Insurer Can’t Dodge Fire Death Coverage, Ga. Court Told

Law360 (November 3, 2023) The estate of a man killed in an apartment fire told a Georgia federal court not to grant the complex’s insurer an early win in trying to avoid covering an underlying wrongful death suit, arguing two claimed exclusions are inapplicable or render the policy ambiguous.

Estate administrator Marie Hughes, joined by Venetian Hills Apartments LLC, argued in a response brief filed Wednesday that Kinsale Insurance Co. should not be able to use exclusions for “failure to maintain” and assault and battery to dodge its obligation to defend Venetian Hills.

George Hughes died in a March 2017 fire while trapped in his bedroom at the Atlanta complex, filings show. Marie Hughes, his sister, sued Venetian Hills in Georgia state court for negligence on behalf of his estate, claiming the complex did not have required fire detection and suppression equipment in its units, such as smoke detectors and fire alarms.

Kinsale sued the parties in August 2021, attempting to avoid covering Venetian Hills in the dispute. The insurer moved for summary judgment in October, claiming the “entire basis” of Hughes’ suit is an allegation that Venetian Hills didn’t maintain its property in a safe condition, falling under the failure to maintain exclusion.

However, the insurer’s argument incorrectly characterizes the underlying suit, Hughes said. The term “safe” in the exclusion is attached to a conjunctive list of other terms, all of which are required to bar coverage and none of which Hughes referenced in her complaint, she argued.

“While the words ‘safe’ and ‘safety’ appear in Hughes’ complaint (as any reasonable person would expect in a negligence complaint), there is no mention whatsoever of some failure on the part of Venetian Hills to maintain the property in a ‘sanitary, healthy, habitable and tenantable condition,'” Hughes wrote. “Kinsale’s contention that it does not owe coverage for any failure to maintain the premises in a ‘safe’ condition is nearly so broad as to be limitless.”

The failure to maintain exclusion also states that “all other terms and conditions of the policy remain unchanged,” creating a potential conflict with an endorsement that broadly grants coverage for injury arising from the property’s ownership, maintenance or use, Hughes argued. The “designated premises endorsement” includes the same language, and both “came into existence at the same time” by having the same effective date as the policy period, according to the brief.

Hughes cited Kinsale Insurance Co. v. Flyin’ Diesel Performance & Offroad LLC , a March Texas federal court decision that held Kinsale had a duty to defend because its use of the same language rendered its policy ambiguous.

“The language appearing at the bottom of the endorsement and exclusion creates ambiguity in the policy,” Hughes wrote. “This court should follow the well-reasoned decision of the Texas federal court issued earlier this year, which is wholly consistent with Georgia law. When conflicting endorsements create ambiguity, a court construes the policy in favor of coverage.”

Kinsale’s argument in favor of the assault and battery exclusion relies on extrinsic evidence that the fire was caused by arson, and that the perpetrator pled guilty to arson and voluntary manslaughter charges, according to the brief. However, facts outside the complaint are not considered when determining a duty to defend under Georgia law, and arson does not fall under the definition of assault or battery, Hughes argued. The arsonist also testified she did not know that George Hughes was in the unit and had no intention to harm anyone, according to the brief.

“Having chosen the language of its exclusion, Kinsale is not free to redefine it to broadly cover conduct that does not fit the exclusion,” Hughes wrote.

Jeff Shiver, counsel for Hughes, said his client believes Kinsale’s policy clearly created a duty to defend and indemnify Venetian Hills in the underlying case.

“It is unfortunate that instead of paying a valid claim, Kinsale chose to deny coverage and sue its own insured — years after the underlying litigation commenced — based on a constrained interpretation of the policy it drafted,” Shiver said.

Counsel for Kinsale declined to comment.

Representatives of Venetian Hills did not immediately respond to requests for comment. 

Kinsale is represented by Andres Cordova and Eric P. Benedict of Clyde & Co US LLP.

Venetian Hills is represented by Matthew G. Moffett and M. Ryan Del Campo of Gray Rust St. Amand Moffett & Brieske LLP.

Hughes is represented by Jeff P. Shiver and Darrell W. Hinson of Shiver Hamilton Campbell LLC.

The case is Kinsale Insurance Co. v. Venetian Hills Apartments LLC et al., case number 1:21-cv-03214, in the U.S. District Court for the Northern District of Georgia.

–Additional reporting by Ganesh Setty and Shane Dilworth. Editing by Nick Petruncio.

Update: This story has been updated to include a response from Shiver.