The U.S. Court of Appeals for the Fourth Circuit has rejected a charity's contention that it was entitled to reimbursement under hole-in-one insurance policies for the $200,000 it paid to two golfers who each hit a hole-in-one on the designated hole, where the hole did not meet the policies' minimum yardage requirement.
The Case
Old White Charities, Inc., purchased insurance policies to insure the potential cost of a hole-in-one contest it conducted during the 2015 Greenbrier Classic and Pro-Am golf tournament. The application for the insurance policy stated that the hole in question had to be a minimum of 150 yards from the tee. The policies that were issued specified a minimum yardage of 170 yards for the hole in question.
During the tournament, two golfers hit a hole-in-one on the designated hole, and Old White paid approximately $200,000 as a result.
The holes-in-one, however, were made from a distance of 137 yards.
The insurers sought a declaratory judgment that the insurance policies did not provide coverage because, among other things, Old White failed to comply with the minimum yardage requirement.
The U.S. District Court for the Southern District of West Virginia granted summary judgment, and Old White appealed to the Fourth Circuit.
The Circuit Court's Decision
The circuit court affirmed.
In its decision, the circuit court first rejected Old White's argument that it was entitled to coverage under the terms of the policies. The circuit court observed that the policies and policy binder "unambiguously" stated that the designated hole had to be at least 170 yards from the tee, but that in fact it was only 137 yards long. Old Charity did not even satisfy the application's "unambiguous" 150 yard term, even if it was deemed to supersede the policies' requirement, the circuit court added.
The Fourth Circuit also was not persuaded by Old White's contention that it had a reasonable expectation of coverage, a rule of law that provides that the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts must be honored even though "painstaking study" of the policy provisions would have negated those expectations.
The circuit court explained that because the policies' language was "unambiguous," Old White had to show that the actions of the insurers' agents had created a reasonable expectation of coverage, but it found that Old White had not made such a showing. According to the Fourth Circuit, no agent had informed Old White that coverage would be available without a minimum yardage requirement. On the contrary, it added, both the application and binder contained minimum yardage terms, and an email exchange discussed minimum yardage.
The circuit court added that even though the quote did not contain a minimum yardage term, the quote stated that it was subject to the terms of the application, and the application included a minimum yardage term.
The Fourth Circuit concluded that because Old White failed to show that it had complied with the unambiguous terms of the policies or that it had an objectively reasonable expectation of coverage, the insurers were entitled to summary judgment.
The case is All Risks, Ltd. v. Old White Charities, Inc., No. 17-1180 (4th Cir. Dec. 20, 2017). Attorneys involved include: Marvin W. Masters, Kimberly Grace Kessler Parmer, MASTERS LAW FIRM, LC, Charleston, West Virginia, for Appellant. Paul L. Fields, Jr., Jocelyn C. DeMars, FIELDS HOWELL LLP, Atlanta, Georgia; Lee M. Hall, JENKINS FENSTERMAKER, PLLC, Huntington, West Virginia; James A. Varner, Sr., Debra Tedeschi Varner, MCNEER, HIGHLAND, MCMUNN & VARNER, L.C., Clarksburg, West Virginia, for Appellees.