Danny Marks, Jr. v. Scottsdale Insurance Company
2015 U.S. App. LEXIS 11072
4th Cir.2015Background
- Timothy Johnson, a member of Northumberland Hunt Club, shot at a deer on Club-leased land; pellets struck and injured Danny Marks, who was on a nearby public road.
- Marks sued Johnson (negligence and gross negligence) and the Hunt Club (negligent failure to promulgate safety rules) in Virginia state court; he did not allege vicarious liability of Johnson for the Club.
- Scottsdale insured the Hunt Club under a commercial general liability policy that named the Club as insured and included an endorsement making Club members additional insureds “but only with respect to [member] liability for [the Club’s] activities or activities [members] perform on [the Club’s] behalf.”
- Marks sued Scottsdale for a declaratory judgment that Scottsdale must defend/indemnify Johnson; Scottsdale counterclaimed seeking a declaration of no duty to defend/indemnify. Scottsdale is defending the Club but denied coverage for Johnson.
- The magistrate judge granted summary judgment to Scottsdale; the Fourth Circuit affirmed, holding the Endorsement unambiguously covers only member liability for the Club’s activities as an entity (i.e., vicarious liability) or member acts on the Club’s behalf, neither of which applied to Johnson’s recreational hunting.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Endorsement’s phrase “[member] liability for [the Club’s] activities” covers a member’s personal recreational acts that occur during a Club activity (hunting). | Marks: "Hunting" is a Club activity; the clause therefore covers Johnson’s act because it occurred during a Club activity. | Scottsdale: The phrase limits coverage to member liability for the Club’s corporate activities (vicarious liability); it does not cover ordinary, personal member conduct. | The court held the clause unambiguously covers vicarious liability for the Club’s corporate activities, not individual recreational conduct; held for Scottsdale. |
| Whether the Endorsement’s second clause (activities members perform on the Club’s behalf) applies. | Marks argued broadly in initial pleadings that Club activities cover the incident. | Scottsdale and Johnson conceded/argued that members acting on the Club’s behalf is limited to acts at the Club’s request or for its benefit. | The court (and parties) agreed the second clause does not apply to Johnson’s hunting; Marks conceded it on appeal. |
| Whether policy language is ambiguous and thus construed against insurer. | Marks: The “activity” language is ambiguous and should be construed in his favor to require defense. | Scottsdale: The endorsement’s language, read in context, has a clear, ordinary meaning limiting coverage to vicarious liability; no ambiguity. | Court found the clause unambiguous in context and did not construe it against Scottsdale. |
| Whether Scottsdale had a duty to defend under the eight-corners rule. | Marks: Underlying complaint alleges facts that could implicate Policy coverage because the shooting occurred during a Club hunting activity. | Scottsdale: Under the complaint’s allegations (no vicarious-liability claim), no facts would bring Johnson within the Endorsement’s coverage, so no duty to defend. | Court held, applying the eight‑corners rule, that the complaint did not allege conduct that would trigger coverage; Scottsdale had no duty to defend or indemnify Johnson. |
Key Cases Cited
- CACI Int’l, Inc. v. St. Paul Fire & Marine Ins. Co., 566 F.3d 150 (4th Cir.) (choice-of-law and insurance-contract principles in diversity cases)
- AES Corp. v. Steadfast Ins. Co., 725 S.E.2d 532 (Va. 2012) (Virginia eight‑corners rule for duty to defend)
- Va. Farm Bureau Mut. Ins. Co. v. Williams, 677 S.E.2d 299 (Va. 2009) (insurance contracts construed to effect parties’ intent; ambiguous language construed against insurer)
- Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631 (4th Cir.) (term ambiguous only if susceptible to more than one reasonable meaning in context)
- Gates, Hudson & Assocs. v. Fed. Ins. Co., 141 F.3d 500 (4th Cir.) (contract term considered unambiguous if clear in context)
- Penn‑America Ins. Co. v. Coffey, 368 F.3d 409 (4th Cir.) (duty to defend broader than duty to indemnify)
- Fuisz v. Selective Ins. Co. of Am., 61 F.3d 238 (4th Cir.) (application of the eight‑corners rule)