MARKS & JOHNSON v. SCOTTSDALE INS. CO. NO. 14-1823

Decided: June 29, 2015

The Fourth Circuit affirmed the judgment of the magistrate judge, holding that he correctly granted summary judgement to the Scottsdale Insurance Company and denied summary judgment to Marks and Johnson.

This case arose as an appeal from an award of summary judgement to Scottsdale Insurance Company following an original suit in which Plaintiff-Appellant Danny Ray Marks, Jr. (“Marks”) sued Plaintiff Timothy B. Johnson (“Johnson”) and the Northumberland Hunt Club (“Club”) for negligence in connection with Marks’ shooting accident, and Scottsdale denied coverage to Johnson. Scottsdale had issued a policy to the Club, covering both it and its members, but only to the extent of “member liability for the Club’s activities or activities members perform on the Club’s behalf.” The key question for consideration was whether Johnson, who was a member of the Club, was an “insured” under the policy for purposes of the original suit. Marks filed two complaints, one against Johnson and the Club for negligence in the shooting accident, and one against Scottsdale seeking, under Virginia law, that Scottsdale had a duty following the insurance policy on behalf of Johnson to defend the suit and indemnify Johnson because Johnson’s shooting was considered one of the Club’s activities. The case was removed to federal court based on diversity jurisdiction, and Scottsdale filed a counterclaim saying that it did not have a duty to defend Johnson in the suit because the policy does not cover Club members for purely personal activities. A magistrate judge heard the two cross-motions for summary judgment and ruled on Scottsdale’s behalf.

In deciding this question, the Fourth Circuit first established that it would review the case de novo and, because there was diversity jurisdiction in this case, determined that Virginia law would control. Thus, under Virginia law, the court was to construe the insurance policy using ordinary contract interpretation rules, and set out those rules. The court then examined the policy itself, and decided that the policy was not ambiguous and therefore should not be construed in Johnson’s favor. Specifically, the court said that the members were covered only “with respect to their liability for the Club’s own corporate activities, not with respect to anything they may do during or in connection with Club activities,” and that member activities are only covered when they are “undertaken at the request or for the benefit of the Club.” After determining the extent of the policy, the court then looked at whether Scottsdale had a duty to defend Johnson based on Marks’ complaint. However, after looking at the complaint, the court concluded that it did not claim to hold Johnson vicariously liable for the Club’s activities nor did it claim to hold Johnson liable for member activities on the Club’s behalf, and instead rest solely on “the recreational pursuits indulged in by Club members,” claims that were insufficient to trigger the policy. The Fourth Circuit therefore affirmed the magistrate judge’s decision.

Full Opinion

Jennie Rischbieter

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