Bodily Injury Exclusion Inapplicable to Wrongful Death Suit

The United States District Court for the Northern District of Ohio has held that a bodily injury exclusion did not preclude coverage for a wrongful death suit, reasoning that the death did not cause the alleged wrongful conduct and therefore did not “arise out of” it.  Clarendon Nat’l Ins. Co. v. Lexington Ins. Co., 312 F. Supp. 3d 639 (N.D. Ohio 2018).  The court also held that the assault at issue was not “discovered” for purposes of triggering coverage until the underlying claimants learned of the alleged wrongful conduct at issue.

A prison guard assaulted a prisoner in 2004.  The prisoner eventually died as a result of injuries sustained in the assault.  At the time, however, the coroner wrongly determined that the prisoner died of a seizure disorder.  In 2008, the county reopened the investigation into the prisoner’s death, and the coroner concluded that it was a homicide.

The prisoner’s family filed a civil action against the county government and several police officials.  The suit alleged, inter alia, wrongful death, violations of 28 U.S.C. § 1983, negligence, assault and battery, intentional infliction of emotional distress, loss of consortium, and civil conspiracy under the Racketeer Influenced and Corrupt Organizations Act.

The county had obtained municipal liability policies from two different insurance carriers.  The first insurer issued a policy that was in force at the time of the assault.  The second insurer issued a policy in force at the time the investigation was re-opened.  The second insurer’s policy was triggered by a wrongful act “that is first discovered or becomes manifest during the Policy Period.”  The second insurer’s policy did not cover wrongful acts “arising out of Bodily Injury,” defined to include “death” when resulting from bodily injury, sickness or disease.  The second insurer’s policy also provided that it had no coverage obligations until “Other Insurance is properly exhausted.”  “Other Insurance” was defined to mean “any other insurance paid on behalf of the insured for damages which affords coverage with respect to injury, damage or acts to which this policy applies.”

The county sought coverage from the first insurer, which agreed to defend it and the police officials in the underlying litigation.  The county also sought coverage from the second insurer, which denied coverage.  The first insurer brought suit against the second for equitable contribution, alleging that it shared a duty to pay defense costs and indemnify the insured for the settlement of the underlying litigation, which did not exhaust the limits of the first policy.

In the ensuing coverage litigation, the court first considered whether the second insurer’s policy afforded coverage in excess of the limits of the first insurer’s policy.  The court called the second insurer’s definition of “Other Insurance” a “peculiar” one that differed from other clauses in other policies.  The court concluded that because the first insurer had not actually paid any amounts “on behalf of the insured for damages” at the time the suit was tendered to the second insurer—as provided for in the second insurer’s definition of “Other Insurance”—the first policy did not qualify as “Other Insurance.”  Accordingly, the court held that the second insurer was not an excess insurer.

The court next considered whether a wrongful act was “first discovered or be[came] manifest” during the period of the second insurer’s policy.  The first insurer argued that the wrongful acts were “first discovered” from the perspective of the claimant in 2008 when the second insurer’s policy was in effect.  The second insurer argued that the wrongful acts were discovered in 2004, when the first insurer’s policy was in effect, because the insureds in fact knew of the assault at that time.  According to the court, although the assault took place in 2004, it was only with the disclosure of the assault in 2008 that the wrongful acts were “discovered”—because it was not until then that the victims would have been aware that they had a claim for damages.

Finally, the court considered whether the claims arose out of “Bodily Injury” as defined in the second policy.  The court found that the exclusion was inapplicable to all but one of the counts in the complaint.  According to the court, “arising out of” under Ohio law meant “cause or contribute to.”  While the definition of “Bodily Injury” plainly included “death,” the court reasoned that the prisoner’s death did not cause the wrongful acts; rather, the wrongful acts caused the death.  As a result, the court held that the bodily injury exclusion did not apply to most counts in the complaint.  However, the court did hold that the RICO count was barred by the bodily injury exclusion.  That count was directed at the coverup of the alleged death; the court held that the death, therefore, was a contributing factor to the coverup.


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