Sports Participant Exclusion Does Not Violate Public Policy

In Giacomelli v. Scottsdale Ins. Co., 2009 WL 4611126 Mont., jockeys Giacomelli and Hamilton suffered injuries in horse races at MetraPark in Montana. Yellowstone County owned and operated MetraPark, and Yellowstone Horse Racing Alliance Inc. (Alliance) leased MetraPark from Yellowstone County to conduct the races. Alleging negligence, the jockeys sued Yellowstone County and Alliance for their injuries.

Alliance had purchased a CGL policy from Scottsdale. The policy covered bodily injuries arising from “the ownership, maintenance or use” of MetraPark or any operations “necessary or incidental” to MetraPark or the horse racing track. Yellowstone County was listed as an additional insured on the policy, which also contained numerous exclusions. Among the exclusions were a “special event participant exclusion” and an “athletic or sports participants” exclusion.

Pursuant to statute, Alliance and Yellowstone County submitted the CGL policy to the Montana board of horseracing, which approved the policy and apparently issued a license to Alliance to conduct horse races.

After the jockeys sued, Alliance and Yellowstone County requested coverage from Scottsdale. Citing the special events participant exclusion and athletic and sports participants exclusion, Scottsdale responded that the CGL policy did not cover the jockeys' injuries and, consequently, refused to defend or indemnify Alliance and Yellowstone County.

The jockeys settled their suits against Alliance and Yellowstone. Pursuant to the settlements, Alliance and Yellowstone consented to the entry of judgments, the jockeys agreed not to execute on the judgments, and Alliance assigned to the jockeys any claims that it had against Scottsdale.

The jockeys then filed a declaratory judgment action, seeking a declaration that the CGL policy covered their claims and that Scottsdale had a duty to indemnify and defend Alliance and Yellowstone County. The jockeys moved for summary judgment to invalidate the special events participant and the athletic or sports participants exclusions for violating public policy and to enforce the remainder of the CGL policy. The district court denied the jockeys' motion, stating that the exclusions did not violate public policy and were unambiguous, and that Alliance and Yellowstone had no reasonable expectation that the CGL policy would cover the jockeys. The jockeys appealed.

The jockeys' principal argument was that §23-4-205, MCA, mandated people licensed to conduct horse races to carry liability insurance covering jockeys. Thus, the special event participant and athletic or sports participants exclusions were contrary to public policy and therefore invalid and the Court should enforce the CGL policy to allow the jockeys to recover the amounts of their judgments from Scottsdale . The district court rejected the first premise of this argument: that § 23-4-205 mandated liability insurance coverage for jockeys.

Although the statute mandated that “for the protection of the public, exhibitors, and visitors, a person licensed to conduct a race meet or operate a simulcast facility under this chapter shall carry public liability insurance in an amount and form of contract approved by the board,” the district court concluded that the term “exhibitor” did not include jockeys. The Supreme Court of Montana agreed, holding that for the purpose of the statute, the “exhibitors” of a horse race where pari-mutuel wagering occurred were those people who organized the horse race—not the jockeys, who are the participants in the exhibition.

The jockeys next contended that the district court erred in holding that the special event participant exclusion and the athletic or sports participants exclusion were unambiguous. The Montana Supreme Court concluded that it need not address the special events participant exclusion because the athletic or sports participants exclusion was dispositive. Although the jockeys argued that the exclusion was ambiguous because it could also be reasonably interpreted to “apply only to injuries arising from the natural or inherent risks of horse racing,” but not to “injuries allegedly caused by an insured's breach of duty to design, inspect, maintain, or operate the race track in a safe condition before the race,” the court found no support for this interpretation in the language of the exclusion. Thus, the court concluded that the athletic or sports participants exclusion, which applied generally to operations of the horse racing track, barred coverage for the jockeys' injuries, and the district court did not err in holding that the jockeys' claims were excluded under the unambiguous terms of the CGL policy.

Finally, the court held that the insured's expectation that the CGL policy covered the jockeys injured while participating in the races was not objectively reasonable given that the athletic or sports participants exclusion unambiguously expressed an intent to exclude coverage for jockeys injured while participating in horse races. Thus, the reasonable expectations doctrine did not apply. Accordingly, the court found that the district court did not err in holding that the special event participant exclusion and the athletic or sports participants exclusion did not violate the reasonable expectations of Alliance and Yellowstone County, and the judgment was affirmed.

Editor's Note: The reasonable expectations doctrine provides that the objectively reasonable expectations of insurance purchasers regarding the terms of their policies should be honored “notwithstanding the fact that a painstaking study of the policy would have negated those expectations.” This decision emphasizes, however, that the doctrine will be found inapplicable where the terms of the policy at issue clearly demonstrate an intent to exclude coverage, and that expectations contrary to a clear exclusion will not be considered objectively reasonable.