Philadelphia Indemnity Insurance Company v. Streb Inc

Background

Philadelphia Indemnity Insurance Company issued Streb Inc. a commercial general liability policy and an umbrella policy for the period February 15, 2018, through February 15, 2019. Streb is a not-for-profit dance and performance company that provides acrobatics instruction. The policies generally required Philadelphia Indemnity to defend suits seeking damages for bodily injury and to pay damages for which Streb became legally responsible, but they contained an exclusion for claims “arising out of the use of any aerial equipment including but not limited to the use of a trapeze or trampoline.” The umbrella policy incorporated the relevant terms and conditions of the general liability policy.

Shana Guins sued Streb in New York State court after suffering severe injuries while attempting a forward tumble from a small trampoline during an acrobatics class. Guins’s complaint did not specifically mention a trampoline, although the undisputed evidence showed that she had been using one. Streb also had a policy from Certain Underwriters at Lloyd’s that covered trampoline-related claims and provided a $50,000 limit that was reduced by defense and other claim expenses.

Philadelphia Indemnity disclaimed coverage under both of its policies and filed this action seeking a declaration that it had no duty to defend or indemnify Streb in the underlying lawsuit. The parties filed cross-motions for summary judgment concerning the duty to defend; Philadelphia Indemnity also sought summary judgment concerning the duty to indemnify. Philadelphia Indemnity separately moved to exclude the testimony and opinion of Streb’s expert, Melanie K. Hall.

Expert testimony

Judge Failla denied the motion to exclude Hall’s testimony. For purposes of deciding the motion, the Court accepted that Hall was qualified in her field and that her method was sufficiently reliable. The Court nevertheless found her opinion of limited usefulness because her experience was primarily in collegiate gymnastics, she provided little supporting material, and evidence about customary meanings in gymnastics was not persuasive for interpreting an insurance contract. The Court also noted that it was not clear under New York law whether expert testimony is proper evidence on whether a contract is ambiguous.

Insurance coverage analysis

The Court applied New York law. Because the parties did not dispute the material facts, the central issue was contract interpretation, which the Court treated as a legal question suitable for summary judgment.

The Court held that the exclusion was unambiguous. Its plain language identified trampolines as a type of aerial equipment and excluded claims arising from the use of any trampoline. The Court rejected Streb’s argument that “aerial equipment” limited the exclusion to only certain types of trampolines or excluded a “mini-tramp.” The Court also found that Streb and its employees used “mini-tramp” and “trampoline” interchangeably and treated a mini-tramp as a type of trampoline.

The Court further held that Guins’s injury arose out of the use of a trampoline because she was injured while attempting a forward tumble from one. Although the underlying complaint did not mention the trampoline, the Court concluded that New York law permits consideration of evidence outside the complaint when that evidence is unrelated to the underlying lawsuit’s merits and conclusively shows that there is no possible coverage. The undisputed evidence established that Guins was using a trampoline, and the unambiguous exclusion eliminated coverage.

Because the exclusion barred coverage, Philadelphia Indemnity had no duty to indemnify Streb. The Court also held that it had no duty to defend because there was no possible factual or legal basis on which Philadelphia Indemnity could ultimately be required to indemnify Streb. The Court rejected Streb’s argument that the omission of the trampoline from Guins’s complaint required a defense.

Disposition

The Court denied Philadelphia Indemnity’s motion to exclude Hall’s testimony, granted Philadelphia Indemnity’s motion for summary judgment, and denied Streb’s cross-motion for partial summary judgment. The Court stated that Streb’s counterclaims for breach of contract and declaratory relief were necessarily decided in Philadelphia Indemnity’s favor because they depended on the same coverage issues. The Clerk was directed to terminate the pending motions, adjourn remaining dates, and close the case.