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Tenth Circuit Rules Insurer Has Duty to Defend Suit Over Fall Down Elevator Shaft – Western World Ins. v. Markel American Ins.

As a Missouri personal injury attorney, I spend a lot of time helping my clients deal with insurance companies. Most injury claims can be paid by an insurance company for the wrongdoer – an auto insurance, property insurance or other policy that covers injuries on the premises or by the covered person. Of course, insurance companies prefer not to pay any money; their ability to make a profit depends on collecting premiums but paying as little as possible in benefits. As a result, they resist covering an injury in any case where they think they can, which leads to disputes. In Western World Insurance Co. v. Markel American Insurance Co., insurance companies were pitted against one another when one refused to defend a lawsuit another had agreed to defend.
The case stems from injuries to Tyler Hodges of Oklahoma City, who was injured while he worked as a ticket-taker at a haunted house. Hodges had to replace a flashlight that had died, so he walked through the house using the light of his cell phone, but turned off that light when an actor complained that it was ruining the illusion. Hodges was trying to reach the house’s freight elevator, where spare flashlights were kept. But due to the lack of light, he didn’t notice there was no elevator on his floor, stepped in and fell 20 feet down the shaft. Though Hodges received a settlement years ago, the haunted house company, Brewer Entertainment, had two insurance companies that fought over who would cover the payments. Western conceded liability, but Markel refused to pay claims, which eventually led Western to sue Markel for half the cost of defending the case. The federal district court found that an escape clause in Markel’s policy permitted it to escape otherwise valid liability and granted summary judgment.
Western appealed, arguing that the escape clause does not take away liability. The Tenth U.S. Circuit Court of Appeals ultimately found that when viewed in context, the clause does not take away liability. Read in isolation, the clause – from a later endorsement to the policy – says that an “insured” does not include any entity that already carries any other insurance, even if that other insurance has been exhausted. But when inserted into the main policy as intended, the Tenth said, it’s clear that the exclusion applies only to the list of entities that count as insureds under the policy. Markel argued that the language is broad enough to apply to the whole policy, not just this list or its final item. But another clause in the policy requires Markel to split the costs of coverage evenly with other primary insurance, the Tenth noted, which would be in conflict with the reading of the escape clause Markel prefers. In a case of ambiguity (or purported ambiguity), the Tenth said, Oklahoma law breaks the tie in favor of the insured, which means Markel must pay. Thus, it reversed the summary judgment order and remanded the case.
I’m pleased to see this victory against an insurance company that seemed to be attempting to wiggle out of its legal duty to defend the case. As the Tenth Circuit observed, insurance companies are willing to squander a great deal of time and money to avoid their obligations, even though it would be simpler to draft contract language that clearly outlines their responsibilities and exclusions to begin with. As a St. Louis premises liability lawyer, I suspect that ambiguities, whether intentional or not, are useful to insurance companies that want to avoid their obligations when an expensive case comes up. It’s not clear what the injuries were in this case, but a 20-foot fall down an elevator shaft certainly sounds grim. Hodges most likely argued that the haunted house company had a legal obligation to make its premises safe for visitors and employees. As a southern Illinois slip and fall attorney, I know this obligation applies to almost any business that invites the public to visit.

If you or someone you love suffered an injury through someone else’s carelessness in Missouri or southern Illinois, don’t hesitate to call Carey, Danis & Lowe for help. For a free, confidential case evaluation, you can send us an email or call toll-free at 1-877-678-3400.
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