Federal Judge Finds Insurer Obligated to Indemnify Apartment Complex Following Fatal Fire
A federal judge recently rejected Kinsale Insurance Co.’s declaratory judgment action in which the insurer claimed that it was not obligated to defend an apartment complex in underlying litigation related to a fatal fire determined to be intentionally set.
In March 2017, George Hughes was in his bedroom in the Venetian Hills apartment complex in southwest Atlanta when a fire was determined to be intentionally set by a nonparty. George Hughes later died from smoke inhalation and burn injuries. In an underlying state action, his estate, headed by sister Marie Hughes, sued Venetian Hills for wrongful death for its alleged failure to maintain proper fire prevention measures, which led to the man’s death.
Venetian Hills was ordered to pay $140 million in a verdict handed down by a DeKalb County, Georgia, jury in December. After a trial presided over by Judge Ana Martinez, the jury awarded $75 million for Hughes’ wrongful death, $25 million for pain and suffering and $40 million in attorney fees.
Venetian Hills turned to its insurer for indemnification. While the complex had an active general liability policy with Kinsale, the insurer filed a declaratory judgment action in U.S. District Court for the Northern District of Georgia. Kinsale challenged its responsibility to indemnify Venetian Hills, maintaining that the failure to maintain exclusion and the assault and battery exclusion, excused its coverage in the underlying litigation.
The insurer argued that because the underlying claim involves the safety of Venetian Hills’ facilities, the policy shouldn’t apply.
Need Legal Help?
Chat with a real estate lawyer near you. It’s only $5 for a 1-week trial. Ask unlimited questions.
Counsel for Hughes, Jeff Shiver of Shiver Hamilton Campbell in Atlanta, told the Daily Report in January that Kinsale rejected several offers of $1 million, the policy limit, despite the likelihood of a verdict against Venetian Hills.
“Despite numerous settlement offers before the state court verdict, to this day Kinsale has not made an offer of any amount,” Shiver told the Daily Report in an email.
Last month, U.S. District Judge Leigh Martin May denied Kinsale’s motion for summary judgment. In the order, issued on June 7, May agreed with Shiver’s arguments that the failure to maintain exclusion was ambiguous, and that the assault and battery exclusion didn’t apply.
“The Court construes the Policy to exclude claims involving Defendant Venetian Hills’ failure to maintain the premises in a safe, sanitary, healthy, habitable, and tenantable condition. Because the underlying civil action only alleges that Defendant Venetian Hills maintained the premises in an unsafe condition, the Policy’s exclusion does not apply,” May wrote.
May also noted that the nonparty in this case, but who was convicted of setting the complex ablaze, indicated that she did not know George Hughes was in the building on the day of the fire and that she did not intend to kill him, the opinion said.
In its argument, Kinsale cited a nonbinding decision from California’s Second Appellate Division, Mount Vernon Fire Insurance v. Oxnard Hospitality Enterprise (2013), which involved a person throwing a “flammable liquid” onto another person and lighting it on fire.
May said Mount Vernon “more clearly qualifies for assault or battery,” while the facts in the present case do not show intentional harm directed against Hughes.
“Judge May’s order denying summary judgment represents an accurate application of the law,” Shiver said. “The order not only follows legal precedent but also provides a clear and reasonable interpretation of the insurance policy and exclusions that Kinsale drafted.”
The attorney reiterated that the ensuing legal battle was not necessary due to the unlikelihood of Venetian Hills succeeding on the merits of their defense for the wrongful-death claim.
“George Hughes’ death occurred over seven years ago, a terrible death that could’ve been avoided. Kinsale knew the liability facts made it very difficult for Venetian to prevail in the wrongful death case and it had many opportunities to settle the case before the verdict,” Shiver said. “My clients never wanted to be in this position but are committed to seeing this through.”
Shiver was joined by Darrell Hinson of Shiver Hamilton.
Venetian Hills was defended by Bryan Grantham of national defense litigation firm Hawkins Parnell & Young in Atlanta, while Kinsale was represented by Andres Cordova of Clyde & Co in Miami. Neither attorney could be immediately reached for comment.
The parties were ordered to confer and determine if there are remaining issues for a trial.
Source: Law.com
Accessibility