The Supreme Court of New Hampshire recently issued an opinion in the case of Michael Newell v. Markel Corporation, et al., 2016 WL 3533495 N.H. (2016). The plaintiff, Michael Newell, was allegedly injured in a slip and fall accident at a property owned by Brames, Inc. Brames was insured under an amusement park general liability policy issued by Essex. The case was before the Supreme Court on the defendants’ appeal of the trial court’s order granting summary judgment to the plaintiff on his insurance coverage issue.
Mr. Newell alleged that he slipped and fell on Brames’ wet bathroom floor during Motorcycle Week. The floor was recently washed by Ivy Banks of I&L Cleaning Services. Brames and Mr. Banks had an arrangement in which Mr. Banks maintained the bathrooms during Motorcycle Week in exchange for tips from patrons using the bathrooms. Mr. Banks neither received nor sought any other payment for his services. The issue before the court was whether Mr. Banks was an insured under the Essex policy.
Mr. Newell brought two lawsuits relating to the accident. His first lawsuit was against Brames, which concluded with an out of court settlement. The second lawsuit was against Mr. Banks. Mr. Banks did not enter an appearance or file an answer. The defendants declined to defend Mr. Banks or intervene. As such, the trial court entered a default judgment and awarded Mr. Newell $300,000 in damages. Mr. Newell brought the subject lawsuit against the defendants to recover the default judgment against Mr. Banks. Mr. Newell argued that Mr. Banks was an insured under the policy, that the defendants breached the insurance contract when they failed to defend and indemnify Mr. Banks, and that Mr. Newell was a third party beneficiary under the insurance contract.
The trial court concluded that under one of multiple reasonable interpretations of the policy, Mr. Banks qualified as an insured as a “volunteer worker.” The trial court construed the ambiguous policy language against the defendants and found in favor of Mr. Newell.
The Supreme Court cited Great American Dining v. Philadelphia Indemnity Insurance Company, 164 N.H. 612, 616 (2013), which noted that “[i]f more than one reasonable interpretation is possible, and an interpretation provides coverage, the policy contains an ambiguity and will be construed against the insurer.”
To determine whether Mr. Banks was a “volunteer worker,” the court looked at the policy, which provided: “And your Volunteer Workers are Insureds only for activities or work they conduct or perform: At your direction; and Within the scope of their duties for you.” The policy stated: “Volunteer Worker means any person who: Isn’t an employee or a leased temporary worker; Donates his or her work; and Isn’t paid a fee, salary or other compensation for that work.”
Essex argued that Mr. Banks was not a “volunteer worker” because he “did not donate his services,” he “did receive compensation in the form of tips,” and he “did not act at Brames’ direction.”
The court looked at the meaning of the term “donate.” The court acknowledged Essex’s argument that the general meaning encompasses providing a gift or giving property or money without consideration. However, the court found Mr. Newell’s argument to be reasonable that the term “donate” cannot mean “to give without compensation,” because the definition of “volunteer worker” in the policy already included “isn’t paid . . . other compensation.” Since both interpretations were plausible, the court determined that the term was ambiguous and construed it in favor of coverage.
The court similarly examined the meaning of the term “compensation,” specifically whether the tips Mr. Banks received qualified as compensation. The court also examined the meaning of the term “at your direction,” regarding whether Mr. Banks acted at the direction of Brames. The court found both terms to be ambiguous and construed them in favor of coverage.
Since all of the disputed terms were ambiguous and must be construed in favor of coverage, the trial court did not err in finding that Mr. Banks was a “volunteer worker” and therefore an insured under the policy. If you have any questions about whether your volunteers are covered under your insurance policies, please do not hesitate to contact us.