Nov. 17, 2022 – An insurance policy exclusion for injuries suffered by fireworks display workers barred claims by two volunteers injured by prematurely exploding fireworks, the U.S. Court of Appeals for the Seventh Circuit has ruled.
In T.H.E. Insurance Company v. Olson, 51 F.4th 264 (7th Cir. 2022), the Seventh Circuit also held that indemnity issue was ripe for adjudication.
State Lawsuit over Fireworks Mishap
In July 2018, Timothy Olson volunteered to help with the annual fireworks display in the Village of Rib Lake. The same month, Todd Zdroik volunteered to help with the fireworks display for the Town of Land O’ Lakes.
Jeff M. Brown is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by
email or by phone at (608) 250-6126.
The Spielbauer Fireworks Company (Spielbauer) distributed the fireworks used in both displays. Each municipality used only volunteers to put on its fireworks displays.
At both displays some of the fireworks exploded prematurely, and both Olson and Zdroik suffered severe burns. Olson later died from causes unrelated to the burns.
Zdroik and Olson’s estate sued Spielbauer in state court. The parties and T.H.E. Insurance (T.H.E.), Spielbauer’s insurer, disagreed about whether Spielbauer’s general and excess liability policies would cover the claims.
Federal Lawsuit Follows
T.H.E. filed a motion in the U.S. District Court for the Eastern District of Wisconsin under the federal Declaratory Judgment Act.
T.H.E. moved for a judgment on the pleadings. The district court granted the motion after determining that T.H.E. had no duty to defend or indemnify Spielbauer, because the insurance policy excluded coverage for volunteers injured at fireworks displays.
Zdroik and the estate appealed.
How to Parse Paragraph?
Writing for a three-judge panel, Judge Michael Scudder explained that under Wisconsin law, courts must construe an insurance policy to give effect to the intent of the parties as expressed in the policy’s wording.
The policy issued to Spielbauer by T.H.E. contained the following exclusion:
“This policy shall NOT provide coverage of any kind (including but not limited to judgment costs, defense, costs of defense, etc.) for any claims arising out of injuries or death to shooters or their assistants hired to perform fireworks displays or any other persons assisting or aiding in the display of fireworks whether or not any of the foregoing are employed by the Named Insured, any shooter or any assistant.”
Judge Scudder explained that the parties disagreed over the effect of the phrase “any other persons assisting or aiding in the display of fireworks,” on the preceding phrase “any claims arising out of injuries or death to shooters or their assistants hired to perform fireworks displays.”
Zdroik, Olsen’s estate, and Spielbauer argued that the exclusion applied to bar claims by volunteers only if they were assisting paid shooters or paid assistants when they were injured.
It followed, Zdroik and the estate argued, that because each municipality used only volunteers for its fireworks display, neither Zdroik nor Olson was assisting a paid shooter or a paid shooter’s assistant and therefore their claims were not barred by the policy exclusion.
T.H.E. argued that the phrase “other persons assisting or aiding in the display of fireworks” applied to a volunteer even if he or she was not assisting a paid shooter or paid shooter’s assistant.
Exclusion Applies to Volunteers
T.H.E. had the better argument, Scudder reasoned.
The wording of the policy exclusion, he noted, created two categories: 1) paid shooters and paid shooter’s assistants; and 2) anyone else who assists a fireworks display, regardless of whether they assist a paid shooter or a paid shooter’s assistant.
“This reading is compelled partly by the last-antecedent rule, which takes the qualifying phrase ‘hired to performs fireworks displays’ and attaches it to the last antecedent only—shooters and assistants,” Scudder wrote.
The inclusion of “or” between the two phrases at issue, Judge Scudder reasoned, severed the linkage between the two phrases that Zdroik and the estate were relying upon to argue that the policy exclusion applied to volunteers only if they were assisting a paid shooter or a paid shooter’s assistant.
“The expansive wording in and around the final category (‘any other persons,’ ‘assisting or aiding,’ ‘whether or not any of the foregoing are employed by the Named Insured, any shooter or any assistant’) puts a reasonable insured on notice that all volunteers are excluded from coverage,” Scudder wrote.
Plain Purpose of Exclusion
Zdroik and the estate argued that the exclusion applied only to coverage for paid shooters and paid shooter’s assistants, because they would be covered by the Wisconsin workers’ compensation scheme, and therefore a reasonable insurer would conclude that the exclusion applied only if a fireworks display featured paid workers.
But that argument, Judge Scudder reasoned, was at odds with the plain purpose of the policy exclusion, which was to cut off coverage for a high-risk activity.
“This purpose explains why the provision sweeps up ‘any other persons’ involved in the risky work of putting on a fireworks display, and why hired shooters and assistants—including all volunteers—are excluded irrespective of who employs them or asked them to help,” Scudder wrote.
That the provision was wordy didn’t change that conclusion, Judge Scudder explained.
“If anything, the extra words underscore the breadth of the exclusion by punctuating just how many people the policy intended to exclude—any hired shooter or any hired assistant no matter who hired them, and any leftover assistant who was not hired but pitched in anyway,” Scudder wrote.
Ripeness Argument Fails
Spielbauer also argued the dispute over indemnity was not ripe.
Judge Scudder acknowledged that under Seventh Circuit precedent, courts should generally put off decisions about indemnity until liability had been determined – a principle rooted in the notion that courts should avoid resolving abstract issues.
But, Scudder pointed out, the Seventh Circuit had decided indemnity issues absent a determination of liability where the indemnity issues didn’t turn on far-fetched contingencies and facts.
“The dispute here was neither abstract nor remote,” Judge Scudder wrote. “If either party recovered anything from Spielbauer, the state court would need to turn to T.H.E.’s duty to indemnify generally and the application of the [policy exclusion] specifically.”