Insurer has no duty to defend, indemnify fireworks distributor for volunteers' injuries
The policy did not provide coverage for any claims arising out of injuries or death to shooters or their assistants.
The U.S. Court of Appeals for the Seventh Circuit has affirmed a district court’s finding that an insurance company had no duty to defend or indemnify a fireworks distributor for the injuries sustained by two volunteers at a July 4 fireworks display.
The volunteers, Timothy Olson and Todd Zdroik, helped with the displays in separate towns in 2018. Olson opened and closed a bin from which other volunteers retrieved fireworks during a show in Rib Lake, Wisconsin. Zdroik worked as a “shooter” by manually lighting fuses on the mortar shells at the Land O’Lakes, Wisconsin, firework display, according to the circuit court’s opinion filed Monday.
The fireworks were distributed by Spielbauer Fireworks Co. In both situations, the volunteers claimed that the fireworks exploded prematurely, causing severe burns to both men, according to the opinion.
Olson later died from unrelated causes, but his estate and Zdroik sued Spielbauer in Wisconsin state courts located where both Olson and Zdroik had admitted to volunteering at the events. However, the parties disputed whether Spielbauer’s insurer, T.H.E. Insurance, covered the volunteers’ injuries under its general and excess liability policies.
T.H.E. sought declaratory judgment in the U.S. District Court for the Eastern District of Wisconsin and Judge William C. Griesbach agreed, finding T.H.E. had no duty to defend or indemnify Spielbauer because “the policy in question excluded coverage for injuries sustained by volunteers at firework displays,” the opinion said.
Olson’s estate, Zdroik, and Spielbauer appealed to the Seventh Circuit.
Under Spielbauer’s general and excess liability insurance policies, the “shooters endorsement” says: “This policy shall NOT provide coverage of any kind (including but not limited to judgment costs, defense, costs of defense, etc.) for any claims arising out of injuries or death to shooters or their assistants hired to perform fireworks displays or any other person assisting or aiding in the display of fireworks whether or not any of the foregoing are employed by the Named Insured, any shooter or any assistant.”
The question before the Seventh Circuit was whether the exclusion extended to any and all volunteers or only to those assisting hired shooters and hired assistants.
The estate, Zdroik and Spielbauer had argued that the exclusion applies to “volunteers only if they were assisting hired shooters or hired assistants at the time they sustained their alleged injuries,” the opinion said.
“At a more practical and concrete level, that would mean the exclusion does not apply to the estate and Zdroik’s claims because there were no hired persons at either Fourth of July fireworks event. For its part, T.H.E. insists that the ‘other persons’ category is broader and includes any volunteer assistant regardless of whether anyone else at the display worked as a hired employee or contractor,” Judge Michael Y. Scudder Jr. wrote on behalf of the appellate court.
The unanimous three-judge panel, also including Judges Joel M. Flaum and Thomas L. Kirsch II, agreed that a plain reading of the provision showed that T.H.E. had no obligation to the appellants’ claims and that the ”‘shooters endorsement’ excludes coverage for all volunteers, even if they made only small contributions.”
Spielbauer further urged the appellate court from reaching the indemnity question, claiming it was not ripe for decision without a judgment on liability. The circuit court disagreed.
Wisconsin law distinguishes between a duty to defend and a duty to indemnify. In 2012, the Wisconsin Supreme Court held in Olson v. Farrar that the insurer’s duty to defend “is broader than its duty to indemnify,” and that “‘the insurer is under an obligation to defend only if it could be held bound to indemnify the insured, assuming that the injured person proved the allegations of the complaint, regardless of the actual outcome,’” the opinion cited.
“First, Wisconsin law allows us to reach T.H.E.’s indemnification obligations because the duty to defend is broader than the duty to indemnify. … Spielbauer does not argue that the district court’s decision on the duty to defend was unripe. And where the district court has found there is no duty to defend, the immediate legal consequence is that there is also no duty to indemnify. … This consequence is a product of Wisconsin’s substantive law, which we are bound to apply in a diversity case like this one.”
In the present case, there was no dispute that the two men were volunteers and that the district court’s opinion hinged on a policy or legal interpretation, rather than a factual issue and that Spielbauer’s coverage was ripe for review.
Related: