In Sciolla v. West Bend Mutual Insurance Co., No.11-5604, 2013 U.S. Dist. LEXIS 178020, (E.D.Pa. Dec. 18, 2013), the Eastern District of Pennsylvania held that an exclusion clause relating to sponsorship was ambiguous and the insurer was unable to sustain its burden of proving the applicability of the clause.
Both Plaintiffs were teachers who were injured while taking part in a Donkey Ball event at their school. The event essentially involved people riding donkeys while attempting to play basketball. Plaintiffs sued Buckeye Donkey Ball, L.L.C. in a previously filed action and Buckeye subsequently assigned its rights to Plaintiffs in order for them to directly assert claims against its insurer, West Bend.
The crux of the case centered on the following “Sports or Athletic Participant Exclusion” in a general liability policy issued to Buckeye:
“With Respect to any operations shown in Schedule, this insurance does not apply to ‘bodily injury’ to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.”
After noting that neither Pennsylvania nor the Third Circuit had interpreted the language of the clause, the court turned to other jurisdictions which have analyzed the commonly used exclusion. Citing Zurich Reinsurance (London) Ltd. v. Westville Riding Club, Inc., 82 F. Supp. 2d 1254 (E.D. Okla. 1999) the court outlined the four elements necessary to apply the exclusion:
1. That the event in which the person was injured was a contest or exhibition;
2. That the contest or exhibition was of an athletic or sports nature;
3. That the contest or exhibition was sponsored by the named insured; and
4. That the injured person was practicing for or participating in the contest or exhibition at the time of the injury.
The court centered its analysis on the third prong (sponsorship) noting that West Bend could not establish that Buckeye was the sponsor of the event. In deciding whether the term “sponsor” was ambiguous, the court looked to common usage and various dictionary definitions of the term. Noting that some courts using common dictionary definitions in their analyses had come to varying conclusions, the court held that the term is subject to more than one interpretation and when applied to the facts in the case at bar, was ambiguous. Given that ambiguity must be construed against the insurer, West Bend was unable to meet its burden to prove the applicability of the exclusion. Plaintiffs’ motion for summary judgment as to the exclusion was therefore granted.
Upon finding that the exclusion did not apply, the court then moved to the question of whether the insurer had a duty to defend Buckeye. After examining Plaintiffs’ complaint and finding that facts within the policy’s coverage were alleged, the court found the West Bend had the duty to defend and should liability be proven at trial, they would also have the duty to indemnify.