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American Family Mutual Insurance Company v. Pilarski

United States District Court, D. Minnesota

June 28, 2018

American Family Mutual Insurance Company, Plaintiff,
Daniel Pilarski, an individual; and William Reiter, an individual; Defendants.



         This matter is before the Court on American Family Mutual Insurance Company's (“American Family”) Motion for Summary Judgment. [SJ Mot., ECF No. 32.] The parties have consented to the exercise of jurisdiction by the undersigned United States Magistrate Judge. [ECF No. 22.] For the reasons that follow, American Family's motion is granted.

         I. Background

         On July 16, 2016, Daniel Pilarski was visiting a Wisconsin cabin owned by his friend William Reiter. [Ex. A to the Compl., ECF No. 3-1; Decl. of Dahrim Boulware (“Boulware Decl.”) ¶ 4, Ex. B (“Pilarski Statement”) at 2, ECF No. 34-2.] Mr. Reiter and Mr. Pilarski took Mr. Reiter's boat out on the water that day. [Pilarski Statement at 2.] The boat has an inboard-outdrive motor. [Boulware Decl. ¶ 5, Ex. 3.] When the two returned to the cabin from the boat ride, they attempted to place the boat back into Mr. Reiter's boathouse. [Ex. A to Compl.; Pilarski Statement at 2.] To accomplish this task, Mr. Pilarski operated a motorized boat winch, but he sustained a serious injury to his left hand in the process of reeling in the boat. [Ex. A to Compl.; Pilarski Statement at 2-5, 6; Boulware Decl. ¶ 6, Ex. 4 (“Reiter Statement”) at 5, ECF No. 34-4.] When the boat was still about six to eight feet from being fully loaded into the boathouse and the cable was very tight, Mr. Pilarski's left hand was trapped by the cable as he tried to guide cable onto the winch's spool. [Pilarski Statement at 2-5; Reiter Statement at 4-6.] Ultimately, Mr. Pilarski lost two fingers on his left hand, and suffered serious damage to a third. [Pilarski Statement at 6, 8.] Mr. Pilarski filed a personal injury lawsuit against Mr. Reiter in Ramsey County District Court (the “underlying action”), alleging that Reiter's negligence caused the injuries. [Ex. A to Compl.]

         Mr. Reiter tendered the defense of the underlying action to American Family, with which he has a Wisconsin Homeowners Policy.[1] [Compl. ¶¶ 14-15, ECF No. 3.] American Family agreed to defend Mr. Reiter, but strictly reserved its rights. [Id. ¶ 15.] American Family seeks a declaratory judgment that an exclusion in Mr. Reiter's policy applies, meaning it has no duty to defend or indemnify Mr. Reiter for any losses suffered by Mr. Pilarski. [Id. ¶¶ 19-21.]

         Mr. Reiter's American Family policy covers “compensatory damages for which any insured is legally liable because of bodily injury or property damage caused by an occurrence covered by [the] policy.” [Boulware Decl. ¶ 3, Ex. 1 (“AF Policy”) at 9[2].] American Family is also required to provide a defense at its expense if a suit is brought against Mr. Reiter. [AF Policy at 9.] As defined in the AF Policy, an “occurrence” includes an accident that results in bodily injury. [AF Policy at 2.] And “bodily injury” includes “bodily harm.” [AF Policy at 1.] American Family also agreed to pay the medical expenses incurred or medically ascertained within three years from the date of an accident causing bodily injury to a person on the covered property with permission of the insured. [AF Policy at 9.] None of these portions of the AF policy are in dispute.

         However, there are several provisions in Mr. Reiter's homeowner's policy that exclude coverage for certain types of personal liability and medical expenses. One of these personal liability and medical expense exclusions applies to watercraft. It reads:

19, Watercraft.
a. We will not cover bodily injury or property damage arising out of the ownership, supervision, entrustment, maintenance, operation, use, loading or unloading of a watercraft:
(1) with inboard or inboard-outdrive motor power owned by any insured;
(2) with inboard or inboard-outdrive motor power of more than 50 horsepower rented to any insured;
(3) that is a sailing vessel, with or without auxiliary power, 26 feet or more in length owned by or rented to any insured;
(4) that is an iceboat, airboat, air cushion or similar type of craft; or
(5) powered by one or more outboard motors with more than 50 total horsepower, owned by any insured.
This exclusion does not apply while such crafts are stored on the insured premises nor to bodily injury to any domestic employee arising out of and in the course of employment by any insured.

[AF Policy at 12.] The dispute between American Family and Mr. Pilarski in this declaratory judgment action centers on this exclusion.

         II. Discussion

         American Family asserts that it is entitled to summary judgment on its declaratory judgment claim because the watercraft exclusion plainly and unambiguously applies to the accident at issue here. Specifically, American Family argues that the undisputed facts show Mr. Pilarski sustained a bodily injury arising out of the loading of a watercraft with ...

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