims the defendants had against their insurers for refusing to provide defense or coverage. After settling with the issuer of Bragg’s homeowners policy, she brought a declaratory judgment action against Grimmett’s commercial liability insurer.
In that action, the parties filed cross-motions for summary judgment. Ms. Surbaugh asserted that the employee exclusion “was ambiguous, was not conspicuous, and had not been brought to the attention of Mr. Grimmett.” The insurer denied the provision was ambiguous, and it contended that it called the exclusion to the insured’s attention by, inter alia, (i) printing it in boldface, capital letters, in a larger font size than the rest of the material on the page, and (ii) sending the insured a cover letter that said: “Please read your policy carefully.” (The insured admitted he had read the letter, but not the policy.)
The trial court agreed the exclusion was unambiguous, but it sent the issue of adequate disclosure to the jury. Mr. Grimmett was the only witness at the trial. At the conclusion of the evidence, the jury received a special verdict form with only one question: “Was the exclusionary language at issue in this case brought to the attention of the insured, Grimmett Enterprises, Inc.” The jury answered, “No.”
On appeal, the Supreme Court explained that declaratory judgment actions involving insurance coverage issues are different from ordinary ones:
[I]ssues of fact, that are normally tried by a jury, may be submitted to a jury in a declaratory judgment action. However, in the context of a declaratory judgment action to determine insurance coverage, generally the issues presented are for the trial court to decide. This Court has held that determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law.
Because the employee exclusion was not ambiguous, and because the facts were not in dispute, the court ruled that the trial court had erred by asking the jury to decide whether the exclusion should be enforced, and it considered the parties’ summary judgment motions de novo. In doing so, it found that the insurer had not, after all, been responsible for Mr. Grimmett’s failure to read his own policy:
[T]here is no basis to suggest that [the insuer] had to do more than demonstrate that it communicated in writing to Mr. Grimmett that he should read the policy and its exclusions and contact American States if he had concerns. Had Mr. Grimmett read the policy, as he was told to do in a letter and on the policy itself, he would have learned of the exclusions and could have contacted American States with any questions he had regarding said exclusions. In other words, [the insurer ] fulfilled its obligation to bring the exclusion to the attention of Mr. Grimmett, but Mr. Grimmett failed to carry out his duty to read the policy.