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Great Divide Insurance Co. v. Hawaiian Kamalii, Inc.

United States District Court, D. Hawaii

March 15, 2019



          Leslie E. Kobayashi United States District Judge

         Before the Court are: 1) Plaintiff Great Divide Insurance Company's (“Great Divide”) Motion for Summary Judgment (“Motion”), filed November 8, 2018; 2) Defendants Hawaiian Kamali`i, Inc., doing business as Hawaiian Canoe Club (“HCC”), Hawaiian Canoe Racing Association (“HCRA”), and Kihei Canoe Club's (“KCC” and collectively “Club Defendants”) Counter Motion for Partial Summary Judgment Re: Duty to Defend (“Countermotion”), filed December 28, 2018; and 3) Defendant Mark David Stevens's (“Stevens”) joinder of simple agreement in the Countermotion (“Joinder”), also filed on December 28, 2018. [Dkt. nos. 38, 49, 51.] These matters came on for hearing on January 18, 2019. On February 5, 2019, an entering order was issued, informing the parties of the Court's rulings. [Dkt. no. 63.] This Order supersedes that entering order. For the reasons set forth below, Great Divide's Motion is granted and the Club Defendants' Countermotion and Stevens's Joinder are denied.


         Great Divide filed the instant action to obtain a declaratory judgment that it does not have a duty to defend nor a duty to indemnify the Club Defendants and Stevens (all collectively “Defendants”) as to claims arising from a September 16, 2016 incident. [Complaint for Declaratory Judgment (“Complaint”), filed 4/17/18 (dkt. no. 1), at ¶ 9.] Great Divide filed this action pursuant to diversity jurisdiction and the Declaratory Judgment Act. [Id. at ¶¶ 6-7 (citing 28 U.S.C. §§ 1332, 2201).]

         I. The Underlying Action

         The action for which Defendants sought defense and indemnification from Great Divide is a state court action filed on November 14, 2017 by Faith Ann Kalei-Imaizumi (“Kalei-Imaizumi”), her husband, and their children (“Underlying Plaintiffs”), Kalei-Imaizumi, et al. v. Stevens, et al., Civil No. 17-1-0474 (“Underlying Action”). [Concise Statement in Supp. of Motion (“Motion CSOF”), filed 11/8/18 (dkt. no. 39), at ¶ 1; Concise Statement of Facts in Supp. of Countermotion (“Countermotion CSOF”), filed 12/28/18 (dkt. no. 50), at pg. 2 (admitting Great Divide's ¶ 1).[1]

         The Complaint in the Underlying Action (“Underlying Complaint”) alleges:

-HCRA “‘was an event sponsor, host and/or an organizer of the 2016 Pailolo Challenge Outrigger Canoe Race that took place on September 17, 2016'” (the “2016 Pailolo Challenge” or “the Challenge”); [Motion CSOF at ¶ 2; Countermotion CSOF at pg. 2 (admitting Great Divide's ¶ 2);]
-the annual Pailolo Challenge is a twenty-six mile, outrigger canoe race from Kapalua, Maui to Kaunakakai, Moloka`i; [Motion CSOF at ¶ 3; Countermotion CSOF at pg. 2 (admitting that Great Divide's ¶ 3 is “accurately quoting from the Underlying [Complaint]”); and
-“[t]he 2016 Pailolo Challenge was the tenth time that Defendant HCC hosted, organized, and/or staged the event.” [Motion CSOF at ¶ 4; Countermotion CSOF at pg. 2 (same as with ¶ 3)].

         The state-issued, marine ocean water event permit for the 2016 Pailolo Challenge identifies HCRA as the Challenge sponsor. [Motion CSOF at ¶ 5; Countermotion CSOF at pg. 2 (admitting Great Divide's ¶¶ 5-22 “accurately quot[es] from the Underlying [Complaint], ” but denying those are the only relevant allegations in the Underlying Complaint).] The Underlying Action also alleges HCRA was the Challenge sponsor, as well as a host and/or organizer of the Challenge. [Countermotion CSOF at ¶¶ 7- 8; Response to Countermotion CSOF (“Reply CSOF”), filed 1/4/19 (dkt. no. 53), at ¶¶ 7-8.[2] As the Challenge host, HCC “had substantial control over and involvement in the staging of the race, including the right to hire and fire the race director and staff” and “had the right to determine and/or enforce the rules and regulations governing eligibility for and the conduct of the race.” [Motion CSOF at ¶ 6; Countermotion CSOF at pg. 2.]

         The Underlying Complaint alleges that, prior to the 2016 Pailolo Challenge, Stevens agreed to provide and operate an escort boat for one of the participating teams. At all relevant times, Stevens owned the “Ohana, ” a twenty-six-foot 2004 Twin Vee Weekender, and he “was an employee, servant and/or authorized agent of Defendants HCRA, HCC and/or KCC acting within the course and scope of that relationship.” [Motion CSOF at ¶¶ 7-9; Countermotion CSOF at pg. 2.] The Ohana had a ladder between its two outboard motors, neither of which had a propeller guard. Further, the Ohana did not have a “‘kill switch'” or other device to prevent the motors from operating while the ladder was deployed. [Motion CSOF at ¶ 10; Countermotion CSOF at pg. 2.]

