What was supposed to be a fun-filled day at the Cleveland Indians ballpark turned tragic. An inflatable slide set up just outside the ballpark as part of a promotional event, collapsed killing one visitor and hurting another. A subsequent investigation found that the slide had not been properly installed. The families of the deceased and injured visitors filed suit. This particular case deals who’s going to pay.
Let’s rewind back to the beginning of the 2010 baseball season. The Indians had hired National Pastime Sports (“NPS”) to run its promotional events which included the inflatable slide. NPS agreed to add the Indians to its Commercial General Liability policy and to also purchase special events coverage would which cover these types of inflatable structures. The policy was issued through CSI Insurance Group (“CSI”) from New Hampshire Insurance (“NHI”).
The issued policy contained several exclusions including for “claims for bodily injuries arising out of maintenance, use, or operation of temporary structures and sports, leisure, and entertainment activities and devices.” However, the special events coverage apparently was not obtained. The Indians claimed they did not receive a copy of the policy and received no other notice of either this exclusion or the fact that the special coverage had not been issued. They received a certificate saying the purchase was complete and assumed this meant that the special events policy was included. The NHI rejected the claims for the incident because the temporary slides fell under the exclusions.
For the Indians, the big issue was about the fact that the special events coverage had not been issued. The Indians filed suit against CSI for, among other things, negligence and negligent representation. However, when all was said and done, the claims were dismissed and the Indians could not file them again. In addition, CSI won its motion for summary judgment. So, what went wrong for the Indians?
The issue is that the Indians had a third party relationship with CSI and NIH. The main relationship was between NPS and CSI though the policy. While the Indians surely would have benefited from being a third party on the policy, according to the district court, CSI owed them no duty to get the right coverage.
While the Indians may be in the dugout right now, they may not have to go to the locker room just yet. First, the Indians may have a cause of action against NPS assuming that the Court is correct and the insurance companies have no duty of care to the third parties. It was NPS who promised to secure the special coverage and it was NPS who should have ensured that the coverage was bought before undertaking the special events. NPS may have had a duty, contractual or otherwise, to get the correct coverage.
And this is not to say that CSI did not have a common law duty to the Indians. A duty might exist in the event that CSI knew that the Indians were third party beneficiaries to the policy, knew that they requested special event coverage, and knew that the Indians would rely on the certificate. Hopefully a ruling will come out before the first “play ball” of the next baseball season. The case is number 12-1589, Cleveland Indians Baseball Co. v. New Hampshire Insurance Co., et al.
Aaron Aisen is a member of Goldberg Segalla’s Global Insurance Services Practice Group and focuses his practice on regulatory matters. He brings a deep background in policy, management, and law at the local, state, national, and international levels.