The Seventh Circuit Court of Appeals concluded that U.S. district judge Phil Gilbert properly dismissed Bailey Watson’s claim for more than $6.7 million against insurers after she was run over with a wood chipper.
Chief appellate judge Diane Sykes and judges Kenneth Ripple and Ilana Rovner delivered the opinion on March 11.The appellate court concluded that the incident is excluded from insurance coverage because the wood chipper was not in use when Watson was run over.
“We agree with our colleague in the district court that the woodchipper cannot be considered in operation at the time of the accident,” the opinion states.
Watson alleged she was seriously injured in August 2020 when housemate James Hodge ran over her with a wood chipper attached to a 1986 Ford F-150 truck at a property they shared. He was allegedly in the process of leaving the property to dump a load of tree limbs and tree trunks as part of his work. Watson was allegedly walking near the vehicle when the truck or wood chipper struck her, knocked her to the ground and drove over her body.
Watson was airlifted to a St. Louis hospital after Hodge drove her to Alton Memorial Hospital. She spent 27 days in the hospital and 16 days in an SSM Health Rehabilitation Hospital.
Watson sent a claim to Hodge’s insurer, Atain Specialty Insurance Company, in February 2021, but Atain denied her claim.
She then filed suit in March 2021 against Hodge and his company, Riverbend Tree Service, in Madison County Circuit Court.
On April 26, 2021, Atain filed a complaint for declaratory judgment in the U.S. District Court for the Southern District of Illinois, seeking an order finding it had no obligation to defend Hodge against Watson’s negligence complaint.
In June, Madison County Circuit Judge Dennis Ruth found Hodge and Riverbend in contempt and awarded Watson default judgment in the negligence action.
Ruth awarded Watson $699,568.52 in medical expenses, $2 million for pain and suffering, $3 million for loss of normal life, and $1 million in wage loss.
Watson then filed a separate garnishment action against Atain in Madison County Circuit Court, which the insurer removed to federal court. Watson’s suit and Atain’s declaratory judgment suit were consolidated with Gilbert presiding. Both parties filed cross motions for summary judgment.
In district court, Hodge argued that Atain failed to defend him in the negligence action in Madison County Circuit Court.
Additionally, Hodge’s other insurance carriers had argued that Watson and Hodge were in a romantic relationship and colluded in allowing entry of default judgment at state court.
Gilbert granted Atain’s declaration request and dismissed Watson’s garnishment action, finding the incident was not covered by the insurance policies.
“In determining whether Atain had a duty to defend Hodge in the underlying lawsuit, the district court viewed the ‘central question’ as whether the woodchipper was in operation when Ms. Watson was injured,” the appellate court wrote.
Watson appealed Gilbert’s ruling.
The appellate court wrote that at the time of the incident, Hodge held two insurance policies with Atain, including an errors and omissions policy and a commercial general liability policy. Both policies excluded coverage for bodily injury arising out of the use of an auto, which includes a motor vehicle.
“[T]he auto exclusion in each of Hodge’s insurance policies barred coverage, and Atain had no duty to defend or to indemnify Hodge in the underlying lawsuit,” the appellate court wrote.
However, the omissions policy did include an exception when two conditions are met: the wood chipper must have been in operation at the time of the incident, and the truck must have qualified as mobile equipment. Because the wood chipper was not in use, the appellate court did not address the second condition.
“Here, the truck itself was in operation, but that is not enough,” the appellate court wrote. “The operation exception applies - and therefore an accident is covered by the policy - when bodily injury arises out of ‘the operation of machinery or equipment that is attached to, or part of, a land vehicle.’ The woodchipper was not being operated at the time of the accident, but rather passively pulled behind the truck. The operation exception, therefore, does not apply.”