         Kalei-Imaizumi was part of the switch crew of the team whose canoe the Ohana was to escort during the 2016 Pailolo Challenge. After the crew members had boarded the Ohana, but before the Ohana began escorting the team's canoe, and while the Ohana was still in a congested race staging area, Stevens's hat flew into the water. Kalei-Imaizumi entered the water from the Ohana to retrieve the hat. As she attempted to re-board the Ohana using the ladder between the motors, the Ohana reversed and a propeller from one of the motors struck her while she was at or near the ladder. Kalei-Imaizumi suffered significant injuries, resulting in the amputation of her left leg and permanent brain injury. [Motion CSOF at ¶¶ 12-15; Countermotion CSOF at pg. 2.]

         Stevens owned the Ohana. [Countermotion CSOF at ¶ 11; Reply CSOF at ¶ 11 (admitting the Club Defendants' ¶ 11).] Stevens has stated, in answers to interrogatories in the Underlying Action, that he was hired for the 2016 Pailolo Challenge by Catherine Bellafiore (“Bellafiore”). [Motion CSOF at ¶ 30; Countermotion CSOF at pg. 3 (admitting that Great Divide accurately referred to Stevens's answers to interrogatories).] The Underlying Complaint can be interpreted as alleging that KCC and/or one of its affiliates hired Stevens. [Countermotion CSOF at ¶ 12; Reply CSOF at ¶ 12.] Specifically, “[i]n her Pretrial Statement, Ms. Kalei-Imaizumi alleged that Bellafiore was ‘acting as an authorized agent and/or representative of Defendant KCC (NOT HCC).'” [Countermotion CSOF at ¶ 14; Reply CSOF at ¶ 14.]

         The Underlying Action includes: a negligent failure to warn claim against Stevens; a claim that Stevens was negligent or grossly negligent in operating the Ohana; a claim that the Club Defendants were negligent in their staging of the race; a claim against the Club Defendants alleging they obtained insufficient liability insurance for the 2016 Pailolo Challenge; a negligent infliction of emotional distress claim against Defendants; and a loss of consortium claim against all Defendants. [Motion CSOF at ¶¶ 16-21; Countermotion CSOF at pg. 2.]

         II. The Policy

         During the period from April 1, 2016 to April 1, 2017, HCC held a Commercial General Liability Insurance Policy, policy number GC966353, issued by Great Divide (“Policy”). [Motion CSOF at ¶ 23; Countermotion CSOF at pg. 3 (admitting Great Divide's ¶ 23); Motion CSOF, Decl. of J. Patrick Gallagher (“Gallagher Decl.”), Exh. B (Policy).[3] The Policy's Insuring Agreement appears in the Commercial General Liability Coverage Form, CG 00 0112 04 (“CGL Form”), Section I, and states:

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result. . . .
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory” . . . .

[Policy at 11.[4] The term “bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” [Id. At 22, ¶ 3.] The parties agree that Kalei-Imaizumi alleges she suffered a bodily injury. [Countermotion CSOF at ¶ 3; Reply CSOF at ¶ 3.[5] The term “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” [Policy at 24, ¶ 13.]

         A. The Insureds

         Section II of the CGL Form states:

1. If you are designated in the Declarations as:
. . . .
d. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your “executive officers” and directors are insureds, but only with respect to their duties as your officers or directors. Your stock holders are also insureds, but only with respect to their liability as stockholders.
. . . .
2. Each of the following is also an insured:
a. Your “volunteer workers” only while performing duties related to the conduct of your business, or your “employees”, other than either your “executive officers” (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.

[Id. at 19 (emphasis omitted).[6] The “ADDITIONAL INSURED - CLUB MEMBERS” endorsement, CL 239 (11/85) CG 20 02 11 85 (“Member Endorsement”), amends Section II “to include as an insured any of your members, but only with respect to their liability for your activities or activities they perform on your behalf.” [Id. At 27.]

         Further, the “ADDITIONAL INSURED - PRIMARY AND NONCONTRIBUTORY - AUTOMATIC STATUS WHEN REQUIRED IN CONTRACT OR AGREEMENT” endorsement, L805 (05/09) (“Contract/Agreement Endorsement”), states:

A. Section II - Who Is An Insured is amended to include as an additional insured any person or organization when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability for “bodily injury”, “property damage” or “personal and advertising injury” caused, in whole or in part, by your acts or omissions, or the acts or omissions of those acting on your behalf:
1. In the performance of your ongoing operations for the additional insured; or 2. In connection with premises owned by or rented to you.
But only for:
1. The limits of insurance specified in such written contract or agreement, but in no event for limits of insurance in excess of the applicable limits of insurance of this policy; and 2. “Occurrences” or coverages not otherwise excluded in the policy to which this endorsement applies.
B. Status as an additional insured for the person or organization to which this endorsement applies:
1. Commences during the policy period and after such written contract or agreement has been executed; and
2. Ends when:
a. Your ongoing operations for that additional insured are ...

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